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The Perils of Going Off Half (Han)Cocked

I really do respect Baltimore Sun business columnist Jay Hancock, but when it comes to the intersection of energy and global warming, he’s just dead wrong.

Another case in point is his recent column on Maryland and the Regional Greenhouse Gas Initiative. It’s full of misstatements of fact and sloppy analysis.

First, Hancock states that RGGI was “approved” by Governor Ehrlich. This is simply not true. Ehrlich signed the Healthy Air Act in 2006, which made Maryland only an “observer” to RGGI policy discussions and did not bind the state to any emission reductions. It was Governor O’Malley who signed the actual pact committing the state to the reduction scheme.

One reason that RGGI hasn’t affected BGE rates much is that its cap is set too high meaning plants won’t come close to emitting more than allowed. So called “polluters” have no incentive reduce their emissions, therefore rendering the whole point of the pact moot. This chart explains it. Even if RGGI only costs BGE customers $1.50 a month it still unnecessarily raises electricity rates for no measurable effect on the climate.

Furthermore, as one RGGI insider noted reducing emissions isn’t the primary goal of the pact:

I do not think RGGI cap was set to reduce emissions because that wasn’t the primary purpose of RGGI. At the start of the RGGI process there was a tacit understanding amongst the participants that the real goal of RGGI was to develop the framework for a CO2 cap and trade program that could be used as a model for a national program. After all, the unstated reality is that it could never hope to actually have any impact on global warming.

That unstated reality aside, RGGI is not an argument for state or federal cap and trade schemes. With stringently lower caps they will be fertile ground for financial shenanigans much like the mortgage backed securities that led to the 2008 economic crash. Rent-seeking financial service firms are lining up to feast on the government mandated emissions permits. Think carbon default swaps!

Hancock’s praises of RGGI for the revenue it produces for energy efficiency and conservation. However, efficiency and conservation schemes sound great but they are a siren’s song, which lead us to the rocky shoals of paying more to use less energy. California, Governor O’Malley’s environmental lodestar when it comes to conservation and efficiency policies, ranked in the top 10 for states that increased their Co2 emissions in 2007. The increased emissions stemmed from increased demand. Even with all its vaunted demand side management and efficiency programs demand spiked and emissions increased. Efficiency programs can only go so far, and there is a real limit on the amount of reduction of Co2 emissions from power plants that you can impose without creating real trouble.

RGGI is also a redistributive scam, as we saw in the 2008 legislative session, ratepayer funded RGGI proceeds turned into carbon pork for technocrats and environmental special interests.
Now, cap and trade may be the cat’s meow. That is if you’re down with a 90% increase in electricity prices, destroying over two million jobs, and reducing GDP by $9.4 trillion

The experience in Europe has been an abject failure. In Spain, for every job cap and trade created more than two were destroyed and each “green job created cost between $750,000 and $1.4 million in subsidies. In Germany cap and trade kick started the renewable energy industry but emissions haven’t declined.

That Hancock was able to get MDE secretary Shari Wilson to talk is heartening. Maybe during their next conversation he could get her to divulge which special interest groups MDE is working with to formulate the state’s greenhouse gas regulations. So far the department is stonewalling. Hancock being a financial reporter and all, I advise him to follow the money.

It’s the same money that paid for a rigged state climate action report, which according to the Beacon Hill Institute, offers policy makers

“…no worthwhile guidance. The report fails to quantify the monetary benefits of reduced GHG emissions rendering its cost savings estimates implausible if not downright unbelievable. The faulty analysis contained in the CAP report leaves policymakers with no basis on which to judge the merits of the CAP report’s recommendations for action on the mitigation of GHG emissions.”


Hancock says the world’s retreating glaciers don’t lie. Really? If melting glaciers are truth tellers for anthropogenic global warming then what are advancing glaciers? He also elides the revelations of Climategate saying they do nothing to overturn the so called “consensus,” that it’s merely a case of petulant academics behaving badly. However it is demonstrably more than that. The implicated scientists performing “tricks” to “hide the decline” lie at the heart of the very “consensus” he touts.

Hancock excoriates conservatives for their opposition to cap and trade and inaction in the face of global warming’s “uncertain” but “huge risk” posing effects to future generations. Given that none of the faulty, computer-modeled apocalyptic predictions have matched observed reality, conservatives weighed the massive costs versus the negligible benefits (1/900th of a degree change in global temperature) and wisely said no this green boondoggle.

Besides, who you are going to believe, me or Hancock’s lying ice?






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