Cooler Heads Digest 21 June 2013

21 June 2013

In the News

EPA fails to link fracking to water contamination for the third time
Michael Bastasch, Daily Caller, 21 June 2013

Carbon Tax: Vote and Eviscerate
Robert Bradley, Jr., Master Resource, 20 June 2013

Greens Need To Take Their Brown Lumps
Steven Hayward, Power Line, 19 June 2013

American Lung Association’s Misguided Support for Wind Power
Lisa Linowes, Master Resource, 19 June 2013

Gasland II and Anti-Energy Extremists
Thomas Pyle,, 19 June 2013

Why Do I Call Them Bat-Chomping, Bird-Slicing Eco Crucifixes?
James Delingpole, Telegraph, 17 June 2013

How Fisker Burned Through $1.4 Billion on a “Green Car”
Deepa Seetharaman & Paul Lienert, Reuters, 17 June 2013

Siemens Will Shutter Solar Unit after $1 Billion in Losses
Alex Webb, Bloomberg, 17 June 2013

Is a Carbon Tax a Conservative Idea?
Marlo Lewis,, 16 June 2013

News You Can Use

"The greatest threat to the alleviation of the structural poverty of the Third World is the continuing campaign by western governments, egged on by some climate scientists and green groups, to curb greenhouse gas emissions, primarily the CO2 from burning fossil fuels.  To put a limit on the use of fossil fuels without adequate economically viable alternatives is to condemn the Third World to perpetual structural poverty."   

- Deepak Lal, Professor Emeritus of International Development Studies at UCLA and Professor Emeritus of Political Economy at University College London, in his new book, Poverty and Progress: Realities and Myths About Global Poverty.

Inside the Beltway
Myron Ebell

Cato Institute Presents the “Case for a Carbon Tax from a Free Market Perspective”

The lead article in the summer issue of Regulation magazine, the Cato Institute’s flagship publication, is titled “What is the right price for carbon emissions?”  The author is Bob Litterman, a Ph.D. economist who is currently a partner in a NYC-based hedge fund. 

Here is Litterman’s conclusion: “It would be best to get started immediately by pricing carbon emissions no lower, and perhaps well above, a reasonable estimate of the present value of expected future damages, and allow the price to respond appropriately to new information as it becomes known.”  

Litterman’s article is followed by four comments by Robert Pindyck, Daniel Sutter, Shi-Ling Hsu, and David R. Henderson. Pindyck and Hsu are for a carbon tax; Sutter and Henderson are opposed.

These articles were described by someone at Cato as “exploring the case for a carbon tax from a free market perspective.” But I don’t see anything resembling a free market case for a carbon tax being made in Litterman’s article or in the pro-carbon tax comments of Pindyck and Hsu.

Nor can I find anything in Litterman’s background or in the references in his article to suggest that he is a free market economist. He was at Goldman Sachs in high positions for twenty-some years and is a member of the board of the World Wildlife Fund. Goldman Sachs is one of the leading practitioners of crony capitalism. The World Wildlife Fund supports a variety of command-and-control environmental and energy-rationing policies that help keep poor people poor around the world.

It appears that some people at Cato are warming to the idea of rule by experts. Manipulating the tax code in order to remake society and force people to conform to some authoritarian agenda is really just another variant of central planning. Rule by experts was criticized insightfully in a1945 essay titled “The Use of Knowledge in Society” by Friedrich A. Hayek, the Austrian economist for whom the Cato Institute’s auditorium is named. Hayek argued that rule by experts threatens human freedom. In my own view, the proper “free market perspective” on a carbon tax is: No way in hell. 


Obama's second term climate agenda is just weeks away

President Barack Obama's speech at the Brandenburg Gate in Berlin on Wednesday, 19th June, included a lengthy exhortation and promise to do more to ration energy in the U. S. and globally. Speaking before an estimated crowd of 4,500, the President organized his speech around President John F. Kennedy's call at the same spot in 1963 for peace with justice.

Here is what the President had to say about the need for more energy rationing to save the planet from global warming:

"Peace with justice means refusing to condemn our children to a harsher, less hospitable planet.  The effort to slow climate change requires bold action. And on this, Germany and Europe have led.
"In the United States, we have recently doubled our renewable energy from clean sources like wind and solar power.  We're doubling fuel efficiency on our cars. Our dangerous carbon emissions have come down. But we know we have to do more -- and we will do more.  
"With a global middle class consuming more energy every day, this must now be an effort of all nations, not just some.  For the grim alternative affects all nations -- more severe storms, more famine and floods, new waves of refugees, coastlines that vanish, oceans that rise. This is the future we must avert. This is the global threat of our time. And for the sake of future generations, our generation must move toward a global compact to confront a changing climate before it is too late. That is our job. That is our task.  We have to get to work." 

In a talk in Washington on the same day, White House climate czar Heather Zichal said that the President would unveil his second-term climate agenda in the next few weeks. According to stories in The Washington Post and Politico, Zichal said that the administration would focus on three policies that do not require new legislation. They are: Clean Air Act regulations to reduce greenhouse gas emissions from power plants; higher energy efficiency standards for appliances; and more leasing for renewable energy on federal lands. 

The New Source Performance Standards rule for greenhouse gas emissions from new power plants was released in draft form in April 2012 and was supposed to go final in April of this year, but was delayed indefinitely by the EPA in March. If this is the regulation that Zichal is including as one of their three key policy initiatives, then there is nothing new here. In fact, by delaying the final rule past April, the administration has failed to comply with a court-ordered deadline.

Zichal could also be referring to a forthcoming rule for emissions from existing power plants. The rule for new power plants makes it impossible to build new coal-fired power plants. The rule for existing power plants could force utilities to close many or all of the coal plants currently in operation.  

The Clean Air Act regulations of greenhouse gas emissions are designed to raise electric rates, which will force consumers to use less, destroy manufacturing jobs, and make uncompetitive forms of power generation more competitive. Compared to the economic damage that these new regulations will do, higher efficiency standards for appliances and more solar panels and windmills on federal land are fairly minor annoyances. They also won't do much to reduce greenhouse gas emissions.    

Around the World

Myron Ebell

Russia Delays Further Climate Treaty Negotiations

The United Nations climate negotiations in Bonn, Germany ended on a hopeful note last Friday when Russia, Ukraine, and Belarus successfully blocked one of the three working groups from doing anything. The Subsidiary Body on Implementation was supposed to consider an agenda that included creating the global mechanism for compensating countries that suffer losses caused by climate change; next year's budget for the secretariat of the UN Framework Convention on Climate Change; and discussing whether the target of limiting warming to 2 degrees C should be lowered to 1.5 degrees C.       

Russia blocked adoption of the agenda because it did not include consideration of adopting procedures for how policies are adopted.  The UNFCCC negotiations have always made decisions by consensus, but what constitutes consensus has never been defined in any rules.

Russia was obstinate in Bonn because of what happened at the eighteenth Conference of the Parties to the UNFCCC last December in Doha, Qatar.  At the end of the conference, the chairman gaveled through adoption of an agreement to continue the Kyoto Protocol until 2020 even though Russia, Ukraine, and Belarus objected. They claim that there was no consensus, while the chairman and most other countries agree that there was a consensus. That's why Russia is insisting on discussion of adoption of more formal rules.  

The next round of negotiations will take place at COP-19 in Warsaw in November. The parties to the UNFCCC have agreed to conclude a new treaty to replace the Kyoto Protocol by the end of 2015. The new treaty is supposed to be ratified and go into effect by 2020.

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