You are on page 1of 67

Cap-and-Trade’s

real-world experience
as applied to CO2

Christopher C. Horner
May 2009
Thomas Jefferson on Global Warming
“Snows are less frequent and less deep.
They do not often lie, below the
mountains, more than one, two, or
three days, and very rarely a week.
They are remembered to have been
formerly frequent, deep, and of long
continuance. The elderly inform me
the earth used to be covered with
snow about three months in every
year. The rivers, which then seldom
failed to freeze over in the course of
CO2 rising
Temperatures but global
(USA) & CO2 temps
1895 to falling
2008
Eight years: Bush’s presidency of
calamitous warming, vs. models

(forget sun, clouds, oceans)


J.R. Petit, J. Jouzel, et al. Climate and atmospheric history of the past 420,000
years from the Vostok ice core in Antarctica, Nature 399(3June), pp 429-436,
1999. As constructed by the United Nations Environmental Program.
But…what if Democrats Convince them?

 “If Republicans convince voters that


clean energy legislation amounts to a
new tax, Obama’s plan is toast.” MoveOn
4/09
 “Nobody in this country realizes that
cap and trade is a tax, and it’s a great
big one” John Dingell (D-MI) 4/09
 In fact, cap-and-trade rationing is “the
most significant revenue-generating
proposal of our time.” Sen. Benjamin Cardin (D-
MD) 4/09
An Economic Threat, to be sure
 But also a political overreach and
opportunity

 Many Dems behind this “remember


BTU!”

 Few Republicans do, though the


message now seems to be gaining
traction
So what is “Cap-n-Trade”
 The State decides how much, e.g.,
gasoline or electricity the private
sector should use, then imposes a
ration (WWII)
 The ration is set on the basis of
historical emission levels…so, e.g.,
success penalized
 This requires ration coupons.
 Now, issued to “people” who don’t
vote
Cap-and-Trade is a tax
It’s just the best kind of tax: Hidden
 U.S. Congressional Budget Office calls it a regulatory tax:

 “the economic impacts of cap-and-trade programs would be


similar to those of a carbon tax: both would raise the cost of
using carbon-based fossil fuels, lead to higher energy prices
and impose costs on users and some suppliers of energy”. --
U.S. CBO, “An Evaluation of Cap and Trade Programs for Reducing US GHG
Emissions”

 Results are same: energy and consumer prices rise, output,


employment and real wages fall

 But it transfers wealth from individuals to well-placed


constituencies

 And it is a very expensive tax – 4-5 times as expensive as a


direct tax: Pizer, William A., “Prices vs. Quantities Revisited:
The Case of Climate Change.” Resources for the Future
Some Insight on Cap-n-Trade:
From 2 EPA Region 9 lawyers (!)
 “Unlike a fee or tax a cap requires Soviet-style
preplanning”

 “[Credits] can easily be subject to gaming and


manipulation, creating artificial scarcity that is likely
to result in disruptions and unfairness”

 “A preview of such disruptions was provided by the


market manipulations that created the California
energy crisis early in this decade.”

 “Rolling blackouts/gas station lines could become a


reality…this type of problem occurred in a Los
Angeles cap-and-trade program called RECLAIM …
[which]…failed spectacularly.” [Spurred current
fraud case too, btw]
The Numbers Game:
Don’t get caught up in it
 It distracts, as it is intended to
 All projections are of the future, and thus
limited
 Bill lacks detail, MIT author not shooting
straight
 Even he admits the $3,100 …AND his
PHC

$800 DWL
 Avoid the trap:
 All schemes are climatically meaningless, and
 There’s only one assessment that matters…
 The objective is to cause your electricity
It’s axiomatic…It’s the Point!
Not some side effect that they’re working on

 “The chief executive of one utility,


Vattenfall … Lars G. Josefsson, who is
also an adviser to German Chancellor
Angela Merkel, said higher
electricity prices are ‘the intent of
the whole exercise. . . . If there
were no effects, why should you
have a cap-and-trade system?’”
--The Washington Post, 9th April 2007
Reality of Cap-n-Trade in EU
 Leakage (e.g., Steel, Aluminum)
 Idling/Gaming (e.g., ceramics, pharma)
 Vows by business that auctioning will
force closure/relocation (by chemical, glass,
cement)
 Price spikes/windfall profits (utilities)
 No emission reductions
 At great cost. So: All Pain, No Gain.
 So successful (“unfair”) that they
threaten a trade war if we don’t do it to
ourselves, too.
EU cap-and-trade performance
Case study cited by Obama for the wonder
of emission-reduction schemes: Spain

¿dónde están las


reducciones de
emisiones?
Now-typical EU headlines
 “Industry shelving investments over EU emissions
plan” 06 February 2008 http://www.eubusiness.com/news-eu/1202313722.44
 “Green laws and regulation risk energy crisis, say
Europe's power companies”, The Guardian, 07 February
2008 http://www.guardian.co.uk/environment/2008/feb/07/energy.renewableenergy

 “RWE halts investments in German power plants


due to rising emission costs”, Forbes, 31 January 2008
http://www.forbes.com/markets/feeds/afx/2008/01/31/afx4596286.html

 “Carbon Trading Scheme to Wipe Out European


Paper Industry” – Printweek 29 January 2008
http://www.printweek.com/news/779830/EU-carbon-trading-scheme-wipe-paper-industry-pro
Which explains the WSJ writing this
about the looming debacle
 “[I]n addition to all the other economic harm, a
cap-and-trade tax will make foreign companies
more competitive while eroding market share for
U.S. businesses….

 The most harm will accrue to the very U.S.


manufacturing and heavy-industry jobs that
Democrats and unions claim to want to keep…

 would be the greatest outsourcing boon in history.

 And it may even increase CO2 emissions overall,


because the developing nations where businesses
are likely to relocate -- if they don't simply close --
tend to use energy less efficiently than does the
U.S.” – March 2009
You will not “just avoid EU’s problems”
And why keep “how” secret? They’d love to know

 Simply auctioning some portion of the


ration coupons (“allowances”) won’t do it
 You still have problems of awarding them to
favored entities (political allocation, not
“market”)
 You still have gaming, distortion, tax
multiplier, and offsets ensuring inefficiency
and wealth transfers simply ensuring no
reductions, just cost
 And because price increases are the point,
leakage will always occur, regardless
This is Another Financial Scandal in
the Making

Make it a political scandal instead


Never fail to mention who was
behind, and now seeks, this:
they are cap-n-trade
Who could have guessed…
A bill written by big business special interests will benefit
… big business special interests

 EU traders called ETS “our new


playground”

 Just last week, per Wall Street derivatives-


types:
 “Bucks to be made”
 “I can see nirvana coming”
 “Huge playground”

 Those aggressively pushing this share a


mindset
 US firms deepest into pushing cap-n-trade led the
financial collapse (Lehman Bros., Merrill Lynch)
So, naturally, it was particular entrepreneurs
who began the global warming industry…
John Palmissano post-Kyoto memo to Ken Lay, 12/97

Kyoto “is exactly what I have


been lobbying for”
"This agreement will be good
for Enron stock!!"
 “if implemented, this agreement will do more to promote Enron's
business than will almost any other regulatory initiative outside of
restructuring of the energy and natural gas industries in Europe and
the United States.”

 "Enron now has excellent credentials with many 'green' interests


including Greenpeace, [World Wildlife Fund], [Natural Resources
Defense Council], German Watch, the U.S. Climate Action Network, the
European Climate Action Network, Ozone Action, WRI, and
Worldwatch."

 "This position should be increasingly cultivated and capitalized on


Even the (non-financially vested) Left
agrees this is a replay of subprime mortgage
mess:
 “The market must be unashamedly rigged to force supply
below demand. …[the ETS leaves the State] Like medieval
pardoners handing out unlimited indulgences… Europe's whizz-
bang carbon market is turning sub-prime.” –The Guardian,
February 2009

 “Unfortunately, the federal cap and trade proposals put forth


so far would create a system that poses almost identical
challenges as those in the mortgage-lending industry.” –
Friends of the Earth, March 2009 [Actually, this is inherent at some
level in all such schemes]

 “Robert Shapiro of the left-leaning think tank NDN: The cap-


and-trade system would create ‘trillions of dollars in new,
asset-based financial instruments.’ Backers of the plan on Wall
Street ‘see emissions-permit trading as a lucrative new market
that could earn them billions in new fees, commissions and,
while it lasts, speculative gains.’” Houston Chronicle, April 2009
Quick Recap
Feel free to ask about other issues e.g., “green jobs”, CCS, etc.

 Rest of the world adamantly rejects doing the


same
 Economic activity (jobs, esp. manufacturing) will
“leak”
 When EU claimed to “act”, they leaked…here
 Emissions went up*, EU suffered economically
 If US acted in absence of China, India, Mexico…
 Wash, rinse, repeat, only even more futilely due
to ours being enforceable/less open to “outs”
 We will suffer completely for naught
 Hard fact: either you “mitigate” both deeply and
truly globally, or not at all and instead
continue the historic response of the most
*successful societies
EU emissions as well as globally
(it is an either/or)
Going Forward:
 Politically this is nothing to fear, quite the
contrary
 Seize the issue: glue it, Enron, etc to those
pushing it
 Seize the offensive as well: cost, extreme,
fairness
 This is the BTU tax debacle, if you make it so
 “You propose ‘doing nothing’!” counter:
dishonest
 Best managed by taking the offensive
 “Why do you want to increase our energy
costs?”
 “What will the temperature be after we pass
CO2 rising but global temps
Eight years: Bush’s
falling presidency
of
calamitous warming, vs. models

(forget sun, clouds, oceans)


Missing: Causation, “Cure”
 Something melting is evidence of something
melting
 It says nothing about Man’s influence
 Things melt. Things grow. Wash. Rinse.
Repeat.
 Temps go up. Temps go down. And again.
 Climate changes…always has, always will
 Suddenly it’s our doing [“again”, see 16 17 centuries]
th- th

 The WTC collapsing is evidence of that…but


 Not evidence that the CIA knocked them down
 If stopping X is the demand: must ask if X did
it
 Then [the rub]: would your “remedy” do
Battle of the Numbers

And the dishonesty used


when a nerve has been struck
Remember: Obama Assessment is
The Only Relevant One
 Dealing with projections of the future
 And a bill that omitted most details
(giving away or selling the ration
coupons?; what qualifies as an
“offset”?; revenue use?)
 So just remember the Express
Purpose:
 Cause energy costs to necessarily
skyrocket
It’s his estimate PLUS Yours
Worse, each $ taken from taxpayer really a benefit to taxpayer!

 Reilly assumes that the $3,128 will be "returned" to


each household as a 1-to-1 benefit. Reilly wrote
that, without this odd assumption, yes, "the cost
would then be the Republican estimate [$3,128]
plus the cost I estimate.“
 Reilly claims the $3,128 taken through taxes is
"returned" as a 1-to-1 benefit to each household
whether or not the government cuts a $3,128
rebate check to each household.
 He essentially argues that all government programs
have a positive benefit –dollar-for-dollar no less –
because they are employing people who recycle
their salaries into the economy (as are those things
he admits are “costs”).
 Thus, a program that employs, e.g., 7 bureaucrats
at a salary total of $350,000 and provides $50,000
worth of benefit, that program is not a $300,000
Got that?
 Any dollars coerced out of taxpayers’ pockets as a
result is a cost, sure, but MIT author only admits to
“deadweight loss” [his figure for reduction in total economic activity
from individuals’ response to the scheme]

 About those dollars still paid, but taken directly by


the state?
 Author admits that those revenues are in fact transferred
from private parties to the state. However…
 The taxpayer receives one-to-one benefits from that which is
spent on government, because it’s spent on government!
 He says “no net cost” because – if it’s taken by the
government – it is intrinsically, beneficially “recycled” for the
taxpayer.
 Companies pay the state more, which is passed on to
consumers in form of higher prices (appx. $3,100 per
hshld.) – but that isn’t a cost: instead, it obtains more
government.
So, the REAL Cost Per MIT Oracle
 Not $215 [admitted as phony]
 Not $800 [his amount consumers would pay,
more]
 Not $3,100 [the amount the state would take,
per HH]
 $3,100 plus $800
 Or, = $3,900
 OK. He is their “truth”
 Now, do Media and Other Left stick
w/him?
 What does continued reliance say
Logically, you’d seek reductions
where emissions are growing
Cap-n-Trade Myth-busting
“Do nothing”?
 Disingenuous: No proposal would “do something”
 Cap-and-trade, or the entire suite of
recommendations, actually “do nothing”
climatically, the comment’s point
 CO2 window is essentially closed, this is a gesture
 Of course, their schemes do have negative costs
 Our argument instead is to “first do no harm”
 Rarely is all-pain-no-gain acceptable. Certainly not
now.
 It is a worthwhile discussion why is it so negatively
received to raise the highly likely (read:
demonstrated) costs of these proposals pushed in
name of highly unlikely end-of-days fear-
mongering?
Cap-and-trade mythology
 Premise: deemed unsupportable (UK High
Court)
 “Industry supports it, how bad can it be?”
 It would “do something”
 Provides “regulatory certainty”
 “Certainty of emissions”
 It is a “market solution”
 “The most efficient way to reduce
emissions”
 “It will reduce emissions”
Common Misstatements
 “Co-benefits” argument, is absurd [least
efficient path]
 As are claims of “will reduce emissions”
 Each scheme carries “offset”
escape/admission
 “Certainty of emissions!” is an
unsupportable excuse to avoid taxing
instead of rationing
 That that’s the lead argument shows how
bad the case for cap-and-trade really is
 There are alternatives, that actually
encourage economic growth and emission
Wrongly called a “Market Solution”
because buying and selling are involved
 Cap-and-trade is an ugly combination of two of the
greatest ills of the past two centuries to affect the
market economy:

 Cartelization, and
 Central planning

 It is a State-run, administrative allocation/rationing


scheme

 Cap-and-trade is as if, instead of seeking to cut back


on smoking by taxing it, you allocated Soviet-style
production permits to cigarette manufacturers. Not a
market solution.

 If it’s a market solution then so is every aspect of


Zimbabwe’s economy, as are wartime ration coupons,
Al Gore to the FT, Nov. 2006:
Democrats remember BTU
 “I worked as vice-president to enact a
carbon tax. Clinton indulged me against
the advice of his economic team...
 One House of Congress passed it, the
other defeated it by one vote then watered
it down, and what remained was a pitiful 5
cent per gallon gasoline tax.’
 Even that turned out too much for some:
‘That contributed to our losing Congress
two years later to Newt Gingrich’.”
-- “Elevenses with the FT: Emission statement,” November
3, 2006 (ellipses in original)
That is Axiomatic
Obama was simply being honest
 “What I've said is that we would put a cap-and-
trade system in place … so if somebody wants to
build a coal-powered plant, they can, it's just that
it will bankrupt them because they're going to be
charged a huge sum...”

 “When I was asked earlier about the issue of coal,


uh, you know, under my plan of a cap-and-trade
system, electricity rates would necessarily
skyrocket.”

 For cap-and-trade to work, it must hurt


 If it does not hurt, it will not reduce emissions
 Regardless, it is climatically meaningless
Global Energy CO2 Emissions: 2005, 2050
Reference Case, and 2050 at 50% of 2005

48.1 Gt/yr

+21.2 Gt/yr
Energy Emissions, Gt CO2/year

(+78%)

-34.6 GT/yr
(-72%)
27.0 Gt/yr

-13.5 Gt/yr
(-50%)
13.5 Gt/yr

2005 2050 Reference 2050 at 50%


of 2005

Illustrative scenarios based on the CCSP MiniCAM reference scenario. Categories may not match exactly with other aggregations. Growth rates for the
appropriate aggregate regions were used as proxies for growth rates in these individual countries. This is one illustrative scenario: other scenarios would have
different emissions growth rates over the century. Results should be taken as illustrative of potential trends rather than as a best guess projection of the
future. 41
Energy CO2 Emissions Reductions Needed in 2050 to Achieve a 50% Reduction in Global
Emissions Below 2005 (not 1990) if Developed ME Achieve a 100% Reduction:
Annual Gigaton CO2 Reduction and Percent Reduction from 2050 Reference*

World Total Developed Major Rest of World


2050 Reference: Economies
48.1 Gt
Energy Emissions, Gt CO2/year

2050 Reference:
31.4 Gt

2005: 27.0 Gt

-50% from 2005:


-72% from Ref. 2050 Reference: -57% from Ref.
(-34.6 Gt) 16.7 Gt (-18.0 Gt)

2005: 14.0 Gt
2005: 12.9 Gt

13.5 Gt -100% from 2005: 13.5 Gt


-100% from Ref.
(-16.7 Gt)

50% Reduction from 100% Reduction from ROW Reduction Needed to


2005 2005 Achieve 50% Global Reduction
42
*Equals percent reduction from 2050 reference for that group (i.e., developed or ROW). Developed MEs include: U.S., Europe, Russia, Japan, Canada, Korea, and Australia.
Scale of CO2 Storage

CO2 Storage Rate at ≈550 ppmv


0.30
25
0.25

0.20 20
Gt CO2/yr

0.15

0.10 15
Gt CO2/yr
0.05

0.00 10
Today 2020

0
Today 2020 2050 2100
Data derived from the Level 2 (approx 550 ppmv) MiniCAM CCSP scenario. See Clarke, L., J. Edmonds, H. Jacoby, H. Pitcher, J. Reilly, and R. Richels (2007a).
Scenarios of Greenhouse Gas Emissions and Atmospheric Concentrations. Sub-report 2.1A of Synthesis and Assessment Product 2.1 by the U.S. Climate Change
Science Program and the Subcommittee on Global Change Research. Washington, D.C.: U.S. Department of Energy, Office of Biological & Environmental
Research. 46
Global 100-Year GHG Mitigations (GtCO2) by
CCTP Goal
CCTP Strategic Goal Very High High Medium Low
Constraint Constraint Constraint Constraint

Goal #1:
Reduce Emissions from Energy 920 – 990 700 – 770 550 - 620 400 - 510
End Use and Infrastructure
Goal #2:
Reduce Emissions from Energy 660 – 1,210 400 – 770 290 – 510 110 – 290
Supply
Goal #3:
Capture and Sequester Carbon 550 – 1,210 180 – 510 110 – 260 70 – 150
Dioxide
Goal #4:
Reduce Emissions of Non-CO2 587 – 620 510 – 550 440 – 480 330 – 370
GHGs

Estimated cumulative GHG emissions mitigation (GtCO2) from accelerated adoption of advanced
technologies over the 21st century, by strategic goal, across a range of hypothesized GHG
emissions constraints.
Source: Clarke, L., M. Wise, M. Placet, C. Izaurralde, J. Lurz, S. Kim, S. Smith, and A. Thomson. 2006. Climate Change Mitigation: An Analysis of Advanced
Technology Scenarios. Richland, WA: Pacific Northwest National Laboratory.
47
So who are the IPCC ‘2,000
world’s leading scientists’ doing
such things?
• That’s the rhetorical device “appeal to authority” (vs. making
one’s case)

• But last year, 31,000+ scientists signed petition disputing AGW


alarmism

• IPCC is touted as > 2,000 world’s leading scientists (though 52


wrote…)

• Turns out, ¾ of “IPCC 2000” are anthropology TAs, transport


policy teachers, instructors in “the human dimension of
environmental change” and others who – per alarmist standards
– are irrelevant

• Suddenly, quietly, the New York Times line becomes…Wait for


it…
• “The IPCC, the 400-member United Nations body…”! (1/17/08)
But even that proves the “experts agree!”
line fatally flawed: Note the response to a list of
hundreds of recent dissenting papers or disputes published

Greens said:

“Padded’ would be an extremely generous


description of this list of ‘prominent scientists.’
Some would use the word ‘laughable’…For
instance, since when have economists, who
are pervasive on this list, become scientists,
and why should we care what they think
about climate science?” Climate Progress, 12/21/07

Great question. Said same re: chemists,


physicists, and…remember this one too…
Gosh, I’d say that put to rest the distraction of
claiming dissenters simply not qualified to speak

 The IPCC’s chief “climatologist” (New


York Times and USA Today), or the
UN’s “chief climate scientist”… (AP)?
 He’s not a climatologist.
 Per Greens’ “standards”, he’s – like
the vast majority of IPCC – “not a
scientist”.
 He’s an economist, and a railway
engineer
 But, have no fear…
Usual tactics
 “There’s a mountain of peer-
reviewed evidence that says we
need to reduce carbon
emissions.”
 There is a mountain of evidence on
the effects if the planet warmed.
That’s not the same thing.
 Can you name a single piece of
evidence showing higher CO2
means significantly higher
temperatures/caused the
Cap-n-Refund, etc?
 Still brings the economic impacts of
 Disadvantages U.S. manufacturers
 Exporting jobs
 Redistributes income, and inescapably unevenly
 But ultimately fails its own test:
 Does it “do something” climatically?
 Nope.
 Still all pain, no gain.
 Apparent, real purpose seems likely to
enable claim “did ‘something’”. Posturing.
W/your money.
 Expensive political vanity, with human and
economic costs
It’s a global warming tax
 Public skeptical of “global warming”
 Public skeptical of taxes
 It’s a global warming tax
 Rs’ “tastes great!/less filling!” not
helpful

 Public sensitized to energy price


hikes
 EU public quickly concluded: issue is
The claim that ETS Just
Shown to be Working?
NYT: "E.U. Carbon Trading System
Shows Signs of Working“ 4/2/09
 No. It didn’t. This is still a dead parrot (h/t Monty Python)
 WSJ’s more accurate headline:
 "UPDATE: EU '08 Emissions D[ow]n As Recession Takes
Hold”
 Greenwire’s summary:
The European Union's trading system for reducing carbon
emissions is showing signs of working, according to a
preliminary analysis released yesterday.
Emissions fell between 4 and 6 percent in 2008 among
industries covered by the E.U. system, compared with
increases of roughly 1 percent in 2007 and 2006, according
to analysts who reviewed the figures.
Most of the decline was attributed to falling industrial and
electricity production caused by the economic crisis, but
analysts pointed out that the size of 2008's decline showed
the system was causing some businesses to be marginally
cleaner.
 Former is accurate, the latter is wistful, unsupported
speculation
 Even the Commission didn’t say that
“But we must act or our [fill in blank]
industry will be ‘left behind’…”
 That is deeply flawed logic or rationale
 “Action” should be judged on its merits
 For example, “… or the U.S. windmill
industry might be left behind!”
 As with the U.S.…SST or Hovercraft
industry, et al.
 So, what if we were a windmill leader?
 Being the leader in something is not prima
facie a worthwhile use of resources
About the more efficient direct tax:
You do not need to propose the tax
 Simply ask: “Cap-and-trade’s a
disaster where tried. If you’re serious
why aren’t you proposing a tax
instead?
 It’s far less inefficient, meaning less
expensive and harms seniors/poor
less.
 Of course we do understand that
means no goodies for lobbyists, but
that’s ok.

ETS-specific Mythology
 ETS had nothing to do with energy price increases
(after collapse…)
 2005-2007 was a “trial period” (only called that once the failure became
obvious, in 2007)

 ETS has EU “on track” to meet reduction promises


 ETS “surplus resulted from over-performance”,
and/or a “data problem”, not from setting the
allocations too high
 ETS has fixed its problems
 Auctioning would fix the allocation problems (if not
leakage)
 (a) requires unattainable political will
 (b) would need equally unattainable full auction, and
 (c) can do that better with a tax

 This failed central planning simply requires more


planning and smarter planners
 Finally: 2008 dip “showed signs of working” (NYT,
They’re not even shy about it
 “Wall Street executives are talking about turning the
battered U.S. financial center into a global hub of green
finance and environmental commodities trading. … ‘There
are bucks to be made,’ said Neal Dikeman, a founding
partner of Jane Capital. ‘Huge playground.’” – “Wall Street sees
'bucks to be made' in House climate plan ”, 4/2/09
 Of course, firms that were the lead Wall Street rent-seekers
on this saw it as arguably the straw that broke their back:
 Lehman Brothers and Merrill Lynch, two of the highest-
profile failures in the ongoing financial system bailout
crisis, share a mistake with their disgraced cousin-in-
bankruptcy Enron. Each of the three invested a large
amount of money in, and sought to profit from, schemes
to force up energy prices through greenhouse gas
restrictions.
 Others with relevant history are leading advocates…the
same red flag as was Enron – people looking to make money
for nothing:
 Notably, companies caught engaging in illegal market
manipulation – Enron, [and electric utilities] American Electric
Power, Cinergy, Entergy, and Calpine – have been among the
most aggressive lobbyists for the Kyoto Protocol or kindred
emission trading schemes. Among the most influential lobbyists
“But Cap-n-Trade has worked”: SO2
 “those who champion using cap-and-trade to address climate change claim
that it has been ‘proven’ to work in the U.S. Acid Rain program. However, this
assertion ignores crucial distinctions. It din not

 “depend on replacing the vast majority of our existing energy infrastructure


with new infrastructure in a relatively short time.”
  
 “depend on spurring major innovation. Rather, the Acid Rain program was
successful as a mechanism to guide existing facilities to undertake a fuel
switch to a readily available substitute, the low sulfur coal in Wyoming’s
Powder River Basin.”
  
 “Existing facilities needed only the addition of a few new railway lines, burner
modifications to accommodate lower sulfur fuel, and, in some cases, new or
more efficient scrubbers. Little new technology or infrastructure was needed
and little was created.”
  
 “The goal of the Acid Rain program was to reduce sulfur dioxide emissions,
while keeping the cost of energy from coal low. To be effective, climate
change legislation must do the opposite;…
  
 “allow any outside offsets and so provides no basis for the widespread
assumption that an offset program will help with climate change….”
The Human Costs of Emissions Caps
 Raising energy costs kills. According to a Johns
Hopkins study, replacing ¾ of US coal-based energy
with higher priced energy would lead to 150,000
extra premature deaths annually in the US alone.
 Reducing emissions hits the poorest hardest.
According to the recent report by the Congressional
Budget Office, a cap and trade system aimed at
reducing emissions by just 15 percent will cost the
poorest quintile 3 percent of their annual
household income, while benefiting the richest
quintile.
 Raising energy costs loses jobs. According to a Penn
State University study, replacing 2/3 of US coal-based
energy with higher-priced energy will cost almost 3
million jobs, and perhaps over 4 million.
EU outcome is expected, and will be ours
under current construct and dynamic
 All projections of energy demand and available
technologies (more instructive than climate model
projections) say these cuts require massive
impoverish-ment or population reductions (Hoffert et
al. Science (11/2002))
 Biomass “has too low a power density...for
biofuels to contribute significantly to climate
stabilization.” 
 Solar energy, even in sun rich America, would
require a massive area of land (220,000 km2) to
provide the emissions-free energy needed, but
all the photovoltaic cells made from 1982 to
1998 combined would only cover an area of 3
km2. 
 “Energy sources that can produce 100 to 300
percent of present world power consumption
For policy purposes: please distinguish
between “acting” and gestures

 If CMMGW were real…trouble. Only gestures ever


proposed.
 Expensive gestures. Futile ones (Wigley, Hoffert et al. Science,
2002).
 They cannot conceivably have any climatic impact.
 There’s a need to say one “did something”. It won’t.
 As an American you already are the world leader
 Let that secret out
 “Europe’s doing it” is a myth

 Unless that means “killing their own economy”

 Tell the truths: From science scandals to mythology:


Strategic Considerations
 EU is mired due to political “face”
 US is also driven by image concerns
 The present question for
administration/ proponents is which
will drive which?
 US unlikely to agree without some
tangible policy adopted here, will find
punt
 EPA unlikely to be allowed to follow
thru
China Syndrome
Follow us in rationing CO2? They’re just not that into it
 “Many argue that the PRC will make sharp cuts in carbon emissions
but only if the U.S. does so first. This claim borders on nonsense. …
 Beijing does not want to harm the competitiveness of its firms with
carbon restrictions. This is certainly true, but it has nothing to do
with whether the U.S. is willing to harm the competitiveness of its
firms first. That is because U.S. firms are well down the list of
China's competitiveness concerns…
 Chinese firms may be competing first and foremost for the U.S.
market, but they are competing against other export platforms to
the U.S. in East Asia and around the globe.
 …if China were to impose carbon-driven restrictions on firms
operating in China without the U.S. "going first” … the relocation
process [under which China is focused on encouraging relocation of
East Asian output to the Chinese mainland, primarily for the
purpose of export] would reverse: East Asian firms would disinvest
in China, moving production to the second-most competitive
regional location for textiles, computer assembly, furniture, and
other products. Depending on the goods, this could be Vietnam,
Bangladesh, Indonesia, or others. These countries would then be
the source of the bulk of U.S. imports.”

 Derek Scissors, PhD, Heritage Foundation, March 2009


The fine print of cap-n-trade…
From late-’08 Dingell-Boucher draft
 Provides “compensation, through the
issuance of a monthly rebate, for the loss
in purchasing power resulting from
this Act and the amendments made by
this Act.”
 Also, a provision to reduce the transfers
pro rata in the event the economic pain is
so great that even the limited-in-scope
Low-Income Consumer Climate Change
Rebate Fund cannot handle it.

 Rather strange for a bill that will grow the