Built on Facts

Waxman-Markey is probably crap.

Posted by Matt Springer on June 27, 2009
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There’s a lot not to like about the Waxman-Markey cap-and-trade bill that passed the House this last week. You’d expect the right not to like it, but this bill has many people of all political opinions unhappy.

From the left: The bill is a huge 1300ish page monstrosity developed behind closed doors. What we do know about what’s in the bill is not promising. Greenpeace opposes it and lists several reasons. The “cap” is weak, flexible, and full of loopholes. The “trade” part is shot full of offsets and concessions to the dirtiest power generation coal plants. Even if everything goes as planned, it will mean increases in fossil fuel generation and the result goal is hilariously far short of the IPCC recommendation. The bill just doesn’t do much of anything for the environment.

From the right: It’s going to be expensive. Really expensive. The CBO gives low numbers for the operating cost of the bill amounting to a few hundred bucks annually per family, but this doesn’t take into account changes in the GDP resulting from the bill’s provisions. Those could reach into the thousands annually per family, and in a regressive way since energy is not exactly a luxury good (it’s usually my second biggest expense, behind rent).

From good-government advocates of any stripe: Literally no one has read the entire bill. The house voted on the bill before a complete copy had even been printed, and 300 pages worth of amendments were passed without having been read. Conservative schemes to foil Captain Planet and poison the air inside day-care centers? Liberal plots to ban air-conditioning and make us all wear birkenstocks? Who knows? Not anyone who voted on it, that’s for sure.

From Built On Facts’ personal list of hobby horses: What could actually have great effects for the environment, the economy, and international geopolitics is if the US actually did develop energy technologies that were honestly cheaper than coal, displacing dirty technologies the old fashioned way – by being better. Nuclear power, offshore wind power, geothermal, space solar, etc. Some of this is almost legitimately competitive with cheap coal now, but is smothered in regulations having nothing to do with safety or the environment and everything to do with politics and NIMBYism. So far as I can tell this bill doesn’t do a whole lot to help get those kinds of technologies closer to a true competitive advantage, and that’s a real shame.

The bill is likely to die in the Senate anyway. Too many Democratic senators are from coal industry states. It’s probably for the best. Congress ought to take a deep breath, clear their heads, and start over. Maybe then they’ll come up with something that, I dunno, actually does something useful.

I’m not going to hold my breath.

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Comments

  1. #1 Russell
    June 27, 2009

    If we had a conservative party, one that urged environmental stewardship and financial sense, it would advocate the obvious and simple alternative to cap and trade: a tax on fossil fuel. That would reduce our dependence on foreign oil, discourage increased use of coal, lessen our production of greenhouse gases, encourage alternate energy technologies, improve the federal budget, and be much simpler than the regulatory framework that cap and trade requires. Alas, the Bull Moose party is as extinct as the dodo, and the modern right is more interested in battling science and pushing ideology than it is in anything truly conservative.

    Why are you wasting so much money on energy? Our utility bill rarely goes past a $100, even with this summer-time high hanging over Texas.

  2. #2 Matt Springer
    June 27, 2009

    Sorry, I was wrong on that point. Energy is a fairly distant third, behind rent and food. I’m counting gasoline as energy though, it’s not just electricity.

  3. #3 Miko
    June 27, 2009

    I wouldn’t count the bill out because of senators owned by coal: the bill is full of subsidies for the coal industry.

  4. #4 Russell
    June 27, 2009

    A distant third makes much more sense. Especially since College Station is over 100 miles from civilization. And everyone there drives the obligatory pick-up. Maybe you get a pass for studying physics. Don’t know. ;-)

  5. #5 Max Fagin
    June 28, 2009

    Russel: What about the increased cost of energy which EVERYONE would then experience as a result of such a hypothetical fossil fuel tax?

  6. #6 CCPhysicist
    June 28, 2009

    I agree with you on this bill, but mostly for the reasons given @1 and especially @3, although it also benefits forest owners. However, I disagree completely with everyone who is opposed to using up foreign oil, especially the BP ad with the false claim (disguised by having some “man on the street” say it) that we have plenty of oil in the US. We should save what little is left of our oil for the time when no one else has any, and we should definitely not allow it to be extracted by foreign countries like Britain (BP) and Norway (StatOil). The future value of that off-shore oil is much higher than it is worth today.

    “What could actually have great effects for the environment, the economy, and international geopolitics is if the US actually did develop energy technologies that were honestly cheaper than coal, displacing dirty technologies the old fashioned way – by being better.”

    If you mean “better” by being cleaner, taxes that penalize the use of a common good (clean air and water) are the best way to enforce that particular value. They would push out the oldest, dirtiest plants – something cap and trade will not do. They might also make hybrid electric cars more feasible.

    If by “better” you mean cheapest to the consumer, you would have little investment in solar right now. All of that is heavily subsidized. You live in a place where it makes no sense to use anything other than solar hot water, but would you spend $5000 to install such a system?

    The only power alternative you list that competes favorably with coal is nuclear. There are many projects starting up because the cost of capital (the main cost of those plants) is low, but that move and others (biomass, solar electric) are also driven by the possible profit from cap and trade and the current profit from direct subsidies.

    I laughed today when the Gov of Miss bragged about some new carbon sequestration operation in his state. The odds that it relies on a major subsidy via a partnership with the US Department of Energy is close to 100%. You would not need to subsidize a particular project if you just raised the cost of emitting a particular pollutant into the public’s air above the cost of eliminating it, and left the solution to the market.

  7. #7 Russell
    June 28, 2009

    Max, the cost would be the downside of the policy. Nothing is free. Note, however, that a fossils fuel tax isn’t an energy tax. It would come near to acting as such in the short run, because energy production now is so completely dominated by fossil fuels. In the long run, that will change. Part of the benefit is precisely to hurry that change.