2009

A good, short, succinct summary of why Rep Lamar Smith (R.-KY) voted against Cap-and-Tax.

Hat-tip: The Chilling Effect

Very interesting, but of course unscientific*, poll of hybrid vehicle owners over at HybridCarBlog.  It turns out that very few hybrid owners bought their hybrid because of global warming fears:

So far, there have been more than 28,000 responses to the poll and the results are a little surprising. 37 percent of respondents picked foreign oil dependency, 29 percent cool technology, 27 percent car pool lane access, but only 7 percent picked global warming.

Certainly, everyone I know in Northern Virginia who bought a hybrid did so because of the (no longer available) HOV lane access, but I am a little surprised and gratified to see that over 50 percent of hybrid purchasers made their decision based on personal rather than political considerations.

More importantly, however, as the post author notes, this suggests that car companies are missing a huge marketing bonanza by concentrating so heavily on save-the-planet considerations in their advertising campaigns.  If we really want to see hybrid technology develop and become more affordable, the auto makers need to wise up to this.  Of course, with the major American automakers (apart from Ford) now substantially owned by politicians and their allies, the chances of this happening are slight.

*So take it with a grain of salt

CEI President Fred Smith talks about the recent passage of climate legislation in Congress.  Read it here.

The Securities and Exchange Commission (SEC) may require corporations to assess and disclose the impacts of global warming and climate change policy on their bottom lines, today’s Climate Wire (subscription required) reports. The story indicates that Commissioner Elisse Walter is the key proponent inside the SEC. The big outside push–no surprise–comes from Ceres, the eco-sustainability investment network. Wisconsin insurance regulator Sean Dilweg and Maryland Treasurer Nancy Kopp are also cited as leading advocates of SEC-mandated “climate risk disclosure.”

Climate Wire rightly notes that, “The move would drive the government deeper into the climate debate, potentially reshaping management decisions at companies across the country.”

The prospect of SEC-required disclosure of climate risk scares the bejesus out of fossil energy producers and energy-intensive manufacturers, Climate Wire indicates:

Big emitters like oil and gas companies, for example, might have to formally reveal the output of their greenhouse gases and the disadvantages they face from federal efforts to charge polluters for every ton of carbon that’s released.

Even more, the revelations could spark financial fallout. Institutional investment groups with trillions of dollars in assets could use the disclosures as the basis for withdrawing money from companies they consider unprepared for rising risk related to regulation and climatic convulsions.

In reality, there is little risk to company bottom lines from climate change per se. Even if one makes the questionable assumption, for example, that global warming will measurably intensify tropical storms over the next few decades, climate risk will always exceed climate change risk by a wide margin. For instance, due to completely natural climatic factors, a company in Florida has a much greater vulnerability to hurricane strikes and damages than a company in Ohio, regardless of how climate changes. Yet this does not stop people and businesses from moving to Florida, enjoying good weather most of the time, and building a prosperous society.

No, the really serious climate risks are policy-related. For example, the application of Clean Air Act permitting rules to stationary sources of carbon dioxide (CO2) emissions–the inescapable consequence of EPA establishing greenhouse gas (GHG) emission standards for new motor vehicles in response to the Supreme Court’s April 2007 Massachusetts v. EPA decision–would potentially expose 1.2 million previously unregulated firms to new controls, paperwork, penalties, and litigation.

Moreover, the endangerment finding prerequisite to EPA adoption of GHG controls for motor vehicles could also compel the agency to promulgate National Ambient Air Quality Standards (NAAQS) for GHG-related “air pollution.” Logically, NAAQS for GHGs would have to be set below current atmospheric levels and, thus, could not be attained even if EPA shut down every car, power plant, and factory in the United States.

Once the regulatory cascade starts, climate policy risk to the U.S. economy could function as a gigantic, permanent, Anti-Stimulus Package. For the gory details, see my comment on EPA’s Endangerment Proposal, especially pp. 33-48.

It’s not enough for Ceres and other eco-zealots to clobber big emitters and industrial energy consumers with costly regulation. They also want those companies to scare away investors in advance of climate regulation via public disclosure of the potential burdens.

However, the Ceres strategy could backfire. If the SEC adopts the Ceres plan, targeted corporations should use the mandated information to publicize the destructive impacts of climate regulations on jobs, growth, investment, and shareholder value. Such information would reveal that the risks of climate policy vastly outweigh the risks of climate change. It could and should fuel a broad-based political backlash against the self-anointed saviors of Planet Earth.

The Securities and Exchange Commission (SEC) may require corporations to assess and report the impacts of global warming and climate change policy on their bottom lines, today’s Greenwire (subscription required) reports. The story indicates that Commissioner Elisse Walter is a key proponent inside the agency. The big outside push–no surprise–comes from Ceres, eco-sustainability investment network. Wisconsin insurance regulatory Sean Dilweg and Maryland Treasurer Nancy Kopp are also mentioned as leading advocates of SEC-mandated “climate risk disclosure.”

Greenwire rightly notes that, “The move would drive the government deeper into the climate debate, potentially reshaping management decisions at companies across the country.”

Greenwire indicates that the SEC, stung by criticism that its lax regulation contributed to the financial crisis, now views an assertive stance on climate risk as a way to shore up its image.

The prospect of SEC-required disclosure of climate risk scares the bejesus out of fossil energy producers and energy-intensive manufacturers, Greenwire says:

Big emitters like oil and gas companies, for example, might have to formally reveal the output of their greenhouse gases and the disadvantages they face from federal efforts to charge polluters for every ton of carbon that’s released.

Even more, the revelations could spark financial fallout. Institutional investment groups with trillions of dollars in assets could use the disclosures as the basis for withdrawing money from companies they consider unprepared for rising risk related to regulation and climatic convulsions.

But the CERES agenda may be too clever by half. Disclosure of climate risk could cut against the global warming movement, by revealing the potential of regulatory climate policy to wreck the economy.

For example, the application of Clean Air Act permitting rules to stationary sources of carbon dioxide (CO2) emissions–an inescapable consequence of EPA establishing greenhouse gas (GHG) emission standards for new motor vehicles in response to the Supreme Court’s April 2007 Massachusetts v. EPA decision–would potentially expose an estimated 1.2 million previously unregulated firms to new controls, paperwork, penalties, and litigation.

Moreover, the endangerment finding prerequisite to EPA adoption of GHG controls for motor vehicles could also compel the Agency to promulgate National Ambient Air Quality Standards (NAAQS) for GHG-related “air pollution.” Logically, NAAQS for CO2 and other GHGs would have to be set below current atmospheric levels and, thus, could not be attained even if EPA shut down every car, power plant, and factory in the United States. Once the regulatory cascade starts, “climate policy risk” to the U.S. economy could easily become a gigantic Anti-Stimulus Package. For the gory details, see my comment on EPA’s endangerment proposal, especially pp. 33-48.

It’s not enough for Ceres and other eco-zealots to clobber fossil energy producers and energy-intensive manufacturers with costly regulation. They want those companies to scare away investors in advance of climate regulations via public disclosure of the potential burdens. However, the Ceres strategy could backfire, because targeted corporations could use the mandated information to publicize the destructive impacts of climate policy on jobs, growth, investment, and shareholder value. Such information would reveal that the risks of climate policy vastly outweigh those of climate change.   

Italy’s Senate has overturned a 1987 ban on nuclear power, passed in panic after Chernobyl.  This is good news for Italians, as they face some of the highest electricity rates in Europe.  Of course, this being Europe, the plants will probably be built with significant government subsidy, so there won’t be much we can learn from it about the viability of nuclear power built without government assistance.  Nevertheless, if European countries are going to meet the ambitious emissions targets they have adopted, nuclear power is going to have to play a large part in doing so.

Scientists, that is.

Earlier this week the House Appropriations Committee passed a $27 billion budget for the Department of Energy. You might think that the DOE already has enough trouble trying to spend the $39 billion it received in the federal stimulus act enacted earlier this year (that’s almost twice the DOE’s entire budget for 2007), but you’d be wrong-when it comes to taxpayer dollars, the money pit otherwise known as the DOE can’t get enough.

There are many problems with the DOE’s bloated budget, but I’m only going to address the most egregious: The Congress’s support for no-strings-attached “clean energy” loans.

As I’ve noted elsewhere, in 2005, the Congress created a Loan Guarantee Program for “innovative” energy production that reduces greenhouse gas emissions responsible for so-called “global warming” (it hasn’t warmed in a decade, but that’s a different story). With the LGP, the federal government promises to cover the loan in case of default, which makes credit cheaper for borrowers.

The Congress put the DOE in charge of the LGP, despite the fact that the Department has no expertise disbursing loans and its woeful history of picking energy technologies to support. The decision to put the DOE in charge is all the more suspect given that these are risky loans to unproven technologies (according to federal estimates, the default rate is expected to be 50%).

At the time, the Congress seemed to protect the American taxpayer from bad loans by stipulating that the borrower pay a “credit subsidy cost,” a fee equivalent to the value of the risk that the government takes by facilitating cheap credit, unless funds are otherwise appropriated. To date, the Appropriations Committee has yet to allocate funds to pay for the credit subsidy cost, although in the stimulus act passed earlier this year, “Hollywood” Henry Waxman (D-Beverly Hills), inserted language appropriating $6 billion to subsidize the credit subsidy cost for a subset of ultra-green projects.

Assuming that the credit subsidy cost is 10% of the loan, the $6 billion LGP subsidy in the stimulus act puts the taxpayer fully on the hook for $60 billion. But that’s not enough for the Obama administration, which asked for more than $900 million in 2009 and $3.5 billion in 2010 to cover the credit subsidy cost (page 436 of the White House’s proposed budget).

Last month, the Energy and Water Subcommittee of the Appropriations Committee seemed to balk at the President’s request. The Subcommittee report stated,

“This Subcommittee has long pushed the Department of Energy on management and cost issues. The bill before us today continues to stress that point to the new Administration and directs the Department to continue to work with the Government Accountability Office (the GAO) to implement its recommendations. The Department continues its 18 year membership in the GAO’s annual list of programs that are at high-risk for fraud, waste, abuse, and mismanagement. While the Department has made progress, recent history has shown that there is substantial room for improvements.”

Clearly, the Sub Committee recognizes that the DOE has problems spending taxpayer money. Yet the Sub Committee only recommended a decrease of the President’s proposed subsidy (-$465 million in 2009 and -$1.5 billion in 2010), rather than an outright rejection, and the full Committee agreed.

So the Appropriations Committee believes that the DOE is a “high-risk for fraud, waste, abuse, and mismanagement” but then it chose to remove a major taxpayer protection from “fraud, waste, abuse, and mismanagement” by allocating more than $2 billion to cover the credit subsidy cost of risky green energy loans. F. Scott Fitzgerald famously said that first-rate intelligence is the ability to hold two entirely opposite thoughts in one’s head at the same time. By this reasoning, Members of the Appropriations Committee are a bunch of whiz kids.

Leading trade lawyer Gary Horlick testified yesterday on carbon tariffs before the Senate Finance Committee.  As the Senate prepares an energy suppression/global warming bill, it is attempting to find ways to soften the “border adjustment” provisions in the House-passed bill (H.R. 2454).

Horlick points out some of the practical problems of setting up a carbon tariff system and cautions about the potential effects of such measures on the international trading system.  As he notes, if the production method rather than the end-product is focused on, such processes as agricultural biotechnology may face increased challenges in the World Trade Organization:

It is tempting to say that we can re-interpret existing WTO rules to permit whatever measures are necessary to protect our environment. But do we really want to change those existing rules? The key to the U.S. economy is constant innovation.

One of the important fields where we lead the world of innovation is biotechnology, which is revolutionizing medicine, agriculture, and even many of the environmental concerns dealt with in proposed legislation (such as environmental remediation and renewable fuels). So far the United States has resisted efforts in Europe and elsewhere to limit our market access for our products because of how they are produced – from biotech means. But if we re-interpret WTO rules to allow trade barriers based on how things are made, we open up a can of worms – and might permit other countries to block our biotech exports, including major items such as corn, soybeans, and other crops.

Talk about creating chaos in the world trading system!