Tuesday, July 1, 2014

Profound Irresponsibility

If he didn’t know it already, Steve Daines has obviously learned since going to Washington that “all politics are local,” and that he should keep his gaze firmly fixed on what’s happening inside Montana’s borders. But really, just how myopic can the guy get?

Danes recently announced that he has introduced something called the “Coal Jobs and Affordable Energy Protection Act,” which would prohibit the EPA’s newly proposed carbon emission regulations from taking effect unless various Federal agencies could certify that the regulations would not result in any loss of jobs or gross domestic product, would not raise electricity rates and would not affect the reliability of electricity delivery.

Now all that may sound sensible and prudent (certainly the Congressman wants you to think so), but understand what it really means: Daines apparently believes that there is no cost, of any kind and however small, that it is worth incurring to secure the benefits of reducing carbon emissions and slowing climate change. None. Zip. Zero.

It is hard to imagine how a politician who never tires of telling us about his background as a successful businessman can take such a short sighted position. What halfway competent businessman would pass up the opportunity to make a modest investment today that will protect his company from catastrophic damages in the future? What businessman worth his salt simply assumes that there is no insurance policy worth paying for?

And it is hard to imagine how a man who claims he cares about families is willing to be so utterly cavalier about the state of the world we are going to hand over to our children and grandchildren. How can a politician who agonizes endlessly about the Federal debt we will leave to our kids believe that we should not inconvenience ourselves one iota to protect the environment we will be leaving them at the same time?

The fact is that for Daines, who apparently can’t see beyond the end of his nose, the EPA regulations are there to wage a “war on coal,” not to arrest, in any minimal way they can, the pace of climate change. In a constituent email Daines quotes Michael Grunwald, writing in Time, to the effect that the EPA regulations “take the war on coal to the next level.” But Daines ignores the rest of Grunwald’s piece, which makes it clear that “In the 21st. century, any national leader that takes environmental protection and the fate of the planet seriously will need to launch a war on coal.” Grunwald’s rhetoric is a little over the top, but I take his point, which Daines should have taken as well: arresting climate change will require us to substantially reduce our dependence on coal and we need to be prepared to make the transition to other energy sources. There’s no future in throwing ourselves on the ground kicking and screaming and shouting “never!”

Of course it could be that Daines, with his eyes fixed firmly on the November elections, doesn’t really take his own bill seriously. Maybe it’s just a sop to throw to the folks back home, to try to convince us he cares. Or maybe Daines is just a climate change denier. We know, after all, that his grasp on science is a little tenuous.

Either way, Daines owes us an explanation for his profound irresponsibility and short sightedness in responding to the threat of climate change. And if he can’t do any better than he’s done so far, we’d better remember that in November.

Thursday, June 26, 2014

Figures Don't Lie, But...

As I pointed out in my last post, while a recent US Chamber of Commerce report on the economic impacts of cutting carbon emissions is open to wildly conflicting interpretations, one thing about it is clear: it doesn’t tell us anything very useful about the carbon standards the EPA wants to apply to existing power plants. That’s because the Chamber analyzed the impacts of a substantially bigger cut in emissions than the EPA is actually aiming for, so naturally the impacts are bigger too, although arguably still pretty modest.

This point apparently plumb evades Rick Hill. Hill, a former Republican Congressman, has a column in today’s Missoulian, pumping up Steve Daines for opposing the EPA regulations and bashing John Walsh for supporting them.  Hill is obviously thinking about next November here, and not much else, because he drags in the irrelevant Chamber study to make his case.

And it gets worse. Here’s Hill:

“The U.S. Chamber of Commerce estimates the regulation will decrease the average household’s disposable income by $3,400 as a result of higher prices for energy and a slowdown to the economy. Those income reductions come in addition to an average of a quarter million jobs estimated to be lost each year through 2030.

What Hill doesn’t say – aside from the fact that the Chamber’s numbers are not really based on “the regulation” proposed by the EPA - is that that $3,400 reduction in household disposable income is the total reduction over the 2014-2030 period; annually, that amounts to an average of about $200, or about one third of one percent of current median household income. So our former Congressman has taken an irrelevant number and presented it in the most deceptive and frightening way possible, all with the hope, apparently, of putting a little positive spin on Steve Daines. He should be ashamed of himself.

I know I don’t have any right to expect Hill to believe me when I say the Chamber study is not really applicable to the EPA standards, but it turns out that I’m not the only one who says so. In fact, the Chamber has taken so much flak on that front that it posted a defense of its study’s relevance on its blog. You can read it here, but really, there’s not much of substance to read. There’s a lot of explanation about why the Chamber and EPA emissions reduction targets don’t match, and the odd speculation that since the EPA proposal is only a draft, the agency might at some point bring its target up to the Chamber’s level (and resounding silence on the possibility that it might take its target down). There’s an even odder suggestion that the Chamber study might somehow be relevant because the EPA proposal requires a handful of states to achieve emission reductions as great as those the Chamber analyzed for the nation as a whole.

But in the end, as the Chamber itself says, the “jury is still out.” Maybe, someday, somehow, it will make sense to use the Chamber’s numbers to assess the impact of what the EPA is proposing to do. But that day isn’t here yet, and politicians like Hill should know that, and stop trying to pull the wool over eyes of Montana voters.

Thursday, June 12, 2014

Doing Violence to the Facts

The EPA last week proposed the first ever regulations to limit carbon emissions from existing coal and gas fired power plants and – I know you’ll find this hard to believe – the Montana Chamber of Commerce doesn’t like them one little bit!

Writing in the Billings Gazette, Glen Oppel, the Chamber’s executive director, assails the regulations for costing too much, accomplishing too little, and killing any future that might be there for “clean coal” technology. Pretty standard stuff, but along the way Oppel does an awful lot of violence to the facts, and to clear thinking about the EPA’s important initiative to combat climate change.

With respect to the facts: Oppel cites several negative impacts of the standards – on GDP, employment, electricity costs and so forth – without telling us that the numbers apparently come from a study commissioned by the US Chamber of Commerce.  Now not everybody thinks the Chamber’s analysis is valid, but here’s the thing: whether or not you like it, it is important to know that the study was an attempt to assess the impacts of a much larger reduction in emissions than actually called for in the EPA standards. So the facts and numbers which Oppel liberally cites are totally inapplicable to the standards we are actually dealing with, and Oppel should know that.

With respect to clear thinking: Oppel gives us a lot of big, scary numbers to worry about, but no way of judging their significance. So, for example, he tells us that implementing the standards will reduce US GDP by an average of $51 billion every year from now through 2030! That sounds like an awful lot, but is it? Take a look at the chart below, where I have plotted the Congressional Budget Office’s estimate of real GDP from 2020 to 2030, in blue, and those same numbers, reduced by the Chamber’s estimate of the GDP lost due to the regulations, in red. The figures are in billions of 2011 dollars, and remember that the Chamber is assuming a bigger, and presumably more costly, reduction in emissions than the EPA is actually proposing.

If you are having a hard time seeing any difference between the two lines, don’t feel bad. It just means that the Chamber is telling us, albeit inadvertently and with zero fanfare, that the impact of the regulations is miniscule. In fact, that $51 billion average annual cost of the regulations that the Chamber calculates for 2014 to 2030 amounts to just one quarter of one percent of GDP over the same period. As Paul Krugman puts it: “That’s cheap!”

With regulations the growth of GDP will follow almost exactly the same path as it would have followed without them, but just a tiny bit later. How tiny? Well, here’s an example: the CBO estimates that without regulations, at some point in 2029 GDP will hit the $23.5 trillion mark. With regulations, if the Chamber’s got it right, we (or whoever’s around then) will have only have to wait another 27 days to get to the same point.

Oppel asks us to weigh these costs, such as they are, against a reduction in global emissions of 1.8%, as though it were self-evident that this is a bad deal.  But if we are going to measure the costs in dollars, we ought to measure the benefits in dollars too.  What we want to know is not that global emissions are going down by 1.8%, but the dollar value of the reduced damages we will experience as a result of that emissions reduction. Oppel is silent on that score, but the EPA is not; it finds that the economic benefits from reducing emissions substantially outweigh the costs.

Finally, Oppel argues that the “regulations represent a de facto ban on developing clean coal technology in the United States.” This is nonsense. In fact, the regulations allow the states wide latitude in meeting emission standards, and if states want to deploy clean coal technology and can do so at a cost they find bearable, they are free to go ahead and try it. The only threat to clean coal technology in these regulations is that they require it to go head to head against all the other low cost and proven emission reduction technologies – including enhanced efficiency and renewables – currently available. That’s putting market competition to work, and you’d think Oppel would embrace it.