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Category — “Bootleggers and Baptists”

Bootleggers, Baptists, and Utility MACT

The “Bootleggers and Baptists” theory of regulation, coined by Bruce Yandle in 1983 in Regulation magazine, uniquely explains what otherwise would be considered bizarre coalitions between moral crusaders and morally indifferent businesses.

In a later telling, Yandle explained how the theory

draws on colorful tales of states’ efforts to regulate alcoholic beverages by banning Sunday sales at legal outlets. Baptists fervently endorsed such actions on moral ground. Bootleggers tolerated the actions gleefully because their effect was to limit competition.

One such unholy alliance has emerged between environmentalists and some utilities in the context of the Environmental Protection Agency’s recent Utility Mercury and Air Toxics Standards (Utility MACT) rule.

Those unfamiliar with the Bootleggers and Baptists theory may conclude that those compliant energy companies are enlightened at long last. But those who know the theory will take a more cynical view.

Shakespeare once wrote, “Misery acquaints a man with strange bed-fellows.” Apparently, so does Utility MACT. [Read more →]

May 29, 2012   2 Comments

The Beginning of the End for Cap-and-Trade? (BP America, Conoco-Phillips, and Caterpillar bolt) (UPDATED)

With little fanfare, an earthquake has rippled through the United States Climate Action Partnership (USCAP). Three significant members, two of them being integrated oil majors, are no longer planning the cap-and-trade (aka, cap-and-tax) game. And if energy affordability and reliability is a metric, expect more companies to bolt. Social corporate responsibility, anyone? After all, there is no climate gain from a unilateral U.S. cap by the alarmists’ own math.

Here is the background. According to its website, USCAP is “a group of businesses and leading environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.” Others of a less charitable bent would characterize them as central headquarters of the U.S. Climate-Industrial Complex, a group of corporate rent-seekers (the bootleggers), made whole by the environmental scaremongers (the Baptists) hell-bent on slapping the United States into a carbon rationing scheme.

Members of USCAP include AES, Alcoa, Alstom, Boston Scientific Corporation, Chrysler, Deere & Company, The Dow Chemical Company, Duke Energy, DuPont, Environmental Defense Fund (EDF), Exelon Corporation, Ford Motor Company, FPL Group, General Electric (GE), General Motors Corporation, Honeywell, Johnson & Johnson, Natural Resources Defense Council (NRDC), The Nature Conservancy, NRG Energy, PepsiCo, Pew Center on Global Climate Change, PG&E Corporation, PNM Resources, Rio Tinto, Shell, Siemens Corporation, and the World Resources Institute (WRI).

It doesn’t take a great deal of analysis to see who hopes to get what from cap-and-trade. The environmental posse– EDF, NRDC, Nature Conservancy, Pew Center, and WRI–get their ultimate dream: control of the U.S. economy by environmental bureaucrats who can determine who gets to buy carbon permits, who gets to sell them, how many can be bought overseas, who gets to slurp from the giant trough of government permit sales, and so on.

It’s not much harder to figure out what the corporations get, whether it’s simply “green” bragging rights to use in commercials (PepsiCo), or the hope to sell subsidized hybrid cars (Ford and GM), or the chance to sell new thermostats to millions of houses and businesses (Honeywell), to build nuclear plants, windmills, or solar farms (GE, Exelon), or to get in early in the hopes of getting free permits from the government (coal, oil, and other high GHG emitters). Again, a sober comparison of social costs and benefits should get these ‘greenwashers’ to bolt.

Three groups that used to be on that list which you won’t find mentioned at USCAP’s website are Caterpillar Inc., BP America, and ConocoPhillips which have made a relatively quiet exit, stage left. [Read more →]

February 17, 2010   4 Comments

Bootleggers and Baptists Tackle (Carbon) Prohibition

Editor note: This post from one year ago is reprinted for its continuing relevance to the climate-change debate. The “bootleggers” are hard at work in the post-Enron era with nearly 150 companies, lead by Exelon Corp., Entergy Corp., and Constellation Energy Group Inc., buying 30-second television spots running from today through President Obama’s State of the Union address on Wednesday. 

The climate-change public policy debate might be thought of as a straightforward morality play. In one corner, we have the good guys laboring mightily against all odds to save the planet from rampant consumerism, human short-sightedness, and corporate greed. In the other corner, we have the bad guys, laboring mightily to preserve their profits by stoking materialism, economic selfishness, and fear of big government. Behind the curtains of this morality play, however, is a fascinating dance between the “good guys” (the Baptists) and “bad guys” (the bootleggers) to pass some form of mutually beneficial prohibition.

The emergence of the bootlegger and Baptist coalition in climate change politics has never been more obvious than last week, when the United States Climate Action Partnership (USCAP – a coalition of big business and big environmental groups) put forward its plan to reduce greenhouse gas emissions by 80 percent below 2005 levels by 2050 through a mandatory, economy-wide cap-and-trade program. While this is somewhat less ambitious than President Obama’s proposal (an 80 percent reduction over that same time period relative to 1990 levels), the real give-away about what’s going on can be found in the proposed emissions standards for new coal-fired power plants. To wit:

• any such facility permitted after Jan. 1, 2015, could not emit more than half of the carbon dioxide emissions now considered normal for coal-fired power plants; and

• any newly permitted coal-fired power plant today would have to have the ability to be retrofitted to meet that standard.

This, dear readers, is little but a replay of the old-source/new-source standards incorporated in the Clean Air Act (CAA), which likewise established tough emissions standards for future power plants but much lighter rules for plants currently in operation. The best review of what happened then and why is the classic Clean Coal/Dirty Air, pointedly subtitled How the Clean Air Act Became a Multibillion-Dollar Bail-Out for High-Sulfur Coal Producers and What Should Be Done about It (Yale University Press, 1981). The authors, Bruce Ackerman and William Hassler, were environmentalists with sterling credentials who simply could not stomach the deal necessary to bring the business community into the pro-CAA camp. Alas, their whistle-blowing operation gained so little attention and had such little impact that, today, environmentalists cannot discuss the Clean Air Act without making the sign of the cross and whispering in awed reverence. [Read more →]

January 23, 2010   16 Comments

The Waxman-Markey Gravy Train (Part II): Specific Winners in the Electric Industry

“No, I have to do this my way. You tell me what you know, and I’ll confirm. I’ll keep you in the right direction if I can, but that’s all. Just… follow the money.”

- Deep Throat to Bob Woodward, All The President’s Men (1976).

Yesterday’s post at MasterResource presented seven areas where the American Clean Energy and Security Act of 2009 (H.R. 2454, aka Waxman-Markey) bribed segments of the electric utility industry into support. So it should come as no surprise that there are specific companies and technologies that are well positioned to gain quick, big bucks by its legislative requirements should climate legislation become law  in its current form.

I have discussed carbon legislation with many of these companies that publicly declare their concern about anthropogenic climate change yet privately see this as the greatest money-making opportunity of their lifetimes. The Bootleggers and Baptist model of government intervention is in clear evidence. Adam Smith must be turning over in his grave given the enormous “invisible handout” that Waxman–Markey provides to a select few in the electricity generation market.

Five Link Chain

In “Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage as a Key Mitigation Option,” released September 30, 2008, the GAO found that a key technological barrier to carbon capture and storage (CCS) deployment was a lack of experience in capturing significant amounts of CO2 from commercial-scale power plants. The significant cost of retrofitting existing plants, which it deemed “the single-largest source of CO2 emissions in the U.S.,” also hampered deployment. The GAO also found that both the EPA and DOE had yet to comprehensively tackle the full range of issues that would require resolution for large-scale deployment. The GAO was spot-on in their conclusions. [Read more →]

August 28, 2009   7 Comments

Waxman–Markey's Gravy Train: Why the Electric Industry Got on Board (Getting favors, adding pages to H.R. 2454)

“I expect all the bad consequences from the chambers of Commerce and manufacturers establishing in different parts of this country, which your Grace seems to foresee…. The regulations of Commerce are commonly dictated by those who are most interested to deceive and impose upon the Public.”

- Adam Smith, 1785 letter. In The Correspondence of Adam Smith. (1)

The American Clean Energy and Security Act of 2009 (H.R. 2454, aka Waxman–Markey) was narrowly adopted by the House of Representatives on June 26. As has become standard practice, few legislators were familiar with the final 1,428-page bill, given all the horse-trading hours before the final vote.

Waxman–Markey was a low point in the political process, but what made passage possible was worse: highly organized support from some quarters of the electric utility industry and a lack of protestation from much of the rest.

Some industry parties believe that their lobbyists successfully watered down an extremely disruptive legislative draft to the point that the final was merely distasteful. But compared to killing the bill, which could have been done had the industry been so minded, getting “a seat at the table” resulted in passage.

I remember when ”getting a seat” in legislative negotiations included infiltrating and defeating bad proposals. Today, it means ensuring your company gets a piece of the political pork. Such “rent-seeking” substitutes political capitalism for principled free-market capitalism and leaves virtually all of us poorer.

There are a variety of sections buried in the 1,428-page Waxman–Markey climate bill that clearly benefit a select few electric utilities. My post tomorrow will discuss which vendors and electric utilities are best positioned to greatly benefit by these legislative requirements should they become law.

The Winners (at our Expense)

A new study by the Energy Information Administration (EIA), Energy Market and Economic Impacts of H.R. 2454, reveals several very interesting, perhaps unintended, consequences that Waxman–Markey will have on the electric power industry. [Read more →]

August 27, 2009   5 Comments

Texas's "Solar Session" Fails to Enact Renewable Mandate #3 (a reality check for a federal RES?)

“We can push solar, and that’s great. But somebody’s got to pay for it. You can’t have those who can barely afford their energy bills subsidizing it.”

- Texas Rep. Sylvester Turner, quoted in the Houston Chronicle

The Houston Democrat made a national statement, not just statewide one, in reference to proposed legislation to surcharge ratepayers to subsidize solar roofs. Such sentiment beat back a well-funded effort by national environmental pressure groups and the solar industry. Has the decade-old Enron-launched artificial stimulus to uneconomic, unreliable renewables reached its apogee? Might existing and planned renewable programs enacted at the expense of ratepayers and taxpayers be reconsidered by the Public Utility Commission of Texas and the 82nd Texas Legislature in 2011?

Background

The Texas Legislature, which meets every two years, fell to Enron and environmental lobbyists back in 1999 when the nation’s strictest renewable energy mandate was passed and signed into law by then Gov. George W. Bush. In 2005, the renewable quota was increased again, making Texas the national leader in industrial wind parks–and energy liabilities parading as assets (see here). [Read more →]

June 9, 2009   7 Comments

A Texas-Sized Energy Problem: Republicans, Democrats, and ‘Baptists & Bootleggers’ Running Wild in the Lone Star State (Obama sends his thanks)

“Texas is the nation’s leader in wind energy thanks to our long-term commitment to bolstering renewable energy sources and diversifying the state’s energy portfolio.”

- Rick Perry, Texas Governor

“Our representatives [in the Texas Legislature] now have less than six weeks to pass the best of nearly 100 bills that have been introduced on clean power and green jobs. These energy efficiency and renewable energy bills set the stage for rebuilding, repowering and renewing our state’s economy during tough times. They will build a sustainable future for Texas.”

- Sierra Club, Environmental Defense Fund, Public Citizen

As reported by Russell Gold in yesterday’s Wall Street Journal, Texas, which has the strictest renewable energy mandate in the country, is about to increase its quota for the third time. Now the wind capital of the U.S., Texas’s new law would make the state the leader in solar power as well. Expensive and intermittent, wind- and solar-forcing will work only to increase electricity rates for captive consumers and reduce reliability on the grid. Taxpayers are on the hook as well.

In a 2008 study for the Texas Public Policy Foundation, “Texas Wind Energy: Past, Present, Future,” Drew Thornley concluded: [Read more →]

April 24, 2009   14 Comments