Sunday, January 25, 2009

O'Malley and His Green Allies Openly Champion Higher Energy Costs

The essence of Henry Hazlitt’s great book Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics is:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups… the bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.

Looking at the revamped Global Warming Solutions Act, now repackaged as the Greenhouse Gas Reduction Act complete with Governor O’Malley’s imprimatur, we see that he and those who support this bill are the bad economists Hazlitt had in mind. In the short run, passing this legislation will salve their misplaced conscience about doing something to “save” the planet, and line the pockets of a small group of rent seekers, like former Maryland Democratic Party Chair Wayne Rogers. In the long term, what this legislation would do is create a regulatory tax on all sorts of goods and services and raise the cost of living for Marylanders.

According to Baltimore Sun reporter Timothy Wheeler (past president of The Society of Environmental Journalists) the bill commits the state to reducing “climate warming pollution”—I guess its global warming again not climate change anymore—25% by the year 2020. Last year’s bill failed due to union and industry opposition. This year the watermelons co-opted their opponents and now they are on board.


The bill O'Malley is pushing is a carefully crafted compromise worked out in recent weeks among proponents and opponents of last year's legislation. It would commit the state to achieving a 25 percent reduction in emissions of greenhouse gases - mainly carbon dioxide - by 2020. The state would have until 2012 to develop a plan for reaching the goal.

But in deference to manufacturers and labor leaders, the bill says the state's plan must ensure that no manufacturing jobs would be lost, and it essentially exempts industry from state regulation of greenhouse gas emissions until 2016.
But here is the key:

Environment Secretary Shari T. Wilson said proponents did not see that as a major concession because manufacturing accounts for only about 4 percent of all
the greenhouse gases released in the state. Electricity generation and transportation are far bigger sources of carbon dioxide, which is a byproduct of burning fossil fuels.

Wheeler says the bill is likely to pass the General Assembly. Its nice to know that a small cadre of special interest groups can commiserate to raise taxes and energy costs for a state of nearly six million people. There’s your “One Maryland” in Action.

The state will levy new regulatory taxes on energy and transportation. One would think that O’Malley, who failed to deliver on his promise of “stop the BGE rate increase,” would not openly support legislation that directly increases the energy and transportation costs of Maryland’s working families—you know the folks who he supposedly champions.

Of course, these green house gas reduction schemes do not work. Even if Maryland ceased all GHG emissions it would produce a climatically meaningless two thousandths of a degree reduction in global temperature. The new bill calls for reduction not cessation, so we are left with all cost and no benefit. The Beacon Hill Institute analyzed Maryland’s Climate Action Plan (CAP) of which the GWSA is part, and the underlying economic methodology. They found:


The Beacon Hill Institute has previously reviewed the cost-benefit methodology employed by CCS in four other states: Washington, Colorado, Minnesota, and North Carolina. The Institute found three serious problems with the CCS cost-benefit analyses:
1. CCS failed to quantify benefits in a way that they can be meaningfully compared to costs;
2. When estimating economic impacts, CCS often misinterpreted costs to be benefits; and
3. The estimates of costs left out important factors, causing CCS to understate the true costs of its recommendations…

The CAP report provides zero guidance to policy makers regarding the desirability of policies aimed at reducing GHG emissions. It fails to perform the most basic task of any cost-benefit analysis–quantifying both the costs and benefits in monetary terms so that they can be directly compared. The analysis mistakes costs for benefits. Astonishingly, the report posits net economic savings from policies intended to reduce GHG emissions without counting the value of those reduced emissions. Unfortunately for Maryland policy makers, these same three problems plague the CAP report,rendering it unsuitable for making any informed policy decisions.

Predictably, O’Malley referred to the CAP in his press release supporting the GWSA. Specifically he warned of Maryland’s vulnerability to rising sea levels in his press release supporting the bill. Only we are not as vulnerable as he and the other doomsayers would have you believe. As I said in the Examiner last summer:

The IPCC estimates potential global sea level rise between 7 and 23 inches. Given a lower rate of warming, the increase actually tracks more toward 7inches. Taking this into account, the Science and Public Policy Institute observed that the “reasonably expected rate of sea level rise in the coming decades is not much different to the rate of sea level rise that Maryland coastlines have been experiencing for more than a century.”

Furthermore,Richard Alley, the author of the IPCC chapter on sea level rise, told Congress that on this issue, “we don’t have a good assessed scientific foundation right now.”

Even if all developed countries met Kyoto targets by 2010 and sustained them through the rest of the century, the effect on global temperatures would be a barely detectable 0.07 degrees.In terms of mitigated sea level rise, that translates to 1 inch.


The Greenhouse Gas Reduction Act is bad economics, bad public policy, which cannot possibly achieve its stated goals. Enactment of this bill will serve the narrow interests of a small set of special interests and deleteriously affect the rest of us. Given that 44% of Americans believe that man is not the cause of global warming and they are losing on all fronts in the court of public opinion its easy to understand why the alarmists are pulling out all the stops,

3 comments:

Gunpowder Chronicler said...

Mark,

Great analysis. There's only one problem: you are coming at it from a serious, thoughtful, analytical point of view.

The entire policy thrust on "climate change", "global warming" or "Hollywood Screenplay turned into government policy" (whatever you want to call it) is basic do-gooder government, where policy is driven not by the facts on the ground, but by what makes the policymakers "feel good".

Those of us who opposes these things aren't even arguing in the same galaxy as the alleged "do-gooders".

warpmine said...

"The entire policy thrust on "climate change", "global warming" or "Hollywood Screenplay turned into government policy" (whatever you want to call it) is basic do-gooder government, where policy is driven not by the facts on the ground, but by what makes the policymakers "feel good".

...and of course all of this at the expense of low income Marylanders that are perpetually stupid as they never ever par attention to what THEIR lawmakers to whom they voted to office DO!
Most believe that the Sun Paper is gospel thus they are ignorant of the very facts that would have educated them in such matters as to making informed decisions come every two years.

The Dmorats could literally claim that the Earth was moving closer to the sun and that it's our faught and only we can change this from happening and of course, the news media would conspire to perpetuate this bizarro premise.

Finally I must reiterate the terrible hold of liberals on our school system which will lap up this religion of "sky is falling" mentality in order to keep the public ignorant and in line.

Daniel said...

Mark,

Great analysis. But I differ from Gunpowder Chronicler just a bit.

From my perspective the following is NOT a problem: you are coming at it from a serious, thoughtful, analytical point of view.

This is exactly what we need. What everyone needs to hear and understand.

Don't give up. Never say die. Never let them see you sweat.

This is absolutely necessary, else no one will ever understand the full scope of what is at hand.

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