Obama’s ‘Bold’ Action on Climate Change

I was invited to comment yesterday over at the New York Times on President Obama’s memorandum to the EPA to reconsider its earlier denial of a waiver requested by the state of California; a waiver that would allow that state to impose its own fuel efficiency standards for passenger vehicles and light trucks so as to reduce that state’s greenhouse gas emissions. The simple point I wanted to make at the Times is that allowing this waiver to go through would largely allow that state to dictate fuel efficiency standards for the nation as a whole. I argued that this is probably a bad thing — state action that imposes significant policy changes on the nation as a whole ought to be enjoined and those decisions ought to be left to Congress.

For those of you interested — and who have a strong stomach — read the comments on the board that follows. You might think that there is nothing particularly radical or even ideological in the argument I made. Apparently, you would be wrong.

This morning, I had a chance to reprise that discussion as a guest on the Diane Rehm Show. With me in the studio was David Shepardson, the Washington bureau chief of the Detroit News and Phyllis Cuttino, the director of the Pew Environment Group’s U.S. Global Warming Campaign. You can listen to the show online if you like, but in case you don’t have the time, here are the highlights:

Both Mr. Shepardson and Ms. Cuttino were nearly breathless about the bold, historic step allegedly taken by President Obama this week. Yet is seems to me that telling the EPA to rethink a decision made some months ago — with no stipulation that it actually reverse course — is something short of a political earthquake.  “Bold action” would be legislative proposal to increase federal fuel efficiency standards, impose a federal carbon tax, institute an ambitious cap & trade program, etc. I’m not saying I support that sort of “bold” action, but please — let’s keep things in perspective.

Ms. Cuttino argued at every turn that energy efficiency equals emissions reductions. But it does not. Energy intensity in the United States declined by 34% from 1980 through 2000, but energy consumption increased by 26% over that same period. More ambitious gains in energy efficiency promise no better. For instance, energy intensity in China declined by 70% over that same period while energy consumption increased by 80%.

The only way to reduce greenhouse gas emissions is to increase the marginal price of fossil fuels OR to strictly ration their availability. Everything else is a dodge. Reducing the marginal cost of energy or energy-related services — which is exactly what energy efficiency standards do — will not, in aggregate, reduce energy consumption.

Alas, Ms. Cuttino refused to acknowledge historic reality. When asked by guest-host Susan Page why the environmental community opposes a carbon tax in lieu of energy efficiency standards, she said that such a tax would be regressive. Well, that’s true. But so is a fuel efficiency standard, which imposes a tax on vehicles at the point of purchase. Unfortunately, I did not have the opportunity to jump in with that observation.

Still, Ms. Cuttino does not speak for the environmental community on this. No less than Al Gore is an enthusiastic supporter of (steep) carbon taxes (to be offset with corresponding tax cuts elsewhere).

Ms. Cuttino kept making the point that higher fuel efficiency standards are a free lunch. They will save motorists money, save U.S. automakers from bankruptcy, and rescue jobs in the auto sector. “Who doesn’t want better fuel efficiency?” she asked. Well, apparently, most people who buy cars don’t — not if they have to pay higher sticker prices for that fuel efficiency or give up other amenities. If it were otherwise, then there would be no need for a federal requirement, now would there?

Of course, polls tell a different story. Sure, if you asked me whether I wanted my car to get more miles per gallon, I would say “yes.” But fuel efficiency is not a free good that drops from the sky. There are trade-offs; higher sticker prices (as even California acknowledges in its petition for a waiver), smaller cabins, lighter weight (a safety concern for some) and reduced performance in some areas. Should decisions about how many and what kind of trade-offs to accept in return for fuel efficiency be made individually by consumers or collectively by politicians? I never found time to make that point, but that’s the nub of the issue.

On several occasions, Ms. Cuttino tried to dismiss my criticisms by saying, well, industry always says that the technology doesn’t exist to meet federal standards or that it would prove to costly, but — what do you know? — people like me were wrong then and I’m wrong now. Of course, I never made either of those arguments. I simply noted that there are no free lunches and that fuel efficiency comes at a cost. Heresy!

Ms. Cuttino’s repeated attempts to conflate “Jerry Taylor” with “industry” were particularly annoying. She is the one in favor of bailing out the auto industry. I am the one who is trying to protect the federal till from their political piracy. It’s a curious world when someone who wishes that bankruptcy would be allowed to take its course over at GM is somehow painted as an industry apologist.

National security externalities were also briefly touched on. Ms. Cuttino argued — as do many — that our consumption of oil strengthens anti-American actors abroad by lining their pockets with petrodollars. I pointed out that there is zero statistical correlation between oil profits and terrorism or oil profits and hostility from state oil producing regimes. Sure, it’s better for Iran to have less money than more, but the conceit that reducing oil consumption reduces problems abroad is completely without foundation.

There was, of course, the usual tripe about how how a strong plurality of Americans want this or want that and that a majority of Americans believe this or believe that. I countered with a hardy ”So what?” A plurality of Americans also believe that evolution is an atheistic fiction, so the fact that a majority of Americans think X does not mean that X is true or that X ought to be the law of the land. Unfortunately, a listener in the second hour complained that this sort of response was so snarky that it didn’t warrant anyone’s time. But why?

At the end of the show, I made the point that a couple of the callers seem to be under the impression that I favor a carbon tax. Not so — I said, look, if we have to reduce greenhouse gas emission then a carbon tax makes a lot more sense than an automotive fuel efficiency standard … but I am not there yet. Ms. Cuttino replied, in a rather annoyed voice, that it is impossible to argue with someone who doesn’t believe in climate science or global warming. But when did I say that? I don’t believe that ”climate science” is a figment of the imagination or that the world isn’t warming. I simply believe that the costs of doing something about that warming by reducing greenhouse gas emissions are greater than the benefits — an entirely different matter.