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WPC response to Governor's letter on cap-and-trade - Part One

June 26, 2009 in Blog

This week Governor Gregoire wrote a letter to members of the Washington State Congressional Delegation asking them support pending federal legislation that would establish a cap-and-trade system across the United States.  In her letter she writes:

“The United States cannot afford to wait any longer to take comprehensive action to break our dependence on foreign oil while at the same time seizing the opportunity to develop 21st Century energy technologies, create jobs, reduce greenhouse gas emissions, and arrest global warming.

In the letter, the Governor offers up “examples” and “evidence” for why these policies are necessary.  However, our research and analysis of the cap-and-trade system proposed in the state of Washington and that system’s experience in Europe, demonstrates that many of the claims and arguments that the Governor provides are misleading or not based in the consensus science.

Below are highlights from areas of the Governor’s letter that diverge from accepted experience and are at odds with environmental economics.  In a separate blog posting we will review the scientific divergences made by the Governor.

Claim: “During my time as Governor, I have taken many actions to position our state to be a leader in the new clean energy economy…energy efficiency standards for buildings.”

Response: We have repeatedly highlighted the failure of these “energy efficiency standards for buildings” to save energy. The state Department of Ecology and Superintendent of Public Instruction have both confirmed this. An opinion piece earlier this year from DOE called savings estimates “prema­ture,” and the SPI’s office released a report last December saying that data didn’t show savings. Our research found that schools built using the standards have actually increased energy use by up to 30 percent.

Claim: “Our state’s $21 billion in annual energy expenditures, much of which currently leaves the state, justifies targeted public-sector investment in energy.”

Response: This is a strange claim for the Governor of “the most trade dependent state in the nation.” Imagine if the rest of the world took this attitude to justify refusing to buy Washington products like Boeing airplanes, Washington wine and apples, or Microsoft software.

Following this policy would harm the people of Washington, creat­ing fewer jobs, make us poorer and hurt the environment.

Focusing on what we do best, we create more jobs and more pros­perity because productivity is in­creased. Buying energy, whether it is oil or windmills, from others who produce those cheaply, saves money for Washington consumers, allowing us to invest in other industries and jobs.

This stance also hurts the envi­ronment. McKinsey & Co. note that the least expensive, low-carbon fuel is sugar cane biofuel. The US, however, has trade barri­ers against that energy source to keep biofuel money here. Doing so, however, led us to use fuels like corn-based ethanol and soy-based biodiesel, both of which have been determined to be more environmentally damaging.

“Targeted” investments in bio­fuels and other politically- se­lected technologies have a poor track record and justifying them with bad economics compounds that problem.

Claim: “We naively set a goal in 2007 of 25,000 green collar jobs by 2020. Today, with our robust community and technical college system with programs specifically designed to support more green jobs, we already have more than 47,000.”

Response: The Governor’s use of the word “naively” is interesting. Naïve implies that the state went about set­ting their goals without adequate knowledge or understanding of what a “green collar” job is or how they could be created. Given that naivete, we should wonder if credit is actually due here.

Additionally, these jobs are more theoretical than real. During the time Washington met and sur­passed that “naïve” target, our unemployment rate has nearly doubled. When the Governor signed the “green jobs” Executive Order in February of 2007, the unemployment rate was 4.8 percent, identical to the US rate. After the creation of 39,000 “green” jobs (there were 8,000 in 2007), the unemployment rate has reached 9.2 percent, 0.1 percent higher than the national average.

Claim: “Economists concluded that Washington’s families, businesses and communities are likely to incur billions of dollars of annual economic costs if we fail to drive reductions in climate-changing greenhouse gas pollution. Increased public health expenses alone could account for $1.3 billion a year.”

Response: The Governor references a study released by the University of Oregon. Those numbers are debatable and they ignore the costs of the policy. Washington Policy Center, in partnership with Beacon Hill Insti­tute, provided an economic analysis of the Western Climate Initiative’s cap-and-trade proposal. The key findings of that report found that Washington State could lose: “18,292 net jobs, $5.71 billion in per­sonal income and $302.54 in per capita disposable income” by 2020, with costs continuing to rise after that. If we ignore the costs of the policy we are likely to adopt a cure that is worse than the disease.

Claim: “The final bill must fairly allocate allowances to Washington’s hydroelectric utilities – recognition of our important hydropower base has been a basic tenet of mine for any cap-and-trade program.”

Response: This paragraph is full of irony. First, the Governor has op­posed counting hydropower as “renewable” under state law, but now asks Congress to do exactly that.

Second, the Governor has repeatedly argued that Wash­ington needs to be a leader in reducing CO2 to set the tone for federal policy. Now, however, federal policy is giving the bulk of free permits to emit CO2 to states with historically high emissions. States, like Washington, that showed “leadership” and reduced their emissions will be punished under the new system. Washington led, but nobody followed.

Click here to read the full WPC response to Governor's letter on cap-and-trade

The Solution to Unemployment: Stop Creating Green Jobs!

June 23, 2009 in Blog

In a letter to Washington's congressional delegation regarding the federal cap-and-trade legislation, the Governor says this:

On the jobs side, by way of example, in our state, we naively set a goal in 2007 of 25,000 green collar jobs by 2020. Today, with our robust community and technical college system with programs specifically designed to support more green jobs, we already have more than 47,000...

Yes, it was naive.

After the Governor issued Executive Order 07-02, calling for 25,000 “green” jobs, we wrote this in August of 2007:

It could be that the total target of 25,000 clean energy jobs by 2020 is extremely low and will be met with ease as utilities diversify their portfolios. If that is the case, then the target itself is relatively meaningless because meeting the target didn’t require government intervention. As such, the only value of such a target is political.

The target was, and is, political, not real. If, however, the Governor actually believes that these "green" jobs are real or positive, the naivete continues.

As we noted last week, according to the Pew Center, the top state in the country for "green" jobs is Oregon which also has the second highest unemployment rate. Not the most attractive poster child for "green" jobs.

During the time Washington met and surpassed that "naive" target, our unemployment rate has nearly doubled. When the Governor signed the Executive Order in February of 2007, the unemployment rate was 4.8 percent, identical to the US rate. After the creation of 39,000 "green" jobs (there were 8,000 in 2007), the unemployment rate has reached 9.2 percent, 0.1 percent higher than the national average.

Imagine where we'll be if we create too many more "green" jobs. At the very least, claiming that the creation of "green" jobs will help Washington "grow a clean energy economy," has not stood the test of actual experience.

Hyperbolic Environmental Claim of the Day: Ban PVCs to Fight Terrorism

June 17, 2009 in Blog

The Healthy Building Network makes this claim today:

It Bears Repeating: PVC Elimination May Be the Most Significant Contribution You Can Make to Homeland Security

What is the link? PVC manufacturers use about 40 percent of the chlorine in the US and terrorists could, so the claim goes, get that chlorine and launch an attack. They cite a GAO study for this claim. The GAO says that replacing chlorine with other compounds "potentially could lessen the consequences" of a terrorist attack. Nothing like three caveats ("potentially could lessen") to really take the steam out of a claim.

It is also worth pointing out the total number of terrorist attacks worldwide using chlorine is almost zero. One counter terrorism blog notes:

The use of chlorine in terrorist attacks, however, is relatively rare. In 1997, a serial bomber detonated several chemical bombs containing chlorine across Sidney’s eastern suburbs that injured some three dozen people. In Japan, on the third anniversary of the Sarin gas attacks on the Tokyo subway system, a chlorine-like gas was found in three beer cans in the Kasumigaseki subway stations. Other than that, reports of the use of chlorine in terrorist attack are sparse.

So, the "most significant contribution" to homeland security is to ban a chemical whose use is "sparse" and follow a policy that "potentially could lessen" the impact of an attack. If this is the best argument they've got, they need to go back to the drawing board.

Cobra’s weather dominator can solve global warming?

June 16, 2009 in Blog

Dominator In a blast from our childhood, one global warming alarmist appears to be channeling Cobra’s (GI Joe nemesis) effort to manipulate the planet’s weather.

Jamais Cascio, a futurist and Senior Fellow at the Institute for Ethics and Emerging Technologies, is calling for the use of geoengineering, a radical step that he says is necessary to “avoid climate disaster.”

In his Wall Street Journal article, Cascio states:

“If we want to avoid an unprecedented global catastrophe, we may have no other choice but to reduce the impact of global warming, alongside focusing on the factors that are causing it in the first place. That is, while we continue to work aggressively to reduce the amount of carbon released into the atmosphere, we also need to consider lowering the temperature of the Earth itself.”

Sprayship Of the geoengineering options being considered to help reduce the Earth’s temperature, Cascio prefers two methods that look promising.  They are:

“injecting tons of sulfates—essentially solid particles of sulfur dioxide—into the stratosphere, and pumping seawater into the lower atmosphere to create clouds.”

Calls to use of such extreme measures will no doubt face steep political challenges, as Cascio acknowledges.  In fact, many still argue for the reconsideration of global warming science.

Nevertheless, if geoengineering is the wave of the future, then let me be the first to cast my vote for the Weather Dominator

Green Building: Now With 50% More Global Warming!

June 12, 2009 in Blog

The essence of an eco-fad is something that sounds good, makes people feel like they are making a difference or provides political benefit for politicians, but either does little to help the environment or actually damages it.

Here's another perfect example.

Some new Seattle condominiums are selling their "greenness" by emphasizing the number of trees they save. One web site notes:

  • By using steel and concrete construction, [we] saved approx. 1,609 trees.
  • Cork remains the only tree whose bark can regenerate itself after harvest, leaving the tree unharmed.

This is one of the more humorous claims I've ever seen. Study after study demonstrates that using timber is far more environmentally sustainable than using energy-intensive resources like steel or concrete. A study from the Consortium for Research in Renewable Industrial Materials shows just how much more environmentally friendly timber is.

In their study of the Life Cycle Environmental Performance of Renewable Building Materials in the Context of Residential Construction, they note that a typical house using wood emits about two-thirds the CO2 during its lifecycle when compared to steel. When compared to wood, concrete emits 35 percent more CO2. Similar margins exist in air emissions and water emissions. Steel has five times the water emissions as wood.

What's more, wood is renewable. Concrete and steel don't re-grow. Trees do. While cork trees can continue to live after their bark is stripped (I'd be interested to see a building constructed with cork bark), trees are re-grown. Washington's forest ecosystems actually rely on a certain percentage of clearings and a number of animals, like deer or snowshoe hare, rely on young forests for forage.

It might be understandable that condominium marketing finds ways to spin environmental benefit, even if they end up highlighting "benefits" that are actually detrimental. Environmental activists, however, fall into the same trap.

Two years back I noted that environmental groups should support local timber harvests if they were serious about their commitment to the local timber that is emphasized by "green" building codes. A member of Green Everett responded that he would continue opposing timber harvests because  "Replanted young trees will take centuries to soak up the amount of carbon from the atmosphere that was stored in the original forest." Wrong. As scientists in British Columbia have shown, it takes about 10-15 years for a forest to re-absorb the amount of carbon lost in a harvest, not centuries. Harvesting trees at 45 years or older means that these forests absorb more carbon over their life, especially when compared to steel or concrete. Rather than looking at the science, he invented a statistic to support his reflexively anti-forestry position.

Forests have been at the center of environmental conflicts for so long in Washington that many are drawn into eco-fads that claim to protect trees. Unless we follow the science, however, eco-fads can often end up costing consumers more and harming the environment.

Rarely Heard Phrases: "Let's Follow Oregon's Jobs Policy"

June 12, 2009 in Blog

One of the most common themes from the environmental left these days is that "green" investments will lead us out of the current recession. Already, however, we are seeing that there is no relationship between these jobs and prosperity.

For instance, in January, the Governor claimed that Washington had created 47,000 "green" jobs, far surpassing the goal of 25,000 by 2020. Additionally, she claimed, the state would promote efforts to create another 2,900 such jobs during the next two years.

Have all of these jobs helped Washington's employment? Through April, Washington's unemployment rate of 9 percent was higher than the national average.

Perhaps, however, Washington hasn't done enough to create "green" jobs. What states are doing more?

Well, a recent study points to Oregon. Seattle environmental group Sightline notes on its blog that:

"Folks in Oregon have been trumpeting the good news all day today -- and rightly so; according to the Pew Charitable Trusts Oregon has the largest percentage of its jobs involved in the clean energy economy."

So, what does all of this "good news" mean for Oregon? They have the second highest unemployment rate in the nation at 12 percent. Only Michigan, which has unique problems, is worse. California, whose unemployment rate is 10.9 percent, is also among the green jobs leaders.

Frankly, there is a certain bit of silliness in this study. Idaho is also among the leaders. I don't remember environmental groups pointing to Idaho's policies as exemplary. What the study most likely means is that the definition of "green" jobs is amorphous and meaningless leading to statistics which are unenlightening.

All of this points out that creating "green" jobs doesn't guarantee anything. Indeed, labor leaders from Washington and Oregon comment today in the Seattle Times that there is more to a good job than being "green."

Green jobs are another eco-fad that politicians have latched onto in order to claim political credit even when the impact of the policy is nonexistent or even negative.

John Dillinger of the 21st Century: Carbon Credits

June 11, 2009 in Blog

News this morning from Australia reports that Australian Federal Police Agents will be required to investigate climate crimes in addition to their regular and more common duties that include, “investigating terrorist threats, drug syndicates, people trafficking, fraud and threats against children."

According to Australia’s Herald Sun:

“Interpol has warned the carbon market will be irresistible to criminal gangs because of the vast amounts of cash to be made. Possible rorts include under-reporting of carbon emissions by firms and bogus carbon offset schemes.”

The concern that a carbon market can be manipulated is not new.In his article, How Incentives to Cheat Undermine Cap-and-Trade, Todd Myers, Director of the Washington Policy Center’s Center for the Environment, wrote:

“Washington and a number of other states are setting up a system that creates an incentive for both the buyer and seller to keep quiet when the buyer doesn’t get what he paid for.

The cap-and-trade system Washington is helping develop as part of a regional effort would require companies that emit greenhouse gases to purchase carbon allocations from the government, or “offsets” offered by others, to bring them into compliance with the law, or pay a fine. The problem is that if the projects that create these offsets don’t protect the environment as promised, both buyer and seller are better off if nobody realizes it. Both have an incentive to collude, keeping the failure of the program a secret.

Such incentives to cheat demonstrate why a regional cap-and-trade system that allows carbon offsets is more likely to have increased enforcement costs, while failing to effectively reduce greenhouse gas emissions.”

Move over John Dillinger, there is a new “Public Enemy Number One!”

Does removing garbage cans provide any environmental benefit, and at what cost?

May 28, 2009 in Blog

According to a report by Emily Heffter of the Seattle Times, the City of Seattle is removing garbage cans from city parks as part of a cost cutting effort, but also hopes that this move “will morph into an all-out culture shift.”  Although the “culture shift” is not spelled out in so many words, one can easily derive that the “culture shift” hoped for by the City is a move to more recycling. 

In the Times report the City claims that, “the parks department planned to save about $160,000 by removing 400 more (garbage cans) — some from well-used parks.”  Yet, even as the garbage cans are being removed, the City announced plans to move forward with efforts to install recycling bins throughout the City.  Heffter reports that the City “put 120 recycling containers at parks…late last year”, and that, “workers now are spreading the containers across the rest of the city.”

But according to a 2007 Seattle Times article, the recycling program comes with its own high costs and may not have that much environmental benefit.

Late in 2007, the City of Seattle announced its plans to begin a recycling pilot program to increase recycling availability at City parks.  At that time, the pilot program was estimated to cost Seattleites some $200,000 for start up costs, with an additional cost estimate of $130,000 annually to maintain the pilot program sites, which would cover 106 recycle bins in City parks.

Responding to the cost for operating the recycling program in 2007, Tim Croll, Solid-Waste Director for Seattle Public Utilities, told the Times, “That's a lot of money... seemingly cost-ineffective.”  He continued, "As for the benefits to the environment, that's an art rather than science."

In fact, just recently, one citizen living near a busy park where the trash cans were removed told the Times, “the can at a nearby bus stop was overflowing from park users' trash.”

So questions remain surrounding the costs Seattleites are being forced to pay for their part in this “culture shift” and whether or not there are any real benefits?

First, Kill All the Humans...

May 26, 2009 in Blog

That's David Horsey's prescription for environmental policy. It is a policy that UK Prime Minister Gordon Brown's environmental minister has already endorsed in part. It is a policy the Flight of the Conchords have outlined.


Green Jobs: More Work, Less Pay

May 26, 2009 in Blog

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.