As I see it, the most important single item in President Obama's budget is his commitment to a cap-and-trade plan (to limit and reduce carbon emissions). It represents nothing less than an absolutely breath-taking attempt at reengineering the entire American economy. The White House expects the system will begin generating revenue for the government in 2012. By auctioning off carbon permits, the White expects the plan to bring some $80 billion a year between from 2012 to 2019.
1) What this is, of course, is a de facto business tax that will get passed along to workers and consumers. (Not to mention the impact on economic growth.) And not a small tax, at that. Over that same period, the White House expects regular corporate taxes to bring in some $3.8 trillion dollars. So the cap-and-trade auction impose an additional 20 percent tax or cost above that level. And remember that we already have the second highest corporate tax rate in the world.
2) Of that $80 billion, $15 billion would go toward "clean" energy investment. The rest would pay for his Making Work Pay tax credits. So what we have is, in essence, an enormous wealth transfer from job creators to consumers.
3) Let me also go back to something I wrote last summer:
Here is what William Pizer, an economist at Resources for the Future and a lead author on the most recent report from the U.N.'s Intergovernmental Panel on Climate Change, said at a symposium earlier this week here in Washington: "As an economist, I am skeptical that [dealing with climate change] is going to make money. You'll have new industries, but they'll be doing what old industries did but a higher net cost.... You'll be depleting other industries."
Of course, many economists will recognize "the green is good for growth" trap that Obama and Clinton have stumbled into. It's just a modern iteration of the famous "broken windows fallacy" where people mistake the shifting of wealth and resources for the creation of new wealth and resources.
Pizer went on to say that calls for dramatic reductions in carbon emissions-the Democrats want 80 percent, John McCain 65 percent-were also unrealistic unless there was"some event"that really galvanized public opinion. Instead, what he predicted was a modest price on carbon via a cap-and-trade plan, a greater push for efficiency, and more regulation of energy-intensive industries.
By Kathleen Hartnett White
The ever-widening recession apparently will not delay the Obama Administration's plans to mandate carbon reductions. Last week, the administration's two most senior decision-makers on climate change stated that the U.S. Environmental Protection Agency (EPA) will declare that carbon dioxide (CO2) is a pollutant endangering human health within the legal meaning of the Clean Air Act. White House climate czar Carol Browner and EPA Administrator Lisa Jackson announced that EPA will make this "endangerment finding" to coincide with the two-year anniversary of the 2007 Supreme Court ruling driving EPA's decision.
Ms. Browner claimed that this decision would actually help the deteriorating economy by providing the legal clarity needed for investment in carbon mitigation. What happened to EPA's recent economic analysis of carbon cuts, predicting annual declines in America's Gross Domestic Product, millions of lost jobs, and 50-150 percent increases in energy prices within 10 years?
The silver lining the administration sees in exorbitant carbon mandates imposed on a recessionary economy: federal revenues from the sale of carbon allowances. Peter Orszag, director of the Office of Management and Budget, acknowledged that the administration's budget includes the government's sale of carbon allowances to generate billions in new federal revenues - potentially $300 billion a year according to estimates from the Congressional Budget Office.
President Obama has consistently advocated auction of even the initial allowances in a carbon cap and tax/trade schemes. This means a power plant would have to purchase federal approval merely to keep operating at current levels. Legislation creating this colossal carbon tax would be the biggest tax increase ever, surpassing in real dollars the 1942 law providing funds for World War II. If included in budget reconciliation bills - which cannot be filibustered - it would only require 50 votes in the U.S. Senate.
The EPA's legal endangerment finding on CO2 is key to this policy. The EPA decision would unleash the onerous regulatory scope of the Clean Air Act. Although Browner said the initial regulations would not be too broad, courts are unlikely to give EPA this leeway. Throughout the 30-year history of the Act, environmental organizations have used the courts successfully to compel EPA action. Steadily expanding air quality rules have arisen far more from court rulings and out-of-court settlements than legislation.
Recall that an endangerment finding is connected to the EPA's blueprint for economic disaster issued last July, the Advanced Notice of Proposed Rulemaking to Regulate Greenhouse Gases. The Bush Administration declined to make the finding whether CO2 is or is not a harmful pollutant but agreed to issue the Notice - apparently a quid pro quo with EPA. A most unusual administrative action, the White House issued and simultaneously condemned the Notice in an accompanying memo signed by five Cabinet secretaries.
An odd preface for his own action, former EPA Administrator Steve Johnson noted that using the Clean Air Act to regulate CO2 "could result in an unprecedented expansion of EPA authority that would have profound effect on virtually every sector of the economy and touch every household in the land."
EPA's long-expected endangerment finding is anything but bland news. Once made, the force of federal law mandates the regulation of a mind-boggling scope of human activity. The legal debate about global warming will be over at the stroke of a federal bureaucrat's pen. The Obama Administration will then have the leverage to design whatever carbon tax it prefers.
The Supreme Court ruling behind EPA's actions did not dictate that CO2 be declared a pollutant. The 5-4 ruling required that EPA merely make and reasonably justify an endangerment finding, one way or the other. The Bush Administration avoided this formal decision evidently because of irresolvable disagreement between EPA career staff and the White House.
Al Gore, the world's most celebrated global warming alarmist, repeatedly preaches that carbon cuts of the magnitude needed to "save" the planet will require a "total transformation of our economy." If the first few weeks are any indication, let there be no doubt in the Obama administration's willingness to use carbon policy as a major tool in such a mission.
CARBON CAPPING ALREADY KILLING CALIFORNIA JOBS
President Barack Obama reiterated his promise to impose invasive and strict carbon caps on our nation's economy last night. He failed to mention what effect they would have on our nation's economic recovery. Fortunately for the rest of the nation, but unfortunately for them, California has already adopted strict new carbon capping rules. The result? They are a jobs killer.
Only a few years ago, CalPortland planned on keeping its plant here operating as long as Mount Slover's limestone held out. ... But the company says the plant's future is now uncertain. The recession has sent cement prices plunging, lowered profits and forced CalPortland's drivers to cut back on hours. And the company says it faces new expenses: the cost of meeting California's new requirements that manufacturers take steps to curb emissions of carbon dioxide, the main heat-trapping gas linked to global warming.
State regulators have projected that retrofitting the state's 11 cement plants would cost $220 million and reduce carbon dioxide emissions by 12 percent per ton of cement. But CalPortland's executives say it would cost more than that to retrofit the Colton plant alone. "We don't have enough limestone left to invest $200 million," said James A. Repman, the company's president.
The key to this story are the completely unreliable cost predictions by the state. When the left tries to cram the world's biggest carbon tax down the throats of the American public, they are going to have tons of "scientific" studies claiming to show that carbon capping will be a net gain for the economy. As California's experience shows, these studies the left puts out are worthless. The New York Times reports:
State regulators predicted in an economic analysis last fall that the climate law would create 100,000 jobs in the state and increase per-capita income by $200 annually by 2020. The upfront cost for the first five years after the law takes effect, they estimated, would be $31.4 billion, about $8.5 billion more than the savings in those years. But if carbon-control costs were spread over the lifespan of the new equipment, the $25 billion in annual costs in the year 2020 would be more than offset by $40 billion in savings....
But the projections were strongly criticized as unrealistic by the affected industries and by independent economists who reviewed the analysis - including two from the Pew Center on Global Climate Change, which supports the emission reduction goals.
In one withering review, Matthew E. Kahn of the University of California, Los Angeles said the analysis unconvincingly portrayed the law as "a riskless free lunch." Another economist, Robert N. Stavins of Harvard, said the regulators were "systematically biased" in ways "that lead to potentially severe underestimates of costs."
All of the left's "green job" claims are nothing but phantom job creation. Carbon capping is a jobs killer, not a jobs creator.
The Green Energy Fantasy
Will a green energy industry be an engine of economic growth? Many want us to think so, including our new president. Apparently a booming green economy with millions of new jobs is just around the corner. All we need is the right mix of government "incentives." These include a huge (de facto) tax on carbon emissions imposed through a cap-and-trade regulatory scheme, as well as huge government subsidies for "renewable," carbon-free sources. The hope is that these government sticks and carrots will turn today's pitiful "green energy" industry, which produces an insignificant fraction of American energy, into a source of abundant, affordable energy that can replace today's fossil-fuel-dominated industry. This view is a fantasy -- one that could devastate America's economy. The reality is that "green energy" is at best a sophisticated make-work program.
There is a reason why less than two percent of the world's energy currently comes from "renewable" sources such as wind and solar--the very sources that are supposedly going to power the new green economy: despite billions of dollars in government subsidies, funding decades of research, they have not proven themselves to be practical sources of energy. Indeed, without government mandates forcing their adoption in most Western countries, their high cost would make them even less prevalent.
Consider that it takes about 1,000 wind turbines, occupying tens of thousands of acres, to produce as much electricity as just one medium-sized, coal-fired power plant. And that's if the wind is blowing: the intermittency of wind wreaks havoc on electricity grids, which need a stable flow of power, thus requiring expensive, redundant backup capacity or an unbuilt, unproven "smart grid."
Or consider the "promise" of solar. Two projects in development will cover 12.5 square miles of central California with solar cells in the hope of generating about 800 megawatts of power (as much as one large coal-fired plant). But that power output will only be achieved when the sun is shining brightly -- around noon on sunny days; the actual output will be less than a third that amount. And the electricity will cost more than market price, even with the life-support of federal subsidies that keeps the solar industry going. The major factor driving the project is not the promise of abundant power but California's state quota requiring 20 percent "renewable" electricity by 2010.
More than 81 percent of world energy comes from fossil fuels, and half of America's electricity is generated by burning coal. Carbon sources are literally keeping us alive. There is no evidence that they have -- or will soon have -- a viable replacement in transportation fuel, and there is only one in electricity generation, nuclear, which "green energy" advocates also oppose.
We all saw the ripple effects last summer when gas prices shot above $4 per gallon, and higher transportation costs drove up prices of everything from plane fares to vegetables. If green policies cause a permanent, and likely far greater, hike in the cost of all forms of energy, what shockwaves would that send through our already badly damaged economy? We don't want to find out.
Regardless of one's views on global warming -- and there is ample scientific evidence to reject the claim that man-made carbon emissions are causing catastrophe -- the fact is that kneecapping the fossil fuel industry while diverting tax dollars into expensive, impractical forms of energy will not be an economic boon, but an economic disaster.
We in developed countries take industrial-scale energy for granted and often fail to appreciate its crucial value to our lives -- including its indispensable role in enabling us to deal with drought, storms, temperature extremes, and other climate challenges we are told to fear by global-warming alarmists. If we want to restore economic growth and reduce our vulnerability to the elements, what we need is not "green energy" forced upon us by government coercion but real energy delivered on a free market
Greenies target toilet paper
Americans like their toilet tissue soft: exotic confections that are silken, thick and hot-air-fluffed. The national obsession with soft paper has driven the growth of brands like Cottonelle Ultra, Quilted Northern Ultra and Charmin Ultra - which in 2008 alone increased its sales by 40 percent in some markets, according to Information Resources, Inc., a marketing research firm. But fluffiness comes at a price: millions of trees harvested in North America and in Latin American countries, including some percentage of trees from rare old-growth forests in Canada. Although toilet tissue can be made at similar cost from recycled material, it is the fiber taken from standing trees that help give it that plush feel, and most large manufacturers rely on them. Customers "demand soft and comfortable," said James Malone, a spokesman for Georgia Pacific, the maker of Quilted Northern. "Recycled fiber cannot do it."
The country's soft-tissue habit - call it the Charmin effect - has not escaped the notice of environmentalists, who are increasingly making toilet tissue manufacturers the targets of campaigns. Greenpeace on Monday for the first time issued a national guide for American consumers that rates toilet tissue brands on their environmental soundness. With the recession pushing the price for recycled paper down and Americans showing more willingness to repurpose everything from clothing to tires, environmental groups want more people to switch to recycled toilet tissue. "No forest of any kind should be used to make toilet paper," said Dr. Allen Hershkowitz, a senior scientist and waste expert with the Natural Resource Defense Council.
In the United States, which is the largest market worldwide for toilet paper, tissue from 100 percent recycled fibers makes up less than 2 percent of sales for at-home use among conventional and premium brands. Most manufacturers use a combination of trees to make their products. According to RISI, an independent market analysis firm in Bedford, Mass., the pulp from one eucalyptus tree, a commonly used tree, produces as many as 1,000 rolls of toilet tissue. Americans use an average of 23.6 rolls per capita a year.
Other countries are far less picky about toilet tissue. In many European nations, a rough sheet of paper is deemed sufficient. Other countries are also more willing to use toilet tissue made in part or exclusively from recycled paper. In Europe and Latin America, products with recycled content make up about on average 20 percent of the at-home market, according to experts at the Kimberly Clark Corporation.
Environmental groups say that the percentage is even higher and that they want to nurture similar acceptance here. Through public events and guides to the recycled content of tissue brands, they are hoping that Americans will become as conscious of the environmental effects of their toilet tissue use as they are about light bulbs or other products.
Dr. Hershkowitz is pushing the high-profile groups he consults with, including Major League Baseball, to use only recycled toilet tissue. At the Academy Awards ceremony last Sunday, the gowns were designer originals but the toilet tissue at the Kodak Theater's restrooms was 100 percent recycled.
Environmentalists are focusing on tissue products for reasons besides the loss of trees. Turning a tree to paper requires more water than turning paper back into fiber, and many brands that use tree pulp use polluting chlorine-based bleach for greater whiteness. In addition, tissue made from recycled paper produces less waste tonnage - almost equaling its weight - that would otherwise go to a landfill.
Still, trees and tree quality remain a contentious issue. Although brands differ, 25 percent to 50 percent of the pulp used to make toilet paper in this country comes from tree farms in South America and the United States. The rest, environmental groups say, comes mostly from old, second-growth forests that serve as important absorbers of carbon dioxide, the main heat-trapping gas linked to global warming. In addition, some of the pulp comes from the last virgin North American forests, which are an irreplaceable habitat for a variety of endangered species, environmental groups say.
Greenpeace, the international conservation organization, contends that Kimberly Clark, the maker of two popular brands, Cottonelle and Scott, has gotten as much as 22 percent of its pulp from producers who cut trees in Canadian boreal forests where some trees are 200 years old. But Dave Dickson, a spokesman for Kimberly Clark, said that only 14 percent of the wood pulp used by the company came from the boreal forest and that the company contracted only with suppliers who used "certified sustainable forestry practices."
Lisa Jester, a spokeswoman for Procter & Gamble, the maker of Charmin, points out that the Forest Products Association of Canada says that no more than 0.5 percent of its forest is harvested annually. Still, even the manufacturers concede that the main reason they have not switched to recycled material is that those fibers tend to be shorter than fibers from standing trees. Long fibers can be laid out and fluffed to make softer tissue.
Jerry Baker, vice president of product and technology research for Kimberly Clark, said the company was not philosophically opposed to recycled products and used them for the "away from home" market, which includes restaurants, offices and schools. But people who buy toilet tissue for their homes - even those who identify themselves as concerned about the environment - are resistant to toilet tissue made from recycled paper.
With a global recession, however, that may be changing. In the past few months, sales of premium toilet paper have plunged 7 percent nationally, said Ali Dibadj, a senior stock analyst with Sanford C. Bernstein & Company, a financial management firm, providing an opening for makers of recycled products.
Marcal, the oldest recycled-paper maker in the country, emerged from bankruptcy under new management last year with a plan to spend $30 million on what is says will be the first national campaign to advertise a toilet tissue's environmental friendliness. Marcal's new chief executive, Tim Spring, said the company had seen intense interest in the new product from chains like Walgreens. The company will introduce the new toilet tissue in April, around Earth Day. Mr. Spring said Marcal would be able to price the new tissue below most conventional brands, in part because of the lower cost of recycled material. "Our idea is that you don't have to spend extra money to save the Earth," he said. "And people want to know what happens to the paper they recycle. This will give them closure
Ulster Environment Minister: Climate change is a ruse to push draconian policies and high taxes
Environment Minister Sammy Wilson has claimed the Labour Government is using climate change to push through draconian policies and high taxes. Sammy Wilson, of the Democratic Unionist Party, ridiculed ideas such as a carbon credit card and other moves focusing on emissions. He clashed with Whitehall earlier this year after objecting to a climate change advert from London which mentioned carbon. He said: "I can understand why it is important that the message be gotten over by a government which has now so many policies, so many intrusive policies. "I can understand why they want to get the subliminal message over. That's the only way the Government is going to succeed in getting people to accept the draconian increases." He said these increases included taxation and challenges to people's ability to travel.
Mr Wilson was appearing before the Stormont Environment Committee which recently passed a vote of no confidence in him over the climate change adverts row. He dismissed part of it as "insidious" government propaganda and questioned the idea that turning off a light could save the world.
In 2006 then environment secretary David Miliband suggested carbon credit cards could be issued as part of a nationwide carbon rationing scheme. An annual allowance would be allocated, with the card being swiped on various items such as travel, energy or food. Mr Miliband said people who used less than their allowance could sell any surplus to those who wanted more.
Mr Wilson alleged: "Those are the kind of policies which are being put forward to get people to accept that, then you have got to persuade them that there's some drastic things coming down the road." The minister has faced criticism from environmental groups and members of the committee.
However, the Democratic Unionist Assembly member for East Antrim put in a pugilistic performance today in defending his attitude to the climate change adverts. He added: "When a minister from Westminster says it doesn't matter what the view of the devolved administrations across the UK are, we have decided on this, we are not even prepared to enter into a discussion ... I think I was probably standing up for the rights of the devolved administration."
He said he believed in improving energy efficiency because it made "common sense" to do so and dismissed any calls for him to go. "I have done the job to the best of my ability, I have done it diligently. Do I always get it right? Probably not, because I am not infallible. "If it came to votes of no confidence I can dispense with them because if I thought I was not doing my job right I would resign."
The minister alleged some of the global warming doomsayers had been the most vociferous in the past, "wanting to spray glaciers black" to ward off an ice age, despite the industrial revolution. He was involved in clashes with Ulster Unionist Assembly member David McClarty who cited the recent arrival in Britain of a Catholic bishop who questioned the truth of the Holocaust after being asked to leave Argentina. He said Mr Wilson's views were also "abhorrent" to some people here.
The minister said there was no comparison between the reality of the dead bodies of the Holocaust and the "theory" of climate change amid claims in the committee that Mr McClarty's intervention was inappropriate.
UUP committee member Roy Beggs accused him of seeking scientific backing from an American institute partly funded by the oil industry. But Mr Wilson said it was a small percentage of support and claimed many scientists expressing concern had links with environmentalists.
There have been warnings of catastrophic flooding and large areas of the planet turned into desert if the rate of global warming is not checked. Sinn Fein MLA Daithi McKay said: "I think the environmental sector has no confidence in the minister, the general public has no confidence, his Executive colleagues and even members of his own party have no confidence in him."
Mr Wilson had calculated the carbon footprint of many of his critics on the committee. He said Mr McClarty circumnavigated the world on Assembly business and added that a perfectly good train service from his East Londonderry constituency to Belfast could significantly reduce the amount of carbon he was responsible for.
Mr Wilson levelled similar points at other committee members but neglected to produce figures for his own travel. He had just stepped off a plane from Westminster, where he is MP for East Antrim. Mr McKay said Sinn Fein was doing its part to cut down on unnecessary travel by discouraging its MPs from attending.
Meanwhile, an AA survey of 15,806 drivers said more than half of drivers over-estimated their vehicle's contribution to global warming. The AA claimed this made them an "easy target" for punitive council green schemes. It said road transport accounted for approximately a fifth of emissions, industry a third, and domestic users a quarter. AA president Edmund King said: "Our research also shows that motorists do consider fuel efficiency when buying a car. However, there seems to be a 'green' bandwagon that more councils are jumping on to penalise drivers for parking charges based on their cars' CO2 emissions. "In reality, this is a green smokescreen to raise revenue which will do little to help the environment. "The AA Charitable Trust is encouraging eco-driving by offering free driver training and perhaps councils should be promoting such initiatives rather than penalising families who own larger vehicles."
Northern Ireland Green Party European election candidate Steven Agnew said the minister was defying substantial evidence and world opinion. "The minister is saying that saving energy is only an issue for the poor and that the wealthy can keep wasting energy if they can afford to. This is a foolish and dangerous suggestion. "1,918 people have signed our 'fire Sammy Wilson' petition, which indicates how dissatisfied people are with our minister of environment."
Green bureaucrats holding Australian economy to ransom
By Michael Costa
Believe it or not, if Kevin Rudd is genuine about stimulating our economy, rather than borrowing enormous sums of money he should talk to Peter Garrett. Why? Because his misguided Environment Minister and the department he runs are holding up billions of dollars of investment.
The way Garrett's department administers the Environmental Protection and Biodiversity Conservation Act provides a perfect rebuttal of Rudd's recent neo-interventionist call for greater government involvement in economic development. The act gives Garrett enormous powers. It requires that he approve any developments likely to have a significant impact on things the act protects, such as world heritage sites, national heritage properties, wetlands of international importance, threatened species and ecological communities, migratory species and marine areas, as well as nuclear actions including uranium mines. If that weren't broad enough, it also requires Garrett's approval of actions that affect commonwealth land. What you need to know is that the act is at present subject to a statutory review, but we'll come back to that.
The act is the federal equivalent of a range of state acts. These overlapping pieces of state and federal environmental legislation are a nightmare for economic development. New projects are subject to dual assessment processes and separate approval. One tier of government may approve a project that then is rejected by another. This creates investment uncertainty and adds to the cost of projects, costs that then are passed on to consumers. When he was environment minister, Malcolm Turnbull streamlined processes by concluding bilateral agreements with all states, except Victoria and the ACT, to create common environmental assessment of projects. Nonetheless, project approval still requires each tier of government to sign off.
Unfortunately, with the change of government, industry players have noticed a change in attitude. Garrett's department has become more interventionist. According to property industry body Urban Taskforce, the Department of Environment, Water, Heritage and the Arts' interference and slow response to requests is making it virtually impossible to meet statutory timelines. Indeed, interference from DEWHA has reached farcical proportions. Petty disputes between the department and the states over the wording of newspaper ads hold up projects worth billions of dollars. Part of the problem is that DEWHA bureaucrats prefer to talk to their state counterparts, with whom they share a common environmental ideology, rather than to state planning officials who they see as pro-development.
The Property Council of Australia says its experience with the act has been that there has been little consistency or certainty for stakeholders and that some items of national environmental significance do not have sufficient evidentiary support to justify their retention on the list. Their public counsel argues that items included on any list should be based on rigorous scientific evidence, not anecdotal evidence, and observes that staff making determinations generally do not have specialist expertise on relevant NES or planning matters, and little appreciation of economic realities.
Under Garrett the act has become the last hope for theological environmentalists who fail in their opposition to projects at the local or state level. Catering to the insatiable demands of these people is costing the economy billions of dollars when the Prime Minister is putting the nation in hock in the hope of avoiding a technical recession. Critical land release projects have been delayed by the capricious action of these unaccountable bureaucrats. In the Sydney basin, for example, where for many years the state government was reluctant to release land, the Edmondson Park land release is being held up by DEWHA.
This is despite the fact planning for this release has been under way since at least 2000 and has involved numerous consultations between the state government, developers, local councils and the community. The principal developer is Landcom, a state government agency. At issue is the so-called Cumberland Plain woodland ecological community. Green groups have used this issue to restrict urban development in western Sydney for almost a decade. The result? More costly and less affordable housing.
Under the influence of theological environmentalists the development of NSW's Hunter Valley has been a frequent victim of the department's political interventionism. A particularly notorious example of this department pandering to green groups has been its frustration of a popular tourist development on Newcastle's Nobbys Headland on the grounds that the gap between two structures had heritage significance.
The handling of a residential development at North Cooranbong in the Hunter Valley, undertaken by the Johnson Property Group, shows just how out of control Garrett's department has become. This project was approved by all relevant NSW government departments, complied with the state government's regional strategy and conservation plan and the developer had provided environmental offsets in accordance with NSW legislation. Despite this, after eight years of assessments, Garrett's department intervened at the last moment and is demanding more land be quarantined for ecological reasons, which will have the effect of increasing the price of land packages by $30,000, making the project financially unviable. The result? Hundreds of millions of dollars and thousands of jobs lost to the local economy.
But here's the catch. As if the present administration of the act weren't bad enough, there is a concerted attempt by environmentalists to use a statutory review to extend its scope and powers. Green groups want to include global warming as an assessment trigger. Their goal? Nothing less than to close down the nation's coal industry. But that's not all. This trigger is so broad it could be applied to all human activity undertaken on land. This would effectively give the department the right of veto over any future development of the Australian economy. Now that would be a recipe for recession.
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