President Obama gave his first State of the Union speech last night and while his delivery reminded many Americans of the man they saw on the campaign trail, his rhetoric was much of the same. Although the president did call for offshore drilling and an expansion of nuclear, his focus was clean energy jobs. He declared,
But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. That means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean coal technologies. And yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.
I am grateful to the House for passing such a bill last year. This year, I am eager to help advance the bipartisan effort in the Senate. I know there have been questions about whether we can afford such changes in a tough economy; and I know that there are those who disagree with the overwhelming scientific evidence on climate change. But even if you doubt the evidence, providing incentives for energy efficiency and clean energy are the right thing to do for our future – because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation.”
A climate bill with incentives that will make clean energy profitable really means a carbon tax on cheaper, more reliable fuels with a cap and trade system. Of course, the President Obama can’t say that. Incentives in this case also means tax credits, subsidies, mandates and loan guarantees for preferred energy sources. To be clear, no energy source should receive such support, subsidizing inefficient energy sources costs Americans as energy consumers in terms of higher prices and as taxpayers.
The president said there were those disagreeing with the overwhelming scientific evidence on climate change. While it was clear from the grumblings from some sections in the Capitol that certain Members of Congress disagree, so do scientists and climatologists. The government relies heavily on the 2007 United Nations’ Intergovernmental Panel on Climate Change (IPCC) report to establish consensus, but more than 700 scientists dispute the findings of that report. And a new study is showing that the amplification of global warming by carbon-cycle feedback is much less than previously though. Another study finds that “the airborne fraction of carbon dioxide has not increased either during the past 150 years or during the most recent five decades.”
Now, it’s turning out that some of the claims in the IPCC report may not be accurate. The Himalayan glaciers won’t disappear by 2035 as it was said in the report; and that claim was based on speculation. Digging deeper, the IPCC climate models were based on data from the Climatic Research Unit (CRU) at East Anglia University. Hackers leaked e-mails and other documents CRU’s scientists and the emails detail how these climatologists refused to share data, plotted to keep dissenting scientists from getting published in leading journals and discarded original data. Some have resigned. Others are under investigation. It turns out that the actions of CRU scientists breached data laws under the Freedom of Information Act. The president brought the swagger he had during his campaign trail back to the podium last night, but his insistence on transparency was nowhere to be found.
And President Obama says we must be the best in clean energy production. Why? What if it’s cheaper to import it? His confidence in American innovation and entrepreneurial spirit is laudable but his mercantilist approach (he also said he wants to double exports in 5 years) to job creation will be a road to inefficiency and less prosperity.
Calling for a necessary transition to a low carbon energy economy, 83 CEOs sent a letter to President Obama demanding movement on cap and trade legislation to create green jobs. According to the press release, “the letter was signed by 83 CEOs from some of the nation’s largest electric power, manufacturing, clean tech, technology and consumer facing companies.”
Imagine that. The politically invested companies that stand to gain the most from cap and trade and spent millions to lobby this bill through Congress want to see it passed at the expense of American energy consumers and the American economy. This is no different than Archer Daniels Midland sending a letter to the president asking for an increase in the ethanol mandate. Robert Bradley Jr. calls cap and trade the Enron Revitalization Act. He even includes a memo from Enron lobbyist John Palmisano about the Kyoto agreement to reduce greenhouse gas emissions:
If implemented, this agreement will do more to promote Enron’s business than will almost any other regulatory initiative outside of restructuring of the energy and natural gas industries in Europe and the United States. The potential to add incremental gas sales, and additional demand for renewable technology is enormous.”
Other than the direct beneficiaries, cap and trade is a raw deal for Americans, but that’s certainly not how the letter reads. The CEOs’ letter says, “This legislation will spur a new energy economy and with it create 1.7 million new American jobs, many in struggling communities across the country.” With enough subsidies and government mandates in place, cap and trade could ostensibly create 1.7 million jobs. But according to calculation from Heritage Foundation economists, cap and trade legislation would destroy far more jobs than the policy would create. The Center for Data Analysis study on the Waxman-Markey cap and trade bill found net job losses (after green job creation) approach 1.9 million in 2012 and could approach 2.5 million by 2035. Manufacturing loses 1.4 million jobs in 2035.
One example where this already happened is Spain. The country spends about $8 billion a year on green energy subsidies. The result is that for every green job created, 2.2 jobs were lost because so much money was taken out of viable parts of the economy and put into a more unreliable green market.
The free lunchers forget to take into consideration that subsidies and government handouts for renewable projects diverts those workers and resources away from more productive use. Moreover, a cap and trade policy will destroy more jobs than it creates. Because cap and trade is a tax on energy, the cost of producing goods for businesses increases, and consumer demand falls for two reasons; price hikes on goods reduce demand and people have less disposable income due to higher energy prices.
Higher energy prices force businesses to make production cuts and reduce labor. Furthermore, as we see in the current recession, reduced consumer spending only exacerbates this. The overall result is increased unemployment and slow economic growth. Jobs will either mover overseas or cease to exist. Smaller businesses that can’t absorb the costs or afford lobbyists will simply disappear.
And we’re not the only ones projecting losses. At a recent Heritage event on the costs of cap and trade, not one of the 6 speakers representing groups who modeled the bill, including the Environmental Protection Agency and the non-partisan Congressional Budget Office, discussed economic benefits from cap and trade – it was all about the magnitude of the losses.
The letter goes on to say, “We need strong policies and clear market signals that support the transition to a low-carbon economy and reward companies that innovate.” Take out the words “support the transition to a low-carbon economy and” and you have sound energy policy that would lead increase production, create jobs, and lower energy prices.