Cooler Heads Digest

Cooler Heads Digest

Issue #4
June 20, 2007

1. The Week in Global Warming News 2. CEI's Insider Information 3. Issue of the Week: Appliance Efficiency Standards4. Action Item: You Made a Difference!5. Cooler Heads Digest Calls for Content

1. The Week in Global Warming News

2. CEI's Insider Information

Inside the Beltway

CEI's Myron Ebell analyzes global warming and energy policy in the nation's capitol

The Senate continues to debate amendments to Majority Leader Harry Reid's (D-NV) anti-energy bill, S. 1419/H. R. 6. A Heritage Foundation study by William Beach and Shanea Watkins finds that major provisions in the bill will raise gasoline prices to over six dollars a gallon by 2016. The bill will also raise electricity, food, auto, and appliance prices. A number of free market and conservative groups sent a letter to Senators that outlines these concerns.

The bill is so bad that none of the improving amendments that may be offered will make much difference. The best chance is that at least 41 Senators oppose higher energy prices and will vote against cloture, thereby preventing a final vote to pass it. In the House, Representative John Dingell (D-MI), Chairman of the Energy and Commerce Committee, and Representative Rick Boucher (D-VA), chairman of the Energy and Air Quality Subcommittee, have been negotiating with Speaker Nancy Pelosi (D-CA) over the contents of an anti-energy package.

According to press reports, they have made a deal to postpone consideration of controversial issues until the fall in order to get a modest anti-energy package to the House floor before the Fourth of July recess (which is scheduled to begin on 29 th June). The Speaker had promised that the House would pass comprehensive global warming legislation, including a cap-and-trade scheme to reduce greenhouse gas emissions, by the Fourth. The House will now aim to have the big bill on the floor this fall. Next week, they will vote on a package containing higher taxes for oil companies, higher energy efficiency standards for all kinds of products, improving the electricity transmission grid, incentives and research money for renewable fuel and alternative vehicle technologies.

Across the US

ALEC's Daniel Simmons summarizes global warming and energy policy in state capitols across the US

With respect to energy and global warming policy, this week was a mixed bag in state capitols across the US. In Vermont , Gov. Jim Douglas showed a great deal of fortitude when he nixed H. 520 with a veto signature. The bill would have allocated 160 million dollars to improve energy efficiency in Vermont homes. The money, however, would have come almost exclusively from taxes levied on Vermont Yankee, a nuclear power utility there. The Governor allowed that energy efficiency is a commendable goal, but correctly ascertained that a tax on energy producers is ultimately a tax on energy users, the people of Vermont.

In California , Assembly Speaker Nunez snuck AB 118 through the state assembly . Fearful of a public backlash, Nunez stifled debate on the measure, which raises 168 million from California drivers in fees. This money, in turn, is earmarked for alternative fuels research and sundry other pork for the biofuels industry.

And in New Jersey , the state Assembly's Telecommunications and Utilities Committee approved a bill that would slash the state's greenhouse gas emissions 20% by 2020, and 80% by mid-century . So swept up in the need to “do something” about global warming, New Jersey legislators forgot to say how they intended to reach these cuts. Targets without a plan do not a strategy make.

Around the World

CEI's Iain Murray analyzes global warming and energy policy at the international level

There are more signs internationally that a carbon-constrained world will be dominated by Profiteering and Protectionism. European analysts predict that the electricity industry there could enjoy windfall profits of €20 billion across the EU. Of course, as Ross McKitrick has shown, this is not new money, and instead represents a huge transfer of wealth to the new Carbon Cartel from ordinary consumers and other productive sectors of the economy. There are also signs that the move towards carbon restrictions is being driven by powerful financial interests. Investment bank Goldman Sachs made $12 billion from energy trading last year and would like to expand that by brokering more carbon deals.

Finally, German environment minister Sigmar Gabriel has announced that if the developing world nations want to continue to grow their economies and lift their people out of poverty by rejecting emissions controls, he will launch a trade war against them. Said Mr. Gabriel, “We'll tell them, you have to pay up on your products at the border to the European Union, to the United States and to Japan .” Another suggestion from WHO was that the developing world should be forced to spend foreign aid on global warming mitigation. While CEI recognizes serious problems with the foreign aid system, this suggestion would reduce the amount of aid used to relieve poverty and build resiliency. It is hard to think of a better example of the misplaced priorities Bjorn Lomborg has drawn attention to in his work with the Copenhagen Consensus.

3. Issue of the Week: Appliance Efficiency Standards

For each of the last three weeks, Issue of the Week has dealt with the major provisions of the HR 6/ S. 1419 (the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007), the omnibus energy package now being debated on the Senate floor. First, we showed how biofuel mandates (Title 1 of HR 6/S. 1419) would raise the American consumer's grocery bill. Then, we demonstrated how CAFÉ standards (Title 5) would put American drivers at greater risk. Last week, we illustrated how anti-price gouging provisions (Title 6) would cause gasoline shortages and long lines at the pump.

This week, Issue of the Week focuses on the absurdity of Title 2, which would ratchet up energy efficiency standards for dish washers, light bulbs, and numerous other appliances. Saving energy is a laudable goal, but when Congress chooses which products the American consumer must purchase, there are always unintended consequences.

Energy efficiency is often counter productive. If an appliance costs less to use, then people will use it more. Back in 1987, the municipal utility of Traer, Iowa, launched the Great Light Bulb Exchange , distributing 18,000 energy-saving bulbs to the small town's residents. Despite the fact that more than half its households participated, electricity consumption rose 8 percent.

“Ultra-high efficiency appliances” tend to be trouble-prone. In 2001, Sears recalled 25,000 of its high efficiency Calypso washing machines because of safety problems. Moreover, Consumer Reports found that the “dirt sensing technology” employed in “ultra high efficiency” dishwashers and clothes washers uses more energy than supposedly less efficient models!

Energy efficiency standards can reduce appliance quality . The June 2007 issue of Consumer Reports stated, “Not so long ago you could count on most washers to get your clothes very clean. Not anymore…What happened? As of January, the US Department of Energy has required washers to use 21 percent less energy…But our tests have found that traditional top-loaders…are having a tough time wringing out those savings without sacrificing cleaning ability, the main reason you buy a washer.

And because energy efficiency standards reduce the quality of appliances, the American consumer must pay more to get the quality they expect. Much more. According to that same Consumer Reports article, “For the first time in years, we can't call any washer a Best Buy because models that did a very good job getting laundry clean cost $1,000 or more.”

Clearly, the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 could be more appropriately called the Making Energy Less Affordable Act.

4. Action Item: You Made a Difference!

Results from Action letter to Caterpillar

The National Center for Public Policy Research and the Project 21 black leadership network challenged senior Caterpillar, Inc. officials at the company's stockholder meeting June 13th, asking them to explain Caterpillar's decision to join the United States Climate Action Partnership (USCAP), which is lobbying for caps on carbon dioxide emissions.

During the meeting's question-and-answer session, Project 21 Fellow Deneen Borelli questioned Caterpillar executives about whether the company performed a complete cost-benefit analysis on the effects a cap-and-trade policy on carbon emissions would have on Caterpillar, its customers and America 's poor prior to the company joining the group, which lobbies for such policies.

"I asked the head of Caterpillar, James Owens, three different times if the company had done a cost-benefit analysis and he said 'no,'" said Ms. Borelli. Mr. Owens also acknowledged that he had received and read the coalition letter sent to him by over 70 national and state policy groups and representatives of mining, ranching, forestry, construction and agricultural industries, urging him to withdraw Caterpillar's membership in USCAP.

The Congressional Budget Office reported in April that the restrictions sought by USCAP would especially harm the poorest fifth of the U.S. population. As a percentage of wages, the poorest quintile would pay nearly double the costs borne by the richest quintile for energy. In addition, the CBO study found that "current workers and investors in [energy] industries would experience costs in the form of lower wages, job losses, and reduced stock values" as a result of a cap-and-trade emissions policy.

"It's outrageous that a CEO would harm his key customers without doing any due diligence to determine the impact on his customers and shareholders," said Dr. Borelli. "This is why shareholders need to demand a debate regarding the impacts of cap-and-trade on their investment. Owens' ignorance on the issue of cap-and-trade could open up his company to shareholder lawsuits." After only ten minutes into a scheduled 30-minute question-and-answer session, Caterpillar executives abruptly ended the meeting.

5.Cooler Heads Digest Calls for Content

Have stories we may want to include in our weekly news roundup? Is your organization working on something other members of the Coalition might be interested in? Let us know by contacting Julie Walsh at jwalsh@cei.org.