The Climate Industrial Complex
Skeptical environmentalist Bjorn Lomborg has a depressing op/ed in the Wall Street Journal today about the emergence of the climate-industrial complex. Yesterday, the House Commerce and Energy Committee passed a cap-and-trade carbon rationing bill that would give away for free emissions permits (rationing coupons?) worth hundreds of billions of dollars to some of America's biggest corporations. As I explained in a column last month:
A 2007 Congressional Budget Office (CBO) study reported the results of a hypothetical 23 percent cut in carbon dioxide emissions (the Waxman-Markey bill proposes a 20 percent cut by 2020). The CBO found that "giving away allowances could yield windfall profits for the producers that received them by effectively transferring income from consumers to firms' owners and shareholders." And how big would the windfall be? "If all of the allowances were distributed for free to producers in the oil, natural gas, and coal sectors, stock values would double for oil and gas producers and increase more than sevenfold for coal producers, compared with projected values in the absence of a cap," concluded the CBO report.
In 2007 Congressional testimony, then-CBO Director Peter Orszag explained, "The government could either raise $100 by selling allowances and then give that amount in cash to particular businesses and individuals, or it could simply give $100 worth of allowances to those businesses and individuals, who could immediately and easily transform the allowances into cash through the secondary market." More recently, in his March testimony before the House Budget Committee, Orszag, who is now President Obama's budget director declared, "If you didn't auction the permits it would represent the largest corporate welfare program that has ever been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits."
Today's Lomborg op/ed glumly, but accurately, concludes:
The partnership among self-interested businesses, grandstanding politicians and alarmist campaigners truly is an unholy alliance. The climate-industrial complex does not promote discussion on how to overcome this challenge in a way that will be best for everybody. We should not be surprised or impressed that those who stand to make a profit are among the loudest calling for politicians to act. Spending a fortune on global carbon regulations will benefit a few, but dearly cost everybody else.
Read the whole Lomborg op/ed here.