2009

Cooler Heads Digest 23 May 2009

by William Yeatman on May 26, 2009

Announcements

The Heartland Institute’s Third International Conference on Climate Change will be held in Washington, DC on June 2, 2009 at the Washington Court Hotel, 525 New Jersey Avenue, NW. It will call attention to widespread dissent to the asserted “consensus” on various aspects of climate change and global warming. Register here.

The Competitive Enterprise Institute has a new video campaign–Al Gore, 1984. The web page links to a joint CEI-National Taxpayer Union project that allows you to email your Member of Congress about the Waxman-Markey energy-rationing bill.

In the News

Study Estimates 2.3 Billion Lost Jobs with Waxman-Markey
Marlo Lewis, GlobalWarming.org, 22 May 2009

Waxman-Markey Bill Jury-rigged for Special Interests
Steven Pearlstein, Washington Post, 22 May 2009

The Climate-Industrial Complex
Bjorn Lomborg, Wall Street Journal, 20 May 2009

Democrats May Make Trouble for Climate Bill
Lisa Lerer and Patrick O’Connor, Politico, 22 May 2009

Waxman-Markey Full of Unpleasant Surprises
The Washington Examiner, 22 May 2009

Warnings from the Left Coast
Rep. Tom McClintock, 21 May 2009

California’s Sorry State Points to America’s Future
Iain Murray and William Yeatman, Fox Forum, 20 May 2009

Cap and Trade is a License to Cheat and Steal
William O’Keefe, San Francisco Examiner, 18 May 2009

Cap and Trade or Coaches and Horses
Financial Times, 18 May 2009

Waxman-Markey Will Wreck U.S. Economy
Washington Examiner, 18 May 2009

Is Wind the Next Ethanol?
Ben Lieberman, Washington Times, 17 May 2009

Mark Mills: Prophet in His Own Time?
Marlo Lewis, MasterResource.org, 15 May 2009

News You Can Use

What Happens When You Give Away the Ration Coupons?

As former Congressional Budget Office Director Peter Orszag (now Obama’s Office of Management and Budget Director) said, “If you didn’t auction the permits it would represent the largest corporate welfare program that has ever been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits.”

Rep. Jay Inslee, Washington Democrat, said lawmakers should not repeat the mistakes of the European Union, which gave away its first round of permits to affected industries free of charge: “When they started the cap-and-trade [plan], they gave away all the permits,” Mr. Inslee said. “It created less controversy and it was a spectacular disaster.” From an article on the hearings by Tom LoBianco published in the Washington Times on 22nd April.

H.R. 2454, the American Clean Energy and Security Act, as passed by the House Energy and Commerce Committee on 21st April gives away 85% of the ration coupons to special interests.

Inside the Beltway

Myron Ebell

House Committee Passes Waxman-Markey, 33-25

The House Energy and Commerce Committee early Thursday evening voted to send the Waxman-Markey energy-rationing bill, H. R. 2454, to the House floor by a vote of 33 to 25. One Republican, Mary Bono Mack of California, voted yes. Four Democrats voted no: Mike Ross of Arkansas, Charles Melancon of Louisiana, John Barrow of Georgia, and Jim Matheson of Utah. Republican Nathan Deal of Georgia was not there to vote, but was opposed to the bill.

Final passage came after four long days of considering amendments. The Democratic majority defeated every Republican attempt to put upper limits on the economic damage the bill could do. They defeated amendments that would have suspended the Act if electricity prices double, gasoline reach five dollars a gallon, or unemployment exceeds fifteen percent. An amendment to suspend the Act if China and India don’t reduce their own emissions was rejected on a straight party-line vote.

They also defeated Rep. Marsha Blackburn’s (R-Tenn.) amendment (based on her bill-H. R. 391) that would have removed greenhouse gases from the list of pollutants regulated by the Clean Air Act. Rep. Edward Markey said in opposing the amendment, “We might as well say that the Earth doesn’t revolve around the sun or the dinosaurs never roamed the Earth as to say that carbon isn’t a pollutant.” (I wrote that down as I listened on C-Span, so it may not be an exact quote.) Yes, there’s no doubt in the U. S. Congress that a naturally-occurring trace gas necessary for life on Earth is a pollutant. As far as I can tell, defeat of the Blackburn amendment means that the cap-and-trade scheme in the bill will run in tandem with regulation of greenhouse gases under some sections of the Clean Air Act.

The debate became more and more unreal as it went on. Chairman Henry Waxman (D-Beverly Hills) and Subcommittee Chairman Edward Markey (D-Mass.) argued that the purpose of giving away 85% of the ration coupons to big businesses was to protect consumers from higher energy prices. But cap-and-trade can only reduce emissions if prices go up. Higher prices force consumers to use less and bring otherwise uncompetitive alternatives, such as wind power, onto the market. Of course, everyone realizes that the real purpose of giving away the coupons is to buy support from big businesses. Jim Rogers of Duke Energy is now looking forward to a big retirement package.

It’s actually unlikely that the bill if enacted will reduce emissions, at least for twenty or thirty years. That’s because nearly all the cuts required can be met by buying offsets, as an analysis by the Breakthrough Institute shows. Many offsets are a scam. Most of the ones that aren’t entirely bogus don’t deliver their emissions offsets until decades after they are purchased. For example, you can buy to have a forest planted with young trees, but they won’t sequester much carbon until they grow much bigger.  A Republican amendment to ban foreign offsets, which are especially hard to monitor and verify, was defeated.

Prospects for Waxman-Markey

Four moderate Democrats voted against H. R. 2454. That spells difficulties when it reaches the House floor, but not insuperable ones. My guess is that the bill can probably pass the House if the Democratic leadership can get it to the floor quickly. But I wouldn’t bet on it passing if the vote occurs after the August recess. That’s because it’s ramshackle (as is any thousand-page bill) and will start falling apart as people begin to explore what’s in it. Right now, the momentum is provided by the big businesses that stand to gain windfall profits from getting free ration coupons.

But there are losers as well, and the losers are going to realize that and then will begin to complain about it. The entire real estate and building industries lose big under Title II.  Even among industries that gets lots of free ration coupons, there are winners and losers. For example, utilities get 35% of the coupons, but in some States utilities get more coupons than their current emissions and in some States they get fewer coupons. How many coupons will Rep. Jay Inslee of Washington be willing to transfer from utilities in his State to some other State in order to gain a vote?

So I think that the momentum is going to change directions fairly quickly. Major far-left environmental pressure groups are opposing the bill largely because it gives away the ration coupons to “polluters.” See here and here.(“Far-left” is not only my adjective. When Greenpeace USA, Friends of the Earth, and Public Citizen sent out a press release criticizing Waxman-Markey, that’s how Greenwire described them.) They will mobilize their supporters as floor action approaches.

Public opinion has already turned strongly against the bill. An in-depth poll conducted by Lauer Johnson Research for the National Rural Electric Co-operative Association in early April found that 58% of those surveyed would oppose any bill to combat global warming that would raise their electricity bills by any amount. We have posted the poll results on the Cooler Heads Coalition web site, globalwarming.org. Waxman and Markey are not going to be able to conceal the likely price increases for long. Initial estimates by the Heritage Foundation, Charles River Associates, and the Congressional Budget Office show much higher costs to consumers than the EPA found in their obviously flawed estimate of 13 cents per person per day. Environmental pressure groups that support Waxman-Markey are using the EPA study, even though one of the reasons it finds such low compliance costs is that it assumes that a lot of new nuclear plants are going to be built.

Obama Raises Car Prices

President Barack took a politically popular step this week in announcing higher fuel economy standards for new cars and trucks. The anti-energy bill enacted in 2007 by the Democratic-controlled Congress and enthusiastically supported by President George W. Bush raised Corporate Average Fuel Economy (CAFÉ) standards to 35 miles per gallon for new cars by 2020 (and included the huge increase in the ethanol mandate as well). President Obama raised that to 35.5 miles per gallon by 2016 (higher for cars, lower for light trucks).

It’s popular because vast efforts have been made to make people assume that they can still buy the same vehicle with the same size and performance at the same price, but after government waves a magic wand it will now get more miles per gallon. That is of course not the case. Big cars and trucks are still going to be produced, but the automakers aren’t going to meet these higher CAFÉ standards if they sell very many of them. Thus prices are going to go up for all cars, but much more for bigger, safer models.

While I’ve been concentrating on the Waxman-Markey bill for the past few weeks, things have also been happening in the Senate. Next week, I’ll catch up on the hi-jinks in the Senate Energy and Natural Resources Committee.

Around the World

Kyoto II

A draft of the negotiating text for the fifteenth Conference of the Parties to be held in Copenhagen in December has surfaced. It incorporates entirely new approaches to regulate greenhouse gases. It appears that binding time tables and actions are out, while mandatory “official development assistance” is in.

Yet China will be submitting their own position to the United Nations in one week. While the specific details of the document are unknown, Bejing demanded Tuesday that rich countries cut greenhouse gas emissions by 40 per cent by 2020 from 1990 levels and help pay for reduction schemes in poorer countries, including China, with 0.5 to 1 percent of their annual economic worth. And such developing countries should curb emissions only on a voluntary basis, and only if the cuts “accord with their national situations and sustainable development strategies”.

The Chinese government didn’t say whether they would be willing to loan us the hundreds of billions or even trillions of dollars they want us to pay them to reduce their emissions.

In the States

Utah

Utah may be getting a new governor who is more sceptical about climate change policies than the current one. Lieutenant Governor Gary Herbert will replace Governor Jon Huntsman if the Senate confirms President Obama’s nomination of Huntsman to be our Ambassador to China.

It Costs Only 13 Cents Per Day!

Julie Walsh
If you’ve heard environmentalists claim that the Waxman-Markey bill will only cost each person 13 cent a day, they are relying on information from a recent EPA study. However, the EPA’s analysis includes this rather large assumption: “Nuclear power generation is allowed to increase by ~150% from 782 billion kWh in 2005 to 1,982 billion kWh in 2050” (page 27). There have been no new orders for nuclear plants since the 70s, yet we are supposed to believe that environmental pressure groups will allow dozens of new reactors to be built.

Waxman-Markey: Coercion for its own sake

by Marlo Lewis on May 22, 2009

Most media coverage of H.R. 2454, the American Clean Energy and Security Act  of 2009 (ACES), focuses on the bill’s cap-and-trade program and the free rationing coupons (emission allowances) that the bill’s co-sponsors, Reps. Henry Waxman (D-CA) and Ed Markey (D-MA), had to hand out to utilities and other interests to secure their support for the legislation.

But the cap-and-trade program occupies only one of four of the bill’s main sections (”titles”).  Other titles contain a host of mandates and “incentives” (carrots and sticks) to reshape energy and transportation markets.   

ACES, for example:

  • Requires utilities to meet a certain percentage of their load with electricity generated from renewable sources, like wind, biomass, solar, and geothermal.
  • Promotes small-scale “distributed generation” of renewable electricity by offering three renewable electricity credits (instead of one credit) for each MWh produced.
  • Authorizes electric power generators to create a Carbon Storage Research Consortium with the power to assess “fees” (aka taxes) totalling approximately $1 billion annually to fund carbon capture and storage (CCS) demonstration plants.
  • Directs the EPA Administrator to hand out free rationing coupons to subsidize CCS.
  • Establishes a CCS mandate requiring new coal-fired power plants to emit 65% less carbon dioxide if permitted after 2020, and emit 50% less if permitted between 2009 and 2020; also requires EPA to review these standards not later than 2025 and every five years thereafter.
  • Requires utilities to ”consider” developing plans to support electric vehicle infrastructure, and provides assistance (including free emission allowances) to subsidize electric vehicles and infrastructure.
  • Mandates stricter building codes achieving 30% higher energy efficiency in 2010 and 50% higher in 2016 for new buildings, and establishes a “building retrofit program” for existing residential and nonresidential buildings.
  • Mandates tougher energy efficiency standards for indoor and outdoor lighting, hot food holding cabinets, bottle-type drinking water dispensers, hot tubs, commercial-grade natural gas furnaces, televisions, and other appliances.
  • Requires the President, EPA, the Department of Transportation (DOT), and California to establish greenhouse gas (GHG)/fuel economy standards for new passenger cars and light trucks.
  • Requires and sets deadlines for EPA to establish GHG emission standards for heavy-duty engines and vehicles and non-road vehicles including marine vessels, locomotives, and aircraft.
  • Requires States to establish goals and submit transportation plans to reduce transport sector GHG emissions, and imposes sanctions on States that fail to comply.
  • Requires the Deparment of Energy (DOE) to establish industrial energy-efficiency standards.

These measures are economically and environmentally irrational even if you believe that global warming is a “planetary emergency.” As the Charles River Associates (CRA) report for the National Black Chamber of Commerce points out, the renewable electricity, CCS, electric vehicle, and energy efficiency mandates will not yield net emission reductions beyond what the bill’s emission caps already require. The targeted interventions may accelerate GHG reductions in some industries or sectors, but that just allows emissions to increase elsewhere in the economy without breaking the cap.

The rationale for cap-and-trade is that it allows the market to find the least-costly methods of reducing emissions. By superimposing renewable electricity, CCS, electric vehicle, and energy efficiency mandates on that system, Waxman-Markey dictates the means as well as the goals.

There are two possible outcomes. First, which is exceedingly unlikely, the cap motivates reductions in exactly the same ways as the targeted mandates and incentives. In that case, observes CRA, the mandates “would waste resources on needless monitoring, measuring, enforcement and compliance.”

If, as almost certainly would happen, the mandates compel different actions and investments than industry would otherwise undertake to meet the cap, then the same emission reductions would be achieved at higher cost.  The targeted mandates and incentives “can only substitute more costly GHG cuts for those that could have been made at lower cost.”

So what is the point? Why tout cap-and-trade as an “efficient,” “market-based” solution and then gunk it up with cookie-cutter, command-and-control measures?

Several reasons come to mind including deep distrust of markets, an abiding belief in old-fashioned central planning, the desire to rig market outcomes to benefit or punish certain interests, and the desire to create more work (endless full employment) for bureaucrats and lawyers.

One that should not be discounted, though, is the pleasure some people derive from placing their heels on other people’s necks. Politics is chiefly about the organization and application of power. It tends to attract people who enjoy bullying and coercing others. To regulate is to coerce. Command-and-control regulation is more coercive than the market-based variety. So despite their real or feigned enthusiasm for cap-and-trade, many climate activists are hopelessly addicted to mandates.

This is How Climate Research Works Too

by Paul Chesser, Heartland Institute Correspondent on May 22, 2009

With the EPA and Congress barreling towards greenhouse gas regulation, you might think that all the states and local governments putting together their own plans might declare victory and move on to more pressing matters like creating make-work with federal stimulus money. You’d be wrong.

The Almanac newspaper reports today that the Menlo Park (Calif.) City Council earlier this week approved a climate action plan created by its volunteer Green Ribbon Citizens’ Committee. As with TARP, however, it appears local leaders may only be willing to go as far as tax-grabbers from larger jurisdictions will pay for them to go:

The City Council approved the plan in a unanimous vote at its May 19 meeting. Prepared by a consultant that specializes in creating climate strategies for local jurisdictions and revised by city staff members, the plan expands upon and fleshes out a dense list of recommendations prepared by the volunteer Green Ribbon Citizens’ Committee in late 2007, council members say.

They acknowledge, however, that (the plan is) incomplete. The city exhausted the $38,000 it expects to receive in grant money to prepare the plan before it had a chance to fully revise the document, and council members look poised to allow a city commission to work on the plan — possibly in consultation with the Green Ribbon committee.

Undoubtedly it was the “consultant” who exhausted the $38k (which the city doesn’t even have yet!). Pretty good gig when these eco-consultants can drop their “climate plan” template on a municipality and collect a cool five-figure (plus?) sum for filling in the blanks. By the way, local watchbloggers, you might check how these consultants are working, lobbying, and wining and dining city officials to get these deals. Back to The Almanac:

Much of the discussion at the May 19 meeting centered on how the city could quantify its efforts to rein in the amount of greenhouse gases emitted into the Earth’s atmosphere. In an impassioned speech to the council, Mitch Slomiak, head of the Green Ribbon committee, urged the city to set measurable goals in reducing emissions, and to treat its “carbon budget” in the same way it regards its general operating fund budget.

You know, like their personal slush fund and favor factory. Like Waxman-Markey.

But council members struggled with how to make the issue tangible.

Easy — make it as tangible as CO2!

Unlike most of the line items in the city’s budget, a decreased carbon output won’t provide a direct benefit to the city.

Hmmm…truly a dilemma for politicians who expect something in exchange for wasting their constituents’ money.

“One might almost conclude that anything we do here is basically symbolic, and setting an example,” said Councilman Andy Cohen.

Money quote: About as close as you’ll get to hearing a global warming alarmist politician saying their climate plans are meaningless.

Councilman John Boyle said he was struggling with the idea of how the plan would fit in with the city’s budget. He noted that even actions that would pay for themselves, such as installing solar panels on city buildings, often take decades to recoup their costs.

But you’re forgetting all the green jobs!

The plan leaves much to be desired, but council members say that approving it is an important gesture — and that its existence may help the city in competing for grants, especially through the federal stimulus bill.

Aha, the real motive — meaningless gestures paid for by (not yet issued) grants, so you can get more grants!

Obama CAFE kills

by Sam Kazman on May 22, 2009

in Blog

President Obama unveiled Tuesday a plan to sharply increase federal gas mileage rules for vehicles sold in the United States, eventually bringing the requirement up to an average of 35.5 miles per gallon. Unfortunately, these rules – known as the Corporate Average Fuel Economy (CAFE) standards – have the deadly effect of causing new cars to be lighter, smaller and less crashworthy.

CAFE is among the deadliest government regulations we have, and with today’s announcement it’s going to get even deadlier. It kills consumers by reducing vehicle size, and now it may well kill car companies by forcing them to produce cars that consumers don’t want. The only redeeming aspect of the President’s announcement is that there’ll be only one standard imposed on the industry, rather both national and California standards. But that just means carmakers will have one noose around their necks instead of two.

A 2002 National Research Council study found that the federal CAFE standards contributed to about 2,000 deaths per year through their restrictions on car size and weight. An increase in the severity of the rules will only raise that death toll. Shockingly, the federal agency tasked with making Americans safer on the road – the National Highway Traffic Safety Administration – has refused to acknowledge this fact, even after being overturned by a federal court for ignoring the issue.

As bad as CAFE is, it’s an even more ominous sign that the National Highway Traffic Safety Administration is being joined in this initiative by the Environmental Protection Agency. Longtime observers of the EPA know that while the agency’s mission is to protect human health and the environment, it’s usually not in that order.

In addition to being sold as a global warming measure, the tightening of CAFE standards is, even less convincingly, being promoted as a boon for economic growth. Advocates have claimed that more fuel efficient cars are the future of the auto industry, yet have not explained why this should require government mandates.

Chrysler Confronts Grim Future, Despite Billions in Taxpayer Subsidies

by Hans Bader on May 22, 2009

in Blog

The federal government poured billions of dollars into Chrysler, which then went bankrupt and merged with Fiat. But Chrysler may never revive, thanks to absurdly generous compensation for the company’s union employees. The Obama Administration has refused to cut union wages substantially, though it had no compunction about ripping off the pension funds and other lenders who loaned money to Chrysler to try to keep it afloat. Even union members seem surprised by how little they were asked to sacrifice.

Moderate Democrat Mickey Kaus, who reluctantly voted for Obama, notes that the federal bailout may yet fail:

“Before the deal, Chrysler’s UAW workers made $28 an hour. After the deal, they’ll make $28 an hour. They gave up a scheduled increase in wages, plus a couple of scheduled bonuses. That explains why Chrysler’s Belvidere, Illinois workers told TV station WIFR that ‘the plan is not nearly as drastic as they expected.’ …

“As for Chrysler’s ‘chance for long-term success,’ it appears vanishingly small. Italian manufacturer FIAT is supposed to save Chrysler with new products, but according to a recent Automotive News article, ‘four of the six new vehicles from Fiat will enter the small-car segment,’ which is highly competitive but ‘covers only 14 percent of the entire U.S. light-vehicle market.’ ‘The volumes need to be big for Chrysler to survive,’ [market analyst Tracy Handler] said. ‘Will they be? I have doubts about that.’

“See also this BBC article (”it’s madness”). Pathetically, Chrysler hopes that even if they don’t save the company the new small cars will ‘[b]urnish the environmental image of Chrysler brands,” says Automotive News. Unfortunately, the pipeline for those brands’ other, larger, products–burnished or not–is pretty much empty.

“If Chrysler workers were paid, say, not $28 an hour instead of $24–still not bad–the firm might actually have a ‘chance for long term success’ through charging lower prices. But that wasn’t a sacrifice Obama was ready to ask (even if Belvidere workers were apparently willing).”

While saddling Chrysler with excessive compensation costs and union ownership, the Obama Administration has inflicted a body blow to its ability to sell its traditional lines of large vehicles by radically ratcheting up federal CAFE fuel-economy standards, which harm the Detroit automakers more than their foreign competitors. 50,000 jobs could be destroyed as a result. Meanwhile, the global-warming regulations backed by the Administration will destroy millions of jobs and “decrease average household purchasing power,” thus cutting auto sales and further hurting automakers like Chrysler.

One of Obama’s own advisers now says that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compares Obama’s tax increases to those that deepened the Great Depression.

In the Depression, President Hoover imposed regressive excise taxes that burdened consumers. Obama is now doing the same thing through his proposed $2 trillion cap-and-trade carbon tax. Obama privately admitted to the San Francisco Chronicle (which didn’t report it) that under his “plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s 1932 excise tax increase was. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air. It is also chock full of corporate welfare, regional favoritism, political pay-offs, and give-aways to special interests.

NBCC/CRA study estimates Waxman-Markey would reduce employment by 2.3 million jobs in 2015

by Marlo Lewis on May 21, 2009

The National Black Chamber of Commerce (NBCC) today released a study by Charles River Associates (CRA) on the economic impacts of H.R. 2454, the American Clean Energy and Security Act of 2009 (ACESA), the regulatory climate bill sponsored by Rep. Henry Waxman (D-CA) and Ed Markey (D-MA).

The results aren’t pretty, and they generally get worse over time as the Act’s emission caps tighten. Relative to baseline levels, ACESA would:

  • Reduce employment by 2.3 million jobs in 2015, 2.7 million jobs in 2020, 2.5 million jobs in 2030, and 3 million jobs in 2050;
  • Lower average annual wages by $170 in 2015, $270 in 2020, $400 in 2030, and $960 in 2050; and,
  • Decrease average household purchasing power by $730 in 2015, $800 in 2020, $830 in 2030, and $940 in 2050.

More valuable than any of these estimates, which depend on many variables that can change unpredictably, is the report’s clear economic logic and common sense.

The report specifically debunks two myths propagated by ACESA proponents. One is that there would be virtually no cost to consumers because (a) utilities would receive lots of free emission allowances, avoiding costs they would otherwise pass on to ratepayers, and (b) revenues from auctioned allowances would be returned as dividends to low-income households.

What this myth overlooks is that emission caps inescapably–and by design–increase the cost of producing and consuming energy. The “cap” in cap-and-trade “works”–that is, reduces emissions–by creating an artificial scarcity in the right to produce and use fossil (carbon-emitting) energy. This drives up the price of coal, oil, and natural gas. It also increases reliance on higher-cost non-fossil energy. 

About 85% of our total energy is carbon-emitting, and about 99% of all transport sector energy is carbon-emitting. Since energy is used to produce and move everything from autos to food to houses to bytes of electronic information, ACESA’s impacts would cascade through the economy. In the report’s words:

This analysis reveals that businesses and consumers would face higher energy and transportation costs under ACESA, which would lead to increased costs of other goods and services throughout the economy. As the costs of goods and services rise, household disposable income and household consumption would fall. Wages and returns on investment would also fall, resulting in lower productivity growth and reduce employment opportunities. 

Although free allocations and revenue recycling can ameliorate the impacts of cap-and-trade on some industries, communities, or income groups, “the cost of bringing emissions down to the levels required by the caps cannot be avoided.”

Proponents also claim ACESA can revive the economy by creating millions of “green jobs.” The CRA study agrees that ACESA would lead to “increases in spending on energy efficiency and renewable energy, and as a result that significant numbers of people would be employed in ‘green jobs’ that would not exist in a no carbon policy world.” However, proponents ignore both the fossil energy-related jobs ACESA would destroy and other job losses due to rising energy costs and lower productivity:

This study finds that even after accounting for green jobs, there is a substantial and long-term net reduction in total labor earnings and employment. This is the unintended but predictable consequence of investing to create a “green energy future.”

Several other findings are noteworthy:

  • Declines in employment are heavier in the Mountain West (-3.5%), Great Plains (-1.4%), Oklahoma and Texas (-1.8%), Missiippie Valley (-1.5%), Mid-Atlantic (-1.3%), Southeast (-1.1%), and Midwest (-0.6%)  than in California (-0.4%) and Northeast (-0.3%). ”The Northeast and California fare better than other regions because of their initial economic circumstances. Namely, these regions’ industries are less energy-intensive, as is hte overall composition of industry.” By sheer coincidence (not), the bill’s co-sponsors, Henry Waxman and Ed Markey hail from California and the Northeast.
  • The bill’s renewable electricity and energy efficiency mandates  make neither economic nor environmental sense even if we assume that global warming is a “planetary emergency.”  The rationale for cap-and-trade is that it allows the market to find the least-cost methods of reducing emissions. By superimposing a system of renewable electricity and energy efficiency mandates on that system, ACESA would dictate the means as well as the goals. There are two possibilities. If, by coincidence, the cap itself motivated all of the actions required to comply with those mandates, then the mandates “would waste resources on needless monitoring, measuring, enforcement and compliance.” If, as is more likely, the mandates compel industry to buy more renewable energy or invest more in efficiency upgrades than it otherwise would to comply with the cap, the total emissions reduced would not change but industry’s (hence consumers’) costs would be higher. The renewable electricity and energy efficiency mandates “can only substitute more costly GHG cuts for those that could have been made at lower cost.”
  • The economic impacts estimated in the report are conservative because they make a very favorable assumption in favor of ACESA, namely, that domestic industries would be able to exceed the cap by about 30% during 2012-2050 by purchasing international offsets (e.g. payments to preserve forests in development countries). Access to international offsets are especially important to cost-containment in ACESA’s early phase, totalling 83% of the required emission “reductions” in 2015. “However, in light of the difficulties in measuring, verifying, and ensuring the permanence of these offsets, international negotiations have stressed domestic sources of emission reductions over international offsets.” The Kyoto II treaty that will be negotiated in Copenhagen “might allow far fewer” offsets than ACESA would provide. ”This would drive up costs substantially.” 

California here we come?

by Myron Ebell on May 21, 2009

in Blog

California’s voters on Tuesday overwhelmingly rejected a series of tax increases that Republican Governor Arnold Schwarzenegger and the Democratic-controlled state legislature claimed were necessary to save the State from bankruptcy.  The voters have it right, as do the conservative Republicans in the legislature.  State Senate Republicans were so determined to oppose the tax increases that they kicked out their leader when he caved to pressure from the Governor and elected stalwart conservative Dennis Hollingsworth as their new leader.

California is in economic freefall largely as a result of spendthrift government spending, crushing taxes, and heavy-handed regulations that have raised the cost of energy and of doing business in California.   The whole sorry story is explained clearly and analyzed acutely in an op-ed in today’s Washington Times by Tom McClintock, a freshman Republican Member of the House of Representatives and a long-time Member of the California state legislature.  Rep. McClintock said in January that in his judgment it was inevitable that California would default on its debt.  Unless the state legislature suddenly reverses course, McClintock will soon be proved right.  California is facing bankruptcy.

There is an alternative: Governor Schwarzenegger comes to Washington and appears at a congressional hearing.  On one side of the Republican Governor will be House Speaker Nancy Pelosi (D-Calif.) and on the other side Senator Dianne Feinstein (D-Calif.).  Schwarzenegger testifies that California is too important to fail and therefore must be bailed out.  After all, California is the model for the nation, especially in its energy and global warming policies (see a CEI paper by Tom Tanton on this subject).  That’s what Schwarzenegger, Pelosi, President Obama, House Energy and Commerce Committee Chairman Henry Waxman (D-Beverly Hills), and Senate Environment and Public Works Chairman Barbara Boxer (D-Calif.) have been telling the country.  As McClintock writes,  “Congress is well under way toward imposing the same policies on the rest of the nation. California is just a little further down that road.”  Actually it’s not a road, it’s a cliff, and California has already jumped.

Insightful commentary by Keith Hennessey on Obama’s fuel economy rules

by Marlo Lewis on May 20, 2009

in Blog

 

In this insightful, informative post, Keith Hennessey, formerly the senior economic advisor to President G.W. Bush, cautions that Obama’s new fuel economy rules could destroy 50,000 auto industry jobs. Yet the rules would have no detectable impact on projected global temperatures or sea level rise–all pain for no gain.

In addition, Hennessey notes that Obama’s action “will accelerate EPA’s regulation of greenhouse gas emissions from stationary sources.” He continues: “While Congress is futzing around on a climate change bill, EPA is getting ready to bring their “PSD” monster to your community soon.” He concludes:

In effect, EPA could insert itself (or your State environmental agency) into most local planning and zoning processes.  I will write more about this in the future.  It terrifies me.

Well, it worries me too. Politically, however, there may be a silver lining in this dark cloud. Concerning which, I posted the following comment on Keith’s blog.

Excellent analysis, Keith. Yes, the PSD monster is a big part of this story, which most media coverage has missed. It will spring to life the moment EPA finalizes the new GHG/Fuel Economy standards by making carbon dioxide a Clean Air Act-regulated “air pollutant.” In addition, the endangerment finding that underpins the standards will substantively satisfy the test, in Section 108 of the Act, that initiates a NAAQS rulemaking. The Center for Biological Diversity and many other warmists argue that NAAQS for CO2 should be set at 350 parts per million. Even outright de-industrialization of the United States probably would not suffice to attain such a standard.

The looming prospect of an era of litigation-driven Clean Air Act regulation is an important subtext of the debate over the Waxman-Markey cap-and-trade bill. Proponents are pursuing a legislative extortion strategy. Their not-so-subtle message: Support the bill (which precludes greenhouse gas regulation under the PSD, NAAQS, Title V, and HAP programs, although not under NSPS and Title II), or we’ll sic EPA and the eco-litigation lobby on the economy.

My big fear is that Republicans will panic and provide Obama-Waxman-Markey bipartisan cover for cap-and-trade. Republicans need to clear their minds and realize that, with a modicum of courage and discipline, they can turn this threat into an opportunity. Although intended as a legislative hammer, it more nearly resembles a political suicide note.

In effect, Team Obama and Waxman are saying, “You had better provide us with bipartisan cover to raise gasoline prices and destroy jobs, or we’ll sic EPA on the economy, and won’t you be in trouble with your voters then when EPA raises their energy prices and destroy their jobs!” Cap-and-trade Democrats are setting the stage for a political backlash that Republicans can later exploit. All Republicans need to do now is keep opposing cap-and-trade as an energy tax, and keep saying that Congress never intended for the Clean Air Act to morph into Kyoto on steroids.

Once moderate Democrats realize how the extortion strategy could backfire, many may jump off the cap-and-trade bandwagon. Some may even support separate legislation to preclude greenhouse gas regulation under PSD, NAAQS, etc. 

Obama officials are already trying to hide behind Mass v. EPA, claiming ‘the Court made us do it.’  This excuse won’t wash. President Obama can protect consumers, jobs, and the economy from EPA regulatory excess any time he wants just by introducing stand-alone legislation to exclude carbon dioxide from regulation under PSD, NAAQS, etc.

Obama has not done so, because he is unwilling to let Waxman-Markey succeed or fail on its own merits. He wants the prospect of regulatory chaos to herd Republicans into the cap-and-trade corral. But Republicans can turn this weapon against those brandishing it just by refusing to share responsibility for policies they oppose. 

Irony of ironies, Mass v. EPA unexpectedly gives Republicans an opportunity to clarify party differences and hold Democrats accountable for the economic fallout from either cap-and-trade or Clean Air Act regulation.

On Page 781

by Paul Chesser, Heartland Institute Correspondent on May 20, 2009

in Blog

Sometimes it takes a while to read pending legislation, which our pals at the American Energy Alliance have been doing with the Waxman-Markey Cap-and-Energy-Tax Bill. With only 165 pages to go, they discovered this nugget (from their press release):

On Page 781 of Waxman Cap-and-Tax Bill, a Response Guide for Mass Unemployment
Beneficiaries to receive 3 years of salary, health insurance, job training, and relocation package as a result of this job-killing measure

Washington, DC – With 946 pages of legislative text, it comes as no surprise that as the days pass by, interesting new provisions buried deep in the Waxman-Markey cap-and-tax bill are revealed. Today we expose section 426.

“While the authors of this bill continue to insist that cap-and-tax will be a clear economic winner, several provisions buried deep in the text confirm their true belief that it will massively stimulate the unemployment rolls,” said Thomas J. Pyle, president of the American Energy Alliance.

Pyle is referring to Title IV, Subtitle B, Part 2, Section 426, of the American Clean Energy and Security Act of 2009, which states; An eligible worker (specifically, workers who lose their jobs as a result of this measure) may receive a climate change adjustment allowance under this subsection for a period of not longer than 156 weeks…80 percent of the monthly premium of any health insurance coverage…up to a maximum payment of $1,500 in relocation allowance…and job search expenses not exceed[ing] $1,500.

“America is supposed to be a land of opportunity and prosperity – not a land where political elites work behind closed doors to ship jobs offshore,” continued Pyle. “And with only 24 percent of the American people even knowing what cap-and-trade is, I am convinced that when the public learns that the leaders of this government are indeed, purposely and knowingly outsourcing American jobs in the name of global warming, they will demand answers and hold them accountable.”

Hat tip: Bridget Wagner at Heritage.

Blue Dog Dem Getting Fed Up

by Paul Chesser, Heartland Institute Correspondent on May 19, 2009

Arkansas Democratic Rep. Mike Ross is one of three middlin’ congressmen on the House Subcommittee on Energy and Environment who was targeted by the National Wildlife Federation Action Fund in a media campaign to support Waxman-Markey. Ross, one of 50 or so in the Blue Dog Coalition, told Arkansas syndicated columnist David Sanders last week he’s getting mighty miffed about Democrat leadership leaving his group out of the negotiation and writing of important cap-and-trade and health care reform legislation. On the energy bill:

Ross explained that it became obvious to him that the Democratic leadership’s strategy on cap-and-trade included blowing past the Blue Dogs on the House Energy and Commerce Committee. Moderates on the committee responded by slowing down what was, in their estimation, a very bad bill.

“We were never brought in,” he pointed out. “We put the brakes on and tried to make it a better bill.”

But after nearly two weeks of work by the moderates on the committee, only modest changes were made.

“This bill is to the left of Barack Obama,” Ross said, adding that it could get worse during the final mark up.

That said, he predicts the controversial legislation will clear the committee and pass the full House, although without his support. And then he believes the legislation will go to the U.S. Senate and die.

Not a good way for Pelosi, Waxman and Reid to keep everybody in their big tent happy and cooperative.

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