James Pethokoukis

Politics and policy from inside Washington

Cap-and-trade prospects looking dodgy

Nov 27, 2009 18:33 UTC

Kim Strassel is right, cap-and-trade looks terminal for 2010 and beyond. Sure, the EPA could try to push its own draconian carbon regulation. But I think that would cause a firestorm on Capitol Hill. Strassel:

Polls show a public already losing belief in the theory of man-made global warming, and skeptics are now on the offense. The Competitive Enterprise Institute’s Myron Ebell argues this scandal gives added cover to Blue Dogs and other Democrats who were already reluctant to buck the public’s will and vote for climate legislation. And with Republicans set to pick up seats, Mr. Ebell adds, “By 2011 there will hopefully be even fewer members who support this. We may be close to having it permanently stymied.” Continued U.S. failure to act makes an international agreement to replace Kyoto (which expires in 2012) a harder sell.

Why cap-and-trade is ‘dead policy walking’

Nov 18, 2009 14:02 UTC

Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

Publicly, Senate Democratic leaders say they are only pushing off debate and consideration of a comprehensive climate change bill until spring. But it is hard to get a major bill passed in a Democrat-controlled Senate when the Democratic majority leader of the Senate wants the bill to go away. And have no doubt that Senator Harry Reid would like to see cap-and-trade go away — or at least disappear until after 2010.

This explains why six different Senate committees will consider the bill, the same recipe for legislative inaction that bogged downhealthcare reform. It’s pure politics. The 2010 midterm elections are shaping up to be tough contests for many Democrats thanks to the anti-incumbent mood of a recession-weary electorate. And most signs point to a sustained level of high unemployment.  As Federal Reserve Chairman Ben Bernanke said in a recent speech, “The best thing we can say about the labor market right now is that it may be getting worse more slowly.”

A new Gallup poll finds that 51 percent of Americans see the weak economy or high unemployment as their biggest concerns. Barely 3 percent mention the environment. And Democrats have been unable to sell cap-and-trade as a job creator. At worst, the public sees it as a jobs killer or a costly energy tax. That charge has particular weight in Reid’s home state, Nevada, a high energy-use state. (All those air conditioners!) So Reid doesn’t want to have to vote for it, which he would be compelled to do as majority leader. And neither do moderates like MaryLandrieu, Blanche Lincoln, Mark Pryor, Debbie Stabenow and Jim Webb. They noticed the heat that centrist House members who voted for cap-and-trade took from constituents during Congress’ summer break.

Webb of Virginia may point to one path forward with a new bill he is co-sponsoring with Lamar Alexander, a Tennessee Republican. It would spend $20 billion on five mini-Manhattan Projects to study various clean energy technologies, including nuclear.

It’s a plan that seems more likely to create jobs, grow the economy and help the environment — at least more so than one completely out of sync with the electorate. And it is one also more likely to make it into law. Despite being subjected to years of hectoring from the media, entertainment industry and government, the American public clearly has no appetite for any climate-change plan that involves more taxes, more regulation and a possible lower standard of living.

And if cap-and-trade is dead for 2009 and 2010, it probably has little hope of reviving in 2011 or beyond when Congress is unlikely to be as Democratic or as green.


Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

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Afternoon speed round

Nov 17, 2009 21:34 UTC

Some of the best things I read today:

1) Tyler Cowen gives his version of healthcare reform. Ideas 3-10 are particularly strong.

2) Noam Scheiber agrees with Summers that budget deficits are not a big deal since less private borrowing mean no crowding out. I wouldn’t get too satisfied with this explantion.

3) IBD’s Jed Graham has  great post that speculates “come 2013, we might begin to see help wanted ads that emphasize the lack of employer-provided insurance as a perk.”

4) Matthew Yglesias looking how Republicans will try to roll back HC reform if it ever passes. The delayed-start will make this easier.

5) Joel Kotkin again show how California is doing everything wrong to boost growth. Just look at Northern California:

Indeed by some accounts, most embarrassingly in a recent Time magazine cover, the shift to green technologies has already created a “thriving” economy.

Time extols Google, Apple, Facebook, Twitter and the other Silicon Valley companies as exemplars leading to a glorious prosperity; somehow the article missed the empty factories, vacant offices and abandoned farms across the state.

For Apple’s Steve Jobs, Google’s Eric Schmidt and venture capitalists connected to Al Gore, these could well be the best of times. Fed policy prints money for investment bankers to speculate; stock prices rise as people have nowhere else to invest. And for the much celebrated venture community, there’s also an Energy Department that pours hundreds of millions into “green” start-ups that build things like expensive electric cars.

California’s high-tech greens may talk a liberal streak in terms of diversity and social justice, but their prescriptions offer little for those who would like to build a career and raise a family in 21st century California. Their policies in terms of land use regulation and greenhouse gas emissions will make it even harder for existing factories, warehouses, homebuilders and other traditional employers of the middle- or working class.

Yet the “greenest” parts of the country–places like the northern end of the Bay Area–are among the toughest places to build or manufacture anything, without huge public-sector subsidies. Indeed, California’s new green requirements, compared with places like Texas or China where manufacturing has other advantages, would further undermine an already struggling sector. Few businesspeople see much growth in the near future in office or residential construction.

US Chamber of Commerce and climate change

Oct 20, 2009 13:33 UTC

OK, here is the USCOC’s basic position on climate change from recent congressional testimony:

The Chamber supports the goals of the Committee to lower concentrations of greenhouse gases in the atmosphere, become more energy efficient, and incentivize “green” energy technologies. The Chamber does not categorically support or oppose approaches such as cap and trade or carbon tax, but rather measures all climate legislation on a bill-by-bill basis against five core principles: any legislation or regulation introduced must (1) preserve American jobs and competitiveness of U.S. industry; (2) provide an international solution that includes developing nations; (3) promote accelerated development and deployment of greenhouse gas reduction technology; (4) reduce barriers to the development of climate-friendly energy sources; and (5) promote energy conservation and efficiency.

Me: One reason so many news organizations got suckered by yesterday’s phony press release is that it seemed pretty plausible that the Chamber would come out in favor of a carbon tax.  Plenty of pro-market folks have come out in favor of such a plan, especially if it was revenue neutral, perhaps offsetting payroll taxes.

Obama, this is why America is not Europe

Oct 13, 2009 16:44 UTC

As usual, Joel Kotkin nails it:

In a rapidly aging society like Germany’s and those of other E.U. countries you can make a case for slow growth, limited work hours, early retirement and a strict regulatory regime. But for America, with its growing workforce and population, slow economic growth simply is not socially sustainable.

More broadly, we are talking about two different mindsets. As one writer puts it, Europeans “emphasize quality of life over accumulation” and “play over unrelenting toil.” In contrast, most Americans seem ill-disposed to relax their work ethic, which has been central to the national character from its earliest days.

Of course, the European approach is celebrated by some Americans, particularly those who already have achieved a high level of affluence. It plays very well in “little Europes” of America, cities like San Francisco, Portland and Boston, places with relatively few children and generally slow-growing populations.

Me: I wonder if eventually US political parties break down to a pro-growth, pro-family, pro-population party and a “sustainable,” growth, Euro-lite party.  Certainly, there are elements of the Democratic party which would fit into either.

2012 Watch: Romney goes after cap-and-trade

Oct 8, 2009 16:31 UTC

Mitt Romney attacks cap-and-trade via video over at his PAC website, Free and Strong America. He basically portrays it as an energy tax on Americans (which it is) that will hurt American competitiveness vs. India and China (which is it will.)

But, more interestingly, he makes is clear that does believe in climate change (which the conservative talk radio crowd generally does not).  And you can be sure his campaign for president will have a more expansive energy policy than just “drill, baby, drill.” During his last run, Romney told me he was certainly willing spend many billions on government investment in alternative energy and other new energy technologies. That’s right, government spending — though I am sure venture capital would play a huge role as well.


learn more about myths and facts about climate legislation here: http://www.wri.org/stories/2009/08/clima te-change-legislation-myths-and-reality

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$10 trillion for clean energy? Maybe a bit overambitious

Oct 6, 2009 17:23 UTC

Working for the International Energy Agency must be hoot. Where else can you recommend a $10 trillion investment and kinda-sorta be taken seriously? From the WSJ:

The IEA, energy adviser to the world’s richest nations, urges more-aggressive reductions in carbon emissions than what many nations are currently planning. In the report, to be released Tuesday, the IEA calls for investment — in clean-energy initiatives such as solar power, new nuclear plants and other measures — of $500 billion a year over the next 20 years.

That is 37% more investment than what the IEA estimated was necessary just a year ago. Some analysts put the current level of investment in clean energy at around $100 billion a year.

And this is my favorite line in the story:

The IEA’s projections, though sometimes seen as overly ambitious, are generally regarded as relevant guideposts for the energy industry.


This is not really a huge deal compared to the size of the energy problem.
Large numbers should always be considered in context.
Let’s see, OECD primary energy consumption is ~5.5 bill tonnes oil equivalent per year. (http://www.iea.org/Textbase/stats/balan cetable.asp?COUNTRY_CODE=28) This corresponds to about 40.4 billion barrels of oil-equivalent. So $500 billion per year is $12.37/bbl oil-equivalent used in OECD per year.
Or, 29 cents/gallon-oil-equivalent. That seems quite reasonable.

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Obama’s unilateral move on climate change

Oct 1, 2009 11:54 UTC

OK, so the White House has greenlit the EPA to go forward with new rules, as the NYTimes puts it,  “to regulate greenhouse gas emissions from hundreds of power plants and large industrial facilities.”  I think this lobbyist quotes in the article gets the politics right:

Scott Segal, a utility lobbyist with the law firm Bracewell & Giuliani in Washington, said the rule should not be used to rush Congress into passing a poorly drafted bill.

But he also said that the proposal “strengthens the president’s negotiating hand in Copenhagen.”

“Even if the Senate does not act,” Mr. Segal said, “he can legitimately say to other nations, ‘We are taking action on a unilateral basis. What are you doing?’ ”


With reference to the above article, the short article below explains the scenario in the Asian Climate Change context.

“Green Energy : A Paradigm Shift in Sustainability”

Green energy is not something new since the discovery of the depletion of the ozone layer and global climate change as a direct impact of green house effect on a worldwide scale.

Various international conventions/agreements on the reduction of green house effect will remain forever on glossy papers if countries around the world are not serious in committing themselves towards real implementation within national boundary.

Political will power, or even real politics for that matter alone, is insufficient in promoting green energy as attested by the economics of reality in both developed and developing countries.

A paradigm shift is needed in forging a new instrument of international co-operation within the wider framework of Free Trade Agreements and joint conviction shared by stakeholders such as the OECD, major banking bodies(i.e. IMF, World bank, ADB) and leading industrial/corporate entities.

Jeong Chun-phuoc
[an an advocate of Competitive & Strategic Environmenting]

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The cap-and-trade endgame on Capitol Hill

Sep 30, 2009 16:54 UTC

The great Dan Clifton of Strategas Research hears the same thing I am hearing:

We continue to believe the Senate does not have 60 votes for a meaningful cap and trade bill and today’s events are largely designed to keep the process moving. With healthcare taking up so much of the calendar and financial regulation to follow, cap and trade is now squarely put into the election calendar. Should something pass next year, we expect the legislation to a be a stripped down energy bill (as opposed to cap and trade) and that will feature a Renewable Portfolio Standard and possibly easing of approval for transmission lines.


Still, we can not take it for granted. Proposed cap and trade legislation would cost Americans thousands in increased energy costs as well as lost jobs. Write to Congress at http://tiny.cc/pxIgi.

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Why strong climate change legislation is dead

Sep 11, 2009 14:44 UTC

My new favorite blog, New Geography, does a fine piece of analysis that reveals why 80 percent cuts in climate change emissions are a fantasy without a radical technology breakthrough:

According to a recent poll by Rasmussen, slightly more than one-third of respondents (who provided an answer) are willing to spend $100 or more per year to reduce greenhouse gas emissions. About 2 percent would spend more than $1,000. … If we do a rough, weighted average of the Rasmussen numbers, it appears that Americans are willing to spend about $100 per household per year.  … At $100 per household, it appears that Americans are willing to spend on the order of $12 billion annually.

At $100 per household, Americans are prepared to pay just $2 per greenhouse gas ton removed. All of this is in a policy context in which the United Nations Intergovernmental Panel on Climate Change suggests that $20-$50 per greenhouse gas ton is the maximum that should be spent per ton. The often quoted McKinsey/Conference Board study says that huge reductions in greenhouse gas emissions can be achieved at $50 or less, with an average cost per ton of $17. International markets now value a ton of greenhouse gas emissions at around $20. At $2 per ton, American households are simply not on the same “planet” with the radical climate change lobby as to how much they wish to spend on reducing greenhouse gases.


Sorry, Drewbie, I gave you half an answer. It takes energy, energy to sort the CO2 out from the N2, O2, etc. in the atmosphere, and then, lucky you, you’ve got a load of CO2 on your hands. You could pump it underground, if you trust that idea. It uses a lot less energy to just not put it in the atmosphere in the first place. And as for plants, give them some water and fertilizer and you’re turning atmospheric CO2 into solid carbon compounds with solar energy, with little or no cost for equipment.You might be interested to know that there’s a company with a process for using electric power to turn CO2 into gasoline. They can take the CO2 from the atmosphere, but they had power plant exhaust in mind to make it cheaper. They were talking about doing this with wind power at night, when they felt there would be a great excess of wind power. But putting the wind power directly into an electric vehicle battery has got to be more efficient. And of course if you burn the gasoline, the carbon goes back into the atmosphere. The essential point is again that this process takes energy.

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