EPA's Greenhouse Gas Finding Endangers U.S. Economy

The Environmental Protection Agency today formally declared that carbon dioxide and five other heat-trapping gases are pollutants that threaten the public health and welfare.

Heritage Foundation environmental expert Ben Lieberman reacted to the announcement as follows:

"This clears the way for the most expensive and expansive environmental regulation in history. The EPA approach to regulating COs will dramatically affect the lives and day-to-day practices of all Americans... all for a change in the Earth's temperature too small to ever notice.

"The finding opens the door to federal regulation of almost anything that emits carbon dioxide and other greenhouse gases. That includes virtually everything that moves, from cars, trucks and ships to lawn mowers and tractors. The agency could also go after things that stand still—regulating millions of emissions-producing hospitals, restaurants and other commercial buildings, and perhaps even eying backyard barbeques.

"Even advocates of the finding recognize that a harsh regulatory regime would yield only negligible benefits—reducing greenhouse gases worldwide by less than TK percent. Yet the proposed regulations carry tremendous costs.

"The Heritage Foundation's Center for Data Analysis has found that, in just 20 years, the proposed carbon dioxide rules alone would lower gross domestic product by $7 trillion, with single-year GDP losses exceeding $600 billion. Job losses would exceed 800,000 annually for several years. The already-struggling manufacturing sector would be hit especially hard.

"Today's announcement, though expected, is a tremendous disappointment for those seeking policies that will improve the environment without devastating our economy."

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Filmmaker vs. Hysterics

The economic consequences of Al Gore

By JOHN FUND

Irish documentary filmmakers Phelim McAleer and Ann McElhinney have stirred up trouble before by debunking smug liberal hypocrisy. Their latest film, "Not Evil, Just Wrong" takes on the hysteria over global warming and warns that rushing to judgment in combating climate change would threaten the world's poor.

The film reminds us that environmentalists have been wrong in the past, as when they convinced the world to ban the pesticide DDT, costing the lives of countless malaria victims. The ban was finally reversed by the World Health Organization only after decades of debate. The two Irish filmmakers argue that if Al Gore's advice to radically reduce carbon emissions is followed, it would condemn to poverty two billion people in the world who have yet to turn on their first light switch.

Mr. McAleer and Ms. McElhinney have put needles into the pincushions of self-satisfied environmentalists before. In 2007, they produced a documentary called "Mine Your Own Business," which told the story of a poor village in Romania where environmentalists fought plans for a new gold mine. The village, where unemployment tops 70%, desperately needed the $1 billion in new investment and 600 jobs the project would bring. But environmentalists have blocked it, claiming it would pollute a pristine environment. Mr. McAleer, then a journalist with the Financial Times, considers himself an environmentalist. But when he covered the story for his paper, he says, "I found that almost everything the environmentalists were saying about the project was misleading, exaggerated or quite simply false."

The two filmmakers are skilled at using provocative publicity tactics. On April 22, they will hold a public showing of their film at the Rachel Carson Elementary School in the suburbs of Seattle. "Since it was Rachel Carson who touched off the campaign to ban DDT, we thought showing 'Not Evil, Just Wrong' there would be appropriate," says Mr. McAleer.

Local environmentalists will probably not appreciate the gesture and will be appalled that the school agreed to rent out its auditorium to the renegade skeptics. But somebody might point out that it's not evil, just appropriate, to hold a debate about the real-world consequences of acting on global warming fears.

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Alternative Fuel Folly

Every so often Washington throws out a controversy that brilliantly illustrates everything wrong with Washington. Consider the brewing outrage over "black liquor." This is the tale of how a supposedly innocuous federal subsidy to encourage "alternative energy" has, in a few short years, ballooned into a huge taxpayer liability and a potential trade dispute, even as it has distorted markets and led to greater fossil-fuel use. Think of it as a harbinger of the unintended consequences that will accompany the Obama energy revolution.

Back in 2005, Congress passed a highway bill. In its wisdom, it created a subsidy that gave some entities a 50-cents-a-gallon tax credit for blending "alternative" fuels with traditional fossil fuels. The law restricted which businesses could apply and limited the credit to use of fuel in motor vehicles.

Not long after, some members of Congress got to wondering if they couldn't tweak this credit in a way that would benefit specific home-state industries. In 2007, Congress expanded the types of alternative fuels that counted for the credit, while also allowing "non-mobile" entities to apply. This meant that Alaskan fish-processing facilities, for instance, which run their boilers off fish oil, might now also claim the credit.

What Congress apparently didn't consider was every other industry that might qualify. Turns out the paper industry has long used something called the "kraft" process to make paper. One byproduct is a sludge called "black liquor," which the industry has used for decades to fuel its plants. Black liquor is cost-effective, makes plants nearly self-sufficient, and, most importantly (at least for this story), definitely falls under Congress's definition of an "alternative fuel."

All of which has allowed the paper industry to start collecting giant federal payments for doing nothing more than what it has done for decades. And in fairness, why not? If Congress is going to lard up the tax code with thousands of complex provisions designed to "encourage" behavior, it shouldn't be surprised when those already practicing said behavior line up for their reward, too.

In March, International Paper announced it had received $71 million from the feds for a one-month period last fall. The company is on track to claim as much as $1 billion in 2009. Verso took in nearly $30 million from the operation of just one mill in one quarter of last year. Other giants are gearing up to realize their own windfalls. Wall Street has gone wild, pushing paper-company stocks up dramatically in recent weeks.

Happy as industry is to have this new federal lifeline in the middle of a recession, it is the only one smiling. Foreign competitors are screaming that the subsidy is unfairly propping up the U.S. industry in tough times. They claim the U.S. industry is ramping up production simply to realize more tax money. Canadian forestry firms are already demanding their government file a trade complaint.

In order to qualify for the credit, alternative fuel must be mixed with a taxable one. (The government might want to encourage alternative fuels, but not to the extent that it loses its gas-tax revenue.) This means that to qualify, the paper industry must mix some diesel with its black liquor. This has sent environmentalists around the bend. They have accused the industry of burning fossil fuels that it didn't used to burn, simply to get the tax dollars. (The industry has not been clear on whether it is, in fact, using more diesel.)

And then there's Congress, which is suddenly looking at billions more in red ink than expected. In 2007 it estimated a 15-month extension of the credit would cost taxpayers $333 million. It has since revised those numbers to take into account black liquor and is now figuring a one-year cost of more than $3 billion. Wall Street analysts are talking $6 billion. Senate Finance Committee bosses Max Baucus and Charles Grassley are reportedly aware of the issue, none too happy, and they are working to bar the paper industry from receiving the credit.

But this, in turn, has tossed up uncomfortable questions. The paper industry argues that if the government is going to be in the business of rewarding good behavior, it ought to do it equally. Is green policy only to be aimed at dirty or economically unviable actors? Is black liquor any less useful than ethanol or biodiesel, and if so why? If not, shouldn't Washington encourage its use? Isn't every green subsidy in fact the basis for a trade dispute? These are questions Congress has no interest in confronting, since it would expose the muddle that is its entire green-energy program.

All of this is highly amusing, if not surprising. Every government attempt to manage energy markets has resulted in similar disarray. Look at the havoc that came from the energy price controls, regulations and subsidies of the 1970s. Or look, more recently, at the ethanol fiasco, and the accompanying soaring food costs. Energy powers the economy. Mess with energy markets, and mess with everything else. When will Washington learn?

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The Ethanol Bubble Pops in Iowa

More evidence the fuel makes little economic sense

In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually. VeraSun boasted the plant could run 24 hours a day, seven days a week to meet the demand for home-grown energy.

But the only thing happening 24-7 at the Dyersville plant these days is nothing at all. Its doors are shut and corn deliveries are turned away. Touring the facility recently, I saw dozens of rail cars sitting idle. They've been there through the long, bleak winter. Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.

A town of 4,000, Dyersville is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.

That's pretty much the story of ethanol. Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust.

In the fourth quarter of 2008, Aventine Renewable Energy, a large ethanol producer, lost $37 million despite selling a company record 278 million gallons of the biofuel. Last week it filed for bankruptcy. California's Pacific Ethanol lost $146 million last year and has defaulted on $250 million in loans. It recently told regulators that it will likely run out of cash by April 30.

How could this be? The federal government gives ethanol producers a generous 51-cent-a-gallon tax credit and mandates that a massive amount of their fuel be blended into the nation's gasoline supplies. And those mandates increase every year. This year the mandate is 11 billion gallons and is on its way to 36 billion gallons in 2022.

To meet this political demand, VeraSun, Pacific Ethanol, Aventine Renewable Energy and others rushed to build ethanol mills. The industry produced just four billion gallons of ethanol in 2005, so it had to add a lot of capacity in a short period of time.

Three years ago, ethanol producers made $2.30 per gallon. But with the global economic slowdown, along with a glut of ethanol on the market, by the end of 2008 ethanol producers were making a mere 25 cents per gallon. That drop forced Dyersville and other facilities to be shuttered. The industry cut more than 20% of its capacity in a few months last year.

What's more, as ethanol producers sucked in a vast amount of corn, prices of milk, eggs and other foods soared. The price of corn shot up, as did the price of products from animals -- chickens and cows -- that eat feed corn.

Texas Gov. Rick Perry reacted by standing with the cattlemen in his state to ask the Environmental Protection Agency last year to suspend part of the ethanol mandates (which it has the power to do under the 2007 energy bill). The EPA turned him down flat. The Consumer Price Index later revealed that retail food prices in 2008 were up 10% over 2006. In Mexico, rising prices led to riots over the cost of tortillas in 2007. The United Nations Food and Agricultural Organization and other international organizations issued reports last year criticizing biofuels for a spike in food prices.

Ethanol is also bad for the environment. Science magazine published an article last year by Timothy Searchinger of Princeton University, among others, that concluded that biofuels cause deforestation, which speeds climate change. The National Oceanographic and Atmospheric Administration noted in July 2007 that the ethanol boom rapidly increased the amount of fertilizer polluting the Mississippi River. And this week, University of Minnesota researchers Yi-Wen Chiu, Sangwon Suh and Brian Walseth released a study showing that in California -- a state with a water shortage -- it can take more than 1,000 gallons of water to make one gallon of ethanol. They warned that "energy security is being secured at the expense of water security."

For all the pain ethanol has caused, it displaced a mere 3% of our oil usage last year. Even if we plowed under all other crops and dedicated the country's 300 million acres of cropland to ethanol, James Jordan and James Powell of the Polytechnic University of New York estimate we would displace just 15% of our oil demand with biofuels.

But President Barack Obama, an ethanol fan, is leaving current policy in place and has set $6 billion aside in his stimulus package for federal loan guarantees for companies developing innovative energy technologies, including biofuels. It's part of his push to create "green jobs." Archer Daniels Midland and oil refiner Valero are already scavenging the husks of shuttered ethanol plants, looking for facilities on the cheap. One such facility may be the plant in Dyersville, which is for sale. Before we're through, we'll likely see another ethanol bubble.

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San Francisco Hearing on Offshore Energy Resources a Kangaroo Court

The kangaroo is back, and with good reason! After an appearance last month in the halls of Congress, a live "kangaroo" appeared today at a federal hearing in San Francisco to protest the "kangaroo court" atmosphere at an important meeting to discuss the future of national energy policy.

Obama Administration Interior Secretary Ken Salazar presided over a public hearing today that only effectively represented one aspect of the debate over offshore energy development. The kangaroo is meant to point out that oil and gas exploration is being largely ignored in favor of promoting wind power along the Pacific coast.

The kangaroo was seen protesting the hearing outside the Robertson Auditorium on the Mission Bay campus of the University of California, San Francisco (1675 Owens Street) between 11:00 AM and 1:00 PM Pacific Time.

"Oil and gas exploration could create trillions in revenue and tens of thousands of jobs, but this hearing is likely to overlook this economic stimulus package in favor of dubious green technology," said National Center executive director David W. Almasi. "Right now is the window of opportunity. The government is considering the next five-year plan for energy policy. To ignore drilling today is irresponsible, which is why it is considered a kangaroo court and why participants will find a live, bouncing marsupial there today."

Today's hearing is the third of four being conducted by Salazar and the Interior Department's Minerals Management Service. The hearings follow a report issued by the Obama Administration that says Southern Oregon and Northern California are prime areas for wind-energy development. This is despite the acknowledgement that current technology and the ocean terrain in the region are incompatible and that the region also lacks the transmission infrastructure necessary to accommodate any offshore production of wind energy.

To the contrary, the Point Arena Basin off Mendocino County, California is thought to have a more than 1.5 billion barrels of recoverable oil. The California coastline is already the home to many offshore drilling operations.

A kangaroo visit was already made to a hearing of the U.S. House of Representatives Committee on Natural Resources in Washington, D.C. on March 31. A similar "kangaroo court" on drought conditions in California was being protested at that time. Before last-minute testimony by area congressmen was added, this hearing was expected to be simply a platform for government officials and environmental radicals to promote further regulation of resources in the name of combating global warming.

"As was seen in yesterday's tea parties against out-of-control government spending and taxation, it's clear that people want their leaders to be more accountable," said The National Center's Almasi. "The same applies to the creation of public policy. When crafting something as important as our nation's energy future, a one-sided hearing just won't do. If they continue in this manner, they can expect to be seeing a lot of this kangaroo."

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Planet doomsayers need a cold shower

Comment from Miranda Devine in Australia

The global warming scare campaign is reaching fever pitch. We have had one eminent Australian scientist claim this week to the senate inquiry on climate policy that global warming has already killed people in Australia. We have had another four CSIRO scientists at the inquiry arguing for Australian emissions reduction targets up to six times greater than planned, 90 per cent by 2050, and warning of catastrophic consequences otherwise.

We have also had the Environment Minister, Peter Garrett, agree on ABC's Lateline program this month that sea levels would rise as much as six metres due to human-caused global warming this century. Yet even the Intergovernmental Panel on Climate Change (IPCC), the United Nations body dedicated to discovering evidence of human-caused climate change, forecasts less than half a metre rise in the century to 2090.

It seems that when it comes to convincing the Government to take drastic, jobs-killing, economy-crushing and ultimately futile unilateral action on climate change, the ends justify the means. "How we get there matters much less than the fact that [emissions] are very low by 2050," CSIRO's Dr Michael Raupach, told the inquiry.

While debating with a National Party senator the wisdom of imposing reductions of carbon dioxide emissions, the University of Melbourne's Professor David Karoly declared: "Loss of jobs is important but loss of life is really important". True enough, but where is the evidence that climate change has killed a single Australian? More to the point, since Australia accounts for just 1.4 per cent of global emissions, even if we shut down all industry and move into caves, how would any theoretical effect on climate be more than negligible?

There is no doubting the passion and intelligence of these scientists and many of their colleagues in the climate change movement in advocating the cause of eliminating so-called "carbon pollution" to save the planet. But the tactics are not very scientific. As a University of Adelaide geologist, Dr Ian Plimer, writes in his new book, Heaven And Earth, Global Warming: The Missing Science, scientists are usually "anarchic, bow to no authority and construct conclusions based on evidence … Science is not dogmatic and the science of any phenomenon is never settled."

His dense book, crammed with 2311 footnotes, is a comprehensive scientific refutation of the beliefs underpinning the idea of human-caused climate change. "It is meant to be an overwhelming demolition job," said Plimer on the phone from Adelaide where he is preparing a field trip this weekend to Broken Hill to study rocks. He wrote the book, "for those out there with an open mind wanting to know more about how the planet works. The mind is like a parachute. It only works when it is open".

From the geologist's perspective he says our climate has always changed in cycles, affected by such variables as the orbit of the planet and our distance from the sun, which itself produces variable amounts of radiation. One of the lessons of 500 million years of history, he says, is that there is no relationship between carbon dioxide and temperature.

Plimer's book comes at a crucial time in the debate about whether and by how much human-produced carbon dioxide causes climate change, and, if it does, what are the effects, and can they be stopped. It is a warning to government, as it refines its emissions trading scheme, in the lead-up to the Copenhagen Climate Convention next year, not to back itself into the corner of relying on dubious computer models in an attempt to stop climate change by reducing so-called "carbon pollution".

Plimer says the business world would never "make trillion-dollar decisions without a comprehensive and expensive due diligence". "To have government policy based on propaganda is very dangerous."

Yet our Government has already promised to reduce emissions by 5 to 15 per cent below 2000 levels by 2020, and 60 per cent by 2050, and is trying to construct a carbon trading scheme by July. A Senate report into this Carbon Pollution Reduction Scheme, tabled on Thursday, demonstrated the difficulty of consensus, containing, as it did, three dissenting reports.

Meanwhile, the coal industry has warned that at least two NSW coalmines will have to close under climate legislation already planned. Those power outages in Sydney lately will be just a small taste of things to come. The consequences are everywhere, with cost of living surges ultimately borne by individuals.

And for what? Plimer says that if government had read the fine print of "the crucial Chapter 5" of the IPCC's 2007 report "Humans Responsible for Climate Change" they would have realised that it is "based on the opinions of just five independent scientists". "Governments are planning to structurally change their nations' economies where most people will suffer from increased taxes and costs … based on the opinion of the fabulous five whose computer models have not been able to accurately predict the cooling that has occurred since 1998," Plimer says.

Plimer, 62, has spent much of his life working in Broken Hill, in the real world of rocks and soil, far enough from the social pressure of academia to think for himself. Such independent scientific dissenters have been demonised, their evidence marginalised, as climate change has become a quasi-religious belief. But you cannot stop one side from debating what is the biggest policy decision of our era. Plimer's book, accessible as it is to the layperson, will help redress the power imbalance between those who claim to own the knowledge and the rest of us.

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