Green Herring

Obama tries to hide the costs of his global warming solution.


The Apollo Alliance, a coalition of environmentalists and labor unions, wants the federal government to spend $500 billion over 10 years to "build America's 21st century clean energy economy" and thereby "create more than five million high quality green-collar jobs." Barack Obama says he can accomplish the same goal for only $150 billion, which gives you a sense of how reliable these projections are.

More fundamentally, both the Apollo Alliance and Obama, who has liberally borrowed from its ideas, mistakenly treat the manpower required to reduce greenhouse gas emissions as a measure of success, when it should be viewed as a cost to be minimized. Obama's "green jobs" rhetoric is part of his strategy to conceal the enormous expense associated with his plan to "transform our entire economy" and "build a new economy that is powered by clean and secure energy."

Obama wants to "implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050." That is even more ambitious than the goal of a cap-and-trade bill that the Department of Energy estimates would cost between $444 billion and $1.3 trillion in reduced economic growth over two decades.

Depending on how bad the effects of global warming are expected to be and how effective Obama's plan is at ameliorating them, such a sacrifice could be justified. But Obama has not made that case. Instead he has said, in essence: Sacrifice? What sacrifice?

The basic problem addressed by a cap-and-trade system, which uses tradable permits to charge companies for the greenhouse gases they generate, is that people contribute to climate change without bearing the cost of their behavior. Like a carbon tax, which achieves the same result more explicitly, a cap-and-trade system works only if it makes energy use (and the emissions associated with it) more expensive.

What are we to make, then, of Obama's promise to cushion the blow of rising gasoline prices and home heating bills by providing "emergency energy rebates"? That is exactly the opposite of what the government should do if it wants to encourage energy conservation and make alternative energy sources more competitive. "Under my plan of a cap-and-trade system," Obama admitted during an unusually candid interview with the San Francisco Chronicle in January, "electricity rates would necessarily skyrocket."

If Obama's cap-and-trade plan works as advertised, it will create incentives for businesses to achieve greenhouse gas reductions as efficiently as possible. He nevertheless cannot resist centrally planning the response—for example, by arbitrarily requiring that 25 percent of the nation's electricity come from renewable resources by 2025, instead of letting the market decide what mix of conservation and alternative energy makes the most sense.

A recent RAND Corporation study concludes that, without "dramatic progress in renewable energy technology," reaching this "25X'25" goal will mean "significantly increasing consumer costs." And the study did not consider "the transition and adjustment costs associated with initiating such a significant shift from fossil fuels to renewable energy technologies."

Those costs involve not just the loss of jobs in carbon-intense parts of the economy but the loss of jobs that would be created if the resources used to mitigate global warming were available for other purposes. Obama and other "clean energy" boosters do not take those losses into account, acting as if every "green job" is a net gain to the economy.

The Apollo Alliance goes so far as to brag that "renewable energy creates more jobs than coal," as if this were a selling point, as opposed to a sign of lower efficiency. It enthusiastically likens the creation of a "clean energy economy" to "the World War II industrial mobilization."

The analogy is more telling than the alliance realizes: Like a war, the effort to dramatically reduce greenhouse gas emissions may be justified to prevent a more costly outcome. But the economic activity it generates has to be weighed against the destruction it causes, something the president-elect so far has shown no inclination to do.

© Copyright 2008 by Creators Syndicate Inc.