William Yeatman

California’s budget woes are causing leading lawmakers from both political parties to increase scrutiny of Governor Schwarzenegger’s climate policies. This past week, a bipartisan group of state senators voiced their objection to a measure passed by the unelected, governor-appointed Public Utilities Commission that would add a fee onto utility bills to pay for a $600 million climate change think tank, the Institute for Climate Solutions. The lawmakers argued that the Institute was illegal without the Legislature’s consent. Also, Republicans in the Senate have signaled that they will hold up any agreement on the budget until the governor pledges to delay the implementation of emissions regulations on California industry. The governor’s office continues to claim that the regulations will create wealth.

I’m reading two competing versions of May Senate ENR Committee congressional testimony by Congressional Research Service researchers regarding the Lieberman-Warner bill slated to come to the floor on Monday, S. 2191. They are revealing for three key reasons:

First, one of the statements in particular makes the point, if still indirectly, that all of the tricks built into the bill eliminate the one reason that cap-and-traders offer for this inefficient scheme over just taxing the activity that they want to reduce: a supposed certainty of emissions/ reductions.

On its face this is absurd as anyone familiar with Europe’s three years of experience can tell you. But it remains important because cap-and-trade is appealing to policymakers who insist on “doing something” exclusively because it allows them to hide the tax on energy use, burying it in a scheme of artificial, state-created scarcity that they then call a “market”. Rather than admit that, its champions instead insist that rationing is preferable to a tax for the reason that a tax provides no assurance what level of emission reductions you would receive. Yet each of these flexibility mechanisms added to the cap-and-trade scheme – domestic “offsets” and inclusion of “international carbon credits” –further removes any notion that one might predict what emissions, or reductions would be, and that it is highly likely no reductions will occur at all.

We see here that last fig leaf being stripped. Neither would “do anything”, both are taxes, but the regulatory tax is less efficient, more easily gamed by rent-seekers and other politically favored constituencies, and more expensive. Cap-and-trade is a refuge for political scoundrels who want to make energy more scarce, which threatens jobs, but don’t want to reduce that threat to your job with the simpler tax because to do so would threaten theirs.

Second, “the proposed Low Carbon Fuel Standard could significantly raise fuel prices and limit supply.” Enough said.

Third, “S. 2191’s potential climate-related environmental benefit is best considered in

a global context and the desire to engage the developing world in the reduction effort.” Knock knock, euphemism police! That is to say that this will under no scenario have any remote prospect of having any impact on that which it purports to address, the (always changing) climate, so needs to be viewed as an offering to China and India to please do this, too, given that we’ve gone done it to ourselves.

In sum, Lieberman-Warner is a price-hiking, job-exporting gesture that, as in Europe, will do nothing regarding the climate and likely won’t yield any emissions reductions; it is instead aimed at so demonstrating our seriousness of purpose that it will prompt people to do something who serially and adamantly ask us to understand that they have zero intention to do it.

At some point the voting public will demand their policymakers stop being so frivolous with other peoples’ economic futures.

With the end of Memorial Day weekend comes the beginning of summer, and with it the beginning of America’s heaviest driving season as millions of Americans take to the highways for summer breaks. But if recent trends hold, vacationers are likely to put fewer miles on their odometers this summer than last. High gas prices are finally curbing America’s demand for the open road. Transportation Department statistics for March indicate that the country just experienced its first year-over-year decline in miles driven since 1979.

There’s a new global warming consensus in town. It’s too bad the once-level-headed, but now chicken-hearted Bush Administration has already skedaddled, perhaps leaving our standard of living at the mercy of Barack Obama and his high regard for the international hate-America crowd.