Carbon cash will end up in wrong hands
The Obama administration has been counting on big revenues from its climate change plans from selling permits for carbon emissions. But commentator David Frum says the way Congress works, the money will end up in utility companies' coffers.
David Frum (David Frum)
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Kai Ryssdal: House Democrats say they've come to terms on a climate-change bill. They've cut back on some of the more aggressive parts of their original plan so they can get the thing passed by Memorial Day. The revised bill still does lay out a pretty ambitious agenda. It reduces greenhouse gas emissions 17 percent by 2020 and increases the amount of power that's produced using renewable sources. Commentator David Frum says it sounds pretty good, but the approach is all wrong.
DAVID FRUM: Barack Obama's responsibility era has lasted barely four months.
On Monday, the president stood in the East Room of the White House with leading health-care executives to announce $2 trillion in hypothetical -- and probably imaginary -- savings in health spending over the coming decade.
His revenue side is revealing itself as even more of a fantasy.
The Obama administration has been counting on big revenues from its climate-change plans. It would sell permits to emit carbon dioxide, which is generated by burning fossil fuels like oil and coal. The administration reckoned the value of these permits at somewhere between $700 billion and $1.8 trillion over 10 years.
But that estimate was always based on disregarding the giant favor-selling machine we know as the U.S. Congress.
The last round of carbon legislation in Congress, back in 2007, ended up giving large emission rights away for free to powerful interest groups. The interests have not got any weaker since.
Which is why as the current legislation moves through Congress, more and more of the permits are again being given away for free: up to 75 percent in the versions of the bill being debated this week. Environmentalists go along with the giveaway because they get something they want: a mandate on utilities to use costly wind and solar and to pass the cost on to consumers.
Consumers will pay more for electricity. But instead of paying it to the U.S. Treasury, they will pay it to utility companies.
All of this was predictable from the start. More than predictable: predicted.
Democrats rejected the simple and rational alternative -- a tax on carbon dioxide -- in favor of a complex system of permits and mandates. Democrats preferred a more interventionist approach because it gives government more power to favor pet technologies like wind and solar over lower-cost nuclear. And as any utility can tell you: power costs money.
RYSSDAL: David Frum is a resident fellow at the American Enterprise Institute.
Comments
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From Wiggins, MS, 05/15/2009
This post is very telling in that it indicates that the true motivations of climate change legislation may be more governmental control and increased revenue for unrelated spending. Also very telling is that every comment in reaction seems to either attack David Frum personally or go on some tangent about their personal feelings about methods of energy production, the basic tenet of this report is never disputed!
From Washington DC, DC, 05/14/2009
I actually think it's almost brave for Mr. Frum to vocally support a carbon tax. Not to mention that he's 100% right: a carbon tax both mitigates global climate change AND bolsters the economy. It's a win-win, especially when compared to a flawed cap and trade system.
From Omaha, NE, 05/14/2009
David Frum is a criminal whoes delusions and lies are on the record when he was misdirecting America into an un-just war in Iraq. He should be prosecuted for his role in the debacle and put behind bars not given airtime on NPR.
Surely, NPR can find other conservatives voices not so tainted with blood on their hands to provide a counter view.
From Logan, UT, 05/14/2009
David Fru's commentary continues the tired sort of politicized comment that is one sided. While he is entitled to his opinion, and he is a reasoned conservative to whom I will listen, he still paints only a partial picture.
I have worked a bit on these issues, and listened to many economists, and CONSERVATIVES, who tout the benefits of cap and trade. I disagree, and think a simple C tax is better. But MANY people, INCLUDING conservatives, like C&T [for reasons I don't completely understand], but it has something to do with markets being a more efficient method to determine prices, allow people to set prices, etc. I suspect there are less principled conservatives who like C&T - because markets can be gamed, and used to benefit some players over others.
So it is NOT just government-loving liberals who advocate for C&T.
And, Mr. Frum also needs to think about FULL CYCLE costs, making some sources [nuclear, coal] more costly, and other less.
Thanks
From nashville, TN, 05/14/2009
Although it has been commented on, what really got my dander up was Frum's "cheap nuclear" comment. David Frum and the American Enterprise Institute (AEI) care nothing about what technology is cheaper. They are really just promoters of existing business interests and their entrenched public subsidies. There is nothing free market about nuclear power plants. The public picks up their insurance costs through the cold war Price Anderson Act (which also limits liability in the case of accidents), a large share of R&D (government funding of reactor research dwarfs that of solar and wind), clean-up of uranium mining pollution (much of it adversely affecting native American communities who do not benefit from the electricity), waste disposal, and who knows what future decommissioning costs. Looked at in this light, David Frum and the AEI are just shills for shifting costs to the public for private profit and shielding businesses from true competition.
From massillon, OH, 05/13/2009
Mr. Frum states the current carbon emissions bill in congress was passed because “Democrats preferred a more interventionist approach because it gives government more power to favor pet technologies like wind and solar over lower-cost nuclear.”
This seems to me to be a very short sighted opinion of costs. How much will need to be spent by future generations to store already spent nuclear fuel and how much has already been spent to prepare a site at Yucca Mountain in Nevada that is still not in use because of concerns of the safety of moving toxic waste from such plants. The fact that a truck in Utah was caught recently leaking waste from a hose that had been duct taped rather than repaired properly shows that industry cannot be trusted to move such wastes safely and that the production of more in the future is in the long run a risk and cost much too high to trust to those that put profit above the lives of people.
Lower-cost? Ask those that lived outside Three Mile Island and Chernobyl how cheap nuclear power is and if the risk is worth the “lower cost” Mr. Frum.
From Minneapolis, MN, 05/13/2009
So let me see if I get this straight - a fellow at the American Enterprise Institute is calling for a tax?
I'm dubious. I think Frum knows full well that a tax won't pass with the mood the nation is in. So he can sound high-minded without worrying that what he advocates will come to be. it's just more kicking the can down the road, but with a more sophisticated (disingenuous) argument.
I also can't imagine that he really prefers revenue going to the government over private utilities. "[I]nstead of paying it to the U.S. Treasury, they will pay it to utility companies" rings false to me from a economically conservative think-tanker.
And, last but not least, aren't the solar and wind power businesses private businesses? Why does Frum care if we choose them over nuclear?
It's likely that the subsidies to solar and wind would be less than the ones the nuclear power industry would need to overcome the billion dollar start-up and multi-billion dollar liability insurance costs they face - for each reactor!
From Fort Gibson, OK, 05/13/2009
This was the worst commentary I have ever heard on NPR and I have listened many years!! This was not an analysis.It was anti global warming double speak and a back door promotion for Nuclear energy.Nuclear is way more expensive than solar/wind..Please contact someone from NukeNet to respond Decomissioning a nuclear plant costs as much as building one and building one is beyond extravagant. Daily releases of nuclear material in itself has very dangerous and expensive side effects.Water use is ERY high and expensive.Please offer an apology for your error..A political process is at least going on now to cut co2.O agree w carbon tax,entirely different reasons
From West Chester, PA, 05/13/2009
I agree with Jared, I think it is important to let listeners know what the American Enterprise Institute's political leanings are, not just assume the audience is aware. In the future, it would be good to have opposing view points on the same subject.
As for the content of today's comments by Frum. It is not only about the short term money, but the long term quality of life. Which, of course, influences the economy in a much more sustainable way. If congress is not acting in a way which is responsible to their constituency then they should be held accountable. That is the story that needs to be reported on, not the concept of cap and trade or other ideas that might actually help our environment.
From Los Angeles, CA, 05/13/2009
Why does this idiot David Frum get air time? Why is there no opposing point of view given on the air? This guy is consistently deeply wrong. Carbon auctions and taxes are meaningless without defining a cap that we ethically can't exceed. That cap exists whether it is legislated or not, and not legislating it just lets the ruthless and unethical actors, or as you call them "utility companies", a free hand at polluting all of our earth's limited resource: air.
Here's a reality calling: pollution affects human health! Those humans include American citizens, who on average can't afford health care. It's been scientifically proven. If you don't believe me, eat lots of fish and see how you like mercury poisoning. I guarantee you that level of mercury didn't enter the fish naturally. Thank GE while you die a slow and painful death from eating our infected nature.
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