Tag Archive for: California Jobs Act

Who Are The Carbon Criminals?

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At first glance, one might think “Carbon Criminals” is meant to describe the people who extract carbon-based fuel, sell it to the public at a competitive price, and in the process, allegedly edge the planet towards a catastrophic environmental collapse. But perhaps one would be wrong.

There’s nothing wrong with questioning our inordinate dependence on fossil fuel, or taking measures to improve the process of extracting and burning fossil fuel in order to protect our environment. To fail to regularly and scrupulously upgrade safety procedures from top to bottom, throughout the fossil fuel industry, may indeed be considered criminal. And as our technology improves and our prosperity enables us to do more, it is arguably criminal to fail to make the burning of fossil fuel a cleaner proposition each and every decade. But the real criminals are not the industrialists who have made carbon based fossil fuel the engine of civilization – the real criminals are the faceless bureaucrats and cynical opportunists who have convinced us we have to auction and trade carbon emissions allowances and carbon offset credits.

Most people still haven’t thought about how this entire scheme is going to work. And even those who have given this considerable thought, such as the bureaucrats at the California Air Resources Board, are often still in the dark on the details. Read their “Scoping Plan,” and draw your own conclusions as to their readiness to dramatically transform our economy, our property rights, and our lifestyle. Here’s a few of the concepts that need to be mastered, then applied into law, in order for “carbon trading” to become a reality:

(1) Emission Allowances – this is a permit that will be sold by the government to any business that emits more than 25,000 tons of CO2 per year. This would be all power utilities, large manufacturers, and most large agribusinesses, to name a few. These permits would have an initial price, still to be determined, that the State would collect from these businesses in order for them to continue to emit CO2 “pollution.” How are these emissions calculated? Some variables are relatively straightforward, such as smokestack emissions. But it won’t end there. Dozens of “CO2 equivalents,” such as the methane emitted from dairy farms, other livestock operations, and even the flooded fields of rice growers, and on and on, will also have to be measured and calculated. This becomes a very subjective, and very expensive procedure. But don’t worry, State approved consultants will be available to perform this calculation.

(2) Carbon Trading – this is the procedure whereby businesses that have failed to reduce their CO2 emissions would buy permits from other businesses who have managed to reduce their CO2 emissions by more than necessary. This is supposed to “put the market to work,” and indeed, it will put a lot of brokers and IT professionals to work, along with armies of attorneys and accountants. As the value of an emission allowance drops each year – so we can supposedly ratchet down our collective CO2 emissions to prehistoric levels within a few decades – companies will have the opportunity to purchase emissions allowances and “offsets” from qualified sellers, in order for them to continue to emit CO2. Alternatively, they can invest money in non-CO2 emitting sources of power – wind power, methane digesters, etc.

(3) Carbon Offsets – these are projects designed to sequester carbon or reduce carbon. A new forest that sequesters carbon in the wood of the trees. A renewable energy project that emits zero carbon. A methane harvester that captures the methane that bubbles up from a waste water pond at a dairy farm, or out of a landfill. To the extent these projects reduce annual CO2 emissions, they are eligible to sell these “offsets” to people who need more permits to emit CO2.

(4) “Additionality” – oops, don’t try to sell a carbon “offset” if you were going to build that zero CO2 emitting hydroelectric dam anyway, or if you were going to reforest your timber property anyway. For that matter, if the price of electricity gets high enough to justify any non-CO2 emitting source of energy, solar, wind, on strictly financial grounds, meaning that you would have built it anyway, then it no longer qualifies as an “offset” project, because it no longer meets the essential criteria of “additionality.” No subjectivity there.

If you don’t accept the premises being used to justify all this – that CO2 is a deadly gas, that fossil fuel is nearly depleted – than it is easier to see what a magnet this whole scheme is for white collar criminals – and their deadly counterparts in the underworld. But even if you do believe carbon is something we need to wean ourselves of, if you ponder the level of corruption that implementation will breed, you may have second thoughts. And as food for 2nd thoughts, consider these articles – just the tip of the iceberg – that describe the ongoing exploitation of the carbon scare by criminal elements:

Deutsche Bank, RWE Raided In German Carbon Fraud Probe

Carbon Trading Complexity Putting Strains on Market Reputation

Anti-fraud investigators swoop on EU emissions traders

U.N. panel suspends two more carbon emissions auditors

Spain Police Arrest Nine In CO2 Tax Probe

Carbon market chaos strikes again

Scandal brewing in the Euro carbon credits market

CDM crackdown continues as board rejects fresh Chinese wind projects

Carbon Credit fraud causes more than 5 billion euros damage for European Taxpayer

That green energy scandal

British carbon traders charged with money laundering relating to alleged carousel fraud

It is difficult to read these stories, all recent, all from reputable sources, without feeling a tremendous apprehension for our future. There is a Citizen’s Initiative, the California Jobs Act, slated for the November 2010 ballot that will suspend implementation of California’s 2006 Global Warming Act, set to take effect in 2012. When the opponents of this measure pull out all the stops, accusing proponents of being shills for “big oil” (despite the fact that most oil companies have come around, and plainly see the dollar signs inherent in embracing the whole global warming scheme), remember who they are: high-tech moguls who want to build the surveillance devices that will manage every kilowatt we use and every mile we drive, public sector bureaucrats and white collar professionals who see the biggest new source of revenue since the enactment of the federal income tax nearly 100 years ago, and, of course, the Wizards of Wall Street, who will milk this for billions upon billions. For more, read “Implementing California’s Global Warming Act.”

Who are the real carbon criminals?

Will California’s Voters Reject their Global Warming Act?

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A citizen’s initiative that looks likely to make it onto the November ballot this year is the aptly named “California Jobs Act,” which would suspend implementation of AB32, California’s Global Warming Act, until unemployment in the Golden State drops down to 4.8%. Passed in 2006, AB32 calls for California’s Air Resources Board (CARB) to write new regulations designed to lower, by 2020, California’s greenhouse gas emissions to 1990 levels. According to CARB’s report “California 1990 Greenhouse Gas Emissions Level and 2020 Emissions Limit,” in 1990, Californian’s emitted 433 million metric tons of “CO2 equivalents” in 1990, and by 2004 these greenhouse gasses had increased to an estimated 484 million metric tons.

Back in 2006, when AB32 was passed by California’s State legislature, and signed by Governor Schwarzenegger, California’s economy was at the crest of the debt-fueled housing-bubble boom. Now that California’s unemployment rate is nearly 13%, the highest in the nation, it is dawning on California’s voters that schemes to go it alone and adopt the bleeding edge of climate mitigation policies may not be the best prescription for economic recovery. Notwithstanding promises of abundant “green jobs,” and visions of a prospering “green economy,” what is most likely to be the economic outcome if California fully implements AB32 by 2012 as planned?

There are several examples surfacing that suggest CARB’s original economic assessment was overly optimistic. An analysis on the net impact of AB32 on jobs in California prepared in March 2010 by California’s non-partisan Legislative Analyst’s Office refuted CARB’s conclusions, and claimed implementation of AB32 would cause net job losses, not net gains. One of the first of studies of the actual economic impact of publicly subsidized renewables, entitled “Study of the effects on employment of public aid to renewable energy sources” was released by economists at the University of Rey Juan Carlos in March 2009.  It documented how the Spanish “green jobs” policies in fact destroyed jobs, detailing this in terms of jobs destroyed per job created and the net destruction per installed mega-watt.

Proponents of AB32 will continue to argue that implementing AB32 will accelerate transition to a prosperous “green” economy, but ultimately their economic argument has to rest on the premise that green policies and green products are cost-competitive with conventional technologies and existing policies. And in most cases, this position is dramatically false. It is one thing to subsidize strategic research into energy technologies that will eventually yield breakthroughs in price and performance, but quite another to require substantially more expensive current renewable energy technology to be deployed at scale today. Solar energy and wind energy are still 2-3x more expensive than conventional energy solutions, and with recent developments in shale gas extraction as well as ongoing progress in safe nuclear technologies, that cost gap is not shrinking. Proponents of solar and wind energy also frequently fail to account not only for the installation cost of these intermittent energy generators, but also the cost of maintaining back-up conventional generators that have to be activated when the sun sets or the wind dies down. They also often fail to assess the costs of constructing additional high-voltage transmission lines to transport electricity from decentralized wind and solar farms to urban areas, as well as the costs to buffer the power grid to accommodate massive fluctuations in generating output from these intermittent sources of energy. Ironically, proponents also fail to assess the costs of lawsuits and permit processes which add, especially in California, massive additional cost to any new energy project, conventional or alternative.

Evidence that renewable energy costs significantly more than conventional energy is not hard to find. An article in the Los Angeles Times, dated March 15th, 2010, entitled “DWP plans 37% rate hike over four years to cover cost increases,” states the primary reason for this is to pay for renewable energy. Other utilities across the state are planning similar increases – not just power utilities, but all utilities who consume power, such as the water, sewage and sanitation districts. All of these utility rate increases cascade into the cost of doing business as a private sector company. And it doesn’t end there – to implement AB32 and realize the ambitious goals for greenhouse gas reduction, CARB intends to rewrite regulations on land-use and land management, vehicle efficiency, building energy efficiency, transportation policies – in general, they intend to regulate virtually every industrial process that results in greenhouse gas emissions. There is a cost for all of this.

California may have a liberal electorate, but Californian’s also have a very well documented aversion to higher taxes. And “mitigation” in the name of global warming is an indirect tax. By raising prices for energy and other resources required by California’s industries, many will leave California. Those who remain will have to defer investment in job creating activity, such as plant expansion or research and development, in order to absorb higher utility expenses and invest in new equipment for mitigation. The “green” jobs created by construction of subsidized, non-competitive energy and utility infrastructure are vastly outnumbered by the jobs lost because the business community has to allocate more of their financial resources to paying energy and utility bills, and consequently have less financial resources to create new products and new jobs.

On the demand side of the economy the same consequences apply. Consumers will have to pay more for energy and other utilities, as well as for products produced in California – including transportation and housing. This will reduce their discretionary consumption, further shrinking the economy. These mandated increases to the cost of doing business and the cost of living in California thanks to AB32 are not explicitly called taxes, but that is what they are.

California has a well-earned reputation as a political trend-setter. Californians were the first electorate to enact term limits. Their property tax revolt in 1978 stunned the nation. California’s voters have the potential – if they vote to suspend AB32 this November – to begin to reestablish their State as a leader of responsible political action. The impact of Californians suspending AB32 will not only be to save themselves from punitive new hidden taxes, but to reignite a constructive discussion regarding what green technologies are really ready for prime-time, and what a realistic balance should be between environmental stewardship and economic growth.