Cap and Trade, the CBO, and Greenpeace

Remember how the Congressional Budget Office is supposed to be the gold standard. Well, the same folks that were touting the CBO as the gold standard when the CBO was analyzing health care reform are looking skeptically at their analysis of cap and trade (known as H.R. 2988 American Clean Air and Security Act, ACES). That's because the CBO found that ACES would have a negligible effect on both people's energy costs as well as government's revenues. There would be a net government revenue increase of about $20 billion over ten years and it would cost the average family about $175 in yearly increases in energy costs.

So, how can this be? Well, I for one believe that the CBO is always the gold standard. If their numbers are the best out there, what does it all mean? A clue can be found in the stance of Greenpeace to ACES. Greenpeace opposes the bill but for different reasons than the average conservative. Here's their statement.

As it comes to the floor, the Waxman-Markey bill sets emission reduction targets far lower than science demands, then undermines even those targets with massive offsets. The giveaways and preferences in the bill will actually spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions. To support such a bill is to abandon the real leadership that is called for at this pivotal moment in history. We simply no longer have the time for legislation this weak.

“With many others in the environmental, faith and consumer rights communities, Greenpeace has expressed tremendous concern about the role of offsets in this legislation. Unless strictly controlled, the abuse of offsets could prevent real emission reductions for more than a decade. The decision to move authority over offsets from EPA to the Department of Agriculture further reduces the likelihood that such controls will be maintained and increases the likelihood they will undermine real reductions.

This legislation sends a strong and unmistakable signal to the world that the United States is not yet ready to show the leadership necessary to reach a strong agreement at Copenhagen in December. Already, we are seeing the impact of this signal as one country after another retreats from the aggressive targets needed to avoid catastrophic climate change.

In short, Greenpeace believes that this bill is so weak and so full of loop holes that ultimately, it will do little. All that will happen is that polluters will switch to other polluting energy sources that have been given a pass, or in this case an offset. For instance, Greenpeace points out that...

The giveaways and preferences in the bill will actually spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions.

All this will do is make non politically connected energy industries go out of business while those with connections will boon. We've seen this with giveaways to both the farming and auto industries in order to get the votes of those legislators that represent those interests. The Wall Street Journal pointed out that 85% of the carbon credits will simply be given away.

In this context, the conclusions of the CBO make perfect sense. That's because it won't necessarily cost that much. Most energy sources will either be significantly subsidized or excluded entirely.

In fact, the conclusions of the CBO, along with the conclusions of Greenpeace, should send shivers down the spines of all. This bill will NOT solve any environmental problems. That's why Greenpeace is against it. It won't necessarily cost society that much. That's because it will shift profit from those with no connections to those with connections. The conclusions of the CBO and Greenpeace paint the picture of a bill for that cynically claims to create a cleaner environment and energy independence while merely transferring wealth from those with no connections to those with plenty of it.