DOE Secretary Chu’s Convoluted Climate Economics

Last week, at the first Senate Environment and Public Works Committee hearing on S. 1733, the Kerry-Boxer “Clean Energy Jobs and American Power Act,” Department of Energy Secretary Steven Chu explained the economic rationale for adopting a Kyoto-style cap-and-trade program.

His argument, in a nutshell, goes like this:

1. Reducing emissions globally will require a massive investment in “clean technologies” — an estimated $2.1 trillion in wind turbines and $1.5 trillion in solar voltaic panels by 2030. These investments will create many green jobs.
2. “The only question is — which countries will invent, manufacture, and export these clean technologies and which will become dependent on foreign products.”
3. The United States is falling behind. “The world’s largest turbine manufacturing company is headquartered in Denmark. 99 percent of the batteries that power America’s hybrid cars are made in Japan.

Kerry-Boxer: Its Bite is Worse than its Bark

Today, the Senate Environment and Public Works Committee will hold the first of three hearings on S. 1733, the Clean Energy Jobs and American Power Act,” also known as Kerry-Boxer, after its co-sponsors Senators John Kerry (D-MA) and Barbara Boxer (D-CA). Kerry-Boxer is the Senate companion bill to H.R. 2454, the American Clean Energy and Security Act (ACESA), also known as Waxman-Markey, after its co-sponsors Reps. Henry Waxman (D-CA) and Ed Markey (D-MA).

For those worried about the economic impacts of these bills, I bring unwelcome news: their bite is worse than their bark. Escalator clauses common to both bills, ignored in most previous analyses, are the setup for dramatic increases in regulatory stringency well beyond the bills’ explicit emission reduction targets. Similarly, “findings” presenting the “scientific” rationale for cap-and-trade are not mere rhetorical fluff but precedents for litigation targeting emission sources considerably smaller than those explicitly identified as “covered entities.”…