Archive for the ‘global warming’ Category
That Custom-Tailored Obama Scandal You Ordered Is Finally Here
His summary: “Fox News call your doctor, because the erection you currently have is going to last longer than 4 hours.” Spot on. One thing is missing, however: someone should advise Jon that the missing link, Goldman Sachs, is also, and quite naturally, involved.
Never one to to allow a “good crisis” to go to waste, Barack Obama is pledging to use the BP oil spill in the Gulf of Mexico as an opportunity to push the U.S. Congress to pass his controversial climate bill. In fact, during a recent interview Obama directly compared the current crisis in the Gulf to 9/11, and indicated that he believed that it would fundamentally change the way that we all look at energy issues from now on. But the truth is that Obama’s climate bill is the same economy killing legislation that it was before the BP oil spill. It would still drive gas and electricity prices through the roof, it would still cause large numbers of U.S. businesses to flee overseas, it would still be one of the biggest tax increases in U.S. history and it would still usher in an unprecedented era of climate fascism. But now thanks to the BP oil spill there is suddenly a lot more momentum in Congress for doing something about energy and about “climate change”.
Of course the truth is that carbon dioxide is not causing climate change and high levels of carbon dioxide are actually very good for the environment, but reducing carbon emissions has almost become a religion for radical environmentalists, and Barack Obama is absolutely determined to push through his “cap and trade” carbon trading scheme. In fact, just as 9/11 completely changed the war that Americans viewed the fight against terrorism, Barack Obama sees the oil spill in the Gulf of Mexico fundamentally changing the way that Americans see energy issues. During a recent interview, Obama told Politico columnist Roger Simon the following….
“In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape how we think about the environment and energy for many years to come.”
Not only that, but Obama considers it one of his greatest “leadership challenges” to make sure that we all “draw the right lessons” from the BP oil spill….
“One of the biggest leadership challenges for me going forward is going to be to make sure that we draw the right lessons from this disaster.”
So what are those “right lessons”?
Well, apparently what we are all supposed to get out of this disaster are the lessons that Obama has been trying to “teach” us all along – that carbon taxes and cap and trade schemes are good for us.
But Barack Obama is not the only one urging us to learn the “right lessons” from the BP oil spill.
In a recent interview with ABC News, Microsoft’s Bill Gates also linked the oil spill in the Gulf of Mexico with “climate change”. Gates warned that if we don’t make the necessary changes soon that we will suffer severe consequences….
“We’ll have more crises like the oil spill and we’ll have the supply disruption. We’ll start to see more and more effects of the climate problem.”
But would the climate bill that Obama is pushing really save us from “climate change”?
Of course not.
But Barack Obama’s climate change bill would do the following things….
*It would drive gas and electricity prices through the roof.
*It would crush the already fragile U.S. economy by piling a bunch of new taxes and regulations on U.S. businesses. Needless to say, large numbers of them would begin looking for greener pastures.
*It would increase worldwide pollution by forcing companies out of the U.S. and into nations that have no restrictions on pollution whatsoever.
*When you add up all of the overt and hidden taxes in the bill, it would represent one of the biggest tax increases in U.S. history.
*Since every action we take involves the production of carbon emissions (including every breath that we take), it would open the door for an era of tyrannical climate fascism where the U.S. government literally monitors every aspect of our lives to make sure that we are being “eco-friendly”.
But Barack Obama makes this climate bill sound like it is the greatest thing since sliced bread. In fact, he continues to promise that the number of “green jobs” gained by this bill will far outweigh the number of other jobs lost.
But is this true?
Of course not.
In fact, other countries that have tried a “cap and trade” scheme have experienced disastrous results. For example, a leaked internal assessment produced by the government of Spain reveals that the “green economy” there has been an absolute economic nightmare for that nation. Energy prices have skyrocketed in Spain and the new “green economy” in that nation has actually lost more than two jobs for every job that it has created.
The unemployment rate in Spain is now hovering around 20 percent and the economy there is on the verge of complete and total collapse. In fact, if the government of Spain does end up defaulting on their debts, it could make the financial crisis that has been unfolding in Greece look like a Sunday picnic.
It should be obvious to anyone with a brain that a climate bill like the one Spain implemented will devastate the U.S. economy. But facts haven’t gotten in the way of Barack Obama pushing his agenda before, so why should they now?
However, it is not just Barack Obama that is pushing an agenda of trying to radically reduce carbon emissions. All over the world, many of the global elite have joined forces with the radical environmentalists in an effort to “save the world” from the growing “threat” of carbon dioxide.
And since each person on this planet is a source of constant carbon emissions, many of those who truly believe in this radical environmental agenda consider the rapidly growing population of the earth to be the number one cause of climate change.
You see, to those obsessed with “climate change”, just getting corporations around the globe to radically cut carbon emissions is not nearly going to be good enough. The truth is that they know that in order to get carbon emissions down to where they want them to be, they are going to have to do something about the growing world population.
To them, in the “war against climate change” anyone who breathes is the enemy. In fact, according to an official UN report, no human can ever truly be “carbon neutral”.
So please understand that for those obsessed with climate change, “carbon taxes” and “cap and trade” are just the beginning. To truly achieve their goals, “one child policies” and “forced abortions” will also be necessary.
So if Barack Obama does get his climate bill pushed through Congress and it does kill the U.S. economy, that would only be a “first step” for those truly dedicated to the radical environmental agenda. What they have planned down the road is a whole lot more horrific.
Leaked Doc Proves Spain’s ‘Green’ Policies — the Basis for Obama’s — an Economic Disaster (PJM Exclusive)
PJM has received a leaked internal document confirming Spain realizes its green failures, just as Obama pushes the American Power Act based on Spain’s program. (Click here for the original Spanish document. An English translation is provided in this article.)
Pajamas Media has received a leaked internal assessment produced by Spain’s Zapatero administration. The assessment confirms the key charges previously made by non-governmental Spanish experts in a damning report exposing the catastrophic economic failure of Spain’s “green economy” initiatives.
On eight separate occasions, President Barack Obama has referred to the “green economy” policies enacted by Spain as being the model for what he envisioned for America.
Later came the revelation that Obama administration senior Energy Department official Cathy Zoi — someone with serious publicized conflict of interest issues — demanded an urgent U.S. response to the damaging report from the non-governmental Spanish experts so as to protect the Obama administration’s plans.
Most recently, U.S. senators have introduced the vehicle for replicating Spain’s unfolding economic meltdown here, in the form of the “American Power Act.” For reasons that are obvious upon scrutiny, it should instead be called the American Power Grab Act.
But today’s leaked document reveals that even the socialist Spanish government now acknowledges the ruinous effects of green economic policy.
Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.
The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.
This document is not a public report. Spanish media has referred to its existence in recent weeks though, while Bloomberg and the Washington Examiner have noted the impact: Spain is now forced to jettison its plans — Obama’s model — for a “green economy.”
Remarkably, these items have received virtually no media attention.
An item which has been covered widely, however, is that President Obama is now pressuring Spain to turn off its spigot of public debt in the name of averting a situation similar to that of Greece.
Also covered widely is Obama’s promotion of the American Power Act — the legislation which would replicate Spain’s current situation in the United States.
Put simply, Obama is currently promoting a policy in the U.S. which is based on a policy that he wishes to see Spain abandon. Welcome to Obamaland, the particulars of which are explained in a fashion grandly more illuminating than this Obama-Zapatero dance in Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America.
A translation of the leaked Zapatero government internal slide presentation: “Renewable Energy: Situation and Objectives April 2010”
1) Renewable Energy: Situation and Objectives April 2010
2) Renewable Energy Situation: The price of electricity affects household welfare
According to EuroStat data, the cost of electricity for households in Spain moved from below the European average to slightly above the average (+5% higher)
3) Renewable Energy Situation: The price of electricity determines the competitiveness of Spanish industry
Energy is a key input in industrial production processes. In basic industries (cement, industrial gases, metals, basic chemicals and steel), energy costs are three times the labor cost. The electrical cost for the Spanish industry is well above the European average (+17% higher).
4) Renewable Energy Situation: The price increase is mainly due to additional costs of renewables
The price of electricity determines the competitiveness of Spanish industry
Historical evolution of the prices of light and pool price [Appears above a graph showing a 77% price spike in industry's price for electricity]
A price increase cannot be explained by the evolution of electricity market price (pool), which has even fallen since 2005
5) Renewable Energy Situation: The price increase is mainly due to additional costs of renewables
The increase in the over-cost paid for renewable energy explains more than 120% of the variation of the electric bill, and has offset the reduction in production costs of conventional electricity (25%)
To these direct costs of renewables must be added indirect costs, as the need for additional investment in networks to integrate renewables (about 10% of planned investment in the planning) and capacity payments to the modular backup facilities (coal and gas) that are running a smaller number of hours
6) Situation of renewable energy: renewable energy has had a positive impact …
Thanks to the increase of renewable energies in the mix:
The rate of energy supply has increased by 3 points since 2005, to 23%, and the import of energy products has been reduced 5.500M Euro (including hydraulics).
Emissions have been reduced significantly, thanks primarily to the mix of electric generation being much cleaner (less than 120 tons of CO2 emissions per GWh of oil produced).
7) Situation of renewable energy: but its evolution in recent years has been too fast
From 2004-2010 the amount of premiums [over-cost paid for renewable energy; the subsidy] has increased fivefold. Only in 2009 it doubled over the previous year to reach 5.045M€, equivalent in amount to the entire public investment in R + D + i in Spain. [The renewables subsidy equaled the entire cost of producing electricity in Spain]. The forecast for 2010 is 6.300M€ (although 5.800M€ budgeted in January). This should add 1.000M€ for cogeneration.
With operational facilities, the renewable sector will receive in the next 25 years more than 126.000M€. In this factor, it adds a commitment to continue providing input to the renewable energies in the mix to meet the European objectives, which will increase this figure significantly.
8 ) Situation of renewable energy: Heterogeneity of renewables: costs
In 2009, the solar photovoltaic technology accounted for 53% of the extra cost of renewables, while they contributed only 11% of energy generated from these sources.
9) Situation of renewable energy: Heterogeneity of renewables: Impact on the external sector
Exports: Net exports of Spanish wind industry 1.300M€ contributed to the trade balance in 2008 and, besides, wind generation avoids fossil imports of 3.6M€.
Imports: By contrast, the PV industry growth was not gradual, hampering the formation of an auxiliary Spanish industry. In 2008 imports of photovoltaic cells and modules in Spain amounted to 5.182M€ (28.6% of net imports of crude and derivatives) as long around the 62% were imported.
10) Situation of renewable energy: Heterogeneity of renewables: Technical problems
Network Management. The proliferation of small plants and fluctuations in the availability of technologies hinder the management of the network.
11) Situation of renewable energy:
Regulatory mechanisms to support renewables have been:
– Pioneers in the world, which has allowed us to stay ahead of the industry, learn from the experience and finding some excesses.
There are numerous examples of these high returns: analyst reports, premiums accepted in other countries, over-subscription in the pre-records, facilities willing to accept lower premiums, “paper market” …
– Overly cautious about the ability of cost reduction technologies
– Inflexible, thereby preventing adjust remuneration to market signals and technological advancement
– Hardly told them by the administration in setting prices initially and have no control over the amounts … Which has caused a “bubble effect,” such as seen with photovoltaics in 2008 and the emergence of the thermal bubble (which would have continued in 2010 and successively had it not been for the pre-registration requirement imposed), as well as a sharp increase the over-costs [subsidies] paid to renewables in the form of a feed-in tariff.
12) Situation of renewable energy: Heterogeneity of renewables: International comparison
In wind power, our rates are in line with Europe. However, solar photovoltaics, Spanish retribution has been the most high, despite the higher number of hours of sun and more solar radiation.
Spain Wind € 75-84/MWh Solar €265/295/350/450/MWh
China Wind € 56-67 Solar € 121/MWh
Japan Wind € 73-89/MWh
Germany Wind € 92/MWh Solar € 287-395/MWh
France Wind € 82/MWh Solar €310-380
Italy Wind € 85/MWh Solar € 350-390
Poland Wind € 90/MWh
13) Situation of renewable energy: Recent technological developments
The investment costs of renewable energies mainly depend on its technological learning curve
The plots have experienced tremendous technological development in recent years, reducing their investment costs
Not being mature technologies, have much future room for improvement, which informs a decision to slow its current expansion
14) Situation of renewable energy: What have we done?
The Government has adapted the following initiatives:
– A new framework for PV in 2008 (RD1578/2008) that brings order to the pace of installation and marking signs ecstatic that transfer with May fast technological development gains to consumers
– Creation of a technology pre-registration for the remainder of May 2009 has allowed us to avoid the “bubble” that was generated in thermal and prevent the system being made even more untenable in 2010.
– Package of measures for the reduction to the tariff deficit with input from the traditional electric companies, consumers and government (without the contribution of renewable energy).
15) Situation of renewable energy: Difficulties in reducing the tariff deficit
– The Government is committed by law to eliminate by 2013 the tariff deficit
– Despite the evolution of the wholesale market (pool), the balance of certain items (the Iberian peninsula, nuclear waste) and higher light, the rate deficit was only slightly reduced.
– Reaching 20% of final energy and 40% of electric generation from renewable sources by 2020.
– Reducing the deficit and preserve the competitiveness of industry and household welfare.
– Transfer gains in technological developments to consumers.
– Avoid speculation caused by excess profits, which damages its image and retards the construction of the plants pre-assigned (with an adverse effect on the industry).
– Mitigate the incentive for fraud that can generate the current differential between the rate and the price of the pool.
– Promote technological improvement and cost reduction, advancing the attainment of “grid parity,” which will allow greater installation of renewables until 2020.
Christopher Horner is a senior fellow at the Competitive Enterprise Institute, and author of the recently-published Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America.
1099 Mandate from Hell Slipped into Health Bill; Global Warming Profiteering; Fannie Mae Owns Cap and Trade Patents; Shock and Pain Coming to UK, US
With news on Goldman Sachs and Greece dominating the news let’s take a look at some other significant stories the past week you may have missed.
1099 Mandate From Hell Slipped into Health Bill
The CATO Organization is noting Costly IRS Mandate Slipped into Health Bill
In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules…
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.
Tax CPA Chris Hesse of LeMaster Daniels tells me:
Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.
The Air Conditioner Contractors of America said:
The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.
In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.
Clearly this is insanity. If enacted, it will be the most widely ignored IRS regulation in history.
Obama Administration Global Warming Profiteering
Pajamas Media is highlighting More Global Warming Profiteering by Obama Energy Official
Surprising documents made available to this author reveal that Assistant Secretary of Energy Cathy Zoi has a huge financial stake in companies likely to profit from the Obama administration’s “green” policies.
Zoi, who left her position as CEO of the Alliance for Climate Protection — founded by Al Gore — to serve as assistant secretary for energy efficiency and renewable energy, now manages billions in “green jobs” funding. But the disclosure documents show that Zoi not only is in a position to affect the fortunes of her previous employer, ex-Vice President Al Gore, but that she herself has large holdings in two firms that could directly profit from policies proposed by the Department of Energy.
Among Zoi’s holdings are shares in Serious Materials, Inc., the previously sleepy, now bustling, friend of the Obama White House whose public policy operation is headed by her husband. Between them, Zoi and her husband hold 120,000 shares in Serious Materials, as well as stock options. Reporter John Stossel has already explored what he sees as the “crony capitalism” implied by Zoi being so able to influence the fortunes of a company to which she is so closely associated.
In addition, the disclosure forms reflect that Zoi holds between $250,000 and $500,000 in “founders shares” in Landis+Gyr, a Swiss “smart meter” firm. She also still owns between $15,000 and $50,000 in ordinary shares.
“Smart meters,” put simply, are electric meters that return information about customer power usage to the power company immediately and allow a power company to control the amount of power a customer can consume. These smart meters are a central component of the Obama administration’s plans to reduce electricity consumption as part of the “smart grid.”
Conflict of interest anyone?
Fannie Mae owns patent on residential ‘cap and trade’ exchange
The Washington Examiner reports Fannie Mae owns patent on residential ‘cap and trade’ exchange
When he wasn’t busy helping create a $127 billion mess for taxpayers to clean up, former Fannie Mae Chief Executive Officer Franklin Raines, two of his top underlings and select individuals in the “green” movement were inventing a patented system to trade residential carbon credits.
The patent, which Fannie Mae confirmed it still owns with Cantor Fitzgerald subsidiary CO2e.com, gives the mortgage giant a lock on the fledgling carbon trading market, thus also giving it a major financial stake in the success of cap-and-trade legislation.
The patent, which covers both the “cap” and “trade” parts of Obama’s top domestic energy initiation, gives Fannie Mae proprietary control over an automated trading system that pools and sells credits for hard-to-quantify residential carbon reduction efforts (such as solar panels and high-efficiency appliances) to companies and utilities that don’t meet emission reduction targets. Depending on where the Environmental Protection Agency sets arbitrary CO2 standards, that could be every company in America.
So Fannie Mae, a quasi-governmental entity whose congressionally mandated mission is to make housing more affordable, has been a behind-the-scenes participant in a carbon trading scheme that would do just the opposite.
Layoffs at casino in Bethlehem
Philly.com is discussing Layoffs at casino in Bethlehem
Less than a year after a grand opening that rivaled the glitz and glamour of a Las Vegas revue, Sands Casino Resort in Bethlehem is laying off 80 employees.
The 9 percent reduction brings the casino’s workforce to 780, down from its current 860, and nearly 200 fewer than when it opened last May 22 with 3,000 slot machines.
Slots revenue is taxed at 55 percent in Pennsylvania, compared with 9.25 percent in New Jersey. Pennsylvania uses the gambling proceeds toward property-tax relief (wage-tax relief in Philadelphia) and aiding the horse-racing industry.
Look at the insanity of it all. Imagine using slot revenue to prop horse betting. What’s next, using internet bingo to prop up casinos?
There are only so many consumer entertainment dollars out there. What people spend at the casino does not go to the horse track or to movies or to eating out elsewhere. No jobs are created out of these maneuvers although there may be some slight shifting of jobs from one community to the next.
Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy
Bloomberg is reporting Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy
Harrisburg, Pennsylvania, which has missed $6 million in debt payments since Jan. 1, should consider seeking Chapter 9 bankruptcy protection, City Controller Dan Miller told a three-hour special committee hearing.
Harrisburg, the capital of Pennsylvania, the sixth-most populous U.S. state, has guaranteed payments on $282 million in bonds on the incinerator, run by the Harrisburg Authority. The payments on the bonds and on a working-capital loan this year add up to four times the amount the city collects in property taxes each year, budget documents show.
The city this month skipped a $637,500 payment due on a loan to Fairfield, New Jersey-based Covanta Holding Corp., operator of the incinerator.
On April 23, the Harrisburg Authority told the city that it won’t make a $425,282 payment due May 1 on a $17 million bond issue the city has guaranteed, said Robert Kroboth, interim finance manager. Kroboth said it isn’t likely that the city will honor its guarantee, meaning the payment will fall to the bond’s insurer, Hamilton, Bermuda-based Assured Guaranty Municipal Corp.
A decision other than bankruptcy is lunacy. The sooner Harrisburg files the better. Los Angeles and Houston ought to do the same.
Union Prohibits Weekend Volunteer Work Party To Fix Elementary School
The News Tribune reports Union squelches Tacoma school volunteers at weekend work party
Volunteers at a weekend work party at Fawcett Elementary School in East Tacoma came prepared to get their hands dirty.
But some say they felt like they were working with one grubby hand tied behind their backs last weekend due to school district and union rules.
“There was a lot of work that could have been done, but wasn’t,” said Ron Joslin, whose daughter is a third-grader at the school.
Tacoma Public Schools spokesman Dan Voelpel said the district appreciates volunteer efforts to help make schools better, but there’s a protocol for volunteer cleanups. First, volunteers must fill out a form detailing what the work party plans to do.
“Our buildings and grounds supervisory staff need to review it to make sure that what people want to do is safe and up to school standards,” Voelpel said. “And we have to, by union contract, notify the unions affected. They can determine if the work being performed substantially takes away from union labor. They can object to the work proposed.”
Mark Martinez, executive secretary for the Pierce County Building and Construction Trades Council, put it this way: “Sometimes people don’t appreciate our craft.” His union represents an estimated 60 Tacoma schools employees.
Parents say one of the vetoed Fawcett projects would have removed overgrown bushes that block views of the street from the school. Other proposed projects that didn’t happen include painting a Fawcett Falcons mascot on a school wall and spreading 40 yards of beauty bark on school playgrounds and elsewhere.
No, Mark Martinez, I do not appreciate your craft because your “craft” is nothing but bloodsucking.
Please consider KCTV5 INVESTIGATION: Taxing Trip
In 2001, Congress passed a law mandating every school district in America provide its homeless kids with a ride to and from school. For example, a school could be required to pick up a child at a shelter in Kansas City and drive them to an Olathe school every day.
While it seemed like a good idea in sound economic times, the recession has exploded the number of homeless students who need help.
But transporting kids to their original schools comes at a staggering cost. In Olathe, the district will pay $44,000 to transport kids this year. In Shawnee Mission, the tab is $150,000. The Kansas City, Mo., district will spend $194,000. And in Kansas City, Kan., the district served 471 homeless students and spent $295,000 transporting the kids.
Here is a 6 minute video that shows what the kids have to endure.
Mervyn King Warns UK Will Hate The Next Government, No Matter Who Wins
The Times Online reports Austerity Britain will hate its new Government, says King
The Governor of the Bank of England was at the centre of an electoral storm last night after saying that the austerity measures needed to tackle Britain’s budget deficit would be so unpopular that whoever wins next week would not get back into government for a generation.
The Governor’s prediction was made to the American economist David Hale, who passed on the remarks in an Australian television interview. Mr Hale, who has known Mr King for many years, was commenting on debt levels in major economies when he turned to the British election. “I saw the Governor of the Bank of England last week when I was in London, and he told me whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be,” he said.
Analysts have said that without commitment to severe austerity in the first weeks of a new Government, Britain could be heading towards a sterling crisis and a boycott of the gilts market.
The National Institute for Economic and Social Research said yesterday that whoever was in power by 2015 would have to raise the basic rate of income tax by 6p to reduce the budget deficit down towards 3 per cent.
That would be on top of cutting spending by an extra £30 billion in spending cuts and raising taxes to meet current targets. NIESR thinks the further tightening, in addition to what are expected to be the deepest cuts for half a century, is needed because the Government has been too optimistic about its economic assumptions. Simon Kirby, one of the report’s authors, said: “It will be a shock and very painful for almost everyone.”
Shock and pain for nearly everyone sounds about right. The same holds true for the US.
Of all the different industry groups scrambling to shape climate policy in Washington–from electric utilities to Detroit automakers–one stands out as a bit unexpected: Wall Street. Financial giants like Goldman Sachs and JP Morgan have enlisted, all told, more than 100 lobbyists to roam the Capitol and influence the debate over how to curb greenhouse gases. There’s a reason for that: Any cap-and-trade bill that puts a limit on emissions and allows polluters to buy and sell permits will create a vast carbon market. That will mean new opportunities for financial firms to broker deals, package carbon offsets, or offer hedging instruments. And that, in turn, will mean profit. Little wonder that investment banks have been bulking up their carbon-trading desks in recent years.But, given what happened the last time bankers went wild on a hot commodity, some politicians are leery of their interest in cap-and-trade. “I know the Wall Street crowd can’t wait to sink their teeth into a new trillion-dollar trading market,” wrote North Dakota Senator Byron Dorgan in July. “But given recent history, I have little confidence that markets are free or fair enough to trust them with a new, large cap-and-trade carbon securities market.” A small but vocal group of climate activists agrees. In The New York Times, NASA scientist James Hansen warned that the carbon market “appears likely to be loosely regulated, to be open to speculators, and to include derivatives” and that bankers would extract profits by inflicting high energy costs on the public, while volatile prices would make it harder for companies to make investments. These critics prefer an approach that leaves Wall Street out–say, a simple carbon tax.
As it turns out, there’s a decent case that a well-regulated carbon market would make tackling global warming easier–and that Wall Street’s wizardry could be put to good use by lowering the overall costs of reducing emissions. But whether that actually happens will depend on Congress’s ability to regulate the financial sector–a task it’s planning to take up after health care. And that means the fate of climate policy may end up hinging on how financial reform shakes out.
To see why carbon markets can be a flexible tool for cutting emissions–and why they could also fall prey to the sorts of problems that dragged down the economy last year–it’s worth reviewing how a cap-and-trade system works. Congress sets an overall limit on the amount of carbon dioxide that can be emitted by issuing a fixed number of pollution permits, which businesses can buy and sell; each year, the limit declines. Companies that decide it’s cheaper to reduce their emissions (say, by boosting energy efficiency) than it is to buy permits will make those easy cuts first. As the cap tightens each year and the total number of permits dwindles, the cost of polluting will steadily rise, and more and more businesses will cut emissions rather than buy increasingly pricey permits.
That’s where Wall Street comes in. Because the cost of permits depends on supply and demand–which, in turn, depends on factors like weather, economic activity, or the cost of clean-energy alternatives–the price of carbon can fluctuate quite a bit. A utility trying to decide whether to operate a power plant that will be around for decades may want to hedge against the chance that carbon prices will rise or fall, and so offload that risk onto investors by buying derivatives. (This is similar to how farmers can buy futures contracts to hedge against an unexpected plunge in wheat prices.) Meanwhile, outside investors would be making bets on how carbon prices will move. In theory, this is all supposed to make the market more efficient.
Critics of carbon-trading usually focus on this derivatives market, which could swell to as much as $2 trillion in the program’s early years. “There’s considerable worry that this market would have the problems that have been found in other physical commodity markets for the past few years,” says Michael Greenberger, a University of Maryland law professor who oversaw the U.S. Commodity Futures Trading Commission’s trading division in the late 1990s. Speculators, for instance, could artificially inflate the price of carbon–which is what some economists think happened in the oil markets last year, when the price of crude shot up from $60 per barrel in February 2007 to $147 per barrel in 2008. That, in turn, could cause energy prices to skyrocket and lead to a mass revolt against the whole idea of a carbon cap.
A different worry involves carbon offsets. Under the House climate bill, companies could pay for outside projects that would reduce greenhouse-gas emissions–a tree-planting project in Brazil, for example–in lieu of making their own cuts. Polluters like having this option because it can often be cheaper to, say, stop deforestation than build a new wind farm. The downside, though, is that these projects require heavy scrutiny–you have to make sure those newly planted trees aren’t chopped down two years later. So the EPA has to tightly limit what offset projects get approved. But, if Wall Street becomes heavily involved in arranging and financing offset deals, it might decide to use its lobbying clout to increase the number of available offsets–which could weaken oversight and let through dubious projects that don’t actually bring emissions down. “They’re interested in maximizing profit, not making the system as rigorous as possible,” says Michelle Chan, an analyst at Friends of the Earth, an environmental group critical of cap-and-trade. “And more offsets equals more fees for Wall Street.”
Not only that, but, in a report earlier this year, Friends of the Earth warned that, because offsets are inherently uncertain endeavors, they could become the newest version of subprime mortgages–call it “subprime carbon.” In 2008, Credit Suisse bundled together 25 different offset projects that were at various stages of U.N. approval, divvied them up into securities, and sold the pieces off to investors–precisely the sort of deal that was rampant during the housing boom and set the stage for a meltdown once homeowners started defaulting.
Then again, plenty of experts argue that these concerns are overstated. After all, when the EU set up its cap-and-trade market in 2005, it decided to let a largely unregulated derivatives market build up, and, so far, fraud and manipulation have been minimal. (The EU did see the price of carbon crash in the early years, but that was because too many permits were erroneously handed out, not because of bankers.) “No one’s complacent, but you just don’t see the same sort of fear about this in Europe,” says Jill Duggan of the World Resources Institute, who helped implement the EU’s trading system. And, on the “subprime carbon” question, Andy Stevenson, a former hedge-fund manager who now works for the Natural Resources Defense Council, argues that investors aren’t flocking to offset-backed securities–the Credit Suisse deal was an exception, and a poorly received one at that–because of the risks involved.
Still, Stevenson and other cap-and-trade backers agree on the need for sturdy market regulations. Examples include position limits (to make sure no single trader can dominate the carbon market) and stricter oversight of over-the-counter derivatives, which aren’t traded on exchanges and have ballooned in recent years. What’s more, the Kerry-Boxer cap-and-trade bill in the Senate would set a ceiling on the price of carbon: If prices rose above a certain point, the government would start releasing a reserve of permits into the market in order to drive down prices and discourage speculators.
Of course, whether all of those safeguards will actually make it into law is still an open question. The House climate bill included a stringent set of regulations for energy and carbon markets, authored by Bart Stupak, but those rules will be superseded by whatever broader financial-reform package Congress ends up passing in the months ahead. And many cap-and-trade skeptics fear that the House and Senate will end up letting Wall Street off easy. “The debate’s still very fluid,” says Chan, “but, in the last few months, we’ve watched some of the leading derivative regulations become riddled with loopholes.” What’s more, says Joseph Mason, an economist at Louisiana State University and a critic of carbon trading, it’s not always possible to legislate fraud and manipulation out of existence. “A million traders can think of many different ways to take advantage of these contracts that you never thought of.”
That’s why some proponents of tackling carbon are starting to look more fondly on the “cap-and-dividend” idea being pushed by Maria Cantwell, a Washington Democrat and one of the leading critics of derivatives in the Senate. In Cantwell’s bill, carbon would be capped at the source–at the coal mine or the oil well–and the price signal would trickle down through the rest of the economy. The money raised from selling permits would be largely rebated back to consumers, and there’d be little trading and not much room for Wall Street. (Not everyone agrees that this is a plus: Stevenson argues that less liquidity in the system could, at times, lead to more price volatility than in a larger, more active market.)
But the politics are the crucial question: So far, cap-and-dividend has attracted interest from some corners–notably, Maine Republican Susan Collins is co-sponsoring Cantwell’s bill–but, as yet, it doesn’t have the wide support that cap-and-trade enjoys. Still, if financial reform goes badly and more Democrats start fretting about Wall Street’s enthusiasm for carbon trading, this could be the next big climate battle.
Bradford Plumer is an assistant editor of The New Republic.
That the new carbon trading market can and will be manipulated by the very same financial oligarchs and government bureaucrats who have brought the world to the brink of economic Armageddon is laid bare in a must-read article by Matt Taibi in the latest issue of Rolling Stone. In “The Great Bubble Machine” Taibi meticulously documents how the amazingly well-connected Goldman Sachs has managed to manipulate and profit from every financial bubble since the Roaring Twenties and how they’re getting set to do it all over again with the creation of a carbon trading bubble:
“The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There’s also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech … the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot.”
Inquiring minds are noting Court throws out Sarkozy’s carbon tax.
France’s new carbon emission tax, due to have gone into effect tomorrow, has been ruled illegal by the country’s constitutional court because it exempted too many polluters.
The Conseil Constitutionnel struck down the tax on Tuesday because the exemptions breached ”the principle of [tax] equality”.
It estimated that 93 per cent of industrial emissions outside of fuel use, including those of more than 1000 of the country’s most polluting industrial sites, would be exempt from the tax of €17 ($27) a tonne of emitted carbon dioxide.
The ruling is a blow for the President, Nicolas Sarkozy, as the measure was one of his flagship initiatives to cut emissions. It also leaves the Government with a €4.1 billion hole in its 2010 budget.
Meanwhile, the President of Brazil, Luiz Inacio Lula da Silva, has signed a law requiring that Brazil cut its projected greenhouse gas emissions by 39 per cent by 2020, meeting a commitment made at the Copenhagen climate change summit.
Winners, Losers, Inequality
The Conseil Constitutionnel made the correct ruling. It’s clear to see what the policy was: handouts to 1000 favored industries at the expense of everyone else.
Walmart Wins Oregon Loses On Energy Credits
Please consider Walmart, others make money on Oregon’s energy tax credits.
When Oregon started handing out jumbo tax subsidies for renewable energy projects two years ago, one of the biggest beneficiaries was also one of the world’s richest corporations — Walmart.
No, the retail giant hasn’t branched to solar panels or wind turbines.
Instead, Walmart took advantage of a provision in Oregon’s Business Energy Tax Credit that allows third parties with no ties to the green power industry to buy the credits at a discount and reduce their state income tax bills.
State records show Walmart paid $22.6 million in cash last year for the right to claim $33.6 million in energy tax credits. The cash went to seven projects, including two eastern Oregon wind farms and SolarWorld’s manufacturing plant in Hillsboro. In return, Walmart profits $11 million on the deal because that’s the difference between what it paid for the tax credit and the amount of its tax reduction.
The loser in the transaction is Oregon’s general fund — which pays for public schools, prisons and health care programs — because the state is out the full $33.6 million in tax revenues.
Walmart isn’t alone. An analysis by The Oregonian shows Costco and U.S. Bank, which also rank among the nation’s top 200 wealthiest businesses, have made millions by buying up energy tax credits to cut their Oregon tax bills. Dozens of other companies and hundreds of individual Oregon taxpayers also have cut their tax bills by buying up the tax credits.
“It’s so convoluted,” says Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon’s energy incentives. “You’ve got all these dollars swirling around. Everyone is trying to grab them as fast as they can.”
Walmart, Costco and U.S. Bank, which top the list of energy credit buyers, shelled out a combined $67 million to avoid paying $97 million in Oregon income taxes.
Walmart and others are making money on projects that were closed, went belly up or never produced the energy or energy savings they initially claimed.
Gov. Ted Kulongoski and state energy officials say they recognize problems with the energy tax credits and are working to overhaul the program when state lawmakers convene for a short session in February. Among the targets of the overhaul is the pass-through option.
“The governor believes there’s been a public value to the program,” says Anna Richter Taylor, Kulongoski’s spokeswoman. “That said, he also is very supportive of efforts to align the rate better with other public investment portfolios.”
Insanity of Cap-And-Trade
Oregon thinks it knows how to fix the problem, but the whole idea of granting companies credits that they can trade is simply fatally flawed.
Walmart, Costoc, and US bank made millions for doing nothing and Oregon taxpayers got clobbered.
In Europe, the Cap-and-Trade Carbon Credit Extortion Scam In Full Swing.
The world’s biggest polluters wanted the carbon cap so they could trade their permits (acquired for free), to other businesses who will have to buy them to expand.
Now some of those polluters are going to move to India anyway after extorting extra permits out of the EU.
Not only is the global warming data bogus and manipulated, the whole cap-and-trade program is now easily seen as nothing more than an extortion scam, a scam that has fittingly blown up in the face of the EU and UN clowns who created it (unless of course that was their intention all along).
Unfortunately, EU workers and taxpayers are the ones who are going to suffer over this, not the clowns who created this ridiculous scheme.
Such is the insanity of Cap-And-Trade. It creates a big stream of winners and losers out of thin air, with taxpayers being the most likely loser.