Tmyers

A Disjointed Defense of Green Buildings and Bonds

April 24, 2009 in Blog

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.

Also, he didn't look at our web page to see if I'd mentioned other schools. I should have footnoted our work, but he can look at Should the State Follow "LEED" or Get Out of the Way?, WPC's comments on Residential/Commercial/Industrial option 3 (RCI-3), Suspending Failed “Green” Building Rules Can Save Schools Millions, "Green" Building Standards Not Improving Student Learning But Are Reducing Funding for Necessary Education Programs, font> among others. We've looked at all of the districts included in the State's green building pilot project and many others highlighted by the environmental community. Some are better than others, but none of the "green" schools live up to their promises, a fact now acknowledged, begrudgingly, by both the SPI and the Department of Ecology.

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.

Earth Day - Yesterday's Failures are Tomorrow's Promises

April 22, 2009 in Blog

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.

Biofuel Promises

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

Biofuel Reality

"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!
9


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.

Celebrating Earth Day...The Right Way

April 17, 2009 in Blog

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.

Money (and Green Jobs) for Nothing

April 6, 2009 in Blog

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.

You Can't Predict the Future. But I Can. With Your Money.

April 2, 2009 in Blog

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.

North Korea Appreciation Day

March 27, 2009 in Blog

KoreaREU121006_548x700 Tomorrow is North Korea Appreciation Day, sponsored under a different name by environmental group WWF and endorsed by UN Secretary General Ban Ki Moon and many others. Remember to turn your lights out tomorrow in honor of the example set by that country.

Secretary Moon is from South Korea. Looks like his country has some work to do.

A Smooth Transition

March 26, 2009 in Blog

With the closure of the P-I, a number of reporters are looking for jobs. Two environmental reporters have a new employer.

Seattle environmental think tank Sightline announed that the two will now be working there. They noted on their blog: "In addition, two veteran reporters from the Seattle Post-Intelligencer -- Jennifer Langston and Lisa Stiffler -- will be teaming up to edit our Sightline Daily news service."

The transition from environmental reporter to environmental advocate should be seamless.

In one of Stiffler's last blog entries at the P-I, she lamented having even reference those who disagree with her, noting "I hesitate to give even virtual ink to the more extreme climate change naysayers" when talking about a conference in New York of climate scientists who disagree with the projections of climate alarmists.

Two years ago, she and another P-I environmental reporter bragged about an award they received. They noted that "we were awarded the Warren G. Magnuson Puget Sound Legacy Award by the environmental activism and education group People for Puget Sound." They promised that they wouldn't "hang up our, uh, keyboards and declare victory." They didn't say what "victory" looked like for reporters. Interestingly, the blog entry was circulated at the Seattle Times to reinforce their rules against reporters accepting awards from groups they cover.

Langston covered a number of environmental issues, including this unintentionally humorous story about a couple who made a "zero-carbon" move.

When addressing environmental issues, many wonder whether the news they read is being presented in thoughtful and complete manner. When reporters transition so quickly and easily to the payrolls of groups they previously were "objectively" covering, it adds to these doubts.

Double or Nothing on 2020?

March 24, 2009 in Blog

Noted environmental doomsayer Paul Ehrlich said in 1969 that "I would take even money that England will not exist in the year 2000." Turns out that this, like all of his other claims, was incorrect.

However, a member of British Prime Minister Gordon Brown's team is looking to come to Mr. Ehrlich's rescue.

Jonathon Porritt, an environmental advisor to Brown will argue this weekend that Britain's population must be cut in half to remain sustainable. Says Mr. Porritt, "Each person in Britain has far more impact on the environment than those in developing countries so cutting our population is one way to reduce that impact."

I've always thought the British were extremely hospitable. No matter how crazy the idea or how much time has passed, Brits will attempt to accommodate the ravings of foreign gadflies. In this case, however, we wouldn't mind if they ignored Mr. Ehrlich. After all, it's what we do.

Belated Prematurity

March 16, 2009 in Blog

Last Saturday, the Department of Ecology responded to my editorial in the Spokesman-Review noting that Washington's "green" schools are failing to reduce energy use. Two things are interesting about their response.

First, they made a dramatic change in their position on energy savings. Previously they claimed that "green" schools were saving up to 50 percent in energy costs, claiming that one school in Spokane was saving $40,000 per year -- which would have been a greater than 90 percent energy savings.

Now, responding to my data showing the schools use more energy than recent non-green schools, they argue something different.

Such claims are premature and, to date, unfounded. The fact is that we are still collecting data from the schools that volunteered to participate in the program’s early phases. Many of these schools opened just this past September.

After four years of claiming that "green" schools save energy, they belatedly call such claims premature. It is true that some schools have just opened, but many schools have been open for a few years, and they are the only schools we use to test energy savings. This is a strong indication they are backing away from the claims they made to help pass the legislation.

Ecology's editorial also cites the health of the students as another reason to support "green" schools.

In Washington state alone, more than 500,000 people have asthma, including 125,000 children. In Spokane County, about 40,000 adults and children have been diagnosed with asthma. Total direct medical costs for asthma reach $240 million each year in our region. How we build our schools matters. Creating healthy schools is a big part of what the High-Performance Schools Protocol – also known as the Green Schools Program – is trying to address.

The key word is "trying." Improving indoor air quality is an important goal, but there is no indication here that Washington's green schools are helping achieve that goal. In fact, the data show that absentee rates in Spokane's three green schools are virtually identical, slightly higher actually, than the district as a whole. Ecology needs to offer data that "green" schools are actually helping achieve these goals. They have not. They simply argue that the goal is worthwhile.

If their new position is we don't know whether "green" schools work, then it would seem to make sense to give the schools time to collect data. Why not suspend the regulation until we can be sure the extra cost for these buildings is worthwhile? At this point, supporters of keeping these costly standards can only say "trust us."

Ad Hoc Environmental Economics

March 13, 2009 in Blog

A lot of economic claims are thrown around regarding the state's efforts to address climate change. One good way to determine the validity of those arguments is to see if they are used in contradictory ways.

One such example is on display in today's Seattle P-I. In the article, environmental activist Becky Kelly argues that "We have a lot to lose by inaction. And we have a lot to gain by leadership." What we have to lose and gain she does not explain. In the past, advocates of the climate change legislation moving through the legislature have argued that by enacting regulations today, we will create more jobs here than if we let others pass climate legislation first.

That logic, however, is contradicted by the very text of the legislation. The new version of SB 5735 contains the following language, requiring an economic analysis that looks at "How to address trade competition from countries and states that are not participating in an emissions reduction program." This recognizes that enacting regulations here provide incentives to move carbon-emitting activities and business elsewhere.

This contradicts the above logic which argues that regulating here, early, will bring jobs to Washington. It demonstrates that the argument made by Becky Kelly and others who demand "leadership" makes no sense. The very need to appeal to "leadership" indicates that other arguments are inadequate to win the point. Being a leader in adopting bad legislation is not something to brag about.

Further, adding costs and regulations, as envisioned by the environmental community, hinder business development. They may not care because they believe the cost is worth achieving their environmental goals, but they cannot argue such policies are good for business. The language of 5735 admits as much.

If we really cared about jobs, we would let others create the demand by passing regulations and we would create the supply by passing tax cuts and business incentives to develop companies that meet the demand elsewhere.

For instance, if Seattle mandates that every home install solar panels, there is no reason to believe that those solar panels will be manufactured in Seattle, especially if energy costs are high and business regulation is tight. It is more likely that other communities will build industries that benefit from Seattle's regulation. Seattle's leadership will create higher costs for their residents and jobs for others.

If Washington wants to lead, it should lead in policies that encourage supply. The regulations being proposed, however, lead in creating demand for products that can easily be produced elsewhere.

Environmental advocates know this. That's why the language is in the bill. They hope, however, reporters and the public won't question their claims about "leadership" and that they will end up believing that regulating first will somehow create jobs here.

Everything is Local for Somebody

March 11, 2009 in Blog

An ironic story in Crosscut talks about the number of "buy local" organizations popping up across the country. The purpose of these organizations is to make sure that none of the members of our buy local effort buy from any of the other buy local efforts. They're not local.

Such buy local efforts are silly for a number of reasons.

First, I don't like the us-vs-them attitude inherent in buy local efforts. I may root for the Huskies over the Cougars, but I'll buy Cougar Gold cheese because I like it and I tend to believe that my personal superiority over Cougars is limited to my choice of schools. Otherwise, I see no reason that I should choose someone from Seattle over someone from San Francisco, Lubbock or anywhere else. Any campaign to "support our own" is fraught with the definition of who is like us. That hasn't always been a positive impulse in history. This is more about excluding other communities than building your own.

Second, buying local doesn't mean it uses fewer resources or is good for the environment. Milk produced in King County may use more energy than milk produced in Yakima. More fuel is used shipping feed from Eastern Washington to King County cows than is used shipping milk from Yakima to King County consumers. Numerous studies demonstrate that distance between the producer and consumer doesn't always reflect the use of resources. In many cases, longer distances are also more "sustainable."

Third, for many buy local advocates, "buy local" means little more than "buy from me, not my competitors." One builder quoted in the article is excited about "buy local" because he is "working on how to approach weatherization, retrofitting and other items in Obama's package." In other words, he's excited about government programs that favor him. I am shocked.

Another "buy local" advocate in the story is a local book seller. His commitment to "buy local" appears to be based solely on his desire that people buy from him rather than Amazon or Barnes & Noble. On the book store's web page, the book seller lists his five favorite books. None of them is by a local author and certainly none of them are printed locally. He wants you to buy books that have been written and printed elsewhere and shipped to him rather than buying books that have been written and printed elsewhere and shipped directly to your home or to a major bookseller.

Some argue that local food tastes better. Others argue that local booksellers or hardware stores offer better service. Fine. In those cases, however, people aren't buying the "localness," they are buying taste or service. If those things are true, there shouldn't be a reason to start a "buy local" campaign. Too often, "buy local" is a misleading surrogate for other values. Worse, activists then look to government to mandate "buy local" rules, provide subsidies and other taxpayer-funded preferences that force consumers to adhere to the values of a few.

In the end, people should be free to buy what they want, whether their priority is taste, service or price, whether they get those attributes from a product made locally or elsewhere.

Shucking and Jiving: A Video Representation

March 9, 2009 in Blog

Bjorn Lomborg, last year's keynote speaker at the WPC environmental conference, has been trying to get Al Gore to debate the pros and cons of climate policy for years. Lomborg finally got a chance to ask a question of the former Vice-President at the Eco:Nomics conference in Monterrey.

Two things of note.

First, Gore refuses to answer the question of whether addressing climate change does more to improve human wellbeing than other policies, such as fighting malaria. He cites "scientists," but never mentions economists or any analysis of where limited resources are best spent. Which is better -- cap-and-trade or a stable carbon price? Should we spend money on stopping AIDS or expanding public transit? These are not scientific questions. They are questions of economics and values.

Second, he continues to ignore, and distort, the climate science while claiming to listen to scientists. At the end of the video, Gore says that for each 1 meter of increase in sea level there will be 100 million "climate refugees." This is wrong on two counts.

First, the UN agency on climate change, the IPCC, projects just over 1 foot of sea level rise during the next century. One meter is more than double the projection. So, Gore chooses an extreme example but passes it off as reasonable.

Second, this assumes that people would not move or adjust to the rise in sea level. As Lomborg mentioned in his speech last year, sea levels rose about a foot during the last century and we didn't notice it. It seems absurd to think that an addition 12-16 inches over 100 years would cause chaos.

Here is Gore ducking those key issues:

Obama Budget Director v. Washington Department of Ecology

February 20, 2009 in Blog

Washington State Ecology Director Jay Manning today told KUOW that cap-and-trade is "the most flexible and efficient way to reduce [carbon] emissions." He is pushing the legislature to adopt such a system in Washington.

I disagree that cap-and-trade is the most efficient way to reduce emissions. And I have friends in high places.

President Obama's Budget Director Peter Orzag has argued repeatedly that a stable carbon price, a tax on carbon-emitting energy, is more flexible and efficient (not to mention transparent) than cap-and-trade. Here's what he said in November of 2007 when he ran the Democrat-controlled Congressional Budget Office:

From that perspective, a tax has an important advantage: It allows more emission reductions to take place in years when they are relatively cheap. Various factors can affect the cost of emission reductions from year to year, including the weather, the level of economic activity, and the availability of new low-carbon technologies (such as improvements in wind-power technology). By shifting emission reduction efforts into years when they are relatively less expensive, a tax can yield a given quantity of emission reductions at a lower cost than can a cap-and-trade program with specified annual emission levels. In addition, by avoiding the potential volatility of allowance prices that might result from a rigid annual cap, a tax could be less disruptive for affected companies. Provided that the tax was set at a level that reflected the expected benefit of reducing an additional ton of CO2 emissions, the tax would provide a motivation for firms and households to reduce emissio!
ns up to the point at which the cost of doing so was equal to the resulting expected benefits.

The simple truth is that the economic impact isn't the primary concern of Manning and others who support cap-and-trade. They care primarily about the cap because they believe it guarantees a reduction in carbon emissions. This guarantee has proven to be false in Europe.

Manning and others should simply say they prefer the security of a cap, even if it is ephemeral, to the uncertainty of a system without a hard mandate. The problem is that in these economic times a glib approach to the costs of the system is no longer credible. That doesn't justify, however, mischaracterizing the facts about the economic impacts of cap-and-trade.

More Stimulating This Year than Last

February 13, 2009 in Blog

One year ago, in response to President Bush's stimulus proposal, I asked the question, "Is Government Spending Good for the Economy?" I expressed skepticism, saying:

...stimulus checks without spending reductions and government spending are similar. Both take money from people in the form of taxes and then put it back into the economy in the form of rebates or government spending. Rebates are better because they go where the economy needs it most (i.e. where demand is high) whereas government spending goes where politicians decide.

At the time, the Seattle Times agreed, saying in an editorial:

In fact, the economy is not a mechanism operated by the president. It is all of us, earning, spending, saving and investing. ... These problems are not going to be fixed with $500 checks. They will be fixed by people cutting their losses, replenishing their savings, adjusting their attitudes about risk and making better decisions.

They seem to have had a change of heart, however. Here's what they said today about President Obama's stimulus package, the economy and by whom it is operated:

A welcome jolt for Washington jobs.
The economic-stimulus package up for a final vote in Congress will infuse the Washington economy with money for jobs, infrastructure improvements and funds for a variety of assistance programs. A welcome jolt of help as the contours of an economic crisis are revealed. ... Beyond the infrastructure improvements themselves, infusions of jobs-producing money translates into mortgage and rent payments and all the usual consumer purchases that fuel families and communities.

Our opinion hasn't changed. Why the Seattle Times changed their mind is open to speculation.

Lincoln's Humble Approach

February 12, 2009 in Blog

Lincoln In honor of Abraham Lincoln's 200th birthday, I listened to an interview with Michael Beschloss who said that Lincoln was a "man of self-doubt." This approach is echoed in other notes written by the President during his time in the White House, one in which he noted that,

In great contests each party claims to act in accordance with the will of God. Both may be, and one must be, wrong. God cannot be for and against the same thing at the same time. In the present civil war it is quite possible that God's purpose is something different from the purpose of either party.

He did not always know whether his approach was correct and constantly questioned himself and sought the advice of others, hence the "Team of Rivals" he gathered around him.

Too often, the debates we have about policy focus on what policy will work best assuming that the perfect solution is merely a question of craftsmanship. We need to remember, however, that just as the knowledge and judgment of that great man was imperfect, our ability to craft perfect political solutions is limited, to say the least.

It is a reason that I have so many doubts about cap-and-trade, a policy that one environmental activist said would involve "remaking the economy of the nation, the whole globe." It is a quote I have used often to highlight the leap of faith required in adopting such massive, all-encompassing approaches.

A more humble approach puts people in charge of these issues, recognizing that only they can know how best to improve energy efficiency and find the best ways to reduce the environmental impact they cause. That's why these approaches are not only more moral by giving individuals control over the key decisions in their life but are consistently more effective than government approaches based on an arrogant, and inaccurate, belief in the expansiveness of their knowledge.