Over the weekend, Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.), and Joe Lieberman (I-Conn.) released some details about their upcoming “tripartisan” energy/climate bill. (I wrote about it here.) This has prompted a flurry of press coverage, as various senators and interest groups react to the proposal.
The result? A torrent of confusion, nonsense, and outright falsehoods. Hooray for the Senate!
First, to get clear on the KGL proposal: they would keep a cap-and-trade (or possibly cap-and-dividend) system for utilities, while oil producers and users would be subject instead to a simple carbon tax. Heavy industry would be exempt from the cap to begin with and would be moved in over time. In other words, the econony-wide cap-and-trade system has been broken in two. Now there’s a mini-C&T system and a carbon tax. But carbon is still being priced; the cost of fossil fuels will still go up.
Do senators get that? It would appear not. Indeed, it’s become pretty clear that most conservative and “centrist” senators don’t have even a rudimentary understanding of carbon pricing. They think the KGL plan is better, but at no point does any of them offer any coherent policy rationale for that preference. And as far as I can tell, journalists don’t even ask the question. This is political Kabuki without even a thin veneer of serious policy considerate. (Usually they have a veneer!)
Start with this characteristically weightless Politico story.
“Any movement away from an economywide cap-and-trade system is a movement in the right direction,” said GOP Conference Chairman Sen. Lamar Alexander, who said the new direction “makes a lot more sense.”
Why is anything other than economy-wide cap-and-trade better? Why is the sectoral approach better? No clue. He doesn’t say. Or this:
“I’m very open to that,” Louisiana Sen. Mary Landrieu said of the new proposal. “I’m completely opposed to economywide cap and trade. A compromise that Lieberman, Kerry and Graham were working on might have more potential.”
Why is she opposed to economy-wide cap-and-trade? Why does KGL have “more potential”? She isn’t asked, and doesn’t say. Moving on:
“I’ll be certainly listening to it,” New Hampshire Republican Sen. Judd Gregg said of the proposal. “It’s got a lot of evolution in it right now.”
Too bad Waxman and Markey didn’t think to put some evolution in ACES. Or something.
“You can’t use cap and trade anymore because it is like manure on the trough,” said Voinovich. “It’s defined, and people are opposed to it.”
Ah ha! At last a reason to oppose cap-and-trade! Except, uh, it’s completely wrong. Every poll in the last five years, almost without exception, has shown that the public favors regulating carbon pollution and they like ACES, the cap-and-trade bill that does it. From a poll out just last month:
When asked whether they “support or oppose regulatiing carbon dioxide … as a pollutant,” 73 percent said yes, with only 27 percent opposed, including 61 percent of Republicans. This was more than the 67 percent who supported “expanded offshore drilling” or the 49 who wanted to “build more nuclear power plants.”
Throw in a rebate to cover higher electricity prices (a provision included in ACES), and 66% specifically support a cap-and-trade system, which is pretty extraordinary for a fairly technical policy. So when Voinovich says “people are opposed to it,” he’s either abjectly ignorant or the “people” he’s talking about are his fellow senators. Ah, life inside the snow globe.
Then there’s Graham himself:
“I think a lot of people are intrigued in business,” he said. “The key to Republican support is business.”
Hm, let’s see where business stands on ACES, the economy-wide cap-and-trade bill:
- American Businesses for Clean Energy (ABCE), a group of large and small businesses that want Congress to reduce greenhouse gas emissions; it already has over 2,400 companies — all of whom joined ABCE in less than four months.
- More than 80 groups signed onto the recent USCAP ad in the Wall Street Journal.
- We Can Lead, a group of more than 150 companies, continues to gain ground advocating for policies that will generate an estimates 1.7 million good, American jobs.
Looks like “business” is on board — unless Graham just means Big Oil business. Surely not!
Now let’s jump over to this story from Darren Samuelsohn of ClimateWire. It gets into more specifics about the KGL proposal and has much gibberish to choose from. To begin with:
“It gets you a solution to the carbon problem that doesn’t destroy that part [i.e., Big Oil] of the economy,” Sen. Lindsey Graham (R-S.C.), a lead co-author of the Senate legislation, said yesterday.
Now, why would cap-and-trade — a price on carbon — destroy Big Oil while a carbon tax — a price on carbon — wouldn’t? No explanation is forthcoming. But Graham is a model of clarity compared to this:
“The issue about equalizing the costs of people who put emissions in the air is what the game plan should be,” said Sen. Mark Begich (D-Alaska).
[rubs eyes] Uh. If Begich is trying to say that all people who emit should pay the same price for their emissions, well, have I got a policy for him! It’s called economy-wide cap-and-trade.
And I defy you to make sense of this:
[Jack Gerard, president of the American Petroleum Institute,] said that the carbon fee approach would yield net environmental benefits, while giving consumers the most transparent signal they can get about what the costs are from the program. Unlike the House bill’s cap-and-trade system, oil companies would pass through the costs with signs at the gas pump letting people know they’re paying more because of U.S. efforts to deal with climate change.
“The effect is you alter consumer behavior,” Gerard said. “If consumers know they have choices between buying a more efficient car, riding a bike or buying an SUV, now they’re making an informed choice.”
Jesus. WHAT? Look, a price on carbon is a price on carbon. Oil companies are going to pass the costs on to consumers. If they want to, they can put signs on gas pumps — the kind of carbon price they pay is utterly irrelevant to that. Similarly, a carbon price will yield slightly higher gas prices, whether the price is from a cap or a tax. Why would one alter consumer behavior but the other wouldn’t? I literally have no idea WTF Gerard is talking about here.
For the record, the EPA found that ACES would raise gas prices by $0.13 by 2015 and $0.25 by 2025. By comparison, gas prices shot up $0.40 last year in May alone. So whatever price signal a carbon price is going to send is likely to get lost in the natural variability of gas prices. But anyway.
Here we get a little closer to the realm of non-gobbledy-gook:
Denny Ellerman, a retired energy economist who worked at the Massachusetts Institute of Technology, said the oil industry’s general interest in the carbon fee stems in large part from their distaste with buying and selling emission allocations. “Just make it a tax, and we’ll pay the tax,” Ellerman said. “They know it gets passed on. They know demand is inelastic. They just don’t like the sound of having the allowances.”
Now we’re getting somewhere. Oil companies want a tax instead of cap-and-trade because they don’t want to trade allowances. But … why? They “don’t like the sound” of it? The thing about tradable allowances is that a particular company could increase its efficiency, sell its allowances, and make money from the system. The difference is that in the dynamism of a carbon market, oil companies would be pressured to innovate. A carbon tax, like a gas tax, is administered by the government; oil companies just pass it on to consumers. Business as usual: that’s what oil companies are trying to secure with this deal. National policy is being shaped around making them comfortable. Awesome.
Suffice to say, I could go on pulling dumb quotes like this for many more pages. It’s just profoundly depressing that world-historically consequential policy is being shaped by people who don’t understand how it works and are primarily motivated by marching orders from corporate polluters.
But, you know … welcome to the U.S. Senate.