Friday, June 06, 2008

Environmentalist who Oppose Cap and Trade

I followed closely the arguments about the Lieberman-Warner Cap and Trade bill which was defeated in the U.S. Senate today. One of the things that surprised me was the lukewarm support from environmentalist and liberal activist for this legislation. I would have assumed they would have made a big push to get this bill passed and would have rallied the troops. Instead, what I found was, at best, a half-hearted support. I did not see much passion.

While most of the environmental and liberal organizations did half-heatedly endorse the Lieberman-Warner Cap and Trade bill, not all did so. Among environmentalist there are some who oppose nuclear energy more than they oppose CO2 emissions and do not want any bill passed that would make nuclear energy more attractive as would be the case with a Cap and Trade bill.

Some environmentalists opposed Lieberman-Warner cap and trade because they think the greenhouse emissions cap is not sufficiently stringent. Some liberals opposed the bill because they perceive that the burden of curtailing global warming would fall heaviest on the poor, and their concern for “economic justice” out weighs their concern for the environment. Other environmental groups had the same criticism as did some conservatives and opposed the bill simply because it was a bad bill.

Among the environmental groups opposing the bill were Friends of the Earth,, CREDO Mobile, Greenpeace, and Public Citizen.

Creedo Mobile is an organization that funds liberal causes by providing cell phone and other services and giving a share of their profits to liberal causes. Since 1985 they have distributed over $60 million dollars to various organizations. Consider the following from Creedo Mobile on why they are opposing Lieberman Warner:

In the end, the goal of a cap and trade system is similar to that of a carbon tax - raise the cost of activities that generate CO2 relative to other activities so that producers and consumers choose to generate less. Many who advocate for a cap and trade system do so over a tax on two grounds - a majority of CO2 emissions come from a relatively small number of producers or companies, and in the American political climate, the notion of imposing taxes is thought to be toxic. But rest assured, a successful cap and trade system only works if it has the economic impact of imposing a tax on CO2.

One of the reasons that many companies like the cap and trade system is that setting it up is a fundamentally political act, subject to all the good and bad that is decision making in Washington, D.C. Coalitions are formed, front groups created, lobbyists hired, Senate campaigns funded. All to ensure that someone else has to pay the tax, or, in the case of cap and trade, to argue over the cap (the lower the cap, the lower the implicit tax, and vice versa). Also to fight over whether or not the initial allocation of CO2 permits are distributed based on current pollution or auctioned off, and if auctioned off, who gets the revenue (the equivalent of who gets to spend the tax revenue). (link)

Creedo is exactly right. A cap and trade is essentially a tax and the Congress picks the winners and losers who pay it. In addition, it creates a massive bureaucracy and may be devastating to the economy. Despite grave misgivings about the efficacy of cap and trade, I was willing to swallow hard and accept it, if the cap and trade could be modified along the lines proposed
by Senator Bob Corker.

I am pleased to see that the environmental community did not all fall in lock-step in support of this flawed proposal. With even liberals agreeing that a carbon tax is superior to a cap and trade, I am thinking that a gas tax may actually be a possibility. Perhaps it is time to hold firm for a gas tax and pull the plug on cap and trade.

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Bob Corker on Lieberman-Warner:

"This bill misses the mark."

The 500-plus-page Lieberman-Warner Cap and Trade bill that was defeated in the U. S Senate today was a very complex bill and was fatally flawed. If you are unsure of the features of the bill and what was wrong with it, I urge you to watch this 16 minute clip of Senator Bob Corker’s Senate presentation.

Cap and Trade is dead for this session of Congress, but unless Congress develops the wisdom to offer a Carbon Tax, a Cap and Trade in some form is probably in our future. Everyone who cares about the issue of global warming needs to become conversant about the features of cap and trade. We can only hope that the next version of Cap and Trade is cured of the defects of the Lieberman-Warner bill.

Corker accepts the science of global warming. He does not demigod the bill, but calmly and clearly explains how cap and trade would work and what is wrong with the Lieberman-Warner bill. He explains that, “27% of the allocations in this bill go to entities that nothing to do with emitting carbons.” And, he says, “This bill transfers 6.7 trillion dollars in wealth.”

He argues that the foreign carbon offsets are fraudulent and should be deleted from the bill. “I am open to discussing cap and trade legislation that takes the country in the right direction,” says Corker. “This bill misses the mark.”

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Wednesday, June 04, 2008

Ms Clinton, It is over.

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Tuesday, June 03, 2008


Corker Seeks to Return More Money Directly to American Citizens, Prevent Massive Government Expansion, Keep More U.S. Dollars at Home

May 28, 2008, JASPER, TN – U.S. Senator Bob Corker (R-TN), a member of the Senate Energy and Natural Resources Committee, today announced his plans to introduce three amendments to the Lieberman-Warner Climate Security Act of 2008, S. 3036, when it comes to the Senate floor for debate next week. The crux of the Corker amendments is to get more money returned directly to the pockets of the American people who will bear the brunt of the costs associated with cap-and-trade.

“I believe we should return more money directly to the pockets of American citizens, prevent massive government expansion, and keep more U.S. dollars at home rather than sending them overseas,” said Corker.

Specifically, the Corker amendments would (1) provide direct relief to American consumers bearing the brunt of the cap-and-trade program’s costs; (2) increase direct reimbursement to the American people by eliminating free allowances—worth over a TRILLION dollars—to entities that have nothing to do with reducing carbon emissions; and (3) eliminate the use of international offsets to meet emissions reductions.

“Since day one, my goal has been to support a bill that addresses climate security AND energy security in a balanced way. This bill is not that and, in my opinion, is not ready for prime time,” said Corker. “While it does focus on climate change, unfortunately it is also a huge spending bill that uses non-discretionary spending—funded in essence by a tax on the American people—to spend TRILLIONS of dollars on new and existing government programs.

“If a cap-and-trade bill becomes law, every single American will pay more for gasoline, more for electricity, more for food, more for everything they buy as a result. I believe that any money generated from a cap-and-trade system should be put back in the pockets of American citizens burdened with these additional costs. Additionally, I believe we need to increase the amount of allowances that are auctioned, rather than giving them away for free to other entities who are supposed to use the value of those allowances to benefit the public. In my view, American citizens would be better served receiving relief directly rather than relying on middlemen to provide that relief through a massive government expansion."

Corker has joined with U.S. Sen. Bernie Sanders (I-VT) to offer a third amendment which will eliminate the use of international offsets to meet emissions reductions. “We should eliminate all international offsets as a way for emitters to comply with the U.S. carbon cap,” said Corker. “There are serious questions about the integrity of many of these projects, and it is difficult to determine whether these projects would have occurred anyway. In addition, these offsets would have a distorting affect on the U.S. cap-and-trade market and would lead to even more American dollars being spent overseas in countries like China, instead of in America.”

Noting that climate change and cap-and-trade would be significant issues facing Congress, Corker has spent his first 16 months in office delving into the complexity of the policy. Last May 2007, he traveled to Europe with Energy Committee Chairman Jeff Bingaman (D-NM) to meet with European Union officials, carbon traders, representatives from the utility industry, and cement manufacturers. In July, Corker went to Greenland with Environment and Public Works (EPW) Committee Chairman Barbara Boxer (D-CA) to view the effects of climate change. He has also spent countless hours with Tennessee-based industry, conservation groups, and experts discussing the impacts of climate change legislation, and in April, Corker began making presentations to his colleagues outlining his concerns with the bill.

Congratulations to Senator Corker for proposing these common sense amendments to the Cap and Trade bill. Maybe you can make a purse out of a sow's ear.

It is clear that a Cap and Trade bill will not pass this year. The House has not even taken up the measure and President Bush has said he will veto a Cap and Trade bill if it does pass Congress. At this time, their does not appear to be 60 votes in the Senate to bring any Cap and Trade bill to a vote. With gas approaching $4 a gallon and politician talking about cutting the gas tax and with general concern about the economy, we cannot expect politician to have the courage to pass a bill that will acutally increase energy cost. Also, we can expect an outpouring of opposition once the public becomes aware of the pocketbook impact of a Cap and Trade bill. In addition, the environmentalist community has not been aggressive in selling the concept or rallying the trooops.

Despite the grim outlook for this session of Congress, a Cap and Trade bill may very well be in our future. McCain, Obama and Clinton are all supporting some version and Democrats, who have been more friendly to environmental causes, will more than likely gain seats in the next Congress. Working on the bill now, even though it will not pass this year, is an extremely important part of the process so that the final bill is a bill that will actually achieve the goal of reducing greenhouse emissions without destroying the economy.

Cap and Trade as now drafted is not a bill worth passing. It would be extremely costly and probably accomplish little. Also, there are numerous amendments pending which, if passed, would weaken the bill and benefit special interest and actually make this bad bill even worse. One of the major problems with the bill is that it gives away too many credits rather than selling them. Corker's amendmends will correct some of the major defects of the Cap and Trade proposal. It is my hope that the final bill is a bill that is worthy of supporting.

Keep up the good work, Senator.

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Sunday, June 01, 2008

Five Myths About the Lieberman-Warner Global Warming Legislation

Starting tomorrow the United States Senate will begin debate of the Lieberman-Warner Cap and Trade bill. It is my hope that a good Cap and Trade bill emerges and is passed. Unfortunately, I have doubts that a good bill will emerge. There are too many interests who will want the bill drawn in such a way as to benefit them that I suspect the final product will be flawed. When Congress must pick winners and losers, the pubic usually looses. A simple carbon tax would be much less costly and much less subject to special interest manipulation. Unfortunately a Carbon Tax bill is not before us and a Cap and Trade bill is.

The Heritage Foundation, a respected Conservative think-tank has come out against the Lieberman-Warner bill. Ben Lieberman, a Senior Policy Analyst for Energy and Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation has produced a short analysis of the bill called Five Myths About the Lieberman-Warner Global Warming Legislation. You can expect this study to be the talking points that will be repeated over and over again by the bills opponents. I am posting that report and responding:

Myth #1: LW would not be expensive.

Fact: Simply put, LW works like a massive energy tax. By restricting carbon dioxide emissions from coal, oil, and natural gas--with a freeze at 2005 levels beginning in 2012, to a 70 percent reduction in 2050--the bill forces down supply and thus boosts the price of energy. In fact, if energy prices did not go up, then the targets in the bill would not be met. As energy is the economy's lifeblood, and 85 percent of it comes from these fossil fuels, the impact will be substantial. Cumulative gross domestic product (GDP) losses could reach $4.8 trillion by 2030, according to an analysis conducted by the Heritage Foundation. The Massachusetts Institute of Technology, the Environmental Protection Agency, Charles River Associates, and the National Association of Manufacturers have all conducted studies predicting significant economic burdens on consumers should the bill be enacted.

Response: I think this is exactly correct. Any effective effort to combat global warming is going to be expensive. Also, it does work like a massive energy tax. One of my criticisms of the environmentalist is that they have soft-pedaled the sacrifice and cost that it will take to address the problem.

Myth #2: The costs fall on industry, not consumers.

Fact: Virtually all the burden imposed by LW falls upon consumers. The bill will spur net job losses well into the hundreds of thousands, and possibly nearing one million. Particularly hard hit is the manufacturing sector where over one million jobs will be lost by 2022 and two million by 2027. The losses in household incomes could reach $1,026 per year by 2015. Annual household energy-price increases could hit $1,000 by 2030, including a 29 percent increase in the price of gasoline from 2008 levels.

Response: This is true. Anytime government puts an additional burden on industry, the burden is born by consumers. I do not know the accuracy of the cost to the economy of the bill, but will assume the estimates are correct.

Myth #3: Global warming is a crisis that must be addressed at all costs.

Fact: Global warming is a concern, not a crisis. Both the seriousness and the imminence of the threat are overstated. For example, the recent United Nations Intergovernmental Panel on Climate Change report estimates 7 to 23 inches of sea level rise by the end of the century--far less than the widely popularized claims of 18 to 20 feet and little more than ongoing trends over the past several centuries. The attempt to link Hurricane Katrina with climate change is directly contradicted by the World Meteorological Organization and many scientists. Overall, current and expected future temperatures are far from unprecedented, and are highly unlikely to lead to catastrophes.

Response: Not true. Global warming is a crisis. While there are dissenting voices, the overwhelming consensus of the scientific community is that it is a serious and imminent threat. Read the Intergovernmental Panel on Climate Change Report. That report clearly says global warming is a serious threat and we have only a few years to do something about it. Global warming is real, and by the time the worse effects occur it may be too late to reverse them. It is only because the consequences of doing nothing are so serious that a costly undertaking like cap and trade or a carbon tax should be contemplated.

Myth #4: LW effectively addresses the threat of climate change.

Fact: Even assuming the worst of global warming, LW reduces the threat by a minuscule amount. The bill reduces emissions of carbon dioxide and other greenhouse gases in the United States only. China has overtaken America as the world's largest emitter, and its emissions growth is several times greater than that of the U.S. India and other fast-developing nations are on a similar trajectory. Thus, the unilateral impact of the bill on global emissions would be inconsequential. At most, it would reduce the earth's future temperature by one or two tenths of a degree Celsius--too small to even verify. In other words, LW is all economic pain for no environmental gain.

Response: This is a legitimate problem. If we reduce our own emission, that will do little to curtail global warming unless we can get China and India on board. However, if the US acts responsibly to curtail its global warming emissions, then we can speak with moral authority and attempt to negotiate treaties that will bring China and India on board.

Myth #5: LW's cap-and-trade approach is a proven success.

Fact: Critics of the cap-and-trade approach in LW, in which emissions are capped and regulated entities may trade their rights to emit, point to the European Union's substantial difficulties since initiating its own cap-and-trade program in 2005. Most E.U. nations are not on track to meet their targets, and many are seeing their emissions rise faster than those in the U.S. The program is furthermore plagued by accusations of fraud and unfairness. LW essentially adopts the European approach wholesale.

Response: This is true regarding the European Cap and Trade but not true about Cap and Trade in general. Just because Europe got it wrong does not mean that we cannot get it right. It is not the concept that is flawed, but the design of the final product. We know that a Cap and Trade system can work. If you recall when Acid Rain was a problem, it was solved by the use of a system of Cap and Trade. In addressing the problem of Acid Rain, Cap and Trade was a proven success.

Conclusion: Overall, the Lieberman-Warner bill promises substantial hardship for the economy overall, for jobs, and for energy costs. Given current economic concerns and energy prices, this is the last thing the American people need. At the same time, the environmental benefits would likely be small to nonexistent. The Lieberman-Warner bill fails any reasonable cost-benefit test.

My Conclusion: If passed into law the Lieberman-Warner bill will cause substantial hardship. If the final product has so many loopholes that it is ineffective then it does not deserve to be passed. However, if the final proposal is a good bill that substantially curtails global warming emission then the benefit of avoiding the consequences of global warming makes the cost acceptable.

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