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Thieves Fall Out

My colleague Marlo Lewis testified at a painfully comic hearing of the Senate Environment and Public Works Committee yesterday on "examining global warming issues in the power plant sector". Marlo's testimony is well worth reading, as is the testimony of two other witnesses: Bob Murray, chairman and CEO of Murray Energy Corporation, one of the biggest independent coal companies in the country: and Tom Borelli of the Free Enterprise Action Fund. But I write to discuss the testimony of three heads of major electric utilities and of two leading 'viros. Peter Darbee, chairman and CEO of PG&E in California, supports a cap-and-trade scheme that would be fair to his company by giving out the initial allocations based on actions already undertaken that reduced emissions (called credits for early action) and on each emitter's historical level of energy produced rather than on its historical level of emissions. This would favor utilities (like PG& E!) that don't burn much or any coal and instead already rely on higher-priced lower-emitting fuels. To be fair to Darbee, I should cut him some slack because his company has to do business in California, a state whose energy policies are remindful of Alice's Wonderland, only less rational. Lewis Hay, chairman and CEO of FPL (Florida Power and Light) favors a modest carbon fee, which differs from a carbon tax because...well, because it's called a fee. If Congress prefers a cap-and-trade instead, then it needs to be designed so that innocent people (like FPL shareholders?) aren't unfairly disadvantaged. Jim Rogers, chairman and CEO of Duke Energy and the nation's most politically savvy capitalist since Ken Lay, supports a cap-and-trade scheme that would be fair to his company by giving out the initial allocations based on each emitter's historical level of emissions rather than on its historical level of energy produced. This would favor companies (like Duke!) that burn a lot of coal. They would in effect be paid to switch to producing more expensive electricity from lower-emitting fuels. Jason Grumet of the self-proclaimed National Commission on Energy Policy testified in favor of a cap-and-trade that has a safety valve price, so that companies will not be faced with uncertain and possibly extremely expensive costs of reducing emissions. David Hawkins, long-time global warming alarmist guru at the Natural Resources Defense Council (which portrays itself as business friendly--they must have a lot of laughs back at the office over that), vigorously opposed any safety valve price. American companies will just have to pay whatever price is necessary to cut emissions by 80 per cent below 1990 levels by 2050 (currently emissions are nearly twenty per cent above 1990 levels). Hawkins added that doing this will give us a 50-50 chance of avoiding global calamity. It is disturbing that Hawkins would support policies that give us only an even chance of saving the planet. Doesn't the precautionary principle demand that we do whatever is necessary? Hawkins seems all too willing to gamble irresponsibly when the stakes are all or nothing. Chairman Barbara Boxer (D-Calif.) noted correctly that the problem with the NCEP safety valve (which is adopted in draft legislation by Sen. Jeff Bingaman, chairman of the Energy and Natural Resources Committee) is that it will keep the costs low but will therefore not actually cut emissions. That is, she unwittingly admitted that it's going to cost consumers tons of money in higher energy bills to attain climate nirvana. Sens. Joe Lieberman (D-Conn.) and John Warner (R-Va.) have announced that they will work together on the EPW subcommittee on the Subcommittee on Private Sector and Consumer Solutions to Global Warming and Wildlife Protection (of which Lieberman is the chairman and Warner the ranking Republican -- I wonder how they remember the name of their subcommittee) to produce and move a cap-and-trade bill that can win wide bipartisan support. The testimonies of Darbee, Hay, Rogers, Grumet, and Hawkins should alert even these two low-emitting bulbs that when it comes time to divvy up the booty thieves nearly always fall out. It's going to be fun to watch the immense political pressures that are going to be put on Members of Congress by every special interest that hopes to make billions of dollars on the backs of American consumers from cap-and-trade. Fun, but not pretty. One more note: Sen. Larry Craig of Idaho gave a great opening statement at the hearing that sounded like he's still one of the leading conservatives in the Senate. Unfortunately, although he still talks like a conservative, he hasn't been voting like one. Last week he voted for final passage of the ghastly anti-energy bill that the Senate passed, which if enacted would raise production prices for Idaho's livestock producers and gasoline prices (to over $6 a gallon according to an economic study by the Heritage Foundation) for Idaho drivers, who tend to favor four-wheel drive pick-ups and big SUVs.