President Barack Obama’s upcoming State of the Union address is supposed to be about jobs and the economy. However, it will also likely carry a “green” message, if Politico’s Andrew Restuccia is correct: “‘You’re going to like what you hear,’ White House aides have told green groups, according to an official at one environmental organization who expects the president to publicly commit to moving forward with EPA climate regulations,” writes Restuccia, who asks in his article, “which Obama will show up on Tuesday night?”
The Administration feels that a 2007 Supreme Court decision giving the Environmental Protection Agency (EPA) authority to regulate greenhouse gases will provide the EPA with standing to regulate all power plants, according to a recent New York Times article. “In the first term, the E.P.A. relied on that decision to negotiate a steep increase in fuel-economy standards with automakers and to overhaul standards for newly constructed power plants,” writes David Leonhardt for the NY Times. “The rules for new power plants would effectively halt the construction of new coal plants.”
The trick would be to bear down on existing coal plants, which, as I mentioned in my blog entry yesterday, has become an urgent for goal for the green movement. After all, Europe is currently experiencing an energy shortage due to its own regulations and, as a result, is burning more coal, raising its greenhouse gas emissions. “Europe’s use of the fossil fuel spiked last year after a long decline, powered by a surge of cheap U.S. coal on global markets and by the unintended consequences of ambitious climate policies that capped emissions and reduced reliance on nuclear energy,” writes Michael Birnbaum for the Washington Post (emphasis added). In other words, according to the greens, cheap coal isn’t just bad for the U.S., which is now using more natural gas–it’s bad for anyone around the world who might use it.
“U.S. coal exports to Europe were up 26 percent in the first nine months of 2012 over the same period in 2011,” Birnbaum reports. “Exports to China have increased, too.”
Quite frankly, it seems hard to grasp how Obama’s State of the Union address, which will focus on jobs, can also be so green. However, we learn from the NY Times that cap-and-tax produces “market-friendly permits.”
“So environmental economists are watching to see if Mr. Obama will also take steps to keep economic growth at the center of his climate policy, by attempting to regulate existing power plants with market-friendly permits,” writes LeonHardt (emphasis added). His thesis is that mandates are more harmful to the economy than cap-and-tax, and, therefore, a cap-and-trade system is more economically friendly–because, of course, we must combat climate change now.
A recent Washington Post article outlines what cap-and-trade has done in some U.S. states, exposing it the regulation as a revenue stream for Northeast America. “For the past decade, ten states stretching from Maine to Maryland have been experimenting with their own modest cap on carbon pollution from electric power plants,” writes Brad Plumer for the Washington Post. “And, this week, the Regional Greenhouse Gas Initiative (RGGI) announced that it would continue to cut emissions by tightening the cap between now and 2020.”
“…power plants don’t have to do much to comply with the existing cap — they’re already sitting well below the limit,” writes Plumer. “As a result, permits to emit carbon-dioxide are extremely plentiful and cheap, costing just $1.93 per ton of carbon. If you’re an electric utility, there’s little incentive to invest in efficiency or renewable power to avoid the cost of buying up pollution permits.”
However, “The program has also been quite lucrative for the states involved, which have raised about $912 million since 2009 from auctioning off pollution permits.” That $912 million in additional costs was indubitably foisted upon the consumer.
Even the NY Times reporter demonstrates some difficulty reconciling a jobs-friendly outlook and climate change regulation. “In the end, the strongest economic argument for an aggressive response to climate change is not the much trumpeted windfall of green jobs,” writes Leonhardt. “It’s the fact that the economy won’t function very well in a world full of droughts, hurricanes and heat waves.” In other words, it’s worth it because of the otherwise disastrous consequences. No wonder the article was titled “It’s Not Easy Being Green.”
It’s only worth it if you believe in man-made disastrous climate change, which, according to Christopher Horner, has in some rhetoric been downgraded to worries about “extreme weather.” Leonhardt admits this also, writing, “And President Obama has subtly shifted his approach, talking less about green jobs and more about extreme weather.”
If the President does make the case for climate change (or energy-related) regulation, it will be interesting to see what successful country he points to. Europe–Germany and Spain, in particular–are no model for the U.S. energy economy.