Obama’s the Candid Candidate on Energy

November 3, 2008 • Commentary
This article appeared in Forbes on November 3, 2008.

Back in January of 2008, Barack Obama met with the editorial board of the San Francisco Chronicle and had this to say on the topic of climate change and electricity prices:

“Under my plan of a cap and trade system, electricity rates would necessarily skyrocket . Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases…they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.

“They–you–you can already see what the arguments will be during the general election. People will say, ‘Ah, Obama and Al Gore, these folks, they’re going to destroy the economy, this is going to cost us eight trillion dollars,’ or whatever their number is.”

Well, it didn’t turn out that way. Until Gov. Sarah Palin brought it up yesterday, nobody seemed to notice that Sen. Obama had said any such thing. While one can wonder why the Chronicle didn’t play up Obama’s rather bracing statement more than it has–or why what was in plain sight on the Internet for nine months didn’t attract more attention from the blogosphere, print media outlets, or even the McCain campaign itself–one thing is clear: Barack Obama is at least (sometimes) intellectually honest. Sen. McCain–at least on this issue–is not.

Sen. Obama’s frank confession about what his climate change policies will mean to electricity consumers is one very good reason why so many conservative and libertarian intellectuals are gravitating toward his candidacy. It’s not that right‐​wing thinkers necessarily endorse his climate change policies. It’s that right‐​wing thinkers are increasingly tired of Republican hypocrisy and make‐​believe policy fights.

Sen. Obama supports cutting emissions by 80% by 2050. Sen. McCain, on the other hand, proposes a 60% cut in emissions by that same date. It is hard to say what those programs will actually cost because we lack concrete details, and the cost of reducing greenhouse gas emissions both now and in the future is uncertain. But we know they will cost something.

A reasonably good stab at quantifying likely costs can be found in an analysis performed last April by the U.S. Energy Information Administration. In that exercise, the EIA looked at a bill sponsored by Sens. Joe Lieberman and John Warner to reduce greenhouse gas emissions by 70% by 2050. EIA concluded that the Lieberman‐​Warner bill would increase annual household energy costs by somewhere between $30 and $325 by 2020 and between $76 and $723 by 2030. Gasoline prices in particular would be between 22 and 49 cents per gallon higher than otherwise would have been the case in 2020 and between 41 cents and $1.01 higher in 2030.

EIA’s analysis, however, did not look at costs between 2030 and 2050 given that too much is uncertain regarding mitigation costs and emission trends. Separate analysis of the bill by the Environmental Protection Agency found that gross domestic product would, as a consequence, be reduced by somewhere between 1% and 3.8% by 2030 and between 2.4% and 6.9% in 2050.

Of course, there are plenty of other analyses of Lieberman‐​Warner and similar greenhouse gas bills out there–some predicting higher costs, some lower–but before you default to the argument that of course the Bush administration reports greenhouse gas emissions reductions will prove costly, be aware that the EIA has a well‐​earned reputation for politically unbiased analysis and the Bush EPA has, if anything, been more‐​than‐​friendly to the case for reducing greenhouse gas emissions.

It’s also worth noting that lead author Joe Lieberman was quite happy with both the EIA and EPA analyses. “Two separate government analyses have now come to the same conclusion,” he said in a press release when the EIA report came out. “Our bill curbs global warming without harming the U.S. economy.”

Let’s return, however, to the present campaign. If you’re outraged over the costs associated with Barack Obama’s climate change program (which would be a bit more costly than the Lieberman‐​Warner bill), voting for John McCain won’t do you much good. Sen. McCain’s program, which is only a bit less costly than the Lieberman‐​Warner bill, would hit you in the wallet nearly as hard as Sen. Obama’s program, and he would probably bring more Republican office holders along for the legislative ride to boot.

If your job is tied to the coal industry and you worry about Sen. Obama’s statement (also in that audio tape), “If somebody wants to build a coal‐​powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted,” then you’re right to worry … about either candidate (Gov. Palin’s promise to the contrary notwithstanding).

If you’re disturbed by the fact that hardly anyone is aware of–or prepared for–the higher energy costs that would hit them if Sen. Obama or Sen. McCain were to translate their climate change programs into reality, note that the problem is political candor and, on this score, Barack Obama has more of it than John McCain.

If, on the other hand, you’re excited by Sen. Obama’s climate change plan, ask yourself this: How much would global temperatures go down if we put this plan in place? Computer models suggest that the answer is only a small fraction of one degree Fahrenheit.

Would the economic benefit of reducing global temperatures by that virtually immeasurable amount exceed $238–983 billion by 2030 (EPA’s estimate of the cost of Lieberman‐​Warner that year)? If not, then your legislative enthusiasm is misplaced.

If you’re sick of substantive issues like this getting lost in the national roar regarding tracking polls, campaign strategy and the like, welcome to the club.

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