Cooler Heads Digest 1 March 2013

1 March 2013

In the News

State Department: Keystone XL Would Have Little Impact on Climate
Juliet Eilperin & Steven Mufson, Washington Post, 1 March 2013

California’s Green Jobs Bust
Conn Carroll, Washington Examiner, 28 February 2013

Green Movement Has Turned into a Death Cult
Dennis Prager, Investors Business Daily, 27 February 2013

The Green Energy Religion Is Based on a False Premise
Bill Frezza, Beaufort Observer, 27 February 2013

Keystone XL: A No-Brainer
Rep. Fred Upton, National Journal, 27 February 2013

Dominion Virginia’s ‘Green’ Solar Program: Bad Economics for a Misplaced Cause
Charles Battig, Master Resource, 27 February 2013

Is Presumed EPA Nominee Gina McCarthy Trustworthy?
Anthony Ward,, 26 February 2013

What Climate Consensus?
Peter Glover, Energy Tribune, 26 February 2013

We Should Defund the IPCC
Larry Bell, Forbes, 24 February 2013

News You Can Use
Carbon Tax Costs

According to a study published this week by the National Association of Manufacturers, a $20 per ton carbon tax would reduce household consumption by $340 in 2033, in addition to lowering employment by 2,520,000 job-equivalents. For more on advocates of a carbon tax, including AEI and Exxon Mobil, see Inside the Beltway.

Inside the Beltway
Myron Ebell

Sequester Begins With Devastating Spending Cuts

The automatic reductions of $85 billion in federal spending, known as the Sequester, which were agreed to by President Obama, Senate Democrats and House Republicans when the Budget Control Act was passed and signed into law in 2011, started going into effect today, March 1.  As President Obama has warned over the past several weeks, the consequences of cutting federal spending by 2.2 percent already are calamitous.  Bloomberg News reported that the Bureau of Labor Statistics was going to have to discontinue its survey of green jobs. 

Here’s what Bracken Hendricks, a senior fellow at the ironically named Center for American Progress and the author of a book on green energy told Bloomberg: “It’s a huge loss.  This means the U.S. will be flying blind on the growth of a very, very important sector in the U.S. economy.” 

It may be the White House agrees with my CEI colleague John Berlau, who told Bloomberg that he was glad to see the green jobs survey go.  That’s because President Obama promised in the 2008 campaign his policies would create 5 million new green jobs within a decade.  The White House later claimed $90 billion in stimulus funding had created 225,000 green jobs (at $400,000 per job).  So the president may be happy not to have be reminded by the BLS’s survey of how far he is from keeping his promise. 

For a Carbon Tax: ExxonMobil, AEI, Brookings and RFF
Against: NAM

It was a busy week for promoting and opposing a carbon tax.  Two studies on the economic effects of a carbon tax that draw opposite conclusions were released by the National Association of Manufacturers and the Brookings Institution.  Kevin Hassett, Ph.D., director of economic policy studies at the “pro-business” American Enterprise Institute, continued his advocacy of a carbon tax at a Resources for the Future forum.  And most interestingly, former EPA Administrator William K. Reilly, said at a conference that, “The strongest advocate on our task force for a carbon tax was ExxonMobil.  I had previously thought that was a public relations thing — I didn’t think they were quite interested in it.”  

The National Association of Manufacturers released a study by NERA Consulting on the Economic Outcomes of a Carbon Tax. The NAM study concludes that a tax starting at $20 per ton of carbon dioxide emitted and increasing by 4 percent per year would have a range of negative effects that would ripple through the economy.  In particular: “The negative impact of a carbon tax on total manufacturing output would be significant, with output from energy-intensive manufacturing sectors dropping as much as 15 percent and output from non-energy-intensive manufacturing sectors dropping as much as 7.7 percent.”

The NAM study also argues that: “A carbon tax would have a net negative effect on consumption, investment and jobs, resulting in lower federal revenues from taxes on capital and labor. Factoring in lost revenue from reduced economic activity, the net revenue from a carbon tax available for deficit/debt reduction and lower tax rates is relatively small.”

The Brookings Institution released a study by Adele C. Morris on The Many Benefits of a Carbon Tax.  The Brookings study proposes a tax starting at $16 per ton of carbon dioxide emitted and increasing by 4 percent per year to reduce the deficit and to lower the corporate income tax rate from 35 percent to 28 percent.  The study proposes 15 percent of the revenues from a carbon tax go to benefits for poor people who would be hurt most by higher energy prices.  Morris also argues in the study a carbon tax would make at least some EPA regulations of greenhouse gas emissions redundant and unnecessary. 

The details of a carbon tax were discussed on Feb. 27 at a Resources for the Future seminar on Comprehensive Tax Reform and Climate Policy.  A video of the seminar can be viewed here.  Participants included Kevin Hassett of the American Enterprise Institute, Billy Pizer of Duke University, Joe Aldy of Harvard University, Larry Goulder of Stanford University, Rob Williams of the University of Maryland, and Ian Parry of the International Monetary Fund.  Aldy worked as an adviser on climate policy in the Obama White House.  Pizer worked in the Treasury Department during the George W. Bush (when Henry Paulson, former CEO of Goldman Sachs, was Treasury Secretary) and Obama Administrations to devise a model carbon tax.

William K. Reilly was one of the speakers at the Climate Leadership Conference this week.  The conference was hosted by the Climate Registry, the Center for Climate and Energy Solutions and the Association of Climate Change Officers.  It was sponsored by a long list of companies and organizations, including Bloomberg BNA News.  The “headline sponsor” was the Environmental Protection Agency.

Erica Martinson filed several short reports for Politico Pro, which is available to paid subscribers only.  In one of Politico Pro’s e-mails to subscribers dated 2/28/13 12:01 PM EST Martinson wrote:

Oil companies are expecting — and sometimes advocating for — a carbon tax, former EPA Administrator William Reilly said today. Two companies, ConocoPhillips and Shell, “have a virtual tax they append to their [internal rate of return] calculations when making new capital expenditures,” he said. “It’s $25 a ton for Conoco; $75 a ton for Shell. So Congress may not be acting, but companies are anticipating somebody will someday,” Reilly said.

The George H.W. Bush-era EPA leader recently participated on an energy policy task force and found ExxonMobil’s position interesting, he said. “The strongest advocate on our task force for a carbon tax was ExxonMobil. I had previously thought that was a public relations thing — I didn’t think they were quite interested in it,” he said.

The task force Reilly refers to is the Bipartisan Policy Center’s Strategic Energy Policy Initiative, which released its report at a press conference on Feb. 27.  Reilly was one of four speakers at the press conference, along with his three fellow co-chairmen: former Sens. Byron Dorgan, D-N.D., and Trent Lott, R-Miss., and Gen. James Jones, former National Security Adviser to President Obama.  Other members of the task force include William Colton, vice president of ExxonMobil, and Ralph Cavanaugh of the Natural Resources Defense Council. The task force’s 50 incoherent energy policy recommendations can be read here.

In other carbon tax news, Senator Orrin Hatch (R-Utah), ranking Republican on the Senate Finance Committee, asked Treasury Secretary nominee Jacob Lew during his confirmation hearing about the Obama Administration’s position on a carbon tax.  Lew responded, “The administration has not proposed a carbon tax, nor is it planning to do so.”   The Senate confirmed Lew by a vote of 71 to 26 this week.  Senator David Vitter (R-La.), ranking Republican on the Senate Environment and Public Works Committee, followed up on Lew’s statement by sending a letter to President Obama asking him whether he opposes the carbon tax bill introduced by Senators Bernie Sanders (Independent Socialist-Vt.) and Barbara Boxer (D-Calif.).

Across the States
William Yeatman

Maryland Legislature Poised To Pass Empty Offshore Wind Bill

By a 7-4 vote, the Maryland Senate Finance Committee passed SB 275, the Maryland Offshore Wind Energy Act of 2013. The legislation, which was proposed by Governor Martin O’Malley, was approved by the House last week, and it is expected to soon win passage in the full Senate.

The bill would cap the amount that Maryland ratepayers would pay for offshore wind at about 13 cents per kilowatt hour. To date, the cheapest proposed offshore wind project, off the Massachusetts coast, is priced at 20 cents per kilowatt hour. Simply put, the price ceiling established by Maryland’s offshore wind legislation is almost 40 percent less than the price floor established by the market. As a result, it is highly unlikely that the Maryland Offshore Wind Energy Act will lead to wind turbines off Maryland’s coast.

Around the World
Anthony Ward

EU Financial Transaction Tax to Fund Climate Change

The European Union’s Commission has proposed a financial transaction tax (FTT) on bonds and stockholdings, and is considering using the tax revenues generated to combat climate change. The tax is currently being supported by 11 members of the EU.  Andris Piebalgs, the EU’s Commissioner on Development, said he  “wants member countries to really take [the idea of using tax revenue for climate change] seriously.”   

The FTT proposal coincides with European Climate Commissioner Connie Hedegaard’s  visit to Washington D.C.  Hedegaard is the EU’s top climate change official and has been an outspoken opponent of the Keystone XL pipeline.  At a press conference on Thursday, The Hill reports  that Hedegaard told reporters that rejecting the Keystone XL pipeline would “be an extremely strong signal from the Obama administration.”  She went on to characterize the pipeline as a harmful investment that would not “pay off  in the world we are living in.”

The Cooler Heads Digest is the weekly e-mail publication of the Cooler Heads Coalition. For the latest news and commentary, check out the Coalition’s website,