Horner Cap And Trade May 2009

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 the winter, scarcely ever do so now…” -- Notes on the State of Virginia 1781

Eight years: Bush’s presidency of calamitous warming, vs. models CO2 rising but global temps falling Temperatures (USA) & CO2 1895 to 2008 (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

The key: don’t just defeat it, extract a price

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

They happened to design it, just to be safe

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 Discussion Paper 98-02.

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 PHC … AND his $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 rates to “necessarily skyrocket” (and all energy costs)

And to “bankrupt” coal along the way

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 , 9 th 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-profits/

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)

Utilities pushing it share unhappy legal history

So, naturally, it was particular entrepreneurs who began the global warming industry … John Palmissano post-Kyoto memo to Ken Lay, 12/97

“ 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 ( monitized ).”

Kyoto “is exactly what I have been lobbying for” "This agreement will be good for Enron stock!!"

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 (it is an either/or)

Otherwise all likely outcomes clearly all-pain, no-gain

* EU emissions as well as globally

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 your massive energy tax?”

The political price to be paid is real, not yours

Eight years: Bush’s presidency of calamitous warming, vs. models CO2 rising but global temps falling (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 th- 17 th centuries]

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 anything?

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

If there’s some other point , what is it?

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 cost but a $400,000 benefit!

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 .

This claim is political suicide. Glue it to all citing MIT study.

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 about the strength of their case, otherwise?

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”

“ We’ll learn from and avoid Europe’s problems”

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 reductions, which is very rare, and hard

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, but Cap-and-Trade is even more subject than the latter to “gaming” by well-positioned interests and other social costs

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 CO 2 Emissions: 2005, 2050 Reference Case, and 2050 at 50% of 2005 Energy Emissions, Gt CO 2 /year 2005 2050 Reference 2050 at 50% of 2005 27.0 Gt/yr 48.1 Gt/yr 13.5 Gt/yr +21.2 Gt/yr (+78%) -34.6 GT/yr (-72%) -13.5 Gt/yr (-50%) 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.

Energy Emissions, Gt CO 2 /year 2050 Reference: 16.7 Gt 2050 Reference: 48.1 Gt 2005: 27.0 Gt 2050 Reference: 31.4 Gt 2005: 12.9 Gt 2005: 14.0 Gt World Total Developed Major Economies Rest of World 50% Reduction from 2005 100% Reduction from 2005 ROW Reduction Needed to Achieve 50% Global Reduction -50% from 2005: -72% from Ref. (-34.6 Gt) -100% from 2005: -100% from Ref. (-16.7 Gt) -57% from Ref. (-18.0 Gt) Energy CO 2 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 CO 2 Reduction and Percent Reduction from 2050 Reference* 13.5 Gt 13.5 Gt *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 CO 2 Storage CO 2 Storage Rate at ≈ 550 ppmv 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.

Global 100-Year GHG Mitigations (GtCO 2 ) by CCTP Goal Estimated cumulative GHG emissions mitigation (GtCO 2 ) 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. CCTP Strategic Goal Very High Constraint High Constraint Medium Constraint Low Constraint Goal #1: Reduce Emissions from Energy End Use and Infrastructure 920 – 990 700 – 770 550 - 620 400 - 510 Goal #2: Reduce Emissions from Energy Supply 660 – 1,210 400 – 770 290 – 510 110 – 290 Goal #3: Capture and Sequester Carbon Dioxide 550 – 1,210 180 – 510 110 – 260 70 – 150 Goal #4: Reduce Emissions of Non-CO 2 GHGs 587 – 620 510 – 550 440 – 480 330 – 370

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)

In fact, it got even better, when IPCC lead author and leading alarmist William Schlesinger admitted that “something on the order of 20 percent have had some dealing with climate .” (February 2009). A far cry, no?

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 …engineers.

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 warming?

The IPCC can’t.

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 just about raising revenues (especially e.g. UK)

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

And they’ve proven they’ll say anything to cheerlead the ETS

“ 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.

Right ?”

You can propose tax incentives [e.g., expensing]

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 , 4/2/09)

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 for Kyoto-style policy are Wall Street firms that expect to make commissions on the purchase and sale of carbon-trading credits. CEI’s Marlo Lewis

“ 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 without greenhouse emissions do not exist operationally or as pilot plants.”

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: clarify.

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

Used to herd holdouts to beg Ds for deal

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.