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Category — Waxman-Markey Climate Bill

James Hansen on Cap-and-Trade & Copenhagen

“The fraudulence of the Copenhagen approach – ‘goals’ for emission reductions, ‘offsets’ that render even iron-clad goals almost meaningless, an ineffectual ‘cap-and-trade’ mechanism – must be exposed. We must rebel against such politics-as-usual.”

- James Hansen, “Never-Give-Up Fighting Spirit,” November 30, 2009

There is a civil war on the Left against cap-and-trade as the centerpiece of a U.S. climate bill. Among the leading critics is NASA scientist and Al Gore mentor James Hansen, who reiterated his opposition in Sunday’s The Observer with Copenhagen’s climate summit in mind:

“Cap and trade with offsets … is astoundingly ineffective. Global emissions rose rapidly in response to Kyoto, as expected, because fossil fuels remained the cheapest energy.

Cap and trade is an inefficient compromise, paying off numerous special interests. It must be replaced with an honest approach, raising the price of carbon emissions and leaving the dirtiest fossil fuels in the ground.”

Hansen also stated earlier this month:

“Cap-and-trade is a hidden regressive tax, benefiting the select few who have managed to get themselves written into the 2000-page bill…. Think revolving door between the government and Wall Street.  Think revolving door between Congress and lobbyists.”

Hansen’s earlier criticisms of HR 2454, the American Clean Energy and Security Act of 2009 (Waxman-Markey climate bill), apply to the current Senate companion, Clean Energy Jobs and American Power Act of 2009 (Kerry-Boxer climate bill).

Hansen’s bottom line on Waxman-Markey was as follows:

“The truth is, the climate course set by Waxman-Markey is a disaster course. It is an exceedingly inefficient way to get a small reduction of emissions. It is less than worthless….”

-James Hansen, “Strategies to Address Global Warming,” July 13, 2009.

During debate on the original version of HR 2454, Hansen complained:

“Governments are retreating to feckless ‘cap-and-trade,’ a minor tweak to business-as-usual….

“Why is this cap-and-trade temple of doom worshipped?  The 648-page cap-and-trade monstrosity that is being foisted on the U.S. Congress provides the answer.  Not a single Congressperson has read it.  They don’t need to – they just need to add more paragraphs to support their own special interests.  By the way, the Congress people do not write most of those paragraphs—they are ‘suggested’ by people in alligator shoes.”

And Hansen spanked harder on the final version: [Read more →]

November 30, 2009   13 Comments

The Rest of Waxman–Markey: Caveat Emptor!

On June 26, 2009, the U.S. House of Representatives passed the Waxman-Markey climate bill, known also as the cap-and-trade bill. This is unfortunate because cap-and-trade takes up no more than 30 percent of its pages. The rest of the telephone-book-sized HR 2454 detailed new regulations, wealth transfers and taxes whose aggregate adverse impacts may well surpass those of cap-and-trade.

Here is a quick list of some important provisions of the American Clean Energy and Security Act of 2009, nicknamed the Enron Revitalization Act of 2009 here at MasterResource.

Still more encouragement for renewable resources that cannot pass market tests. A national “renewable portfolio standard” will require that 20 percent of the nation’s electricity in 2020 (relative to 2.8 percent today) come from sources the law defines as “renewable” or (to a limited degree) improvements in efficiency. For the past ten years, wind power is the only renewable whose output has grown substantially, and it is only viable because of a federal production tax credit. Other renewables are generally even less economic. The national RPS is special interest legislation for wind.

Research on fuels and technologies that harms consumers and reduces employment opportunities. Section 114 institutes a new $1 billion annual tax on power from coal- and gas-fired [Read more →]

October 26, 2009   4 Comments

Forced Coal-Plant Conversions to Natural Gas: False Hope for "Cheap" Climate Action

[Editor: This MasterResource post from July is reprinted given the 'war on coal' strategy by environmental groups and certain activist strands of the upstream natural gas industry, led by Chesapeake Energy (Aubrey McClendon.]

Robert F. Kennedy Jr., president of Waterkeeper Alliance, posits in the Financial Times (July 19) that converting our fleet of coal-fired power plants to natural gas could be accomplished “practically overnight” and will have the effect of “jump-starting our economy….without the expense of building new power plants.” Thus did Kennedy express his new-found love of natural gas: It’s our “bridge fuel to the ‘new’ energy economy.” (Where have we heard that before–wasn’t that Enron’s tag line decade or two ago?)

Yet Kennedy’s proposal ignores the extremely high cost of fuel conversion (upwards of $100 million for a medium-size coal plant) and the added fuel cost to burn gas. He seriously mischaracterizes how an electricity market operates. And Joe Romm (Climate Progress) had added to the confusion by calling Kennedy’s proposal a “game changer.” For Romm plentiful gas means “damn easy and cheap” compliance with the Waxman-Markey climate bill (HR 2454).

Environmentalists looking to draft the natural gas industry in a forced conversion effort against coal do not know what the gas industry does: it is highly uneconomic and would overload the pipeline system that was not built with coal conversions in mind.

Gore’s 100% Dream … and Round Two

Late last year Al Gore, self-appointed father of the climate-change movement, astonished his most ardent acolytes with a plan to produce 100% of the nation’s electricity from renewable energy and carbon-free sources within 10 years. In making the announcement, Gore noted that “The quickest, cheapest, and best way to start using all this renewable energy is in the production of electricity. In fact, we can start right now using solar power, wind power, and geothermal power to make electricity for our homes and businesses.” As always, Gore carefully sidesteps the impact of his proposals to the consumer’s pocketbook and our country’s future economic well-being. [Read more →]

October 10, 2009   5 Comments

Why Natural Gas Should Not Play the Cap-and-Trade Game (the real enemy is mandated renewables/conservation, not coal)

“Waxman-Markey is largely top-down regulation dressed in cap-and-trade clothing.”

David Schoenbrod and Richard Stewart, “The Cap-and-Trade Bait and Switch“, Wall Street Journal, August 24, 2009.

The Environmental Left is pushing hard to provoke a civil war between natural gas industry (its “friend”) against the coal (and oil) industry. John Podesta (Center for American Progress) and Tim Wirth (UN Foundation) have cooked up a menu of bribes (taxes, a.k.a. “incentives,” “credits,” “allowances,” and “expand”) as follows:

Electricity

• Establish incentives to retire aging, inefficient, dirty coal-fired power plants, and replace them with renewable and low-carbon electricity.

• Create a renewables integration credit to offset specific costs associated with producing high levels of renewable energy and to reward those who go beyond the renewable electricity standard.

• Establish a dedicated incentive for development and deployment of “dispatchable” renewable energy to build markets for electricity storage technology.

• Require that the carbon price and other costs are included when determining the dispatch order for moving electricity onto the grid in order to prioritize natural gas and other clean electricity.

• Expand carbon capture-and-storage provisions to include other permanent storage technologies in addition to geologic sequestration. Ensure that carbon capture and storage research and deployment efforts include retrofitting existing coal- and gas-fired power plants.

Transportation

• Expand the market for natural gas as a heavy-duty transportation fuel by increasing incentives for gas-powered buses and heavy trucks.

• Create incentives for communities to develop mass transit systems that employ buses fueled by natural gas.

Decision-makers in the gas production, transmission, and distribution businesses should reject this Trojan Horse. Obama energy policy spanks natural gas, the predominant swing fuel in electric generation, by forcing renewables and conservation (conservationism) in the market. And fair warning: the more natural gas gains in market share relative to oil and coal, the less friendly the environmentalist movement will be. (Take note of the hydraulic fracturing debate between environmentalists and the oil and gas production sector.)

Don’t Take ObamaBait

Low natural gas prices have created a desperate industry, but the answer is not quick-fix politics that create political dependence and hurt the general economy. The modus operandi of ‘Mr. Natural Gas’ Ken Lay back in Enron’s heyday, and Boone Pickens today, should be rejected–as should political (“rent seeking”) capitalism as a philosophy. [Read more →]

September 8, 2009   2 Comments

Houston's Energy Citizens Rally (and why silence from Chronicle editorial board?)

I have lamented how the editorial board of my hometown Houston Chronicle long ago took a hard left position on the ”problem” and “solution” of anthropogenic global climate change. Not even the U.S. House of Representatives’s Waxman-Markey climate bill–labeled a “monstrosity” and “less than worthless” by NASA scientist and Al Gore mentor James Hansen, and “out of control” by UN Foundation head Tim Wirth–has loosened the grip of climate alarmism and policy activism at the Chronicle despite an opposite view by the paper’s popular business editorialist Loren Steffy.

Last week, an estimated 3,500 Houstonians, the large majority working for oil and gas companies, gathered at the Verizon Theater downtown to protest Waxman-Markey’s carbon-dioxide cap (cap-and-trade, correctly identified by Tim Wirth as a carbon tax). The protest was covered nationally by the New York Times and the Wall Street Journal, and reported as a news item in the business section by the Houston Chronicle. Such was expected, as was the Left’s characterization of the event as industry sponsored and largely industry attended. Fair enough.

But why didn’t the editorial board of the Chronicle weigh in on this major event in some way. [Read more →]

August 29, 2009   2 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

ObamaCare to ObamaEnergy: Questioning 'Telephone-Book-Sized Legislation'

“The Republicans are right — it’s a cap-and-tax bill. That’s what it is because they are raising revenue to do all sorts of things, especially to take care of the coal industry, and it makes no sense.”

- Tim Wirth, “Climate Bill ‘Out of Control,’ Former Senator Says,” Bloomberg,  August 18, 2009.

“Trading of rights to pollute … introduces speculation and makes millionaires on Wall Street. I hope cap and trade doesn’t pass, because we need a much more effective approach.”

Remarks of James Hansen, 350 Climate Conference, Columbia University, May 4, 2009 [Speech writeup in Appendix below]

Left commentators are interpreting what has gone wrong with the Obama healthcare plan. One explanation is the sheer complexity of the legislation. “[Obama] had a near-Depression to deal with, and a banking crisis of mammoth proportions,” stated MSNBC’s Howard Fineman. “But all the telephone-book-sized legislation and proliferation of czars left a lot of independent voters scared — and they are running from him now.”

The Waxman-Markey climate bill (HR 2454) is part of the same problem. Explained  Fineman: [Read more →]

August 21, 2009   2 Comments

Cap-and-Trade Creators Dubious of Waxman-Markey (SO2 vs. CO2; political failure vs. 'market failure')

The Wall Street Journal recently ran an interesting story explaining that the two economists who invented the “cap-and-trade” approach to regulating pollution do not think it is an effective mechanism for dealing with manmade climate change. As with so many other economists (including those at the CBO [.pdf]), the creators of cap-and-trade think that an explicit tax is a much more efficient way for the government to limit greenhouse gas emissions.

To avoid confusion, let me stress that I am not endorsing a carbon tax myself–indeed I have a forthcoming article [.pdf] in The Independent Review that critiques the standard mainstream case for government pricing of carbon emissions. Nonetheless, it is interesting to see just how tepid the academic support for Waxman-Markey is becoming. It’s not simply “shills for Big Oil and Big Coal” who oppose it, as many activists would have us believe.

On the contrary, even hardcore alarmists such as James Hansen have come out strongly opposed to Waxman-Markey. And, as the Wall Street Journal story details, even the economists who invented cap-and-trade itself don’t think it’s useful in the global warming context. [Read more →]

August 20, 2009   6 Comments

McCain Echoes Hansen: Waxman-Markey is a 'Farce' (The Civil War widens among climate alarmists)

“[The Waxman-Markey] 1,400-page bill is a farce. They bought every industry off—steel mills, agriculture, utilities…. I would not only not vote for it. I am opposed to it entirely, because it does damage to those of us who believe that we need to act in a rational fashion about climate change.”

- Senator John McCain to Stephen Moore, Wall Street Journal, August 1-2, 2009, p. A9.

“The truth is, the climate course set by Waxman-Markey is a disaster course. It is an exceedingly inefficient way to get a small reduction of emissions. It is less than worthless….”

-James Hansen, “Strategies to Address Global Warming,” July 13, 2009.

The death of federal climate legislation in 2009 will not only be because traditional Republicans and conservative Democrats said “no”. It will also be because true believers like Senator John McCain realize that politicized cap-and-trade is all pain and no gain. A scorched earth economic policy that does not meaningfully address a feared “scorched earth” to come is worse than no policy at all.

Consider the conversation between Stephen Moore and Senator McCain in last weekend’s Wall Street Journal:

Since Mr. McCain was the co-sponsor of the McCain-Lieberman bill last year to limit CO emissions through a cap-and-trade system, I ask him about the climate change bill that passed the House last month and he surprised me with his opposition. “I believe climate change is real . . . but this 1,400-page bill is a farce. They bought every industry off—steel mills, agriculture, utilities,” he says.

So you wouldn’t vote for the House bill? “I would not only not vote for it,” he laughs, “I am opposed to it entirely, because it does damage to those of us who believe that we need to act in a rational fashion about climate change.”

And compare this to what NASA scientist, climate alarmist, and Al Gore confidant James Hansen has said about the original version of Waxman-Markey: [Read more →]

August 3, 2009   14 Comments