Kerry-Lieberman

Spinning the Defeat of Cap-and-Trade

by Marlo Lewis on August 11, 2010 · 1 comment

in Global Warming

Barring the trickery of a lame duck conference committee, cap-and-trade is dead in the 111th Congress. Some blame Obama for not taking a more hands-on role. Others blame environmental groups for waging a $100 million lobbying campaign without winning a single GOP convert to the Kerry-Lieberman cap-and-trade bill. Others blame the allegedly “well-funded denial machine,” even though proponents, who include major corporations like British Petroleum, must have outspent CEI and its free-market brethren by more than 100 to 1.

Today’s Climatewire (subscription required) features interviews with Exelon Corp. VP Betsy Moler and Phil Sharp, President of Resources for the Future, who lament that Republican lawmakers, the “inventors” of “market-based” environmental policy, have turned against their own “invention.” If I catch their drift, Moler and Sharp are trying to spin GOP opposition to cap-and-trade as self-contradictory, hence as unstable, hence as reversible. As Climatewire reports, Moler is not ready to “throw in the towel” and Sharp entertains the hope that a “new kind of coalition” will emerge in the next Congress.

Now, let’s look at this notion, peddled by Moler and Sharp, that Republicans betrayed themselves and besmirched their own legacy by blocking cap-and-trade. Here’s how it’s discussed in Climatewire:

In an interview, Moler said that her deep disappointment was the rejection by Republican leaders in Congress of a market-based strategy for raising the price of carbon emissions, to speed transitions by power plants, industry and consumers to cleaner energy.

The Democrats called it “cap and trade.” Republicans labeled it “cap and tax,” and the change in one word proved lethal.

“The thing that just amazes me, confounds me, surprises me is how successfully the Republican leadership and a lot of the people who would be potentially negatively impacted have been in vilifying what have historically been market-based solutions,” Moler said.

Inventors Turn on Invention

“Cap and trade is really a Republican instrument that grew out of a lot of the Republican thought leaders as a market-sensitive, market-friendly, anti-command-and-control mechanism” to reduce sulfur- and nitrogen-based air pollution in the 1990 Clean Air Act amendments. “Now, some of the same people who invented it have turned on it as an energy tax,” she said. “It’s a huge missed opportunity. I don’t know where you go next.”

Moler’sregret is seconded by Philip Sharp, president of Resources for the Future, who, as a Democratic House member from Indiana, stood with Moler in the 1990s in the energy deregulation campaign. Sharp was a pivotal factor in Congress’ adoption of the 1990 Clean Air Act amendments and the 1992 Energy Policy Act, which opened the way for FERC’s electricity market orders four years later.

“I’m not here to say cap and trade is the only way to do this,” Sharp said in an interview. “It worked magnificently with SO2 and a couple of other instances.” Scaling it up massively to deal with economywide carbon emissions is another question. “We don’t know we can manage it as effectively,” he said.

“But what is really unfortunate in the public debate is that the current Republican leadership has overthrown one of the great Republican successes in this country [under President George H.W. Bush], to capitalize on the flexibility of the marketplace” in achieving regulatory change, Sharp said.

“I don’t think people appreciate the extraordinary challenge that represented and the difficulty of getting it done” in the 1990s, he said. Now, with the demise of that approach, Congress has invited U.S. EPA to step in on the climate front “and regulate the living [daylights] out of everything and see how well a modern economy works doing that.”

Moler and Sharp miss several key points.

First, the Title IV acid rain cap-and-trade program enacted under President George H.W. Bush is not the “magnificent” success they suppose it is. As Kenneth Green, Steven Hayward, and Kevin Hasset of the American Enterprise Institute note, prices of tradable sulfur dioxide (SO2) emission permits have been highly volatile: “SO2 trading prices have varied from a low of $70 per ton in 1996 to $1500 per ton in late 2005. SO2 allowances have a monthly volatility of 10 percent and an annual volatility of 43 percent over the last decade.”

Second, utilities participating in the SO2 emissions trading program could meet all or part of their obligations by purchasing low-sulfur coal and/or installing scrubbers, a commercially-proven emission control technology. In contrast, there is no low-carbon coal, and no commercially-proven technology to “scrub” carbon dioxide (CO2) emissions out of power plant exhaust streams.

Third, unlike sulfur, which is an impurity or contaminant in coal and oil, carbon is intrinsic to the chemistry of fossil fuels. Consequently, whereas emission control requirements for SO2 do not logically entail an unlimited agenda aiming at total abolition of the fuel, emission control requirements for CO2 do imply abolition as the ultimate objective. Such extremism is reflected in the apocalyptic rhetoric of the global warming movement, in petitions demanding that EPA establish national ambient air quality standards (NAAQS) for CO2 at 350 parts per million and for other greenhouse gases at pre-industrial levels (not even a global depression lasting several decades would be sufficient to lower CO2 concentrations to 350 ppm), and in Al Gore’s campaign to “repower America“ with “zero-carbon energy” within “ten years.” More pertinently, pull-out-the-stops, sky-is-the-limit regulation lurks in the Waxman-Markey and Kerry-Lieberman bills’ escalator clauses, which all but ensure that the explicit emission reduction target (83% below 2005 levels by 2050) would be superseded by more aggressive requirements.

Fourth, just because a “market-based” approach is more efficient, in principle, than command-and-control regulation does not in any way obligate Republicans to support Waxman-Markey or Kerry-Lieberman if those same Republicans oppose all regulatory climate policies.

Fifth, every Republican in the Senate voted for the Murkowski resolution to block EPA regulation of greenhouse gases via the Clean Air Act. So it’s silly to say that Republicans “invited U.S. EPA to step in on the climate front ‘and regulate the living [daylights] out of everything. . .’” President Obama threatened to veto both the Murkowski resolution and the much weaker Rockefeller bill, which would merely postpone EPA regulation of stationary sources of greenhouse gases for two years. It’s the Democratic leadership, not the GOP, that has “invited” EPA to make climate policy through the regulatory back door.

Finally, Republicans betray themselves (ask President George “Read My Lips; No New Taxes” Bush) when they vote for rather than against higher taxes. Because carbon is intrinsic to the chemistry of fossil fuels, a carbon cap-and-trade scheme is a virtual broad-based energy tax. The same cannot be said of the SO2 program, which was merely a virtual pollution tax. Moler and Sharp would like GOP lawmakers to believe they can win elections by becoming the Party of Energy Taxes. Fortunately, most Republicans don’t need much coaching to realize that is complete bunk.

Will the Party of No Foil the Half-Baked Greenhouse Machiavellis?

by Marlo Lewis on July 21, 2010 · 1 comment

in Global Warming

Many have already written the obituary for the Kerry-Lieberman bill and other cap-and-trade legislation in the current Congress. In today’s Politico, however, columnist Darren Samuelsohn quotes Sen. John Kerry’s rejection of that assessment: ”No, it’s not dead because we’re going to have a lame duck session and we have weeks ahead of us.”

Re-read the first part of Kerry’s explanation. Kerry is saying that even if the Democratic leadership does not hold a vote on cap-and-trade before the November elections, fearing the wrath of the electorate, the greenhouse gang might still enact cap-and-trade after the elections, when voters could no longer hold them accountable.

How exactly would cap-and-traders pull it off? Samuelsohn summarizes the strategy as explained by an unnamed spokesman for a “major advocacy group”:

But one source from a major advocacy group said Wednesday that another option is for the Senate to pass a pared back energy measure now and then go to conference during a lame-duck session with the House-passed climate bill that includes greenhouse gas limits across multiple sectors of the economy. At that point, the source said, anything is possible.

Clever, but perhaps not clever enough. As Machievelli infamously advised princes long ago, one should not say to someone whom one wants to kill, “Give me your gun, I want to kill you with it,” but merely “Give me your gun,” for once you have the gun in hand, you can satisfy your desire.

Kerry, the unnamed advocacy group spokesman, and others have let the cat out of the bag. They are saying in effect, “Give us an energy bill, any energy bill, we want to snooker you with it to get cap-and-trade. We’ll conference any energy bill passed by the Senate with Waxman-Markey in a lame duck session, and neither you nor the American people will be able to stop us. Hah!”

Except that loose-lipped schemers are half-baked Machiavellians. The Party of No can and should have the last laugh. All Senate Rs have to do is resist the temptation to “do something.” They now have a compelling and easily explained reason to postpone further consideration of energy legislation until the next Congress. It is simply that the greenhouse gang, by its own admission, does not intend to play fair or respect the wishes of the electorate.

Rs who strongly feel the impulse to “do something” need merely wait until January 2011, when they are widely expected to hold more seats in both the House and Senate, and when Waxman-Markey will no longer be in play.

Greenhouse Protection Racket

by Marlo Lewis on July 6, 2010 · 1 comment

in Odds & Ends

Climate policymaking in our Nation’s capital often resembles the heavy-handed dialogue of old-time mobster films.

“Are you gonna come along quietly, or do I have let the California Air Resources Board (CARB) muss ya up?” That was pretty much the line White House Environment Czarina Carol Browner took to obtain the auto industry’s support for the joint EPA/National Highway Traffic Safety Administration (NTSHA) greenhouse gas (GHG) emission/fuel economy standards rule. EPA is now in a position both to determine the stringency of fuel economy standards for the auto industry and to set climate policy for the nation. Yet the Clean Air Act provides no authority to regulate fuel economy and says nothing about greenhouse gases or global climate change. ”Badges? We don’t need no stinking badges.”  

Modus Operandi: Threaten in Order to Remove the Threat — for a Price

Here’s how the regulatory mugging went down. 

In February 2009, EPA Administrator Lisa Jackson commenced a rulemaking to reconsider Bush EPA Administrator Stephen Johnson’s denial of California’s request for a waiver to establish its own greenhouse gas emission standards program. Because the waiver would also allow other states to adopt the California program, because GHG emission standards are mainly fuel economy standards by another name, and because automakers would have to reshuffle the mix of vehicles delivered for sale in each “California” state to achieve the same average fuel economy in those states, Jackson’s proceeding threatened to subject automakers to inefficient, consumer-thwarting, regulatory patchwork.

In May 2009, Czarina Browner conducted secret negotiations with automakers, CARB Chairman Mary Nichols, and major environmental groups. Browner required participants to take a vow of silence and forbade anyone to take notes, violating the Presidential Records Act. The closed-door negotiations produced an “historic agreement” whereby automakers would support the EPA/NHTSA GHG/fuel economy standards rule and California and other states would deem compliance with the federal standards as compliance with their own.

In addition, observes Rep. Darrel Issa (R-Calif.), at the same time the Browner-led negotiations were taking place, ”the government was also engaged in bailout talks with General Motors (GM) and Chrysler,” resulting in “an ownership stake for the federal government of 61% of GM and 8% of Chrysler, respectively.” Whether Browner literally made the auto industry an offer it could not refuse, with the sweetener of financial assistance also contingent on the industry’s embrace of GHG regulation, we may never know.

This much is clear. By granting California’s request for a waiver, EPA created the threat of a regulatory patchwork, enabling the White  House to offer ”protection” in the form of the joint GHG/fuel economy standards rule. The protection “fee” was the auto industry’s unquestioning support for the joint rule and its prerequisite, EPA’s endangerment rule.

Thus, the Auto Alliance became the key industry lobby opposing Sen. Lisa Murkowski’s resolution to overturn EPA’s endangerment rule. The Alliance warned that if the endangerment finding were overturned, the “historic agreement” would unravel, confronting automakers with “the alarming possibility of having to comply with multiple sets of conflicting fuel economy standards.” 

That is correct, but only because EPA Administrator Jackson, reversing her predecessor’s decision, granted California a waiver to establish GHG emission standards for new motor vehicles. An obvious solution would be to overturn the waiver. After all, the Energy Policy and Conservation Act clearly prohibits states from adopting laws or regulations ”related to fuel economy,” and the California motor vehicle emissions program is basically a de facto fuel economy program. The waiver effectively repeals federal law, violating the separation of powers. Not that you’ll ever hear about that from Government Motors. Mum’s da woid.

Mirage of Regulatory Certainty

The auto industry is not the only target of the greenhouse protection racket. For years, the greenhouse gang has been saying that only cap-and-trade can end the intolerable ”regulatory uncertainty” facing the electric power sector, energy-intensive manufacture, and other CO2 emitters. But who created the uncertainty in first place if not the self-same advocates of cap-and-trade? If they were serious about relieving uncertainty, they would disavow the regulatory schemes for which they have been campaigning.

Businesses lobbying for cap-and-trade in the name of certainty should read the fine print. The Waxman-Markey and Kerry-Boxer bills, for example, have multiple escalater clauses setting the stage for dramatic increases in regulatory stringency well beyond the bills’ explicit emission reduction targets.  Similarly, the bills’ “findings” presenting the “scientific” rationale for cap-and-trade are not mere rhetorical fluff but precedents for litigation targeting emission sources considerably smaller than those explicitly identified as “covered entities.” Enact such legislation, and the only certainty is that regulatory burdens will grow unpredictably.

Too Clever by Half

Last but not least, cap-and-taxers sell their policy as protection from litigation-driven greenhouse gas regulation under the Clean Air Act.  The sales pitch goes something like this: “Pretty nice company you got deah, shame if sumpin’ bad waz to happen to it. Everybody needs protection. You need protection. It’s called Kerry-Lieberman.” Note the familiar pattern. The gang pushing cap-and-trade as protection from EPA are the same folks who sued EPA to regulate greenhouse gases and who vilified Sen. Murkowski and others for attempting to stop EPA.

This is all too clever by half. If cap-and-trade dies in the 111th Congress, which seems increasingly likely, the Obama administration and its allies on the Hill will take sole ownership of the compliance costs, job and GDP losses, and “absurd results“ arising from EPA regulation of greenhouse gases under the Clean Air Act. 

Democratic leaders may not recognize it yet, but they have painted themselves into a corner. They have become the Party of Endangerment — the party endangering the U.S. economy by championing the endangerment rule, with all its cascading regulatory effects.

Sen. Inhofe demolishes energy independence rationale for cap-and-trade

by Marlo Lewis on June 23, 2010 · 3 comments

in Global Warming

Sen. James Inhofe’s daily Environment & Public Works Press Blog is a source I check early and often. The posts, which are more like essays than press releases, are incisive, rigorous, and witty. 

In today’s post, Sen. Inhofe explains, by the numbers, why the claim that cap-and-trade will help us get “beyond petroleum” is horse feathers. Cap-and-trade will significantly increase our pain at the pump, yet will hardly make a dent in U.S. dependence on petroleum and oil imports.

In EPA’s analysis, the Kerry-Lieberman bill would raise gasoline prices to $5.00 a gallon in 2050 yet would leave U.S. petroleum consumption about where it is today. EPA’s analysis last year of the Waxman-Markey bill came to much the same conclusion, observing that it “creates little incentive for the introduction of low-GHG [greenhouse gas] automotive technology.” Similarly, the Energy Information Administration estimated that Waxman-Markey would reduce U.S. petroleum consumption in 2030 a mere 5% relative to the baseline projection. 

And, as Sen. Inhofe notes, there is no provision in either bill to refund the extra bucks consumers would have to shell out at the pump.