Sep/090
Smoking Papers On Global Warming
Smoke Stacks
By INVESTOR’S BUSINESS DAILY | Posted Wednesday, September 16, 2009 4:20 PM PT
http://www.ibdeditorials.com/IBDArticles.aspx?id=337991812954735
Climate Change: A Treasury Department analysis says a cap-and-trade law could cost American families more than $1,700 a year. No wonder administrators tried to keep the study secret.
The House narrowly approved — by seven votes — the Waxman-Markey cap-and-trade bill in June over complaints that it would be an undue financial burden to American families. It passed after House Speaker Nancy Pelosi strode to the chamber floor and claimed that “this legislation means jobs, jobs, jobs and jobs. Let’s vote for jobs.”
Even some of the bill’s supporters had to roll their eyes at the assertion. It was a talking point intended to convince those who have not been paying attention to the legislation’s severe shortcomings, not wise and experienced lawmakers who know better.
Throughout the debate, the bill’s defenders said Waxman-Markey would cost “less than the price of a postage stamp per day,” a small price to pay, they declared, for saving the Earth from global warming. Their evidence: a Congressional Budget Office report that estimated the cost would be $175 per household a year.
But, as is often the case in Washington, it’s what they didn’t say that was more important.
While the House debated and eventually voted, filed away within the walls of the Treasury Department was an internal estimate that projected a cap-and-trade law would cost Americans up to $200 billion a year in new taxes. These taxes won’t be levied directly but will be paid when power providers and other carbon dioxide producers buy CO2 emission allowances from the federal government and then pass the costs on to customers — as will inevitably happen.
Overall, the costs would be “the equivalent of hiking personal income taxes by about 15%,” Declan McCullagh reports on his “Taking Liberties” blog on CBSnews.com.
“At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year,” McCullagh wrote.
Had it not been for the efforts of the Competitive Enterprise Institute, the analysis would have likely remained a guarded secret.
A handful of Treasury documents related to cap-and-trade, carbon dioxide and greenhouse gases were made public Tuesday, but only after CEI’s Christopher Horner used the Freedom of Information Act to force its disclosure.
“In short,” Horner wrote on National Review’s “Planet Gore” blog, the Treasury documents are “a candid snapshot of what they’re admitting to each other, while telling you a, ah, different story — to your face.”
But the government is allowing only so much candor.
The estimated cost of a cap-and-trade program in terms of higher energy prices has been, unsurprisingly, edited out of one of the Treasury documents. A thick black line follows the sentence that opens with “While such a program can yield environmental benefits that justify its costs, it will raise energy prices and impose annual costs on the order . . . .”
In two other documents, passages explaining the “significant costs and potential revenues” generated by “domestic policies to address climate change” were covered by black ink.
The only logical conclusion is that the figures are so staggeringly large that bureaucrats, and possibly elected officials, feel that they have to hide them from the public.
Treasury’s censors weren’t able to expunge everything, though.
A separate administration transition memo drafted two days after the election notes that the “Economic costs will likely be on the order of 1% of GDP, making them equal in scale to all existing environmental regulation.”
In other words, under cap-and-trade, the economic costs of environmental regulation would double overnight.
Horner has said he’ll ask the courts to force the government to release the redacted references to increases in energy costs as well as other parts that have been blacked out.
We wish him the best. The country needs more people like him and fewer government officials who, for political purposes, conceal information that the public has a right to know.
Sep/090
CO2 emissions take center stage over MPG
EPA and the DOT
by Sebastian Blanco (RSS feed) on Sep 15th 2009 at 3:22PM
http://www.autoblog.com/2009/09/15/epa-and-dot-announce-new-fuel-economy-greenhouse-gas-plan-co2/
Back in May, the Obama Administration raised the national CAFE standard to 35.5 mpg (for cars and trucks) by 2016. The higher standard would build from the 27.3 mpg 2011 standard and go up five percent each year until 2016. Today, the Environmental Protection Agency and Department of Transportation issued a joint statement proposing just how the two agencies will work together to reach the higher standard required for model year 2012-2016 vehicles.
The 35.5 mpg number from the CAFE regulations can be reached, the DOT and EPA say, if all MY 2016 vehicles have “an estimated combined average emission level of 250 grams of carbon dioxide per mile” (to compare, that would be 155 g/km using the European g/km measurement) and that target is met by improving fuel economy. We can’t help but think that a focus on CO2 instead of mpg is needed in light of new claims that cars can get 230 mpg.
The two agencies say that the new standard will save 1.8 billion barrels of oil, reduce greenhouse gases by 950 metric tons and save “the average car buyer” over $3,000 in fuel costs. The main point, though, is that everyone involved has agreed to combine the CAFE standards and EPA’s greenhouse gas emissions standards into one, making it clear what automakers have to do to sell cars in any state in the Union.
Considering the long fight that the Auto Alliance had with California and other states that wanted to adopt more stringent rules than the Bush-era EPA was willing to declare, the EPA and DOT’s proposal appeals to Alliance president Dave McCurdy. “Final rules are essential to providing manufacturers with the certainty and lead time necessary to plan for the future and cost effectively add new technology,” he said. “We look forward to working constructively with the Obama administration to provide comments and begin meeting our shared goals of increasing fuel economy, enhancing energy security, and reducing greenhouse gas emissions through this single national program.” Press releases are after the jump, as is information on how to comment on the EPA and DOT’s proposed rule over the next 60 days.
[Source: EPA/DOT, Auto Alliance]
Washington, D.C. – “Last May, automakers committed to President Obama to increase the average fuel economy in new vehicles by 40 percent to a combined 35.5 miles per gallon by 2016. This historic joint-rulemaking proposal released today by the Environmental Protection Agency and the National Highway Traffic Safety Administration creates a coordinated national approach for increasing fuel economy and reducing greenhouse gases and prevents competing regulations at the state and federal level.
The proposal provides manufacturers with a roadmap for meeting significant increases for model years 2012-2016. Final rules are essential to providing manufacturers with the certainty and lead time necessary to plan for the future and cost effectively add new technology. We look forward to working constructively with the Obama administration to provide comments and begin meeting our shared goals of increasing fuel economy, enhancing energy security, and reducing greenhouse gas emissions through this single national program.”
DOT Secretary Ray LaHood and EPA Administrator Lisa P. Jackson Propose National Program to Improve Fuel Economy and Reduce Greenhouse Gases
New Interagency Program to Address Climate Change and Energy Security
WASHINGTON – U.S. Department of Transportation (DOT) Secretary Ray LaHood and U.S. Environmental Protection Agency (EPA) Administrator Lisa P. Jackson today jointly proposed a rule establishing an historic national program that would improve vehicle fuel economy and reduce greenhouse gases. Their proposal builds upon core principles President Obama announced with automakers, the United Auto Workers, leaders in the environmental community, governors and state officials in May, and would provide coordinated national vehicle fuel efficiency and emissions standards. The proposed program would also conserve billions of barrels of oil, save consumers money at the pump, increase fuel economy, and reduce millions of tons of greenhouse gas emissions.
“American drivers will keep more money in their pockets, put less pollution into the air, and help reduce a dependence on oil that sends billions of dollars out of our economy every year,” said EPA Administrator Lisa P. Jackson. “By bringing together a broad coalition of stakeholders – including an unprecedented partnership with American automakers – we have crafted a path forward that is win-win for our health, our environment, and our economy. Through that partnership, we’ve taken the historic step of proposing the nation’s first ever greenhouse gas emissions standards for vehicles, and moved substantially closer to an efficient, clean energy future.”
“The increases in fuel economy and the reductions in greenhouse gases we are proposing today would bring about a new era in automotive history,” Transportation Secretary Ray LaHood said. “These proposed standards would help consumers save money at the gas pump, help the environment, and decrease our dependence on oil – all while ensuring that consumers still have a full range of vehicle choices.”
Under the proposed program, which covers model years 2012 through 2016, automobile manufacturers would be able to build a single, light-duty national fleet that satisfies all federal requirements as well as the standards of California and other states. The proposed program includes miles per gallon requirements under NHTSA’s Corporate Average Fuel Economy Standards (CAFE) program and the first-ever national emissions standards under EPA’s greenhouse gas program. The collaboration of federal agencies for this proposal also allows for clearer rules for all automakers, instead of three standards (DOT, EPA, and a state standard).
Specifically, the program would:
- Increase fuel economy by approximately five percent every year
- Reduce greenhouse gas emissions by nearly 950 million metric tons
- Save the average car buyer more than $3,000 in fuel costs
- Conserve 1.8 billion barrels of oil
Increase Fuel Economy and Reduce Carbon Dioxide Emissions:
The proposed national program would require model year 2016 vehicles to meet an estimated combined average emission level of 250 grams of carbon dioxide per mile. Under the proposed program, the overall light-duty vehicle fleet would reach 35.5 miles per gallon (mpg) in model year 2016, if all reductions were made through fuel economy improvements. If this occurs, Congress’ fuel economy goal of 35.0 mpg by 2020 will be met four years ahead of schedule. This would surpass the CAFE law passed by Congress in 2007, which required an average fuel economy of 35 mpg in 2020.
Reduce Greenhouse Gases:
Climate change poses a significant long-term threat to America ’s environment. The vehicles subject to the proposed rules announced today are responsible for almost 60 percent of all U.S. transportation-related greenhouse gas emissions. These will be the nation’s first ever national greenhouse gas standards. The proposed standards would require model year 2016 vehicles to meet an estimated combined average emission level of 250 grams of carbon dioxide per mile under EPA’s greenhouse gas program. The combined EPA and NHTSA standards would reduce carbon dioxide emissions from the light-duty vehicle fleet by about 21 percent in 2030 over the level that would occur in the absence of any new greenhouse gas or fuel economy standards. The greenhouse gas emission reductions this program would bring about are equivalent to the emissions of 42 million cars.
Save Consumers Money:
NHTSA and EPA estimate that U.S. consumers who purchase their vehicle outright would save enough in lower fuel costs over the first three years to offset the increases in vehicle costs. Consumers would save more than $3,000 due to fuel savings over the lifetime of a model year 2016 vehicle.
Conserve Oil and Increase Energy Security:
The light-duty vehicles subject to this proposed National Program account for about 40 percent of all U.S. oil consumption. The program will provide important energy security benefits by conserving 1.8 billion barrels of oil, which is twice the amount of oil (crude oil and products) imported in 2008 from the Persian Gulf countries, according to the Department of Energy’s Energy Information Administration Office. These standards also provide important energy security benefits as light-duty vehicles account for about 60 percent of transportation oil use.
Within the Auto Industry’s Reach:
EPA and NHTSA have worked closely to develop this coordinated joint proposal and have met with many stakeholders including automakers to insure the standards proposed today are both aggressive and achievable given the current financial state of the auto industry.
NHTSA and EPA expect automobile manufacturers would meet these proposed standards by improving engine efficiency, transmissions and tires, as well as increasing the use of start-stop technology and improvements in air conditioning systems. EPA and NHTSA also anticipate that these standards would promote the more widespread use of advanced fuel-saving technologies like hybrid vehicles and clean diesel engines.
NHTSA and EPA are providing a 60-day comment period that begins with publication of the proposal in the Federal Register. The proposal and information about how to submit comments are at: http://www.epa.gov/otaq/climate/regulations.htm for EPA and http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.43ac99aefa80569eea57529cdba046a0/
for NHTSA.
Draft Environmental Impact Statement:
NHTSA has prepared a Draft Environmental Impact Statement (EIS) for the proposed CAFE standards. The Draft EIS compares the environmental impacts of the agency’s proposal and reasonable alternatives. NHTSA is providing a 45-day comment period on the Draft EIS. Information on the submission of comments is provided at the above NHTSA Web address.
Dec/070
Beware of Cap and Trade Climate Bills
December 6, 2007
by Ben Lieberman
WebMemo #1723
http://www.heritage.org/Research/Economy/wm1723.cfm
America’s Climate Security Act of 2007 (S. 2191), sponsored by Senators Joseph Lieberman (I-CT) and John Warner (R-VA), is the latest and fastest-moving “cap and trade” bill introduced in Congress this year. All such climate change measures warrant careful scrutiny, as they would likely increase energy costs and do considerably more economic harm than environmental good.
A Costly Proposition
These measures would set a limit, or cap, on carbon dioxide emissions from fossil fuel use. The effect of such a cap would be to impose rationing of coal, oil, and natural gas on the American economy. Each covered utility, oil company, and manufacturing facility would be given allowances based on past emissions or some other formula. Those companies that emit less carbon dioxide than permitted by their allowances could sell the excess to those that do not; this is the trade part of cap and trade. Over time, the cap would be ratcheted down, requiring greater cuts in emissions.
Each proposal differs from the others on specifics: the stringency of the cap, the number and type of companies covered, the ground rules for allocating and trading allowances, and other details. S. 2191 is, in several respects, more stringent than other cap and trade bills. Its requirement that emissions decline to 15 percent below 2005 levels by 2020–even in the face of a growing population and rising energy demand–sets a very difficult target.[1]
Measures like S. 2191 that target carbon emissions aggressively will be costlier than those that give the economy more time to adjust to the energy constraints. For example, over the long term, energy companies may find ways to capture and store carbon dioxide emissions underground, rather than emit them into the air, or switch to lower-emitting alternative energy sources as they are developed. But most experts see these advances as taking decades–much longer than the initial targets in S. 2191 allow. In fact, these targets may actually complicate the development of longer-term innovations, as they will divert resources to near-term fixes.
Carbon dioxide is the unavoidable byproduct of fossil fuel combustion, which currently provides 85 percent of America’s energy. Thus, it will be very costly to move away from this preferred energy source, and especially doing so as expeditiously as S. 2191 requires. A study by Charles River Associates puts the cost (in terms of reduced household spending per year) of S. 2191 at $800 to $1,300 per household by 2015, rising to $1,500 to $2,500 by 2050.[2] Electricity prices could jump by 36 to 65 percent by 2015 and 80 to 125 percent by 2050.[3] No analysis has been done on the impact of S. 2191 on gasoline prices, but an Environmental Protection Agency study of a less stringent cap and trade bill estimates impacts of 26 cents per gallon by 2030 and 68 cents by 2050.[4]
Even these cost projections may underestimate the true costs, because they assume no unpleasant surprises. But the world has already witnessed many unpleasant surprises with Europe’s ongoing efforts to impose a cap and trade program under the Kyoto Protocol, the international climate treaty to reduce greenhouse gas emissions.
In fact, European efforts have racked up significant costs while failing to reduce emissions.[5] Nearly every European country participating has higher emissions today than when the treaty was first signed in 1997. Further, despite ongoing criticism of the United States from Kyoto parties for failing to ratify the treaty, emissions in many of these nations are actually rising faster than in the United States.
The European experience also shows the problem of cap and trade fraud.[6] None other than Enron’s Ken Lay was a strong supporter of carbon cap and trade when the idea was first floated in the 1990s, saying that it could “do more to promote Enron’s business than almost any other regulatory initiative.” These carbon allowances that will be bought and sold have a value estimated at $50 billion to $300 billion annually, and the trade in them would be a huge new business.[7] Enron may be gone, but others ready to take advantage of cap and trade–often at public expense–are not.
The actual cost of S. 2191 is difficult to estimate–as America has never had to deal with such severe energy constraints–but would likely be very high.
A Regressive Tax
By limiting the supply of fossil fuels, S. 2191 would raise the cost of energy. For consumers, cap and trade means more expensive gasoline and electricity as well as net job losses in energy-dependent sectors. Senator Lieberman himself concedes costs into the hundreds of billions of dollars. And as the Congressional Budget Office has noted, such energy cost increases act as a regressive tax on the poor.[8]
Lost Jobs
The net job losses from S. 2191 are estimated by Charles River Associates to be 1.2 million to 2.3 million by 2015.[9] Some of these jobs will be lost for good, due to the impact of higher energy costs on economic activity. Others, chiefly in the manufacturing sector, will be sent overseas. In the very likely event that S. 2191 significantly raises domestic manufacturing costs and that developing nations refuse to impose similar restrictions, the American economy could experience a substantial outsourcing of manufacturing jobs to those nations with lower energy costs.
Little Environmental Gain
While the costs of aggressive cap and trade proposals are substantial, the environmental benefits are suspect. This is true even if one fully accepts the claim of man-made global warming. The most ambitious measure to date is the Kyoto Protocol, but even if the U.S. were a party to this treaty and the European nations and other signatories were in full compliance (most are unlikely to meet their targets), the treaty would reduce the Earth’s future temperature by an estimated 0.07 degrees Celsius by 2050–an amount too small even to verify.[10] S. 2191 would at best do only a little more.
Indeed, a number of economists, including many who are far from global warming skeptics, warn of overly aggressive cap and trade measures imposing costs exceeding the benefits.[11] In other words, the costs of implementing such measures would be higher than the value of the global warming damage that they would prevent.
The Slippery Slope
It is a near certainty that the first climate bill enacted will not be the last one. In fact, most major environmental organizations have already criticized S. 2191 and other pending global warming bills as inadequate, or as at best “a good first step.” The economic impacts of S. 2191, though substantial in their own right, could be a mere down payment toward costlier subsequent measures.
Conclusion
Cap and trade bills are nothing short of a government re-engineering of the American economy. And S. 2191, with its aggressive targets to reduce emissions from fossil fuel use, would put the nation on a path of serious economic harm not justified by any benefits.
Ben Lieberman is Senior Policy Analyst for Energy and the Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.