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Washington's Five Worst Environmental Moments of 2008

December 30, 2008 in Blog

It was a mixed year for environmental policy and we saw the good and the bad. If there is one theme, however, it is that 2008 was the year of eco-fads. Science and thoughtful policy were set aside frequently in the name of showing "leadership" on environmental issues. As we've noted before, "leadership" is the justification politicians cite when there is no other compelling reason to support a particular policy. What all of these share is not only that they are expensive or science-free, but that they will actually do harm to the environment by distracting from approaches that truly improve environmental stewardship.

So, here are the worst environmental moments of 2008. Feel free to add any moments you think deserve mention in the comments.

Honorable mention:

Here are the top five.

5. "We're talking about remaking the economy of the nation, the whole globe." - Becky Kelley of the Washington Environmental Council on the passage earlier this year of the state's legislation to reduce greenhouse gases. The foolishness of this statement, from the environmental community's lead on climate issues, is remarkable. The economy is extremely complex (as we are seeing now) and efforts to "remake" the economy have repeatedly failed. Even small efforts to change the economic calculus are fraught. Witness the impact of biofuel mandates on food prices. As long as environmental activists believe they can remake the economy, they will continue to fail to improve the environment and will damage prosperity and jobs.

4. Seattle's Car Free Days. This program, designed to make it difficult, or impossible, to drive your car in Seattle earned ridicule even from the enviro-conscious residents of Seattle. Fundamental to the environmental philosophy of the left is the belief that politicians need to force people to change their lifestyle. That approach often fails, as evidenced by the backlash to the program because people often have their own ideas. As WPC's Brandon Houskeeper noted in his analysis of the program, the City didn't even make an effort to see if the campaign actually reduced CO2 emissions. This was the ultimate in policymaking to show leadership.

3. Banning bonfires on Alki. The City of Seattle ended up deciding against this policy, but it is another example of commitment to the cause displacing science. We wrote about Seattle's effort to ban bonfires on the WPC blog earlier this year. Banning bonfires would have done little (or nothing) to reduce CO2 emissions. Trees absorb carbon from the atmosphere. Burning wood then releases that CO2 which is absorbed by other trees. This is why biomass is listed as a renewable energy source by the state's "green" energy law. It was an ill-considered proposal that lacked science or common sense.

2. Washington's Cap-and-Trade legislation and the Western Climate Initiative. The state's approach to reducing greenhouse gases has turned into a hodge-podge of approaches that will encourage political game playing, require wide-reaching efforts to force lifestyle changes, will cause dramatic economic costs and will ultimately fail to achieve meaningful reductions in CO2. Other than that, it is fine. The accounting system that underlies the Western Climate Initiative is extremely complex and the result of a political negotiation. Is it any wonder that the two biggest financial collapses of this decade, Enron and the housing bubble, involve accounting games? WCI creates an accounting web many times more complex. That complexity is an invitation to gaming the system as the Government Accounting Office's recent report on Europe's cap-and-trade makes clear. Fortunately, th!
at complexity is beginning to cause some to look for alternatives.

1. Seattle's decision not to salt roads during the December snowstorm. This list is fairly Seattle heavy, but they have earned it. This is another policy undertaken without good science or clear thinking. In justifying the sorry state of the roads during the storm, the City claimed that salting the roads was bad for the environment. The Seattle Times reported, however, that some believe the approach ultimately chosen by the city, sanding the roads, may be more damaging. While I was at the Department of Natural Resources, our top concern in forestry was to keep silt and sand out of the water, so it would not surprise me if the City's current strategy did more damage. Ultimately they chose to risk the safety of people and access to businesses during Christmas in favor of ill-conceived environmentalism. p>

It wasn't all bad this year. There are some good moments as well. We list the top five good moments tomorrow.

Who needs science when we're saving the planet?

December 29, 2008 in Blog

A British group, Sense About Science, has published their Celebrities and Science Review 2008 and one issue we've addressed in the past made the list.

Both Barack Obama and John McCain indicated that they believe the vaccine preservative Thimerosal was linked to rising autism rates. The President-elect noted during the campaign that:

"We've seen just a skyrocketing autism rate," said President-elect Obama. "Some people are suspicious that it's connected to the vaccines. This person included. The science right now is inconclusive, but we have to research it," he said.

The problem is that numerous studies have disproven the link. Earlier this year a study noted that even though the preservative was banned in California several years back, autism rates continue to climb. The problem is that this eco-fad needlessly increases the cost of vaccines and distracts from efforts to find the real cause of autism. Researching proven dead ends is costly and dangerous.

The study lists numerous other scientific errors made by celebrities and politicians. This is an ongoing problem in environmental policy. The City of Seattle's decision not to salt the streets to clear the snow is another example. As long as we are making policy decisions based on fads, not science, we shouldn't be surprised when the result is bad for prosperity and the environment.

Political Presents Under the Tree

December 16, 2008 in Blog

The Seattle Times reported recently that Governor Gregoire favors allocating free carbon credits to companies in Washington as part of the cap-and-trade system she advocates. Companies would be allowed to emit the same amount of CO2 as they have in the past. If they are able to reduce their emissions, they can sell the allowances they were given from the government. The allocations would decline year to year, but the initial allocation would be based on historical emissions - plus politics.

This system was used in Europe and led to some companies being given large excesses of carbon credits which they then sold on the market. In short, government gave something of value (carbon credits) to companies who then profited from them. Worse, a recent report by the Government Accounting Office found that politicians handed out presents, choosing winners and losers when it came to handing out allocations, leaving some industries short and others long.

Most power generation facilities were short whereas industrial facilities, including iron and steel; manufacturing ceramics; and pulp, paper, and board manufacturing were long. Member states allocated the shortage to the power sector because they believed this sector could reduce emissions at a lower cost than covered entities in other sectors. In addition, there were concerns that compliance with the ETS (emissions trading system) would create costs for covered entities that compete with facilities outside the EU that are not subject to carbon limits. Therefore, member states generally allocated the surplus to the globally competitive industrial sectors and the shortage to the power sector, which does not generally compete with entities outside the EU.

In other words, politicians changed the allocations arbitrarily to favor some sectors over others for political reasons. This is a major problem with cap-and-trade. Free allocations allow politicians to hand out favors to those they like and punish others. Some of these accounting games have already occurred.

It is one reason why the EU is not likely to meet the Kyoto targets. Governments over allocated credits in an effort to limit the impact on the economy, making it difficult to reach the targets.

The alternative to free allocation is auctioning. There are some advantages to this system, but the version of auctioning favored by the environmental community would be worse than free allocations and would amount to a multi-billion dollar tax increase in the middle of a recession.

A complex system like cap-and-trade invites accounting tricks and political favoritism. That's why many who once favored cap-and-trade are looking to other alternatives to reduce the risk from CO2. Unfortunately, Washington seems mired and married to a bad system.

Spending Our Way to Green Jobs and Cheap Energy

December 15, 2008 in Blog

Today's Seattle Times features a story from Les Blumenthal about a plan to create 50,000 "green" jobs by spending billions for a new green energy infrastructure. He writes:

As the current economic downturn deepens, there is talk of another major public-works project for the Northwest, one that would deliver green wind power to the Interstate 5 corridor, which connects Seattle and Portland, and by some estimates would help create 50,000 jobs.

Later, there is a cost of $1.8 billion mentioned for some, but not all, of the work. This article is a textbook example of the sloppiness of claims about "green" jobs.

First, the 50,000 jobs isn't the result of the spending but the total potential number of jobs in the wind energy sector overall. The spending advocated by Rep. Inslee and Sen. Cantwell would "help" create those jobs. They appear to be taking credit for all the jobs when this program would be only a small portion of the costs. How many new jobs are dependent on this program? They don't say, perhaps because the link is so tenuous that any claim would be unverifiable. So they offer a large number in the hopes that people will fixate on it but they qualify it to the point where it is meaningless (i.e. it "could" "help" create the jobs).

Second, the jobs come with a cost because the cost of the program will be paid by ratepayers. BPA is required to pay the costs of the new infrastructure back to the Treasury, meaning it will have to increase rates. The article doesn't estimate how much it would cost ratepayers, it only  mentions the potential increase in jobs. Thus, even if we are paying ten to do the job of one, they figure, at least we are creating jobs. When costs are considered, however, people might have a different idea.

Third, this is treated as a jobs program a la the New Deal. The assumption is that government spending can be used to create jobs effectively. There are many problems with this concept. If government spending creates jobs without cost, why not have the government control 100% of the economy? Spending, government or private, is only as good as the return on that investment (we could hire everyone into the military which would create lots of jobs but it is a bad investment). Spending on bad investments is bad for jobs and prosperity. Spending well helps growth and government is notoriously bad at choosing wise investments. Harvard economist Greg Mankiw notes that two recent studies (one by the Chair of Obama's Council of Economic Advisors Christina Romer) indicate that spending by government is about one-third as effective at creating economic growth as i!
nvestments made by business. Thus, taking money from the private sector to spend in the public sector isn't a good strategy in the medium- to long-term. And even when it provides short-term stimulus, it has a disproportionate future cost.

Finally, advocates of alternative energy often argue that such energy sources won't significantly increase the cost of energy. This article, however, shows that they try to have it both ways. They argue that alternative energy doesn't cost more but that the billions in spending to support green energy is good because it creates jobs. We have argued in the past that incorporating the costs of the risk from CO2 into carbon-based energy is appropriate, but we need to be honest about the various costs of energy and the trade offs. Pretending there are no trade offs is precisely why politicians consistently make poor environmental and economic decisions.

There are certainly reasons to modernize the grid and reasons to diversify our energy portfolio. But we shouldn't pretend that there are no costs associated with spending to achieve a political goal, whether that is meeting an artificial alternative energy target or taxing some sectors of the economy to create jobs in other sectors.

State Can Restore Puget Sound With Real and Immediate Fixes and Without New Taxes

December 1, 2008 in Publications

The fanfare around the recent unveiling of the much anticipated Action Agenda by the Puget Sound Partnership was reminiscent of an art showing. Partnership advocates used broad strokes to paint a worrisome picture regarding the waters of the Puget Sound.

Wanted: Auto Industry Leadership, No Experience Required

November 21, 2008 in Blog

After failing to pass a $25 billion bailout of the auto industry, Congress is now asking for a business plan so they know how the money will be spent.

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

This wasn't part of the original request, but now Congress feels they need an indication of what the money will be used for. What is interesting is that they think they can be a better judge of a future business plan than auto industry execs. They have no experience in this area but since they are elected, they feel that such things are in their purview. Not that the current execs are doing well, but when facing a difficult and complex problem turning to people who have less experience and understanding (and less personal financial stake) isn't typically a good solution.

This is, of course, the problem with government involvement in business -- once the "public" has a stake, these businesses must answer to the "public" interest, whether that makes sense or not.

What might Congress decide is in the "public" interest? Here's the LA Times' idea:

If the US government—on behalf of the people—is going to spend considerable sums of public money and incur public debt to keep these institutions alive, let's insist on returns that benefit society as a whole, not merely Big Three shareholders, management, and employees. What might these public benefits be? Well, for one, isn't it time for Detroit to turn out a car that gets at least 100 miles per gallon—and to do it in three years?

Apparently the Times and the Congressional leadership believe changing the laws of physics is as easy as changing the law. It is worth considering that the LA Times editors expertise in engineering is why they work in the newspaper industry. Perhaps we should demand that the car can fly too.

All of this reminds me of a passage from one of my favorite books, Magnetic Mountain by Stephen Kotkin. He writes of another government effort to plan an industry without an understanding of the industry itself:

Some sense of the unreality of the situation can be gleaned from the fact that although there was little sense of how to design such a steel plant, a conference was convened on the time frame for the completion of the factory's construction. The debate proceeded over two alternatives, five years or seven years. [One planner] felt that building the factory within five years would constitute a miracle, but an official informed him that three and a half years was "all the party could afford." The pronouncement was followed by a temporary suspension of the discussion. When discussion resumed, the options had been reduced to either six years or three.

As poorly as the Big Three have done, what makes Congress think they have the ability to make better decisions given their lack of experience and knowledge about the auto industry, especially if they try to do so while simultaneously serving the "public interest" by adding unreasonable mandates and goals? Why will it turn out any differently than the story above?

Saving the auto industry...to kill it.

November 19, 2008 in Blog

The Big Three have spent the last few days asking for an additional $25 billion in federal money on top of the $25 billion they got earlier this year to re-tool their factories. The irony is that many of the same people advocating the bailout are also the ones trying to kill automobiles.

Those on the left argue that the Big Three are too big to fail and that allowing them to go bankrupt would cause economic hardship. Robert Tracinski of Real Clear Markets finds this gem of a quote that sums up the position of many arguing for the bailout:

Susan Helper, a professor of "regional economic development" at Case Western Reserve University tells the New York Times "From a social point of view, even if GM is not providing a return on investment, it is still providing a lot of good jobs."

The problem is that while we're looking to spend $25 billion to save the auto industry, we're also taking steps to kill the auto industry -- $22 billion just for Sound Transit in the Puget Sound. Let's be clear that the goal is not simply to increase options but, in fact, to force people out of their cars.

For example, when I told the Seattle P-I that to effectively reduce CO2emissions from cars we needed to focus on improving the fuel efficiency of cars rather than mandating behavioral change to reduce vehicle miles traveled (VMT), I received a sharp rebuke. Doug Howell of the National Wildlife Federation accused me of relying on "miracles," saying:

There are two fundamental ways to reduce global warming pollution from transportation: cleaner vehicles and fewer of them. Transportation is nearly half our pollution problem. Cleaner vehicles and fuels can reduce much of the problem. But no matter how we do the math, there is no way for Washington to reach its climate goals without reductions in VMT. This argument holds true for Hummers and hybrids. The bonus: Strategies to reduce VMT also create efficiencies that benefit commuters and businesses.

Put simply, unless we force people out of their cars, we'll never achieve the CO2 reductions we want. I think Doug is simply wrong because 1) he underestimates the pace of technological change and 2) he overestimates the ability of government to force people to change their behavior (witness the fiasco known as the Seattle "Car Free Days" program). There are a couple of other fundamental problems with that view, but I'll leave it there for now.

The Sightline Institute, an ideological traveler of the National Wildlife Federation notes that there is an additional inconvenient truth: forcing reductions in VMT means, fundamentally, getting the poor off the road so the rich can cruise. In discussing comprehensive road tolling to get people off the road they note that:

The "losers" would include people priced off the roadway—folks who’d prefer to drive, but can’t afford to—as well as those who would keep on driving, but pay more in tolls than they receive in time benefits.

There is one problem with this logic. If someone is continuing to drive even when they pay more in tolls, they are deciding that, in fact, they are receiving more in time benefits than the cost of tolls. The "cost" of something varies from person to person. The concept that there is a single true cost of something is emblematic of a viewpoint that believes government can calculate and impose the best strategy.

In the end, the logic of these activities is that we need to spend $25 billion to save an industry that we are spending $22 billion locally to kill and the result will be to allow the rich (driving big cars) more space to drive the open road. 

Expensive and Ineffective Cap-and-Spend Replaces Cap-and-Trade in Washington

November 18, 2008 in Publications

After the Legislature passed legislation earlier this year to support a regional cap-and-trade effort to reduce greenhouse gas emissions, environmental activists are now looking to modify the system, increasing the costs and making it less likely to effectively reduce CO2 emissions. The new system puts hundreds of millions, even billions, in the hands of politicians, hoping they will make good decisions about reducing greenhouse gases. The problem with this cap-and-spend approach is that it imposes an enormous new tax increase on Washington residents and rather than encouraging efficiency, will provide incentives for businesses to avoid the system, leading to loss of Washington jobs while doing little to reduce emissions. This month the Environmental Watch looks at the pitfalls of this costly and ineffective new proposal.

Fix it quick before the problem goes away!

November 11, 2008 in Blog

Back in June there was a lot of angst about oil prices and the fault was laid at the feet of "speculators" who some accused of driving prices up. Here is what New Jersey Governor and Obama ally Jon Corzine said at the time:

"I think everyone believes there's too much speculation in the oil markets," said New Jersey Gov. Jon Corzine, an Obama ally who announced the proposals in a conference call with reporters. "A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market."

Oil prices have fallen from $145 to $60 a barrel in six months, the fastest decline in history. Without government regulation.

Back in June I wrote that such government regulation would be risky and that I had more faith in consumers and oil purchasers to find the proper price because "speculators risk their own money." Those who bought oil at $140, or more, a barrel are not very happy right now. Consumers reduced their demand, oil consumption fell, oil purchasers became nervous about being overextended and prices fell.

During a campaign it is understandable that candidates would pander, promising to solve the issue du jour with resolute government action. The case of oil "speculation," however should be an object lesson to politicians who jump at the chance to add permanent and costly government regulation rather than allowing the aggregated decisions of millions of people to adjust prices.

The ultimate irony, however, is that Obama's supporters who wanted to crack down on speculators because of the oil price spike will now lament that cheap oil is encouraging people to drive more. Don't be surprised when those same folks call for an increase in gas prices to fight climate change.

Public comment period on Puget Sound Partnership's Action Agenda begins!

November 6, 2008 in Blog

The Puget Sound Partnership released today a draft copy of its Action Agenda.  The Agenda, according to the Partnership, will serve as a roadmap to help prioritize cleanup projects and protection plans for the Puget Sound.

The public is invited to participate in a public comment period, which begings today and will close on November 20, 2008.  The Partnership is required to deliver a finalized Agenda to the legislator by December 1, 2008.

Also released today is a draft of the Partnership's  Finance Plan  outlining how the Partnership proposes to pay for the Agenda action items.  The Partnership is estimating that it will cost, at a minimum, $200 million to $300 million to implement the Agenda in the 2009 - 11 biennium.

Stay tuned for more details...