Playing with the Numbers

Unlike Steve Daines and Ryan Zinke, who have really gone off the deep end, there are people out there criticizing the Clean Power Plan for reasons that are at least plausible. Plausible, but fatally flawed.

I’m talking here about folks who seem to grudgingly acknowledge that climate change is a real problem, and concede that the Clean Power Plan is an attempt to do something about it. But in their view the attempt fails, because it costs too darn much and accomplishes so darn little.

It’s an argument that’s been around since last year when EPA made its original proposal, and now that the final version of the rules have been announced, it’s come back.* And it’s an argument that ought to be taken seriously. Certainly from an economic point of view, the alarm bells should start going off if someone can convince you that the plan is going to cost an arm and a leg, destroy the economy as we know it, and have climate impacts that aren’t worth a red cent. 

But before you throw up your hands and conclude that we are all doomed by the inexorable logic of economics, take a deep breath and realize that there is a problem here, which is that the folks who purvey this analysis are playing with the numbers by routinely exaggerating the costs and misrepresenting the benefits of reducing emissions.

Costs are overstated by presenting them as great big numbers (billions! trillions!) and then claiming that it is self-evident that any number that big has to have ruinous economic consequences. Here are a couple of examples:

Brad Johnson tells us in a recent Missoulian op-ed that “The EPA itself admits that the plan comes with an $8 billion price tag every year by 2030 just in compliance costs.” This, Johnson says, will result in our “destroying” our economy. Yep, $8,000,000,000 is a pretty big and scary number. But now get out your calculator and divide that number by 320,000,000, the current population of the United States. The answer, $25, is the per capita annual cost of complying with the Clean Power Plan. That’s seven cents a day, about equal to what we spend on chewing gum and potato chips. Does Johnson, a Montana Public Service Commissioner, really believe that’s going to drive us to the poor house?

Not to be outdone, David Kreutzer, who works for the Heritage Foundation, also writing in the Missoulian, claims that according to the Energy Information Administration “in the decade of the 2020s, lost GDP will total $1 trillion, and total employment will fall by as much as 500,000 jobs.” Whew, $1 trillion! That’s a lot of dough, except when you compare it to $270 trillion, which is about what total GDP is going to add up to during than same decade. What Kreutzer is trying to scare us with here is a plan that is going to reduce national output by 4/10ths of a percent. We can make that back up with about six weeks of normal economic growth.

It’s hard to know what Kreutzer means by employment falling by “as much as 500,000 jobs,” but assuming it means that with the CPP there would be 500,000 fewer jobs each year than would otherwise be the case, the effect is again very, very small; employment would be reduced by 3 tenths of a percent.* *

What do we get in exchange for incurring these costs? Well, according to Johnson and Kreutzer, not very much. Just a small, almost imperceptible reduction in global temperatures, and what good is that? Well, think about it. I’m not sure they really mean that the Clean Power Plan will reverse the rise in global temperatures – which would be quite an accomplishment – or simply slow it down, but in any event, what happens to global temperatures is not really a meaningful measure of the economic benefits of the plan. What counts, rather, is the economic magnitude of the damages that are avoided when the plan is put in place. On that score, Johnson and Kreutzer and most of their cohorts are utterly silent.  But here are the numbers from the EPA.

By 2030 avoided damages to the global climate and US public health add up to between $34 and $54 billion per year. Take the lower number, and it completely swamps the $8 billion worth of compliance costs that Johnson worries about.

It’s fine if critics want to perform a hard nosed, sharp penciled cost/benefit analysis of the Clean Power Plan. But if they’re going to do that, could they please get it right?

* I wrote a number of posts on the rule last year, chiefly responding to critics like Mike Miller, Glen Oppel, Rick Hill, Steve Daines, Alan Olsen and Keith Regier, The US Chamber of Commerce, and Roger Webb. If you missed any of those posts, and haven’t gotten tired of me holding forth on this issue, you can click on the links.

** Be very wary when anyone tells you that some variable, x, could change by “as much as y.” What that means is that y is the most that x might change by; x might not change at all – it might even fall! “As much as” describes the extreme case, not what is actually expected.

A Time to Get Serious

When Steve Daines rose on the floor of the United States Senate last month to talk about the Clean Power Plan, he had the opportunity to address the world’s greatest deliberative body about the world’s most pressing challenge: arresting climate change. Montanans might have hoped that Daines would use the occasion to say something thoughtful and productive about how we can meet that challenge, but no: what we got was tendentious, polemical, and sadly misinformed.

You can watch Daines’ disturbing performance here, but if you’re not up for quite that much vitriol, just consider these points from the speech:

Like a snarky teenager, the senator refers to the EPA as President Obama’s “Employment Prevention Agency.”

Either because he’s delusional or simply doesn’t care about the truth, Daines calls the Clean Power Plan the President’s “plan to devastate Montana’s coal industry.”

Because under the plan Montana’s emissions rate must fall from 2,481 to 1,305 pounds of carbon per megawatt hour between 2012 and 2030, Daines figures our carbon emissions – and by implication, our burning of coal - will go down by 47.4 percent. But it won’t happen. Danes is confusing a decline in the emissions rate with a decline in emissions mass, and doesn’t seem to realize that that the two  will only be the same in the very unlikely event that over those same 18 years there is no increase at all in electricity generation.*

He says the plan would “make construction of any new coal-fired plant virtually impossible,” conveniently forgetting that for market reasons, nobody’s planning to build coal-fired power plants anyway.

He claims that the plan would be “devastating for our economy” and that “thousands of family wage jobs would be lost,” apparently failing to take into account all the jobs that would be created in the renewables and energy efficiency sectors, and grossly overstating the economic impact of a contraction in the coal industry, the extent of which is, in any case, unknown at this point.

He argues that the plan will stifle energy innovation and the development of “clean coal” technology, willfully ignoring the fact that the plan allows states to reduce their emissions however they think best. If coal-fired power plants can really find a low cost, efficient way of reducing emissions that allows them to go head to head with renewables and enhanced efficiency, the Clean Power Plan says more power to ‘em.

And so it goes. But there’s one thing that Daines doesn’t do. He never once – not one single time – mentions climate change. He never once acknowledges that to arrest climate change, carbon emissions are going to have to go down. He never once shows us that he realizes that in order to reduce emissions, the global energy system must be restructured. And he never once admits that since John McCain’s 2008 presidential campaign, no Republican has made any serious proposal whatsoever for dealing with climate change.

We desperately need to have a serious, dispassionate, and thoughtful conversation about how we can arrest climate change. To do that we need leaders who can leave politics, the well-being of campaign donors, suspicion, name calling, obfuscation and abuse of the truth at the door. We won’t get there with leaders who, like Senator Daines, act like a five year old kid who sticks his fingers in his ears, stamps his feet, and just screams “no, no, no!”

*Okay, maybe I should cut the senator a little slack on this point. It is confusing and I tried to clarify it in this post last year.

Living With The Consequences

Gary Marbut, for whom gun slinging is apparently one of the cardinal virtues, is unhappy with my friend Ellie Hill.

Writing in the Missoulian, Marbut assails Ellie’s seemingly modest proposal that the state should comply with Federal law and report the names of certain severely mentally ill people to the national firearms background check registry. You might think, in the wake of Newtown and Virginia Tech and now, Charleston, that we would all agree that keeping deranged young men from buying guns is a good idea, but Marbut’s having none of it.  Reporting the names of the mentally ill will do nothing to make us safer, he claims, because mental health professionals are unable to predict whether particular individuals will be violent, and people undergoing mental health treatment  are no more violence prone than anyone else. Even worse, Marbut says, is that mentally ill people will not seek treatment if they know that doing so means they’ll lose their right to buy a gun.

Marbut doesn’t appear to have actually read Hill’s bill. The fact is that the bill requires reporting the names of only those mentally ill people who have been involuntarily committed, have been ruled incapacitated and appointed a guardian, or have been charged with a crime and found to be either unfit to stand trial or not guilty by reason of mental disease or defect. These individuals form a very small subset of all mentally ill people. They are not among the vast majority of mentally ill folks who can seek the treatment they need without any fear of being denied the opportunity to buy a gun.  And they are more likely than most of us to harm themselves, or others, if they have access to guns.  True, that can’t be predicted with certainty, but the heightened probability of violence cannot be disputed.

The background check system can only slow, but not stop, gun crime. That’s true for lots of reasons, but the big one is that anybody who can’t pass a background check can still buy one of the thousands of guns that are sold privately or at the gun shows that flourish across the country. And it turns out that if a criminal wants to buy a gun, Montana is a good place to do it. Back in 2010, the Washington Post published an investigative report which listed the states that exported guns that ended up being used to commit crimes somewhere else; Montana came out near the top of that list. Think about it: that means that some of those guns that fly out the door at unregulated Montana gun shows end up being used to rob a convenience store, or in a drive-by shooting, or assaulting someone, or shooting a cop, or in a killing at a school or church.

The gun show and private sale loophole in the background check law is big enough to drive a bus through, and until it is closed, Marbut has nothing to worry about: people can get all the guns they want. But the rest of us will have to live with the consequences.