As part of the effort to enact a range of new restrictions on carbon emissions, many point to the creation of "green jobs," arguing that new government spending and regulation can bring us out of the current recession. The latest version of this is highlighted in the Seattle Times which cites a study saying they can be part of a "green recovery." The study, however, uses a statistical trick to make bad jobs sound good.
The study argues that "government investment produced more 'job hours' than tax cuts or traditional infrastructure spending." There is a reason that the study focuses on "job hours" rather than growth or productivity: green jobs require more labor to do less.
For example, it is sometimes argued that renewable energy is better because it creates more jobs than other energy sources. For instance, a California campaign to promote solar notes "Solar Photovoltaics create more jobs per Megawatt of capacity than any other energy technology."
This is a foolish argument. We could create more jobs in agriculture by banning tractors and requiring human labor to plant and harvest. This would create more "job hours" in agriculture. Would anyone support this? Of course not. It would make us all poorer. The jobs would be horrible and pay poorly and it would certainly raise the cost of food. Promoting a particular policy because it is more labor intensive is a sure path to economic ruin.
The Times article also questions "stimulus" spending on highways, saying "as if peak oil and global warming don't matter." The peak oil theories, which argue that oil is beginning to run out leading to severe economic impacts, have been around for some time and traditionally heat up when oil prices rise, as they did last summer. Freakonomics co-author Stephen Dubner addressed peak oil hysteria recently on his blog, noting "It is always interesting to watch what happens when the media latches onto a given issue and then, as the reality on the ground evolves — sometimes radically — the media fails to catch up to, or even monitor, the changes. This means the public is stuck with an outdated version of conventional wisdom which, even if it were true in the first place, is no longer so."
The politics of climate change are going the route of many other such issues, with proponents of the policy making dramatic, but inaccurate, claims. When the facts catch up, proponents simply move on to the next outrageous claim, always trying to stay one step ahead of the facts. Claims of green jobs and a green recovery are the latest iteration of that process.
The Environmental Protection Agency is in Seattle today to hear testimony on their effort to regulate carbon emissions to mitigate the impact of climate change. One theme is emerging in government efforts on this issue -- don't leave legislation to legislators.
"In effect, the prospect of EPA regulation is a bulwark against Congress falling down on the job," said Dan Esty, a Yale University environmental professor.
The philosophy expressed here is that constitutional checks and balances from elected representatives are useful only to the extent Congress does what is "right." Otherwise, the executive needs to step in and do whatever is necessary, other branches of government, and public opinion, notwithstanding.
That general philosophy was put into action today in Washington when the Governor, who previously argued that the legislature must endorse her climate change legislation, suddenly realized that legislative approval was not needed. The Democratic majority in the legislature rejected the Governor's bill. As a result, she today announced an executive order that mirrored many of the elements of the bill lawmakers turned down.
Here is the intent language of HB 1819, which failed to clear the House.
NEW SECTION. Sec. 1. The legislature finds that Washington should maintain its leadership on climate change policy by implementing a cap on carbon emissions and developing strategies to achieve those reductions, including continuing Washington's participation in the design of a regional cap-and-trade program with the western climate initiative.
The Director of the Department of Ecology to: (a) Continue to participate in the Western Climate Initiative to develop a regional greenhouse gas emission reduction program and to work with the federal Administration, Washington’s congressional delegation and appropriate committees to help design a national greenhouse gas emission reduction program that reflects Washington State priorities.
The Governor herself testified before the legislature in an effort to get support for the above language. The bill, despite that effort, died. In an opinion piece in April, the Governor wrote "Now we need a strong climate action bill from this year's Legislature to grasp the opportunities that await us." The question is, what made the Governor suddenly realize that that legislative support she had sought for a strong climate action bill was no longer necessary?
A number of stories and comments crossed my screen yesterday addressing what it means to be "green," and it is unclear to me why anyone would see these as positive.
First, a local environmental group posted this quote on Twitter from environmental activist Stephen Viederman:
"Climate change isn't an environmental issue. It's an issue of equity and justice."
I thought this was a strange quotation to highlight. It indicates that environmental issues are only useful as tools to achieve other leftist goals, like government intervention to impose a particular view of "equity and justice." It also demonstrates a point we made yesterday that leftists, like the NDP in British Columbia, will toss environmental concerns overboard to achieve other goals. Why else would they make protecting the environment contingent on supporting other leftist values?
Second, the people of India can celebrate their position as "greenest" citizens. What got them there also says a lot about what environmental activists, in this case the National Geographic Society, think "greenness" is.
That cold water bath many Indians have because there's no electricity...that 'matka' they use because they can't afford a fridge...and the long walk they take to work and back because private transport is expensive and public transport shoddy. There's an upside to the hard life. Indians may be green with envy at the consumption-driven lifestyle in the West, but their own frugal ways and modest means have catapulted them to the top spot in the world's Green index, making them the most environmental-friendly denizens of Planet Earth.
Environmentalists too frequently glorify poverty as a "green" way of life and this is just the latest, and most honest, evidence of that. Many greens, however, still choose to live here rather than such a "green" paradise. Remember this link between poverty and "greenness" the next time you hear promises of "green" jobs.
We've noted many times before that rich countries have better environmental records than poor ones. I'd be willing to bet that Seattle's air quality (or New York's) is better than Delhi's. Poverty means suffering and environmental degradation.
At an environmental breakfast yesterday morning, one of the more extreme local environmentalists told the audience that "Environmentalists can be difficult but they make great ancestors." The comment, from an activist who inherited her wealth, made me laugh. The reality is that environmentalists like her exist because their ancestors were successful entrepreneurs. Across the world, wealth creates the ability to become an environmentalist.
Finally, someone pointed me to this article in Psychology Today. It addresses how our minds misapprehend risks from a variety of sources. One of the ways we get it wrong is when comparing risks of "natural" products to man-made products. The article notes:
The word radiation stirs thoughts of nuclear power, X-rays, and danger, so we shudder at the thought of erecting nuclear power plants in our neighborhoods. But every day we're bathed in radiation that has killed many more people than nuclear reactors: sunlight. It's hard for us to grasp the danger because sunlight feels so familiar and natural. Our built-in bias for the natural led a California town to choose a toxic poison made from chrysanthemums over a milder artificial chemical to fight mosquitoes: People felt more comfortable with a plant-based product. We see what's "natural" as safe—and regard the new and "unnatural" as frightening.
This is why groups like the Washington Toxics Coalition and others stir up fear of the latest "toxic" threat no matter how small. Natural is good. If people made it, it is bad. They prefer their faulty seat-of-the-pants assessment to actual scientific assessment.
Is this what it means to be green? Does promoting the environment mean promoting poverty? Are environmental issues simply tools to justify government expansion? Does being green mean ignoring science and an honest assessment of costs and benefits in favor of an unsophisticated commitment to an idealized version of the "natural."
If so, it is not surprising that support for their views is in decline.
Last night BC Premier Gordon Campbell won a rare third term in power, campaigning on his leadership on the economy. But he also benefited by taking action on climate change in a smart way, taking the issue away from the leftist New Democratic Party (NDP).
As Premier, Campbell implemented a carbon tax, with rebates to taxpayers, as the best method to address CO2 emissions. It was an alternative to the bureaucratic cap-and-trade and the myriad of regulations being offered elsewhere, like Washington State. The NDP, seeing a political opportunity, attacked the tax, hoping to raise populist ire. That strategy, however, backfired.
The first week of the election campaign was a complete disaster for the NDP, dominated by news stories about environmental heavyweights like David Suzuki denouncing the NDP for selling its soul in a populist bid to exploit some short-term voter anger. The message from many of the province's most influential environmental groups couldn't have been clearer: If you care about the earth, vote Liberal.
Last night's election losses are the culmination of the NDP's game-playing on the environment.
We have advocated a stable carbon price with offsetting cuts in property, investment and other taxes, as the best way to address carbon emissions. The package must not raise overall taxes and our preference would be a tax cut. The individual decisions of businesses and families will more effectively reduce carbon emissions, and do it in a way that preserves freedom and promotes prosperity.
Even though the BC model is slightly different than our approach, there are two key takeaway lessons.
First, too often the left treats environmental policies simply as tools to win election. The environmental community jumps on eco-fads with an eye first to political gain and second to environmental benefit. This is why greens continue to support failed environmental policies like the Kyoto Protocol and "green" building mandates in Washington. When the NDP saw what they thought was a more politically expedient route, they threw environmental policy overboard.
Second, the election shows that when conservatives take a serious and responsible approach to the environment, they can take the issue away from the left and win. We shouldn't enact a carbon price just for the politics, but it is another example that good policy is also good politics.
Allowing the left to dominate these issues leaves the debate as a choice between supporting or ignoring the environment. Engaging gives voters a choice between responsible environmental policies that promote prosperity, or the ineffective environmental policies of the past that rely on government forcing lifestyle changes and hurting prosperity.
BC voters made that choice last night and the conservatives are enjoying a third term.
Free trade usually means reducing trade restrictions among nations. This can result in companies continually moving production to countries with cheap labor and lax environmental regulations. It may also hurt workers in developing nations when products from other countries flood the marketplace.
This paragraph shows how incoherent his view of trade is. In just two back-to-back sentences he argues that free trade is:
Bad because companies move to developing countries giving them an advantage so they can ship products to developed countries at the expense of jobs there.
Bad because free trade opens developing countries, giving developed countries an advantage so they can ship products to those developing countries at the expense of jobs there.
Ironically, he doesn't see the contradiction from one sentence to the next!
Such incoherent arguments are rebutted by economists as diverse as Paul Krugman, whose Nobel Prize honors his work in trade economics (I recommend his book Pop Internationalism), and Milton Friedman. They recognized that free trade makes both trading partners better off.
"Fair" trade, on the other hand, works (to the extent that it does) only because it is so little used and because only those with available, discretionary income are participating. TransFair USA, the primary organization certifying "fair" trade practices, indicates that there were 87.7 million pounds of fair trade coffee imported by the US in 2008. This is less than 3 percent of the total coffee imported each year. If such trade rules were imposed for everyone, however, it would raise the cost of all coffee, reducing the amount enjoyed by Americans and putting growers in developing countries out of business. Fewer jobs, less prosperity.
There is another reason that advocates for the poor support free trade. Muhammad Yunus, who won the 2007 Nobel Peace Prize for his work in micro-lending, writes in his excellent book Banker to the Poor:
I would like to see all barriers and protections around the world markets disappear. Protectionism is built up in each nation in the name of the poor, but its real beneficiaries are the rich and clever people who know how to manipulate the system. By contrast the poor have a better chance in a bigger open market than in a smaller protected market. Everyone would benefit from the free flow of commodities, finances and people.
Free trade, not protectionism in the false guise of "fair" trade, is the way out of poverty. It is also the way toward a cleaner environment since wealthy countries consistently have cleaner air and water than poor countries.
Finally, if Mr. Watson's view of trade is correct, what must he think of the free trade that goes on between Washington and Idaho where labor costs and environmental regulations are different? Soon, all jobs will be moving to Idaho. But that's OK, because then Washington goods will flood Idaho, making them more poor. Right?
For those on Twitter, you can follow the Environmental Center @WAPolicyGreen.
We've noted the repeated failure of government to pick and choose correct "green" technologies as politicians work against economics and the wishes of people. Ecofads too often substitute for sound policy. The Seattle Weekly highlights one more example.
In "King County's 'Green Cab' Experiment Goes South," the Weekly notes that effort to get more "green" cabs in the county is now falling apart because the County ignored economic realities. In granting the green cab company special preferences, they also added some other rules:
"...the company is obliged to operate differently than other cab companies. Most cabbies are self-employed. They either own a license or lease a taxi from someone who owns one. But the county, trying to ensure that drivers could earn a living wage and benefits without being subject to the whims of license owners, mandated that the new company be run according to a traditional employer-employee relationship. Green Cab would pay drivers regular salaries and allow them the opportunity to unionize.
"But many drivers like the independence of working for themselves. And Green Cab can only afford to pay $8 or $9 an hour, Aboye says, whereas non-employee drivers in the region average $10.50 an hour (without benefits), according to a recent Seattle survey. Unable to recruit drivers under those conditions, Aboye says he and other Green Cab owners are driving the taxis themselves, rather than hiring others to take the wheel. Right now, only 18 Green Cabs are on the road, even though the county was prepared to issue 50 licenses."
Ignoring economic realities and imposing rules on people that they don't want is a recipe for failure. This is just the latest example. The result is that King County doesn't have "green" cabs and they've killed jobs.
“Disposing of this asset in the face of more wildfires and climate-change-related storms is the opposite direction that the state should be headed with its emergency-response infrastructure,” agency spokesman Aaron Toso said.
Two problems. First, the plane in question isn't an air tanker. It is an executive aircraft that is not part of the "emergency-response infrastructure" in any real sense.
"As an environmental scientist, I am frustrated by the poor information distributed by public officials, the media and others regarding the current and predicted frequency of extreme weather events. It is time for the scientific community to set the record straight. ... How many times have you heard that severe windstorms and heavy rains will increase in the Northwest under global climate change? The truth is, there is no strong evidence for these claims and the whole matter is being actively researched. Some portions of the Northwest have had more rain and wind during the past decades, some less. And initial simulations of future Northwest climate do not suggest heavier rain events."
Those who want to use climate change to support particular policies often claim that we must "follow the science." When there is a conflict between their desired policy and the science, however, they are quick to distort the science or ignore it altogether.
The Port of Seattle, calling itself "The Green Gateway," touts a recent study finding that shipping from Asia to the Midwest through Seattle produces the fewest carbon emissions. Shipping through Seattle, they argue, is the choice for environmentally conscious shippers.
Their web page talks about their work they've done to make this so. They note that:
The Ports have worked hand-in-hand with the transportation industry, regulatory agencies, community organizations, labor and environmental advocates. That cooperative approach has helped us move farther, faster without adding fees for port users.
So why is it that Seattle is so green? They explain:
Seattle and Tacoma are closer to Asia than any other U.S. port, resulting in shorter ocean transit times and lower fuel consumption on the ocean leg of the journey.
Apparently all of these groups got together and decided to move Seattle closer to Asia. The report also notes that rail lines from Seattle to the Midwest use less fuel per ton of freight.
So, after working with all of these groups and commissioning this study they found something that every person working in a free market should know: prices aggregate a tremendous amount of information and send a clear and accurate signal about the efficient use of resources. Prices are the best aggregators of the many costs, including energy costs, at all stages of the production of a product. If the Port wanted to know which route was the greenest, they needed only look at the price of shipping from Asia through various ports. (This might not be true if there is a monopoly or other regulatory distortions, but that is not the case here.)
When their study was done they found that the route that burned the least fuel, costing shippers the least in fuel costs, was also the greenest. That shouldn't surprise anybody.
If we want sustainability, the market is more likely to give us a clear path than all the various interest groups, each seeking a cut of the pie, combined.
Tonight, the Pacific Science Center will welcome Nicholas Stern, whose alarmist economic analysis is embraced by those advocating for radical and costly measures to address climate change. His work, however, is outside of both the scientific and economic consensus.
First, climate alarmists often point to the scientific consensus forged by the UN's Intergovernmental Panel on Climate Change (IPCC). Stern, however, often uses science that lies outside of the IPCC's projections. For instance, he estimates the potential of a 7 meter (24 foot) sea level rise due to the melting of the Greenland ice sheet beginning at just 2 degrees C increase. Elsewhere, Stern highlights the danger of a 1 meter (39 inches) sea level rise. The median estimate for sea level rise from the IPCC, on the other hand, is about 350 mm (14 inches).
He also shades his estimates toward the catastrophic, even when admitting that his estimates are based on little evidence. For example, he says that at 2 degrees C of increase there is risk of "15 – 40% of species facing extinction (according to one estimate)." One estimate. Supporters cannot simultaneously rely on the scientific "consensus" and then violate it when convenient.
Second, his economics also lie far afield of the consensus. Stern has been widely criticized for using extremely low discount rates to estimate future costs. A discount rate is an estimate of the time value of money. Discount rates tell us whether it is better to spend or save today. An extremely low discount rate means that avoiding small future impacts is worth huge investments today. Stern's discount rates are far below what virtually every other economist would consider reasonable and this has some very strange results.
Yale professor William Nordhaus, who has studied the potential economic impacts of climate change for decades, explains how silly Stern's estimates are. In his excellent book A Question of Balance, Nordhaus writes,
The Stern Review would justify reducing per capita consumption for one year today from $6,600 to $2,900 in order to prevent a reduction of consumption from $87,000 to $86,900 starting two centuries hence and continuing at that rate forever after. This bizarre result arises because the value of the future consumption stream is so high with near-zero time discounting that we should sacrifice a large fraction of today’s income in order to increase a far-future income stream by a very tiny fraction.
That's one reason why the vast majority of economists do not take Stern's projections seriously. By way of contrast, the Copenhagen Consensus, which brought together many economists, including a number of Nobel Prize winners, ranked climate change dead last in its priority list of the top challenges facing humanity.
Those who are concerned about climate change need to decide: do they support the scientific and economic "consensus," or do they support Nicholas Stern? So far, they are choosing Stern.
The normally thoughtful Sightline Institute has a silly response to my recent piece applying the lessons of green buildings to the legislative proposal for a $3 billion tax and spending package to upgrade state buildings with "green" elements. The proposal claims that a portion of the cost of the package would be paid by energy savings.
Their first critique is that our report is off base because it doesn't address the proposal directly. This is true. The proposal was unveiled on a Monday and the first hearing was Tuesday at 8 am. So, our piece is an attempt to draw lessons from Washington's experience with spending on "green" buildings. History never repeats itself exactly, but that doesn't mean we ignore it. Ironically, in one of the author's previous posts about the "green" bonds legislation, he cites data from "green" buildings studies to support the legislation. So he argues that our methodology isn't applicable after he previously used the exact same comparison to support the legislation.
Incidentally, we did, subsequently, write a short piece directly addressing the bill itself. You can read it on our blog asking "Are Green Bonds Worth It?"
They go on to say that "There is nothing in the legislation that mandates particular kinds of retrofits or LEED certification." This isn't quite right. There is a great deal of talk about "green jobs" and "green" elements. In fact, they call the spending proposal "green" bonds. To pretend that certain types of projects won't be favored ignores all the rhetoric used to justify it. Sightline's own support of the legislation is based on that very expectation.
The next critique shows how fast-and-loose some play with facts when they want something. Advocates of green buildings produced a report saying that those buildings perform better than the "standard stock" of American buildings. Our study notes that the "standard stock" of buildings averages 40-years old. Noting that a new "green" building is more efficient than a 40-year old building is a pretty attenuated claim. But green building advocates misuse the study, implying that it shows new "green" buildings are better than simply new buildings. It shows no such thing.
Sightline, however, says I make their point since the green bonds bill would update those buildings. They say "But that’s precisely the point: many of the school buildings eligible for retrofits really are 40 years old, or are built to minimum standards, or both." Really? Show me the data. Does the author know that are are they simply saying it because they want to believe it?
That leads to the more important point. The author notes the bill "doesn’t force districts to make improvements if they don’t pencil out." No, it doesn't force but it does actively encourage districts to make improvements that don't pencil out. Since schools pay none or only a small part of the cost, virtually any energy saving pencils out. Spending $10 to save $1 makes sense as long as someone else is spending the $10. That's what this does. The sponsor himself was very clear in his testimony that the purpose of this spending is to create jobs and energy saved is a positive side effect. The primary goal, however, is to spend the money.
The next section is the most muddled. The author uses the metaphor of a pitcher throwing strikes, so it seems like he added this last part because he needed a third. I quote a piece by the Superintendent of Public Instruction's office (SPI) from last December that savings are uncertain. My comments are a response to some who claim that that report shows a 24 percent energy savings. But the report says those savings are "projected," not actual. Our research shows those projections to be inaccurate.
Sightline quotes the SPI report saying that schools weren't asked to report those savings, but that some schools had reported "immediate and anticipated future cost savings." He goes on to say:
In other words, WPC uses the SPI report to criticize Dunshee’s legislation but ignores the fact that the districts weren’t asked to report about their energy savings. What’s more, some of the districts chose to report their energy savings anyway found just what you might expect: energy efficiency investments pay for themselves over time.
It is too early to tell, on the whole, whether buildings constructed following the WSSP protocol will produce enough savings to offset the up front investment. But many schools are reporting savings -- and the lessons we learn from the program’s ongoing data collection should inform investment decisions on retrofits.
In the first sentence he says savings are uncertain because they didn't offer data. The second sentence says that some schools reported savings, although he portrays them as real when they are actually only projected. The third sentence is back to uncertain. The fourth sentence is back to saying "many" schools are reporting savings. So, the data are uncertain, except where they point to his desired conclusion. That's called cherry-picking the data and it is evidence of a lack of rigor.
Ironically, he then accuses us of cherry picking. He argues:
The only other empirical evidence WPC offers to criticize the WSSP is that they claim to have found at least one non-green building that outperformed a green building in the same district. However, they don’t share the age, location, square footage or energy use at the schools being compared, so we can’t know if WPC’s comparison is fair or not.
This critique indicates that it is unlikely that the author read our piece very carefully. Not only do I give more than one example, I name some of the schools we looked at. I wrote, in the eighth paragraph of my piece, that:
In Tacoma, where supporters touted the energy savings of Giaudrone Middle School, the building has consistently used about 30 percent more energy per square foot than another Tacoma middle school built the same year but without mandated green standards. In Spokane, none of the three “green” elementary schools are as energy efficient as Browne Elementary, built in 2002, prior to passage of the “High Performance Buildings” law.
As for the "green" bonds proposal itself, our research is demonstrating that the savings claimed by advocates are amorphous. The data only include projected savings and actual savings are rarely audited. Further, the total amount spent on the types of projects highlighted by advocates has been about $160 million over ten years. This proposal increases that to $200 million, of the total $3 billion spent, over two years. Given the lack of clear data, hoping that this dramatic increase in the program will produce the projected savings seems hopeful in the extreme.
One thing we can agree on is Sightline's call for a cost-benefit analysis of energy saving projects. Now if we could just get the legislature to consider that approach, we'd be getting somewhere.
Each year on Earth Day, politicians announce new efforts they promise will help the environment, often at no cost or even with the promise of "green jobs." Past promises, however, have consistently fallen short. Those failures are quickly forgotten and new promises are made.
Politicians claimed corn ethanol would be the answer for transportation fuels. That didn't pan out, so they now hope wood waste will be the savior. They argued that "green" buildings would dramatically cut energy costs. When that turned out not to be true their answer has been more green buildings. And after 20 years promoting electric and hydrogen cars failed, they turned to the technology that emerged from the marketplace -- hybrids. But who knows what auto technology will be the standard ten years from now, and picking hybrids today may look as foolish then as picking hydrogen cars looks today.
Many of these technologies may have promise. The government, however, repeatedly falls for ecofads, picking and choosing individual technologies, often to the detriment of more promising technologies and, ironically, the environment. Technology is the greatest hope to improve energy efficiency and use resources sustainably and efficiently. The best decisions are made by millions of creative entrepreneurs, engineers and others who risk their own funding and time on these ideas, not politicians who care more about political credit than actual environmental sustainability.
Here are a few of the promises made today and some of the results of similar promises made in the past.
Gov. Chris Gregoire today signed House Bill 2165 to help the Washington State Department of Natural Resources (DNR) create energy from wood waste in our state’s forests. “It is fitting that Washington State takes this step forward to create clean, renewable energy and green jobs on Earth Day,” said Commissioner of Public Lands Peter Goldmark. “Turning wood waste into electricity or liquid fuels will create both energy and jobs while improving the health of our forests.” - Department of Natural Resources release, April 22, 2009
"By requiring a growing percentage of our fuel supply to be renewable biofuel that meets appropriate fuel quality standards, we will reduce our dependence on imports of foreign oil, improve the health and quality of life for Washingtonians, and stimulate the creation of a new industry in Washington that benefits our farmers and rural communities." - Preamble, Washington State ESSB 6508, 2006
"California regulators, trying to assess the true environmental cost of corn ethanol, are poised to declare that the biofuel cannot help the state reduce global warming. As they see it, corn is no better – and might be worse – than petroleum when total greenhouse gas emissions are considered." -Scientific American, April 20, 2009
"The news that biodieselmaker Imperium will be cutting 24 employees (or more than half of the staff) from its Grays Harbor plant, announced Thursday night, won’t be a big shocker to anyone who has followed the company’s yearlong downward spiral. The Seattle-based biofuel firm, which has raised more than $200 million over its lifetime, withdrew an IPO that could have raised an additional $345 million, back in January 2008, and soon after reduced staff from a high of 107 employees." - Earth2Tech, March 13, 2009
"Green" Building Promises
"The legislature finds that public buildings can be built and renovated using high-performance methods that save money, improve school performance, and make workers more productive. High-performance public buildings are proven to increase student test scores, reduce worker absenteeism, and cut energy and utility costs." - Washington State SB 5509, Passed 2005
"Green" Building Reality
"When the “green” schools law was passed four years ago, supporters argued the standards would pay for themselves, reducing energy use by up to 50 percent. Supporters claimed one school in Tacoma was already saving more than 30 percent in energy use. The data showed something different. Giaudrone Middle School, built with the “green” elements, uses about 30 percent more energy than a middle school built in the same district in the same year, but without those “green” elements. ... Adding insult to injury, buildings cost more to build than was promised. Advocates told the Legislature that green buildings would cost an additional 2 percent. Interviews with facilities directors indicate the real number is 6 percent, which is not trivial. Each year, the state and school districts spend about $450 million on school construction. A 6 percent increase is about $27 million." - Washington Policy Center Op-Ed, Spokesman-Review, February 28, 200!
Electric Car Promises
"As a necessary and desirable step to expedite the transition to transportation technologies and infrastructure with reduced emissions, the department shall implement an electric vehicle and alternative fuel vehicle infrastructure program that accelerates planning and allocation of funding for pilot projects to demonstrate the feasibility of large scale deployment of charging and alternative fuels distribution infrastructure." - Washington State SB 5735, Passed April 14, 2009
Electric Car Reality
"California air regulators on Thursday gutted rules seeking to place tens of thousands of zero-emission vehicles on the road, instead ordering automakers to produce a fleet of cleaner-burning hybrids. The decision is expected to affect 12 other states -- including Washington -- that had adopted California's target for zero-emission vehicles, defined as those powered solely by batteries or hydrogen fuel cells. ... The rules have been modified four times since they were introduced. The biggest change came in 2003, when the Air Resources Board significantly scaled back the mandate and ruled that hydrogen cars, hybrids and cleaner-burning gasoline vehicles could meet the state's goals." - Associated Press, March 27, 2008
Today's promises build upon a shoddy record of using tax dollars to pick and choose technologies politicians touted as the environmental savior of tomorrow. Why will these promises be any different than the many made in the past.
Next Wednesday, April 22, is Earth Day and we are celebrating in proper style. Join us at Rachel Carson Elementary School in Sammamish at 6:30 to see "Not Evil Just Wrong: The True Cost of Global Warming Hysteria," an excellent film about the costs of thoughtless environmentalism.
The film is the second documentary by journalists Phelim McAleer and Ann McElhinney. Two years ago they joined us as keynote speakers for our environmental luncheon when they showed clips from their first film, "Mine Your Own Business."
The film highlights the high cost of the ban on DDT and the millions in Africa and Asia who have died from malaria as a result. Two years ago, the World Health Organization, saying they could no longer ignore the science, approved the use of DDT as a tool against malarial mosquitoes. The film combines interviews with scientists, environmental activists and average citizens to raise concerns about the current wave of regulations and taxes being proposed to fight global warming.
You can see clips of the film at the Not Evil Just Wrong Youtube site or watch the preview below.
The private screening is the first in the Seattle area and is free. Please RSVP by calling (206) 963-3409 or lleveque [at] washingtonpolicy [dot] org">lleveque [at] washingtonpolicy [dot] org.
Today, Rep. Hans Dunshee will announce his $3 billion spending plan for "creating jobs by funding construction of safety, health and energy-saving improvements to public facilities." The goal is apparently to provide spending similar to the federal "stimulus" package. Since the state budget must be balanced, however, the money must be bonded as future debt to be paid by taxpayers.
If the bill passes the legislature it would go to the public in November.
The sponsor claims that the bill will pay for itself. Half of the energy savings from spending on energy efficiency in public buildings will be placed into an account to pay off the bond. Further, he says that the bill would create 90,000 jobs, although he does not say how long each of those jobs would last or describe the quality of those jobs.
Several questions and challenges come to mind.
Past claims of energy savings have proven false. In 2005, Rep. Dunshee predicted that his legislation requiring schools to meet "green" building standards would reduce energy costs by 30 percent. Our research in the four years since the bill passed shows that green schools don't reduce energy costs and, in many cases, actually increase them. The Superintendent of Public Instruction recently admitted that the data do not support the previous energy savings claims.
Some energy efficiency projects are extremely expensive. When the City of Seattle looked at putting solar panels on Qwest Exhibition Hall, officials estimated that the project would break even only after 40 years. If money is spent for inefficient, but politically popular, projects the return on investment will be low or negative.
Most of the funding will likely come from increased taxes. Of the $3 billion budgeted, only $500 million applies to the "Washington Works"account created to capture half of the energy savings. To cover the full $3 billion, those expenditures would have to yield a more than a 12-to-1 return on investment. This is optimistic in the extreme. For a 20-year bond, excluding interest costs, this is about the pace of the growth of Google's stock price since its IPO in 2004.
The bill assumes school districts are mismanaging their schools. Undoubtedly school district officials will support this bill. Who can resist the temptation of free money, especially in tough times? The assumption of the legislation, however, is that there are massive energy savings to be had that are simply being ignored by school districts. Some districts may make this mistake, but my experience in speaking with facilities directors at school districts is that they know their buildings very well and identify opportunities for energy savings quickly.
It is unclear how energy savings would be counted. Schools and universities could come to regret taking the money if the accounting of energy savings is expansive. One-half of the energy savings will be returned to the state to pay off the bonds. Determining, however, what are actual savings may be difficult. This will involve establishing a baseline of energy expenditures for each building when energy costs can vary from year to year for a variety of reasons. It will also involve determining why any energy savings against that baseline occurred. Was it a mild weather year? Did teachers turn out the lights? These are not trivial considerations. One "green" school found that the temperature preference of the principal increased energy costs by thousands of dollars. Will they claim energy savings, and therefore payments, even if costs go up, arguing that costs would have been even higher? The City of Seattle made exactly this argument when !
it turned out that the new "green" City Hall actually used more energy than the old one. Charging school districts in that circumstance could add insult to injury.
It could pit schools and universities against the state. Further, since part of the savings associated with state spending would have to be paid to the state, school districts will have an incentive to minimize the claimed savings. The state, on the other hand, trying to claw back as much as they can, will want to exaggerate the savings. Who wins this accounting tug-of-war will determine whether schools are winners or losers in this program.
What happens if cost-effective projects aren't found? Any effort to spend a certain amount of money is likely to breed waste. At the end of each biennium, afraid to lose remaining funds, agencies find ways to spend them. It is likely that this program will see a similar rush to spend, regardless of the utility of projects. The money offered in this program doesn't expire, so it will be used for increasingly inefficient purposes. There is no standard for return on investment, only the requirement that the money be spent. It is likely that the return on investment of some projects will be negative, spending ten dollars to save one. This is a good deal for those who receive the money. Since taxpayers, not the districts or other beneficiaries, are liable for the costs, any new savings, however meager, is found money. Thus, districts will be happy to put forward any project that saves even $1 a year because they receive at least half of the bene!
fits and none of the costs.
We've addressed the "green jobs" ecofad in the past. Additionally, the goal of government spending should not just be to create jobs, but to create prosperity. For example, which makes more sense, 1) a project that generates 1 MW of energy and creates 10 jobs, 2) a project that creates 1 MW of energy and creates 100 jobs, or 3) a project that creates no energy but creates 500 jobs? If jobs are the goal, we could simply pay people to dig and fill in holes.
Ultimately the quality of the project is the key. We want to create productive jobs, not make-work jobs. This is especially critical since the funding for those jobs will come from businesses who are already creating jobs. An unproductive "green" job is worse for economic recovery than a productive job in another sector like health care.
We'll see how many of these questions are answered when the proposal is formally unveiled today.
The latest version of the state's climate change bill, E2SSB 5735, includes a number of efforts to favor the technologies politicians believe will be the key to reducing CO2 emissions in the future. The bill calls for creating an "alternative fuels corridor" using government funding and property. In building the corridor, the Department of Ecology will:
Limit renewable fuel and vehicle technology offerings to those with a forecasted demand over the next fifteen years and approved by the department;
To understand what a fool's errand this is, think back fifteen years, to 1994. California was trying to mandate all-electric vehicles, an effort they abandoned in 2007. Hybrid vehicles were unknown. Today, every car company offers hybrids and the Prius outsells the most popular SUV.
Only three years ago, legislators argued that biofuels were the carbon-free fuel of the future. Today that view seems naïve as the biofuel industry struggles and studies show significant costs and carbon emissions associated with the most popular biofuels. The pace of technological change is remarkable and predicting the future is extremely difficult.
Ironically, one of the advocates of the bill agrees.
The Sightline Institute, one of the more thoughtful environmental groups, falls into the trap of believing it can predict the future while criticizing opponents for believing the same thing. In a recent blog entry, they criticize opponents of the President's stimulus package, saying:
Everyone knows something about the bailouts, Obama's "handling" of the economy, how health care will play out, or the timing of federal climate policy. Note to everyone: shut up ... But whatever else you may know, you do not know what will happen in the future.
The irony is that while criticizing others' inability to predict the future, the climate policies they advocate expressly rely on the ability of politicians to predict what technologies will be viable in the future and spend taxpayer money on that bet. The problem is that politicians are very poor at this and fail again and again as evidenced by their support of all-electric vehicles, hydrogen vehicles and biofuels. As a result, politicians, unsure of where to place their bets, bet on every number on the roulette table. They lose large amounts of money on every spin, but can always claim to have picked the winning number. Uncertainty breeds bad decisions.
How do you address this uncertainty? Sightline argues that since the market doesn't always work perfectly, government must step in:
The only sensible thing to do when you see something that's clearly, inherently unsustainable is to do your best to stop it before someone gets hurt. ... Unsustainable things will stop, by definition. Once we come to grips with that fact, we can start planning a smoother and more gentle transition to a set of expectations, and way of life, that can really last.
In other words, we cannot predict the future, but when politicians see something they believe to be unsustainable, they should step in and stop it, using government planning. What if politicians guess wrong? What if they can't predict the future? There are two ways to deal with this uncertainty.
We can distribute power and hold those who make poor decisions responsible for those decisions, like in the market. Or we can consolidate power and separate decisionmakers from the consequences of those decisions. If individuals make bad decisions in the first approach, they bear the burden and the consequences are distributed. If politicians make bad decisions in the second scenario, the consequences are multiplied by the consolidation of power and the burden is borne by taxpayers.If politicians choose wrong, as they almost certainly will, when it comes to climate change spending, we will find ourselves years from now with higher carbon emissions and having wasted billions.
If we create a broad incentive to reduce carbon emissions, like a stable carbon price, millions of Washingtonians will take large and small steps. Some will succeed and some will fail. The competition of the market, however, will produce the most efficient and effective solutions as it did when it favored hybrids over the government selected all-electric vehicles. Those who fail will have done so with their own money. Even if most choose wrong, those who choose correctly will benefit and spread their innovation.
The future is uncertain, and there are ups and downs. But consolidating power in the hands of politicians turns ordinary risks into all-or-nothing bets, betting taxpayer money on their ability to do something they admit they cannot – predict the future.
Distributing power limits the cost of bad decisions and increases the diversity of thought and creativity that is critical to finding the technological solutions that are at the center of all environmental solutions.