Mike O'Brien

One of the questions I usually have when I look at a bill is 'who wrote this thing' it is well-known that no senators or congressman write bills. Rather, lobbyists propose language to staffers that eventually finds its way into the bill. The lobbyists here come from the Natural Resources Defense Council and Environmental Defense which was formerly the environmental defense fund.

The debate here is between Sen Jim Inhofe (R-OK) and Dan Weiss of the Center for American Progress. Let the debate begin:

Inhofe asserts:

Companies will have to invest in questionable technology that helps them to reduce emissions and meet the cap. Businesses that are unable to reduce emissions within their cap will have to purchase more allowances. Models of carbon allowance prices have ranged from $20 per metric ton of CO2 in 2020 to up to $83 per metric ton of CO2 in 2030.

Weiss responds

The technology exists to reduce them through comprehensive application of energy efficiency, wind power, and solar power. For instance, McKinsey & Company, a global management consulting firm, concluded in a recent study that the “United States could reduce its greenhouse gas emissions in 2030 by 3.0-4.5 gigatons of CO2 emissions using tested approaches and high-potential emerging technologies.” This would equal a 40 percent to 64 percent reduction in carbon dioxide emissions from today.

Inhofe asserts:

[The] EPA suggests that gasoline prices will rise $.53 per gallon on top of the baseline rise in gasoline prices. Additionally, EIA found that gasoline prices could rise anywhere from 41 cents to over a dollar by 2030.

Weiss responds

The Environmental Defense Fund conducted an assessment of various government and independent studies of the earlier version of the Climate Security Act and found that the median increase in gasoline price hikes would be 13 percent by the year 2030. This is an increase of slightly more than one half of 1 percent per year.

As noted above the EDF is not an impartial group, but rather a coauthor of the bill.

Inhofe asserts:

The cost per household will rise variedly across the country, largely because of the rising cost of home heating and electricity. CRA International suggests that the average cost per household will be $1,740 per year by 2020 and will continue to increase to $3,456 per year by 2050 in 2007 dollars. This number varies by region as well, with Oklahoma and Texas families spending $3,298 more and the Midwest spending $2,021 more by 2020.

Weiss responds

An Environmental Defense Fund overview of analyses of the Senate Environment Committee-passed version of the Climate Security Act found that, “For the average American family, the cost of capping greenhouse gases will amount to less than 1 percent of household budgets over the next two decades.”

To protect moderate- and low-income households, the bill would provide $900 billion to load-bearing utilities for ratepayer relief should higher electricity prices occur. It also includes an $800 billion tax cut to offset the strain from any other higher prices.

So... the $1.2 Trillion tax created by this program will go back to the utility companies? Why tax in the first place?

Inhofe asserts:

The problem Europe currently faces in losing jobs overseas is one that will become even more real in America, which has already lost 2.5 million manufacturing jobs since 2001. The U.S. Chamber of Commerce has stated that “the chemical industry has already moved significant operations overseas because it cannot compete in the world market while complying with domestic energy constraints and emissions controls.” The problem will be compounded if the United States adds more costs to manufacturing within its borders because of emission caps. This is a fact that even a lead author from the United Nations Intergovernmental Panel on Climate Change has noted. William Pizer, an economist at Resources for the Future and a lead author on the most recent report from the UN IPCC, recently stated at a symposium in Washington, "As an economist, I am skeptical that [dealing with climate change] is going to make money. You'll have new industries, but they'll be doing what old industries did but at a higher net cost.... You'll be depleting other industries."

Weiss responds

The Climate Security Act would create tens of thousands of new clean-energy jobs. In addition to making clean energy more economically attractive, the bill would invest billions of dollars in efficiency and renewables. The bill includes $150 billion for renewable energy investments alone. If this sum were equally divided into $50 billion each for investments in wind, concentrated solar, and geothermal, we estimate that by 2050 it would generate a total of 81 billion kilowatt-hours of wind-powered electricity, which could power approximately 7.7 million homes and create 42,000 jobs; 52 billion kWh of concentrated solar electricity, which could power about 5 million homes and create 5,600 jobs; and 131 billion kWh of geothermal electricity, which could power about 12.4 million homes and create 71,000 jobs.

So, millions of jobs would be lost and 42,000 jobs would be gained.

Inhofe asserts:

While most Americans spend about four percent of their monthly budget on heating their homes or other energy needs, the poorest fifth of Americans spend 19 percent of their budget on energy. Lieberman-Warner fails to sufficiently protect the poor who depend on cheap energy, and does little to ensure their economic safety. As seen above, EPA models show that electricity prices will be 44% higher in 2030, numbers that are hard to accept by any family, much less the economically disadvantaged. While the bill has provisions to distribute allowances to load serving entities (LSE) to defray costs to the poor, the very design ensures that many lower income families will get little, if any, relief.

Weiss responds

A cap-and-trade system can use revenues from the auction of allowances to provide the resources required to offset any potential energy price increases for middle- and low-income families. The Center on Budget and Policy Priorities estimates that it would only require a modest 14 percent of the total value of emissions permits to completely offset any increased energy costs for the bottom fifth of the income spectrum.

Inhofe asserts:

Of the several analyses that have been conducted on S. 2191, one result is increasingly certain: reductions in carbon are contingent on the construction of extensive numbers of new nuclear plants. Each of these analyses may vary in their assumptions, but the results of each analysis show that significant new nuclear development is necessary to achieve the emissions reductions mandated by S. 2191.

[This] clearly indicates that nuclear energy is the key to reducing carbon emissions and mitigating the costs of any such effort. However, the investment necessary to fund such dramatic construction is staggering. According to the Nuclear Energy Institute, building the 268 plants indicated by EIA’s analysis would likely cost $1.6 trillion (including financing costs). The Electric Power Research Institute’s projection of 64 new plants by 2030, which is considered an extremely optimistic goal by industry experts, would require the industry to finance approximately $384 billion. Companies looking to build just one or two plants may need financing equal to half of their total market capitalization. CEO’s will not gamble the health of their companies if the financial risks are too high or if political support is shaky. Loan guarantees will be critical to providing a stable financing platform to support this level of investment.

Weiss responds

Nuclear power is probably the most expensive form of low-carbon power. New plants are projected to deliver electricity for $.15 a kilowatt hour, whereas the national average retail rate is about nine cents a kilowatt hour. Energy efficiency, wind power, solar photovoltaics, and concentrated solar thermal electric can achieve all the reductions that we need in the utility sector for the foreseeable future, and at a lower price. As a mature technology with 20 percent market share and the beneficiary of nearly $100 billion in subsidies since 1948, further government pork for nuclear is unjustified.

I think it is interesting that Weiss chooses to complain about pork, which is the motivation for the entire bill.