The Worst Environmental Policies 501c3 Money can Buy

Last week, Baltimore Sun environmental activist reporter Tim Wheeler crowed about how Maryland is nearly on track to meet the Greenhouse Gas Reduction Act goal of a 25% reduction of 2006 level greenhouse gas emissions by 2020. However, the state needs Governor O’Malley’s offshore wind boondoggle, increased gas tax and limits on septic systems to reach the goal. How convenient.

Wheeler also noted a preliminary report from researchers at Towson and the University of Maryland citing 36,000 jobs and $6.1 billion boost to the state’s economy.

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According to the Maryland Department of the Environment’s Climate Change website we can infer that the Regional Economic Studies Institute (RESI) at Towson and the Center for Integrative Environmental Research (CIER) at the University of Maryland performed the economic impact analysis.

CIER is a grant recipient of the Town Creek Foundation. Town Creek is the environmental advocacy foundation, which paid for and wrote Maryland’s Climate Action Report, and funded the lobbyists (Environment Maryland and Chesapeake Climate Action Network) to push for the Greenhouse Gas Reduction Act. The Greenhouse Gas Reduction Act is based on the climate commission’s action plan.

The Town Creek Foundation paid the Center for Climate Strategies (CCS) $100,000 to run the proceedings of Maryland’s Climate Change Commission. Town Creek board member Donald Boesch is a member of the commission, and last year Town Creek gave CCS $150,000 to “create a package of greenhouse gas emission reducing transportation policies around which support from key Maryland stakeholders can coalesce.”

I view the word stakeholder in the same way Washington Examiner Editorial Page Editor Mark Tapscott does, “obscurantist bureaucratese for ‘those who rub each other’s backs to insure that every hog gets a full plate at the taxpayers’ expense.’” Which in the case of Governor O’Malley and Maryland energy and environmental policy is spot on.

We’ll see if Town Creek paid RESI and CIER for their work when they publish their 2012 grants or their 2012 IRS return becomes available.

However, there are two other analyses Wheeler never bothers to mention—natch—that paint a very different picture of the economic impact of Maryland’s climate policy.

The first, brought to you by Red Maryland four years ago, is the Beacon Hill Institute’s peer review analysis exposing the fallacies in the Maryland Climate Commission’s economic analysis.

BHI found:

1. CCS failed to quantify benefits in a way that they can be meaningfully compared to costs;

2. When estimating economic impacts, CCS often misinterpreted costs to be benefits;

3. The estimates of costs left out important factors, causing CCS to understate the true costs of its recommendations…

For policymakers, the CAP report offers 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 [emphasis mine].

In January 2009, the non-partisan Department of Legislative Services weighed in with it’s own policy analysis.

DLS found that the commission’s recommendations were “largely command-and-control policies rather than incentive-based policies.” Like BHI, DLS also found similar flaws in the commission’s economic analysis such as omitted costs, improper benefit-cost valuation, and forecast errors.

In summary DLS found:

However, despite a significant amount of research, considerable uncertainty remains over the ultimate economic impacts of such a policy. In addition, the choice and design of the specific mitigation programs implemented will affect the magnitude and distribution of GHG mitigation costs. Policies that are not incentive-based (i.e., command-and-control) and/or do not implement economy-wide regulations will be much more costly. The distribution of costs within the economy will depend on several key factors, including the energy- and carbon-intensity of energy consumed by each sector.

In Maryland, the manufacturing sector will likely experience a greater amount of employment and output losses relative to the rest of the economy as a result of GHG reduction policies. However, policies that attempt to mitigate these losses and exempt the manufacturing sector will only increase the total cost of GHG mitigation and shift the burden to other economic sectors. Ultimately, the cost of GHG mitigation policies, even those imposed on businesses, will be borne by individuals.

As usual, Marylanders are going to pay dearly for Governor O’Malley’s political goals masquerading as sound public policy.

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