Thursday, May 29, 2008

Revealing Testimony   [Chris Horner]

Two Congressional Research Service researchers gave testimony before the Senate Energy and Natural Resources Committee this month regarding the Lieberman-Warner bill, which is slated to come to the floor on Monday [S. 2191]. Their testimony is revealing, for three key reasons.

First, one of the statements makes the point, if indirectly, that all of the “market” gimmicks built into the bill eliminate the lone rationale that cap-and-traders have offered for adopting this inefficient scheme (rather than simply taxing the activity that they want to reduce): a supposed certainty of emissions reductions.

On its face, the promise of emissions reductions is absurd — as anyone familiar with Europe’s three years of experience can tell you. But it remains important because cap-and-trade is appealing to policymakers who insist on “doing something” about CO2 exclusively because cap-and-trade allows them to hide the tax on energy use, burying it in a scheme of artificial, state-created scarcity that they then call a “market.” Rather than admit that, its champions instead insist that rationing is preferable to a tax because a tax provides no assurance of what level of emission reductions you would receive. Yet each of the flexibility mechanisms added to the cap-and-trade scheme — domestic “offsets” and inclusion of “international carbon credits” — removes any notion that one might predict what emissions or reductions would be, and make it highly likely no reductions will occur at all.

We see here that last fig leaf being stripped. Neither would do anything, both are taxes, but the regulatory tax is less efficient, more easily gamed by rent-seekers and other politically favored constituencies, and more expensive. Cap-and-trade is a refuge for political scoundrels who want to make energy more scarce, which threatens jobs, but don’t want to reduce that threat to your job with the simpler tax because to do so would threaten theirs.

Second, “the proposed Low Carbon Fuel Standard could significantly raise fuel prices and limit supply.” Nuff said.

Third, “S. 2191’s potential climate-related environmental benefit is best considered in a global context and the desire to engage the developing world in the reduction effort.” Knock knock, euphemism police! That is to say: under no scenario will cap-and-trade have even a remote prospect of actually doing what it purports to do — positively affecting our always changing) climate — and so needs to be viewed as an offering to China and India. Look what we’ve done to our economy! Won't you please join us?

In sum, Lieberman-Warner is a price-hiking, job-exporting gesture that, as in Europe, will do nothing regarding the climate and likely won’t yield any emissions reductions. Its goal instead is to demonstrate our seriousness of purpose, in the hope that doing so will prompt developing nations to follow suit — despite the fact that those nations have serially and adamantly stated that they have zero intention to do so.

At some point, the voting public will demand their policymakers stop being so frivolous with other people’s economic futures.

05/29 12:00 PMShare