Topic: Energy and Environment

Is This Infrastructure Really Necessary?

The United States has “at least $232 billion in critical public transportation” needs, claims the American Public Transportation Association (APTA). Among the “critically needed” infrastructure on APTA’s list are a streetcar in downtown Los Angeles, another one in downtown Sacramento (which local voters have rejected), one in Tempe, and streetcar extensions in Tampa and Kansas City.

Get real: even ardent transit advocates admit that streetcars are stupid. The economic development benefits that supposedly come from streetcars are purely imaginary, and even if they weren’t, it would be hard to describe streetcars – whose average speed, APTA admits, is less than 7.5 miles per hour – as “critically needed.”

Much of the nation’s transit infrastructure is falling apart, and the Department of Transportation has identified $100 billion of infrastructure backlog needs. (Page l – that is, Roman numeral 50 – of the report indicates a backlog of $89.9 billion in 2012 dollars. Converting to 2019 dollars brings this up to $100 billion.) Yet APTA’s “critical needs” list includes only $24 billion worth of “state of good repair” projects. Just about all of the other “needs” listed – $142 billion worth – are new projects or extensions of existing projects.

In fact, few if any of these new projects are “needed” – they are simply transit agency wish lists. For example, it includes $6 billion for phase 2 of New York’s Second Avenue Subway, but no money for rehabilitating New York’s existing, and rapidly deteriorating, subway system. Similarly, it includes $140 million for a new transitway in Alexandria, Virginia, but no money for rehabilitating the DC area’s also rapidly deteriorating Metrorail system. (In case anyone is interested, I’ve converted APTA’s project list into a spreadsheet for easy review and calculations.)

The $166 billion total on APTA’s “Project Examples” list is less than the $232 billion APTA says is needed, but even if all of the difference is “state of good repair” projects, that difference plus the $24 billion on APTA’s list doesn’t add up to what the DOT says is needed to restore transit infrastructure. This shows that even APTA doesn’t take public safety and “crumbling infrastructure” seriously.

I’ve previously pointed out that the best-maintained infrastructure is funded out of user fees. For example, Federal Highway Administration data show that only 2.9 percent of toll bridges are “structurally deficient,” compared with 5.5 percent of state-owned bridges funded mainly out of gas taxes and 12.2 percent of locally-owned bridges that are funded mainly out of general tax dollars. Gas taxes are a user fee, so state bridges are better maintained than local bridges, but tolls are an even better user fee so toll-funded bridges are in the best shape.

Politicians allow infrastructure funded out of tax dollars to deteriorate because they would rather spend money on new projects than maintain old ones. APTA’s list simply confirms this: APTA is trying to entice politicians into funding all sorts of new projects rather than maintain the existing ones that are falling apart.

To justify this spending, APTA claims that transit produces $4 in economic benefits for every $1 spent. This is based on a report prepared for APTA in 2009. This report includes two kinds of benefits from transit spending.

First, when anyone spends money on anything, the recipients of that money turn around and spends it again. That’s called “indirect” or “secondary” benefits. Spending money on digging holes and filling them up would produce similar secondary spending. That doesn’t mean the government should pay people to dig holes and fill them up (although that’s really what it’s doing for many rail transit projects). For one thing, if government didn’t spend that money, there would be more money in the hands of taxpayers, who would spend it, generating just as many secondary benefits.

Second, the study counts cost savings to transit riders and other travelers, such as the savings from not having to own a car, from getting to destinations faster, or from congestion relief. But transit costs far more and travels far slower than automobiles; there is no cost or time savings from substituting expensive, slow methods of transportation for inexpensive, fast methods of transportation. Transit also does not provide a significant amount of congestion relief; in fact, large buses, streetcars, light rail, and commuter trains that have many grade crossings often do more to increase congestion than reduce it.

The study’s arguments are even less plausible today, when transit ridership is shrinking, than they were in 2009, when transit ridership had been growing. Charlotte, Los Angeles, and Portland recently spent hundreds of millions or billions on new light-rail lines or light-rail extensions, yet transit ridership in those regions dropped after the new lines opened. There is no way that can that be good for transit riders or other travelers.

APTA’s wish-list is just one more reason why Congress should only pass an infrastructure bill if it is one that is funded exclusively out of user fees. An infrastructure bill funded out of tax dollars or deficit spending would impose huge costs on taxpayers in order to build unnecessary projects that we won’t be able to afford to maintain. 

Federal Gas Tax Increase Not Needed

President Trump’s new budget proposes to increase federal spending on infrastructure by $200 billion over 10 years. Many members of Congress are supportive. Some favor raising federal gas taxes to fund more highway spending, and President Trump may be on board.

However, increasing federal gas taxes and federal infrastructure spending is a bad idea. For one thing, the vast majority of government infrastructure is owned by the states, including 98 percent of all U.S. streets and highways. The states have many options to finance their highways and other infrastructure including state gas taxes, sales taxes, debt, user charges, public-private partnerships, and privatization.

A federal gas tax hike makes no sense because states can raise their own gas taxes anytime they want. Indeed, half the states have raised their gas taxes in just the past six years, as the Wall Street Journal reported yesterday:

Ohio Gov. Mike DeWine is pushing for an 18-cent-per-gallon increase in the state’s gas tax after he said he discovered a $1 billion infrastructure spending hole that transportation officials say was masked for more than a decade by borrowing.

The proposal is running into objections from some state lawmakers and sparking debate over how much the state should spend on new transportation projects and how much of that should be borne by taxpayers.

Governors in more than half a dozen states are considering boosting gas taxes. They follow more than two dozen states that have done so since 2013, as rising construction costs and greater fuel efficiency erode revenue generated from the taxes.

The chart shows that while the federal gas tax has been held at 18 cents per gallon, state gas taxes have risen steadily, according to API data. The average state gas tax increased from 21 cents per gallon in 1994 to 34 cents per gallon today, which includes excise taxes and other taxes on gasoline.

More on highways and infrastructure here and here.

68% of Americans Wouldn’t Pay $10 a Month in Higher Electric Bills to Combat Climate Change

Public opinion polls have long found that Americans say they are concerned about climate change. But does that mean people are willing to reduce their own standard of living and make personal sacrifices in efforts to do something about it? New survey data suggests not. An AP-NORC survey finds that 68% of Americans wouldn’t be willing to pay even $10 more a month in higher electric bills even if the money were used to combat climate change.

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Proposals that use government intervention in the economy to combat climate change, like the Green New Deal (GND), will require people make personal sacrifices. The GND resolution, introduced to Congress by Rep. Alexandria Ocasio-Cortez  (D-NY) and Sen. Ed Markey (D-MA), calls for the U.S. to undertake a 10 year national mobilization, on the scale of World War II, to overhaul its entire infrastructure and industry, including upgrading or replacing every single building in the US with new energy-efficient technology, and reach net-zero greenhouse gas emissions in 10 years with a goal of completely eliminating Americans use of gas, oil, and coal. Currently, about 80% of all the energy Americans use comes from fossil fuels like gas, oil, and coal. 

To say the least, the Green New Deal isn’t cheap. Most analyses estimate it will cost in the trillions of dollars and require Americans to make personal sacrifices. Both supporters and opponents of the plan agree that the environmental aspects of the plan would cost at least $10 trillion. That’s about three times the entire U.S. federal budget. Even when spread out over 10 to 30 years, these estimates indicate an annual price tag of thousands of dollars per U.S. household. Higher levels of government spending necessarily require higher taxes, either now or in the future. Advocates of the Green New Deal say it can be paid for with the government borrowing money (deficit spending.) But deficit spending today means higher taxes tomorrow.

Many 2020 Democratic hopefuls have signed on to the plan, including Kamala Harris, Elizabeth Warren, Cory Booker, Kirsten Gillibrand, Bernie Sanders, and Amy Klobuchar. They may believe this is a popular move with the public. Perhaps because surveys show the public is concerned about climate change. For instance, a 2018 Quinnipiac survey found that 69% of Americans say they are concerned about climate change.  And the same survey found that a smaller, but still substantial, share (50%) believe that climate change will personally affect them during their lifetimes.

But what people say they are concerned about and what they are actually willing to do about it are not the same thing.  An AP-NORC survey found that 68% of Americans wouldn’t be willing to pay $10 a month in high electric bills to combat climate change. The survey asked people if they would be willing to pay a fee in their electric bill every month that would be used to combat climate change. Then the survey asked about different potential fee amounts. The survey found overwhelming majorities of Americans opposed paying the fee to combat climate change if it cost:

  • $10 a month, 68% opposed
  • $20 a month, 69% opposed
  • $40 a month, 76% opposed
  • $75 a month, 83% opposed
  • $100 a month, 82% opposed

Was there any amount Americans were willing to pay to combat climate change? Yes, $1 dollar. Fifty-seven percent (57%) of Americans would be willing to pay a $1 a month fee in their electric bills to combat climate change.

Although Americans say they are worried about climate change, most clearly aren’t worried enough to spend their own money on it, or make personal sacrifices for the cause. Perhaps it might be that people know they are supposed to be concerned about climate change because this is a salient message they receive from trusted sources and thus say so on surveys. However, receiving these messages and cues hasn’t been enough to convince them to give up their own money, let alone lower their own standard of living, for the cause of combating global warming. However, significant personal sacrifices are what proposals like the Green New Deal will require. These data provide some indication that purported support for government interventions in the economy to deal with climate change may be inflated. Instead, Americans may be more supportive of public policies that foster an economic environment that allows for technological innovation and invention among rising entrepreneurs and private sector businesses competing to come up with the next big idea that makes our world cleaner, healthier, happier, and more productive. 

 

Lightbulb Efficiency Standards

The Washington Post recently criticized the Trump administration for proposing to eliminate an Obama administration rule that would extend minimum lightbulb energy efficiency standards to specialty bulbs and add them to a list of incandescent lights that will be effectively banned in 2020. The Post argues that the policy of imposing energy efficiency standards on lightbulbs “has no downside.” Energy efficiency regulations are often described as the equivalent of a free lunch, but these rules, like all regulations, have both benefits and costs.

Lightbulb efficiency standards were included in the Energy Independence and Security Act of 2007 (EISA), which established efficiency standards for “general service lamps.” These standards applied to various technologies, including traditional incandescent bulbs, CFLs, and LEDs, but excluded many types of specialty bulbs, such as decorative candelabra bulbs. The act also required the Department of Energy (DOE) to initiate procedures to determine whether the lightbulb standards should be increased and required a final rule to be published before 2017. If the DOE was unable to fulfill this requirement, the act created a backstop that would impose a 45 lumen (a measure of light intensity) per watt (lm/W) minimum on lightbulbs starting January 1, 2020. A traditional 100 watt incandescent bulb emits 1600 lumens of light, only 16 lumens per watt, and thus would be banned. 

After passage of the EISA, Republicans in Congress stymied implementation of the standards by inserting language in DOE appropriation bills prohibiting the use of federal money for their implementation and enforcement. During the Obama administration the DOE attempted to circumvent the appropriation restrictions by creating new rules that expand the lighting standards to include many of the originally exempted lightbulbs and apply the 45 lm/W backstop in 2020. These regulations were published shortly before Trump’s inauguration in January 2017. The new proposed rules eliminate the Obama revisions.

Despite the Post’s assertion, the Obama regulations do impose costs. As the 2017 rule notes,

DOE acknowledges that manufacturers may face a difficult transition if required to comply with a 45 lm/W standard. Manufacturers have voiced concern regarding the loss of domestic manufacturing jobs, the stranding of inventory, the ability to meet the demand for all general service lamps with lamps using LED technology, and the burden associated with testing and certifying compliance for all general service lamps.

The fact that manufacturers are upset by the rule indicates there are some costs. Furthermore, limiting consumer choice itself is costly; some specialized incandescent bulbs may not be available after 2020.

The benefits of the standards also may be small. The Post states that the lack of the mandate would cost consumers $12 billion per year and 140 billion kilowatt-hours in energy waste. But these estimates assume that consumers will not choose LED and more energy efficient lamps over incandescent bulbs on their own.

Ever since the first oil shocks in the 1970s there has been a debate about the necessity of energy efficiency standards for autos, trucks, and appliances. Consumer groups and engineers, often working at federal energy laboratories, have argued consumers fail to purchase vehicles and appliances that are more expensive initially but save money over time through less energy use. Economists have responded with evidence that consumers make appropriate tradeoffs between initial costs and savings over time and that public programs to promote energy conservation have costs that are greater than benefits.

As I have previously summarized, the most extensive evidence exists for cars. According to this research, consumers are quite willing to pay more initially for a vehicle that saves them money in gasoline costs over the ownership life. The same argument applies for appliances and lightbulbs. As the president of the Alliance to Save Energy, a pro-efficiency standard group, argued,

There aren’t many people out there clamoring for outdated light bulbs that use four or five times as much energy. Consumers have moved on and embraced high-efficiency bulbs like LEDs because prices are plummeting and because they’re getting a better-performing, longer-lasting product that saves them money.

I recently replaced the incandescent candelabra bulbs in the outdoor lights outside my front door that used 40 watts of electricity with LED equivalents that used 4. The market provided me with an energy saving option even though no regulation required it to do so. If the light is used 3 hours a day 365 days a year and the electricity costs 10 cents per kWh, then the annual savings is $3.94 per year ($4.38 annual costs for the 40 watt bulb vs. $.438 for the 4 watt) which pays for the $8.26 cost of the LED bulb in a little over 2 years.

As the economic literature, manufacturers, and even some proponents of efficiency standards recognize, I am not unique. Consumers understand the cost savings of LEDs, so the economic and environmental benefits propounded by the Post will occur without the tradeoffs required by government mandate.

Written with research assistance from David Kemp.

Markets and Emissions

In reviewing the Green New Deal, the Wall Street Journal’s Greg Ip says, “Because the private market has no incentive to reduce carbon emissions, government intervention is necessary.”

No incentive? That is obviously incorrect.

In competitive markets, there is relentless pressure on businesses to reduce costs, including the costs of energy and other resource inputs. The production and consumption of just about everything is far more energy efficient today than in past decades because of businesses striving for profits and consumers striving to save money.

Ip’s claim is refuted by another story in the WSJ today regarding airline fuel efficiency.

The industry’s move toward reducing carbon emissions has been slow. Improvements in new airplanes have reduced emissions significantly, but with more airplanes flying more people, overall tonnage of carbon emitted by commercial aviation has been inching higher, not lower, in recent years.

The statement “has been slow” is unfair, as the rest of the article indicates:

Today’s new planes are about 20% more fuel-efficient than the previous generation from the 1990s, Airbus and Boeing say, and 70% more fuel-efficient than early jets of the 1960s. On a per-passenger basis, fuel economy has improved: Airlines now fly with fewer empty seats and more seats packed into each jet. But most of the improvement has come from manufacturers. Engines get more thrust out of the fuel they burn, planes are much lighter today and aerodynamics has reduced drag.

The drive by airlines to save money and keep ticket prices down has led them to push manufacturers to design ever more efficient airplane and engine configurations.

The WSJ article includes a chart showing total fuel consumption by U.S. airlines has fallen from about 18 billion gallons in 2000 to about 17 billion in 2017. What the article does not report is that total U.S. air passenger-miles increased from 700 billion in 2000 to more than 950 billion by 2017.

In aviation, as in many industries, rising consumer demand puts upward pressure on emissions, but businesses and markets have strongly countered that pressure with an endless stream of innovations that have reduced fuel use and thus carbon emissions.

Here is another example of the business drive for efficiency from a Cato study on household appliances. With rising energy prices in the 1970s, markets dramatically increased the energy efficiency of refrigerators even before federal efficiency standards were put in place in 1990. New fridge energy consumption plunged from more than 1,800 kwh a year in 1975 to 976 kwh in 1990—driven by consumers wanting to save money and producers innovating in competitive markets.

Contrary to Greg Ip, private markets have strong incentives to reduce energy use and thus reduce carbon emissions.

 

(A cleaner copy of the chart is in this paper).   

Green New Deal Would Crush Liberal Values

A contradiction in left-wing politics for decades has been the professed support of community, diversity, localism, and democracy on the one hand with the advocacy of federal power to address society’s ills on the other. The Green New Deal (GND) issued by Rep. Alexandria Ocasio-Cortez and co-sponsors illustrates the contradiction in spades.

The proposed scope of new federal authority under the GND is remarkable. The plan demands a “national, social, industrial, and economic mobilization on a scale not seen since World War II” and a “10-year national mobilization.’’ The use of the war-like “mobilization” is particularly aggressive when talking about peacetime domestic policymaking.

The plan would push the nation to reach zero greenhouse gases, upgrade all buildings, generate all power with zero emissions, overhaul transportation, and generate “massive growth” in clean manufacturing. It would supposedly provide all people education, training, a good job, high-quality health care, affordable and safe housing, economic security, clean water, clean air, healthy and affordable food, and access to nature.

It would do all this with spending, regulations, and government “ownership stakes.”

Yet even as the central government’s power was hugely increased, the GND promises “transparent and inclusive consultation, collaboration, and partnership” with everybody. As bureaus all over Washington were formulating one-size-fits-all plans to control our lives, the GND promises, “all people of the United States may be full and equal participants in the Green New Deal mobilization.”

The GND has lots of warm and fuzzy language. It would ensure “the use of democratic and participatory processes that are inclusive of and led by frontline and vulnerable communities and workers.” And it would implement “community-defined projects and strategies.”

However, long experience shows that when the federal government subsidizes and regulates local activities, decisionmaking moves from local elected officials to unknown and inaccessible federal bureaucrats. The GND would replace local and voluntary interactions with top-down coercion.

The exercise of vast federal power under the GND would steamroll collaboration, partnership, diversity, localism, and participatory processes.

In the language of Rep. Ocasio-Cortez’s proposal: Whereas the Green New Deal is supposed to help society in many ways, be it resolved that the plan would be a Grand New Disaster for liberal values such as community and democracy.

Perceptions and Reality about Climate Change

The PowerPost section of the Washington Post bills itself as “Intelligence for Leaders.” The January 24 print edition carried an article titled “More Americans are alarmed about climate change, polls say,” by Dino Grandoni. On the next page, an op-ed by two University of Pennsylvania faculty, Cary Coglianese and Mark Neavitt, blamed last year’s hurricanes Florence and Michael, as well as the California fires, on climate change.

The assertions made in both pieces are quite testable.

Post: “A third, and perhaps most important, reason [for heightened concern] is the spate of nasty weather events in recent years, which include the sort of massive wildfires in the Western United States and intense hurricanes in the Atlantic that many climate scientists expect to become more common in a warming world.”

Facts: We are living in a warming world, and we are also living in a world with no demonstrable increase in the power and/or frequency of tropical cyclones.

 

Figure 1. Accumulated Global Tropical Cyclone EnergySource:  Ryan Maue, 2011 and updates through January 24, 2019.

 

Figure 2. Total hurricane frequency (top) and major hurricane frequency (bottom).  Source: same as Figure 1.

The perception that hurricanes are increasing in power comes in part from the 2014 “National Assessment” of climate change effects on the U.S., from the U.S. Global Change Research Program (USGCRP), which clearly cherry-picked hurricane data. Although records go back much further, it emphasized the increase in activity from 1980 through 2009. At the time of publication, they could have extended data through 2013, which would have shown that activity reverted to its 1980 level. Here is that data in perspective:

 

Figure 3. North Atlantic Hurricane Intensity, expressed as the Power Dissipation Index. It is very clear that the 1980-2009 period was hardly unique and very similar to 1940 through 1960, which saw a similar increase in activity. From the 2016 book “Lukewarming,” page 172.

Then there is the matter of wildfires. While California Governor Jerry Brown blamed the massive Camp Fire in Paradise on global warming, that was thoroughly debunked by University of Washington atmospheric scientist Clifford Mass, writing that global warming

has little impact the Camp Fire and many of the coastal California fires of the past few years (e.g., the Wine Country Fires of October 2017). And blaming global warming takes attention away from the actions needed to prevent such tragedies from happening again.

As Mass notes, the fire that destroyed Paradise, and most large California fires, are driven by strong easterly winds created by the atmospheric pressure difference between seasonal high-pressure systems in the Great Basin and the California coast, which should become less with global warming. In northern California these are called Diablo winds, and in the south they are the Santa Ana’s.

Ah, but surely the tinder-dry vegetation that fueled the Camp Fire was made more flammable by heat and drought. Again, no. Using real data instead of rhetoric, Mass demonstrates that in virtually every summer, California surface vegetation dries out the same amount as it did in 2018.

There is one thing Grandoni’s article got spot-on, and it’s the last two paragraphs:

That greater concern about climate change identified in both surveys is a return to the past.  In November 2008, when Barack Obama was first elected to the White House, 70 percent of Americans said the issue of global warming was personally important to them.

It was only when Democrats tried to pass cap-and-trade legislation aimed at addressing greenhouse gas emissions that the concern plummeted by 14 points in 2010.

In fact, cap-and-trade only passed in the House, and then a net of 63 seats—and the majority—switched from Democrat to Republican in the 2010 election.

Will there be a similar “return to the past” if the House passes a carbon tax as a part of some Green New Deal? For sure it will never get through the Senate, just as in 2010, and it will be used against the House majority, just as it was then.

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