Hill Heat

From the Wonk Room.

Sen. Sheldon Whitehouse (D-R.I.), in a Senate hearing on the EPA budget Tuesday morning, decried the extraordinary amount of spending by corporate global warming polluters to lobby Congress. Reading from a report on new lobbying disclosures, Whitehouse noted that carbon polluters such as electric utilities and oil and gas companies have spent nearly $80 million on lobbying just in the first quarter of 2009. Whitehouse concludes:

So if we wonder why the Senate is the last place in America that still doesn’t get it – that climate change is a real problem for people and that carbon pollution is something that people should pay for when they emit it, big utilities, big industry – gee, connect the dots.

Watch it:

“For as long as there’s been pollution,” Sen. Whitehouse explained, “there has been a constant battle with polluters who don’t want to pay the costs of their pollution, either preventing or cleaning it up”:

They’d like to just dump it and have it be somebody else’s problem. There’s absolutely nothing new about that. Polluters don’t want to pay. What’s new is our understanding of what the costs are of carbon pollution. Economic costs, environmental costs, wildlife and habitat costs, and as we’ve recently learned, very significant national security costs.

The E&E News story Whitehouse entered in the Congressional Record explains how carbon-industry lobbyists are vastly outspending environmental groups and clean energy companies:

From the Wonk Room.

The Hill reports that “House Energy and Commerce Committee leaders on Tuesday night announced a new agreement on a contentious climate change bill, assuaging the concerns of enough committee Democrats to get the bill out of committee.”

Former President Jimmy Carter “who presided over the oil crisis of 1979, told Congress Tuesday that America’s energy challenges are deeper and more urgent today than when he was president, but the solutions are the same.”

The Southern Alliance for Clean Energy has found that a “proposed energy efficiency goal would save Georgia $6.3 billion in costs and create 9,000 jobs over the next decade.”

From the Wonk Room.

The House Natural Resources Committee is holding a field hearing today “to discuss the responsible expansion of solar energy in California and across the nation” at the University of California, Riverside Palm Desert Graduate Center.

The New York Times discusses the Intervale Green complex, a “new, green, low-income housing development” by the Women’s Housing and Economic Development Corporation with 128 units, “a large, glass-windowed lobby, two green roofs and a sculpture-filled courtyard.”

Rep. John Shimkus (R-IL), Heritage Foundation, Americans for Tax Reform, and local op-eds in North Carolina and Louisiana repeated the “just wrong” lie that an MIT study found cap and trade is a $3100 tax.

From the Wonk Room.

According to Rep. Mike Doyle (D-PA), corporations would be subsidized for most of their global warming pollution for more than ten years, under terms being negotiated for the climate and energy bill being drafted by the House Energy and Commerce Committee. If this is true, the Waxman-Markey American Clean Energy and Security Act would violate a pledge by President Obama to fund tax cuts for working families through carbon market revenues and runs the risk of windfall profits for covered emitters. Doyle said most of the pollution permits created for a cap-and-trade system to reduce greenhouse gases would be given away:

While the exact numbers were still in flux, Doyle said, “The majority of the permits will be allocated (given away) at first.”

Asked what percentage would be sold to utilities, manufacturers and other firms, Doyle responded, “Not a big number initially…in the first 10 to 15 years.”

The Center for American Progress “supports auctioning 100 percent of the greenhouse gas emission permits from day one under a cap-and-trade program” and using the auction revenues to assist workers and industries to make the transition to a low-carbon economy:

This would include supporting new investments in green technology and energy efficiency; sheltering American households from any economic dislocations due to shifting energy prices; alleviating higher costs for energy-intensive industries; adapting to some of the effects of global warming that we are already experiencing globally; and creating good, “green jobs” and more vibrant, healthier communities in this process. A 100 percent auction will ensure that large polluters, and not the hardworking Americans least able to foot the bill, are financing the investments necessary to carry out these vital public projects.

Without any climate policy, the public is subsidizing all the present and future costs of climate change. President Obama has previously expressed his willingness to be flexible on the pollution subsidies in order to establish a cap-and-trade system. As President Obama explained to business leaders in March, he is flexible on his campaign pledge for full auction of pollution permits:

Now, the experience of a cap-and-trade system thus far is that if you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work, or people can game the system in so many ways that it’s not creating the incentive structures that we’re looking for. The flip side is, you’re right, if it’s so onerous that people can’t meet it, then it defeats the purpose – and politically we can’t get it done anyway.

From the Wonk Room.

“Thousands more people have been forced to flee their homes as strong winds drive fierce wildfires” fueled by “temperatures in the 90s, dry air and wind gusts as high as 40 miles per hour” in California, now in a state of emergency.

“Climate change is the greatest strategic risk facing property and casualty insurers”: Studies conducted in the last few years have demonstrated that “global warming is causing wildfires in the Western U.S. to occur more frequently, last longer, and cover more ground than they did in the past,” and “more and more severe wildfires will raise insurance rates, too.”

“An unusually warm spring thaw in Alaska is causing some of the state’s worst flooding in decades, with rising rivers wiping out an entire village,” forcing Gov. Sarah Palin (R-AK) to declare a disaster for the flooded areas and to cancel her attendance at the White House Correspondents’ Dinner.

From the Wonk Room.

Speaking at an event meant to oppose Democratic clean energy legislation, Rep. Mike Pence (R-IN) warned corporations calling for the United States to take action on global warming to “keep their powder dry.” Grist’s Kate Sheppard asked Pence after the GOP mock climate hearing yesterday what he would say to the corporations in the U.S. Climate Action Partnership (US-CAP) who have testified that a mandatory cap on global warming pollution is needed. Pence told companies that support a green economy to “keep their powder dry” as the GOP attempts to preserve Bush-era energy policy:

Um. I, I just would say that any American who is prepared to endorse a national energy tax that there’s a better solution. Uh, that they should keep their powder dry. And uh, take their case to the American people that they don’t need, particularly during this very difficult time in the economic life of our nation, to raise the energy cost on our businesses and on American families.

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As Grist noted, “the House heard the leaders of Duke Energy, ConocoPhillips, and DuPont ask for a cap as recently as April 22.” Politico reports that Nike has been telling the U.S. Chamber of Commerce “to take a more progressive stance on the issue of climate change.” And Exelon Corporation, one of America’s largest electric utilities and another US-CAP member, is featured in a new advertisement today from the Environmental Defense Action Fund calling for a carbon cap as a part of comprehensive clean economic policy:

From the Wonk Room.

Pennsylvania’s Sen. Arlen Specter, who announced his switch from the Republican to the Democratic Party today, will remain a key swing vote in a Senate locked by GOP filibusters on green economy legislation like cap and trade, renewable energy standards, and green jobs programs. Specter will be joining a bloc of conservative Democratic senators who are publicly skeptical of President Obama’s clean energy agenda, and who have repeatedly voted against Obama’s proposal to place limits on global warming pollution:

Supporting a filibuster for green economy legislation
Roll call votes #125, 126, and 164.

Requiring that green economy legislation not affect the cost of energy production or use
Roll call votes #116, 117, and 169.

From the Wonk Room.

Although Interior Secretary Ken Salazar made it clear he “likes coal,” the Interior Department “said on Monday it will try to overturn a Bush administration rule that made it easier for coal mining companies to dump mountaintop debris into valley streams.”

As Arctic carbon dioxide levels are growing at an “unprecedented rate,” an “area of an Antarctic ice shelf almost the size of New York City has broken into icebergs this month.”

Speaking about the Waxman-Markey clean energy bill, Rep. Gene Green (D-TX) called for free pollution permits to petroleum refiners and Rep. G. K. Butterfield called for free pollution permits to electric distribution companies. These companies have given more than $375,000 to energy committee members in the first three months of 2009.

From the Wonk Room.

Accusing Massachusetts Institute of Technology economist John Reilly of using “fuzzy math” and “fuzzy logic,” the Weekly Standard has further distorted an MIT study of the economics of carbon regulation. By making an economically unsupportable assumption, Weekly Standard editor John McCormack transforms a $3100 fabrication promulgated by House Republicans into a $3900 fabrication:

While $800 is significantly more than Reilly’s original estimate of $215 (not to mention more than Obama’s middle-class tax cut), it turns out that Reilly is still low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.

In reality, the energy economist from the Massachusetts Institute of Technology who co-authored the “Assessment of U.S. Cap-and-Trade Proposals” report does a better job of interpreting “reality” than McCormack. It’s McCormack’s logic that is “fuzzy.”

$3100?

The MIT study estimates the average value of the carbon market over a thirty-five year period to be $366 billion per year. If you were to divide that value by the number of households in America, you get $3,128 per household. Asserting that the value of the market is equivalent to the economic cost of the policy – which one has to do to claim that the cost of cap and trade is $3100 per household— requires the assumption that this revenue stream magically disappears somewhere. Reilly attempted to explain this to the Weekly Standard:

It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says “your share of GHG auction revenue”, used to cut someone’s taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the “average” household. Each of those ways of using the revenue has different implications for specific households but the “average” affect is still the same.

For example: Exxon Mobil became the largest corporation in the world by raking in $442.9 billion in revenue in 2008, “costing” the average American household $3,785.

Is the existence of Exxon Mobil a $3,800 tax on American families? No, because most of its revenues are redistributed in the economy—as oil rig employment, petroleum products (which fuel transportation and trade), and of course, multimillion-dollar salaries for its top executives and massive profits for its shareholders.

$3900?

The MIT study of the economic effects of cap and trade did estimate the “welfare cost” of the transition from an unsustainable pollution-based economy to a clean-energy economy. As Reilly explained to McCormack (to no avail), this cost to the economy involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [greenhouse gases]>

So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.

The MIT study found that this “welfare cost” is tiny with respect to the size of the economy, even with strong reductions in global warming pollution and a very high price for carbon permits. The change in total welfare is less than one-tenth of one percent in 2015, never rising above two percent for the forty-year run of their model. Averaging out the “price” of a clean-energy economy versus the status quo over those forty years, Reilly found the cost for “the average household just in 2015 is about $80 per family, or $65 if more appropriately stated in present value terms,” and the “present value cost per average current household through 2050” is “about $800.”

McCormack decided to add $3100 to $800 and get $3900, even though Reilly told him one has to assume the carbon market value gets flushed down the toilet:

If you took the revenue and flushed it down the toilet or burned it, the cost would then be the Republican estimate plus the cost I estimate. But that is quite unrealistic, as the auction revenue will be recycled into the economy some way.

Using McCormack’s logic, we could take our $3,800 Exxon Mobil “tax” and then add in, say the $855 per household per year spent on the war in Iraq (given a lowball estimate of $100 billion in total expenditures per year) as the welfare cost of the existence of Exxon Mobil. Adding $3785 to $855 returns a figure of $4640 per average household.

Saying “Exxon Mobil is a $4640 tax” would be silly and intellectually irresponsible. But that’s essentially what McCormack is doing, as is the once-respected Heritage Foundation, who is promoting McCormack’s nonsensical $3900 figure.

From the Wonk Room.

As a wildfire in Myrtle Beach on the South Carolina coast “spread over thousands of acres by early Friday” and a “7,500-acre-plus blaze” raged in South Florida, scientists reported that “wildfires spur climate change, which in turn makes blazes bigger, more frequent and more damaging to the environment.”

Rep. Gene Green (D-TX), who “represents a district with several oil refineries, a huge source of greenhouse gas emissions, said about the Waxman-Markey clean energy bill, “they have to get our votes, and I’m not going to vote for a bill without refinery allowances.”

Sen. John Barrasso (R-WY), a prominent coal industry advocate, asked administration nominees whether they agreed with comments this week by Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, that no new nuclear or coal plants may ever be needed in the United States.