Tuesday, July 16, 2013

The question continues: Why is Obama trying to stall economic activity through regulations that will only raise energy prices and discourage investment?

As Global Warming Stalls, Activists Talk 'Climate Change' 

By Diana Furchtgott-Roth

July 16, 2013

With an apparent stall in global warming, the focus among environmentalists has switched to "climate change," perhaps to justify President Obama's new environmental regulatory initiatives.

On Thursday the Senate Committee on Environment and Public Works holds a hearing entitled "Climate Change: It's Happening Now."

And last week the Department of Energy issued a report called U.S. Energy Sector Vulnerabilities to Climate Change and Extreme Weather. The report projects increases in storm and flood frequency.

However, a review of the data over the past 100 years does not show a steady increase in major storms such as hurricanes, or a steady increase in the number of floods, even though global greenhouse gas emissions increased.

The National Oceanic and Atmospheric Administration shows the number of hurricanes over the past 100 years has been volatile, with no clear trend. There were seven floods reported by the NOAA's Mid-Atlantic River Forecast Center in 2012, the precise number reported in 1912.

In between, some years have shown higher numbers, others have shown lower numbers. The only trend is that data have been volatile.

Since 2003 global temperatures appear to have reached a plateau. With rising greenhouse gas emissions from Asia and other emerging economies, many predicted that temperatures would continue to rise. Why they have not done so is a puzzle.

U.S. greenhouse gas emissions have been declining since 2007, and fell by 1.6 percent between 2010 and 2011, the Environmental Protection Agency announced earlier this year.

The Energy Department report offers ammunition to President Obama's possibly extra-legal plans to use his executive power to reduce greenhouse gas emissions.

Despite the 111th Congress's decision in 2009-2010 not to pass cap-and-trade legislation, when Democrats had veto-proof majorities in the House and Senate, on June 25, in a speech at Georgetown University, Obama called for similar regulatory measures to reduce greenhouse gases. His wish list includes:

• Reduction of greenhouse emissions from existing power plants, as well as future plants;
• Increases in efficiency standards for appliances;
• Placement of wind farms and solar power plants on federal lands;
• Installation of three gigawatts of renewable power on bases; and
• Production of 20 percent of the federal government's energy from renewable sources over the next 7 years.

The cost of the legislation was a major reason for the failure of the Waxman-Markey and Kerry-Lieberman "cap-and-trade" bills, which would have capped emissions and encouraged firms to buy and sell rights to pollute. The revenues from the bills, about $646 billion over 8 years, would have at that time been the largest tax increase in history.

The bill would have required EPA to shrink greenhouse gas allowances steadily to 2050. When any year's emissions exceeded a firm's cap, the firm would have to purchase allowances from the government or other companies. That is a tax under another name, driving up costs that would be passed on to consumers in the form of higher energy bills.

The price increases in cap-and-trade systems disproportionately affect low-income Americans, who spend a higher share of their income on energy. Data from the Labor Department show those in the lowest fifth of the income distribution spend an average of 24 percent of income on energy, compared to 10 percent of income for those in the middle fifth, and 4 percent of income for those in the top fifth.

Even if rising greenhouse gas emissions are affecting the climate, actions by the United States, whose global share of greenhouse gases is 17 percent, will not be helpful in the absence of changes by China and India.

Other countries are increasing emissions. China, India, and Germany are expanding coal consumption, according to the International Energy Agency. Global coal use will rise by 1.2 billion tons in five years. "By 2017," according to a December 2012 International Energy Agency report, "coal will come close to surpassing oil as the world's top energy source." Obama's planned reductions in U.S. emissions, with associated costs, will just be a drop in the global bucket.

With the slowdown in many measures of global warming over the past decade, climate change is playing second fiddle to jobs in the public eye. Americans know that no reduction in global warming will occur if America reduces greenhouse gases without similar action by China and India, and these countries have not agreed to comparable steps.

The president's climate change measures will reduce economic growth by raising energy prices. As well as reducing jobs in the mining industry—over 100 coal-fired power plants have closed since the beginning of 2010—it will also discourage energy-intensive manufacturing.

Manufacturers are returning to America due to low-cost energy, and the president's proposals could drive them away and discourage others. The new French Vallourec Star pipe mill in eastern Ohio is making tubes for the electric pipe industry. Other companies making similar investments are Luxembourg's Tenaris and China's Tanjin Pipe. Royal Dutch Shell is building a $4 billion ethane cracker plant in Pennsylvania, and is planning on hiring 5,000 construction workers.

Since 2009, the German chemical company BASF has invested more than $5.7 billion into North America, including a formic acid plant under construction in Louisiana. BASF officials say that energy prices in America are lower than in Europe, where fracking is discouraged.

Other European countries planning to invest in America due to low energy prices include Austrian steelmaker Voestalpine (an iron-ore processing plant in Texas), and South Africa-based Sasol (a natural gas to diesel conversion plant in Louisiana).

Imposing cap-and-trade by regulation will drive away such companies and slow America's economy, without significantly affecting global temperatures.

Diana Furchtgott-Roth is a senior fellow at the Manhattan Institute.

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