A Free-Market Energy Blog

Obama’s “Bold” Action on Climate Change

By Jerry Taylor -- January 27, 2009

I was invited to comment yesterday over at The New York Times on President Obama’s memorandum to the EPA to reconsider its earlier denial of a waiver requested by the state of California—a waiver that would allow that state to impose its own fuel efficiency standards for passenger vehicles and light trucks.  The simple point I wanted to make at the Times is that allowing this waiver to go through would largely allow that state to dictate fuel efficiency standards for the nation as a whole.  I argued that this is probably a bad thing. State action that imposes significant policy changes on the nation as a whole ought to be enjoined and those decisions ought to be left to Congress.

For those of you interested—and who have a strong stomach— read the comments on the board that follows.  You might think that there is nothing particularly radical or even ideological in the argument I made.  Apparently, you would be wrong.

This morning, I had a chance to reprise that discussion as a guest on the Diane Rehm show.  With me in the studio was David Shepardson, the Washington Bureau Chief of The Detroit News and Phyllis Cuttino, the director of the Pew Environment Group’s U.S. Global Warming Campaign.  You can listen to the show online if you like, but in case you don’t have the time, here are the highlights.

Both Mr. Shepardson and Ms. Cuttino were nearly breathless about the bold, historic step allegedly taken by President Obama this week.  Yet is seems to me that telling the EPA to rethink a decision made some months ago—with no stipulation that it actually reverse course—is something short of a political earthquake. “Bold” action would be legislative proposal to increase federal fuel efficiency standards, impose a federal carbon tax, institute an ambitious cap-and-trade program, and so forth.  I’m not saying I support that sort of “bold” action, but please—let’s keep things in perspective.

Ms. Cuttino argued at every turn that energy efficiency equal emissions reductions.  But it does not.  Energy intensity in the United States declined by 34% from 1980 through 2000 but energy consumption increased by 26% over that same period.  More ambitious gains in energy efficiency promise no better.  For instance, energy intensity in China declined by 70% over that same period while energy consumption increased by 80%.  The only way to reduce greenhouse gas emissions is to increase the marginal price of fossil fuels OR to strictly ration their availability.  Everything else is a dodge.  Reducing the marginal cost of energy or energy-related services—which is exactly what energy efficiency standards do—will not, in aggregate, reduce energy consumption. 

Alas, Cuttino refused to acknowledge historic reality.  When asked by guest-host Susan Page why the environmental community opposes a carbon tax in lieu of energy efficiency standards, she said that such a tax would be regressive.  Well, that’s true.  But so is a fuel efficiency standard, which imposes a flat tax on vehicles at the point of purchase.  Unfortunately, I did not have the opportunity to jump in with that observation.  Still, Mr. Cuttino does not speak for the environmental community on this.  No less than Al Gore is an enthusiastic supporter of (steep) carbon taxes (to be offset with corresponding tax cuts elsewhere).

Ms. Cuttino kept making the point that higher fuel efficiency standards are a free lunch.  They will save motorists money, save U.S. automakers from bankruptcy, and rescue jobs in the auto sector.  “Who doesn’t want better fuel efficiency?”  she asked.  Well, apparently, most people who buy cars don’t—not if they have to pay higher sticker prices for that fuel efficiency or give up other amenities.  If it were otherwise, then there would be no need for a federal requirement, now would there? 

Of course, polls tell a different story.  Sure, if you asked me whether I wanted my car to get more miles per gallon, I would say “yes.”  But fuel efficiency is not a free good that drops from the sky.  There are trade-offs; higher sticker prices (as even California acknowledges in its petition for a waiver), smaller cabins, and reduced performance in some areas.  Should decisions about how many and what kind of trade-offs to accept in return for fuel efficiency be made individually by consumers or collectively by politicians?  I never found time to make that point, but that’s the nub of the issue.

On several occasions, Ms. Cuttino tried to dismiss my criticisms by saying, well, industry always says that the technology doesn’t exist to meet federal standards or that it would prove too costly—but what do you know?—people like me were wrong then and I’m wrong now.  Of course, I never made either of those arguments.  I simply noted that there are no free lunches and that fuel efficiency comes at a cost.  Heresy!

Mr. Cuttino’s repeated attempts to conflate “Jerry Taylor” with “industry” were particularly annoying.  She is the one in favor of bailing out the auto industry.  I am the one who is trying to protect the federal till from their political priracy.  It’s a curious world when someone who wishes that bankruptcy would be allowed to take its course over at GM is somehow painted as an industry appologist.

National security externalities were also briefly touched on.  Ms. Cuttino argued—as do many—that our consumption of oil strengthens anti-American actors abroad by lining their pockets with petrodollars.  I pointed out that there is zero statistical correlation between oil profits and terrorism, or oil profits and hostility from state oil producting regimes.  Sure, it’s better for Iran to have less money than more, but the conceit that reducing oil consumption reduces problems abroad is complete without foundation.

There was, of course, the usual tripe about how how a strong plurality of Americans want this or want that and that a majority of Americans believe this or believe that.  I countered with a hardy “so what”—a plurality of Americans also believe that evolution is an atheistic fiction, so the fact that a majority of Americans think x does not mean that x is true or that x ought to be the law of the land.  Unfortunately, a listener in the second hour complained that this sort of response was so snarky that it didn’t warrant anyone’s time.  But why? 

At the end of the show, I made the point that a couple of the callers seem to be under the impression that I favored a carbon tax.  Not so. I said, look, if we have to reduce greenhouse gas emission then a carbon tax makes a lot more sense than an automotive fuel-efficiency standard … but I am not there yet.  Ms. Cuttino said, in a rather annoyed voice, that it is impossible to argue with someone who doesn’t believe in climate science or global warming.  But when did I say that?  I don’t believe that “climate science” is a figment of the imagination or that the world isn’t warming.  I simply believe that the costs of doing something about that warming by reducing greenhouse gas emissions are greater than the benefits—an entirely different matter.


  1. Ed Reid  

    There is no possibility of a national “solution” to a global “problem” such as AGW. Unless a “solution” is GLOBAL, it is doomed to failure.

    However, that is not to say that such a “bold” action by a national leader would not cause economic harm for his/her nation. It certainly would and apparently will. The Obama “80% by 2050” plan would cost one 2008-scale economic bailout per year over the period. While it would not reduce global annual CO2 emissions in absolute terms, it might reduce the rate of growth of atmospheric CO2 concentration below what it otherwise would have been, unless the manufacturing industries which move offshore to CO2 emissions havens operate with no greater efficiency there than they did here.


  2. jae  

    The only positive thing that I can say about the current economic mess is that Obama does not DARE to take any “bold” action on carbon (unless he is WAY stupider than I think he is). It is kinda humorous, in a weird way, since Climate Change has become such a banner for the far-left.


  3. cfh  

    I am never surprised when the left-environmentalists reject every argument that leads to a conclusion they disagree with.

    They are not interested in arguments — only with conclusions. They want to dictate the size of vehicles we can buy, so any argument to the contrary is rejected.

    If they want to buy tiny cars or no cars at all, fine. But why dictate to someone who may need a larger vehicle to carry more people (not all families are a couple with at most two kids) or maybe to tow a trailer sometimes?

    They may make their own choices. Why not let every one else make theirs also?


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