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Saturday, April 25, 2009

Obama Reckless Endangerment

APRIL 24, 2009

Wall Street Journal

Reckless 'Endangerment'

The Obama EPA plays 'Dirty Harry' on cap and trade.President Obama's global warming agenda has been losing support in Congress, but why let an irritant like democratic consent interfere with saving the world? So last Friday the Environmental Protection Agency decided to put a gun to the head of Congress and play cap-and-trade roulette with the U.S. economy.

The pistol comes in the form of a ruling that carbon dioxide is a dangerous pollutant that threatens the public and therefore must be regulated under the 1970 Clean Air Act. This so-called "endangerment finding" sets the clock ticking on a vast array of taxes and regulation that EPA will have the power to impose across the economy, and all with little or no political debate.

This is a momentous decision that has the potential to affect the daily life of every American, yet most of the media barely noticed, and those that did largely applauded. When America's Founders revolted against "taxation without representation," this is precisely the kind of kingly diktat they had in mind.

Michigan Democrat John Dingell helped to write the Clean Air Act, as well as its 1990 revision, and he says neither was meant to apply to carbon. But in 2007 five members of the Supreme Court followed the environmental polls and ordered the EPA to determine if CO2 qualified as a "pollutant." The Bush Administration prudently slow-walked the decision. As Peter Glaser, an environmental lawyer at Troutman Sanders, told Congress in 2008, "The country will experience years, if not decades, of regulatory agony, as EPA will be required to undertake numerous, controversial, time-consuming, expensive and difficult regulatory proceedings, all of which ultimately will be litigated."

The Obama EPA has now opened this Pandora's box. The centerpiece of the Clean Air Act is something called the National Ambient Air Quality Standards, or NAAQS, under which the EPA decides the appropriate atmospheric concentration of a given air pollutant. Under this law the states must adopt measures to meet a NAAQS goal, and the costs cannot be considered. For global warming, this is going to be a hugely expensive futility parade.

Greenhouse gases mix in the atmosphere, and it doesn't matter where they come from. A ton of emissions from Ohio has the same effect on global CO2 as a ton emitted in China; and even if Ohio figured out a way to reduce its emissions to zero, it would still have no control over the carbon content in its ambient air. But under the law, EPA would be required to severely punish Ohio -- and every state -- for not complying with NAAQS.

Under the Clean Air Act, the EPA also must regulate all "major" sources of emissions that emit more than 250 tons of an air pollutant in a year. That includes "any building, structure, facility or installation." This might be a reasonable threshold for conventional pollutants such as SOX or NOX, but it's extremely low for carbon. Hundreds of thousands of currently unregulated sources will suddenly be subject to the EPA's preconstruction permitting and review, including schools, hospitals, malls, restaurants, farms and colleges. According to EPA, the average permit today takes 866 hours for a source to prepare, and 301 hours for EPA to process. So this regulatory burden will increase by several orders of magnitude.

The EPA took the highly unusual step of not accompanying its endangerment finding with actual proposed regulations. For now, EPA Administrator Lisa Jackson claims her agency will only target cars and trucks. That is bad enough. It probably means, for example, that California's mileage fleet burdens will seep out to every other state. So even as taxpayers are now paying tens of billions of dollars to prop up GM and Chrysler, Ms. Jackson will be able to tell the entire auto industry it must make even more small cars that consumers don't want to buy.

Still, why confine the rule only to cars and trucks? By the EPA's own logic, it shouldn't matter where carbon emissions come from. Carbon from a car's tailpipe is the same as carbon from a coal-fired power plant. And transportation is responsible for only 28% of U.S. emissions, versus 34% for electricity generation. Ms. Jackson is clearly trying to limit the immediate economic impact of her ruling, so as not to ignite too great a business or consumer backlash.

But her half-measure is also too clever by half. By finding carbon a public danger, she is inviting lawsuits from environmental lobbies demanding that EPA regulate all carbon sources. Massachusetts and two other states have already sued in federal court to force the EPA to create a NAAQS for CO2.

Which brings us back to the Obama Administration's political roulette. Democrats know that their cap-and-tax agenda is losing ground, notably among Midwestern Senators. The EPA "endangerment" is intended to threaten businesses and state and local governments until they surrender and support the Obama agenda. The car industry is merely the first target, meant to be the object lesson.

Massachusetts Democrat Ed Markey put it this way at MIT recently: "Do you want the EPA to make the decision or would you like your Congressman or Senator to be in the room and drafting legislation? . . . Industries across the country will just have to gauge for themselves how lucky they feel if they kill legislation in terms of how the EPA process will include them."

This "Dirty Harry" theory of governance -- Do you feel lucky? -- is as cynical as it is destructive. And contra Mr. Markey, if cap and tax is killed this year, it will be done in by Democrats, many of whom are starting to realize the economic harm it would inflict. In March, the Senate voted 89 to 8 on a resolution vowing to pass a climate bill only if "such legislation does not increase electricity or gasoline prices."

That's called democracy, but for the Obama Administration such debate is an inconvenient truth. If they can't get Congress to pass their agenda, they'll use EPA and the courts to impose it. How lucky do you feel?

Friday, April 24, 2009

Obama Overreach

APRIL 24, 2009

Global Warming Overreach

By KIMBERLEY A. STRASSEL

Congressman Henry Waxman played to the crowds this week with high-profile hearings designed to boost his climate legislation. To listen to the Energy and Commerce committee chair, a House global warming bill is all but in the recyclable bag.

To listen to Congressman Jim Matheson is something else. During opening statements, the Utah Democrat detailed 14 big problems he had with the bill, and told me later that if he hadn't been limited to five minutes, "I might have had more." Mr. Matheson is one of about 10 moderate committee Democrats who are less than thrilled with the Waxman climate extravaganza, and who may yet stymie one of Barack Obama's signature issues. If so, the president can thank Democratic liberals, who are engaging in one of their first big cases of overreach.

Not that you couldn't see this coming even last year, when Speaker Nancy Pelosi engineered her coup against former Energy chairman John Dingell. House greens had been boiling over the Michigan veteran's cautious approach to climate-legislation. Mr. Dingell's mistake was understanding that when it comes to energy legislation, the divides aren't among parties, but among regions. Design a bill that socks it to all those manufacturing, oil-producing, coal-producing, coal-using states, and say goodbye to the very Democrats necessary to pass that bill.

Such sense didn't deter Mrs. Pelosi, who first tried an end-run around Mr. Dingell in 2007 by putting Massachusetts Rep. Edward Markey in charge of a new global-warming committee. When that didn't get her a bill, she helped her fellow Californian, Mr. Waxman, unseat Mr. Dingell. Environmentalists threw a party, and the Waxman-Markey duo got busy on legislation to please their coastal crowds.

Cap and trade was already going to be a brawl, but the two upped the ante by including tougher targets and restrictions. If that weren't enough, they rolled in every other item on the green wish list: a renewable electricity standard; a low-carbon fuel standard; a broader renewable fuels policy; new efficiency standards. Any one of these is a monumental fight on its own. Put together they risk an intra-party committee mutiny.

There's Mr. Matheson, chair of the Blue Dog energy task force, who has made a political career championing energy diversity and his state's fossil fuels, and who understands Utah is mostly reliant on coal for its electricity needs. He says he sees several ways this bill could result in a huge "income transfer" from his state to those less fossil-fuel dependent. Indiana Democrat Baron Hill has a similar problem; not only does his district rely on coal, it is home to coal miners. Rick Boucher, who represents the coal-fields of South Virginia, knows the feeling.

Or consider Texas's Gene Green and Charles Gonzalez, or Louisiana's Charlie Melancon, oil-patch Dems all, whose home-district refineries would be taxed from every which way by the bill. Mr. Dingell remains protective of his district's struggling auto workers, which would be further incapacitated by the bill. Pennsylvania's Mike Doyle won't easily throw his home-state steel industry over a cliff.

Add in the fact that a number of these Democrats hail from districts that could just as easily be in Republicans' hands. They aren't eager to explain to their blue-collar constituents the costs of indulging Mrs. Pelosi's San Francisco environmentalists. Remember 1993, when President Bill Clinton proposed an energy tax on BTUs? The House swallowed hard and passed the legislation, only to have Senate Democrats kill it; a year later, Newt Gingrich was in charge. With Senate Democrats already backing away from the Obama cap-and-trade plans, at least a few House Dems are reluctant to walk the plank.

Rumors were in fact flying earlier this week that Mr. Markey might have to postpone next week's subcommittee markup. For now, he and Mr. Waxman are busy trying to buy or arm-twist votes. They have some potent tools, in particular the enticement of giving some carbon-emission permits away for free, or allocating them to specific industries. Yet having set expectations so high, the duo risk losing liberal members if they give away too much.

The Obama team is aware it has trouble, which explains last week's well-timed Environmental Protection Agency "finding" that carbon is a danger. The administration is now using this as a stick to beat Congress to act, arguing that if it doesn't the EPA will. (Reality: Any EPA actions will be tied up in court for years.) It also helps explain EPA's Monday analysis claiming the legislation won't cost all that much. (Reality: The agency could only make this claim by assuming an endless recession.)

The real risk to the president is that his bill goes down at the hands of his own party -- with nary a Republican to blame. Whether Mrs. Pelosi and Mr. Waxman considered this as they crafted their gem is unclear. But the overreach has made it a possibility now.

Friday, April 17, 2009

Alternate fuel folly

APRIL 17, 2009

Wall Street Journal

Alternative Fuel Folly

By KIMBERLEY A. STRASSEL

Every so often Washington throws out a controversy that brilliantly illustrates everything wrong with Washington. Consider the brewing outrage over "black liquor."

This is the tale of how a supposedly innocuous federal subsidy to encourage "alternative energy" has, in a few short years, ballooned into a huge taxpayer liability and a potential trade dispute, even as it has distorted markets and led to greater fossil-fuel use. Think of it as a harbinger of the unintended consequences that will accompany the Obama energy revolution.

Back in 2005, Congress passed a highway bill. In its wisdom, it created a subsidy that gave some entities a 50-cents-a-gallon tax credit for blending "alternative" fuels with traditional fossil fuels. The law restricted which businesses could apply and limited the credit to use of fuel in motor vehicles.

Not long after, some members of Congress got to wondering if they couldn't tweak this credit in a way that would benefit specific home-state industries. In 2007, Congress expanded the types of alternative fuels that counted for the credit, while also allowing "non-mobile" entities to apply. This meant that Alaskan fish-processing facilities, for instance, which run their boilers off fish oil, might now also claim the credit.

What Congress apparently didn't consider was every other industry that might qualify. Turns out the paper industry has long used something called the "kraft" process to make paper. One byproduct is a sludge called "black liquor," which the industry has used for decades to fuel its plants. Black liquor is cost-effective, makes plants nearly self-sufficient, and, most importantly (at least for this story), definitely falls under Congress's definition of an "alternative fuel."

All of which has allowed the paper industry to start collecting giant federal payments for doing nothing more than what it has done for decades. And in fairness, why not? If Congress is going to lard up the tax code with thousands of complex provisions designed to "encourage" behavior, it shouldn't be surprised when those already practicing said behavior line up for their reward, too.

In March, International Paper announced it had received $71 million from the feds for a one-month period last fall. The company is on track to claim as much as $1 billion in 2009. Verso took in nearly $30 million from the operation of just one mill in one quarter of last year. Other giants are gearing up to realize their own windfalls. Wall Street has gone wild, pushing paper-company stocks up dramatically in recent weeks.

Happy as industry is to have this new federal lifeline in the middle of a recession, it is the only one smiling. Foreign competitors are screaming that the subsidy is unfairly propping up the U.S. industry in tough times. They claim the U.S. industry is ramping up production simply to realize more tax money. Canadian forestry firms are already demanding their government file a trade complaint.

In order to qualify for the credit, alternative fuel must be mixed with a taxable one. (The government might want to encourage alternative fuels, but not to the extent that it loses its gas-tax revenue.) This means that to qualify, the paper industry must mix some diesel with its black liquor. This has sent environmentalists around the bend. They have accused the industry of burning fossil fuels that it didn't used to burn, simply to get the tax dollars. (The industry has not been clear on whether it is, in fact, using more diesel.)

And then there's Congress, which is suddenly looking at billions more in red ink than expected. In 2007 it estimated a 15-month extension of the credit would cost taxpayers $333 million. It has since revised those numbers to take into account black liquor and is now figuring a one-year cost of more than $3 billion. Wall Street analysts are talking $6 billion. Senate Finance Committee bosses Max Baucus and Charles Grassley are reportedly aware of the issue, none too happy, and they are working to bar the paper industry from receiving the credit.

But this, in turn, has tossed up uncomfortable questions. The paper industry argues that if the government is going to be in the business of rewarding good behavior, it ought to do it equally. Is green policy only to be aimed at dirty or economically unviable actors? Is black liquor any less useful than ethanol or biodiesel, and if so why? If not, shouldn't Washington encourage its use? Isn't every green subsidy in fact the basis for a trade dispute? These are questions Congress has no interest in confronting, since it would expose the muddle that is its entire green-energy program.

All of this is highly amusing, if not surprising. Every government attempt to manage energy markets has resulted in similar disarray. Look at the havoc that came from the energy price controls, regulations and subsidies of the 1970s. Or look, more recently, at the ethanol fiasco, and the accompanying soaring food costs. Energy powers the economy. Mess with energy markets, and mess with everything else. When will Washington learn?

My Rant

The claim that climate change is direct result of man's energy consumption is simply unproven and politically motivated. While they propound lies that certain lightbulbs or cars will destroy the earth and raise ocean levels as much as 20 feet within the next century, fascists, like Al Gore, fly around in their Gulfstream jets and live in homes that use 22 times the energy of an average American's home! Their propaganda is outrageous and potentially catastrophic for the economies of United States, the developed world and developing world.

The proof of global warming or man's influence on climate change is not settled science. Just consider the source of the big lie: the proselytizing hypocritical high priest of the pagan environmental religion Al Gore or the other Kool-Aid drinking climateers from the left such as Learjet liberals, Hollywood high school drop-outs, billonaire elitists, the left-leaning mainstream media, the United Nations, academia, environmental radicals, socialists, other anti-capitalists and so called "researchers", "experts" and/or "scientists" whose paychecks depend upon the apparent existence of the "issue".

United States energy conservation and independence is a worthy goal that should be supported by Republicans, the Democrat Party, true Democrats, Independents and environmentalists. Energy independence is a major national security concern. However, lying to our people, implementing the cap & trade boondoggle which will crush our economy or doing anything that will cause the United States to transfer an portion of its sovereignty to the United Nations is idiotic. Not in my name!