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U.S. Chamber of Commerce — or Echo Chamber of Horrors?

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"U.S. Chamber of Commerce — or Echo Chamber of Horrors?"

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The U.S. Chamber of Commerce is a strong opponent of climate legislation even though the vast majority of the major businesses on the Chamber’s board who have a publicly stated their position on climate legislation support strong action (see here).

Now Tom Donohue, President and CEO, U.S. Chamber of Commerce, is echoing the House GOP in pushing a petroleum industry falsehood designed to scare the public into opposing even modest climate and clean energy legislation (see “House GOP repeat in unison the petroleum industry falsehood that CBO finds the Waxman-Markey bill would raise gasoline prices 77 cents a gallon“).  In a column for the Chamber’s online magazine, Donohue writes:

The Congressional Budget Office estimates that the cost impact could be as much as $0.77 per gallon for gasoline, $0.83 per gallon for jet fuel, and $0.88 per gallon for diesel fuel–all ultimately borne by the consumer.

That scary charge is, as I’ve shown, a complete falsehood.  It comes from the American Petroleum Institute, (see here) which decided to ignore the actual CBO analysis and offer its own instead, claiming it is what CBO found.  The API is a strong opponent of the bill and has been pushing disinformation on global warming for more than a decade.

Let me set the record straight once again.

As a study by 5 national laboratories noted in1998, “$50 per tonne of carbon [$14 a tonne of carbon dioxide] corresponds to 12.5 cents per gallon of gasoline.”

To cause a $.77 increase in gasoline prices, the climate bill would have to result in greenhouse gas allowance prices of some $85 a ton of CO2. Now you can go to Table 3 of the CBO analysis yourself, and you’ll see that CBO estimates the allowance price will hit $26 a ton in 2019 - and that is in actual (not inflation-adjusted) dollars.  In 2008 dollars, that would be closer to $21 to $22.  So in fact the CBO estimates that gasoline prices in 2019 would be about 20 cents a gallon higher than today (in constant dollars). And that’s a lot lower than the price will rise if we don’t take strong action to jumpstart the transition to a cleaner, more efficient energy system.

In fact, CBO found, “Waxman-Markey cuts U.S. GHGs sharply but costs only a postage stamp a day “” without counting the efficiency savings.”

Finally, as I’ve argued, I think the CBO estimate is on the high side.  I doubt the allowance price will significantly exceed $15 a ton in 2020 (in constant dollars) — see Game changer, Part 2: Why unconventional natural gas makes the 2020 Waxman-Markey target so damn easy and cheap to meet. So the gasoline price rise will be even lower and more than offset by the myriad energy efficiency measures in the bill and in other Obama administration policies.

Perhaps it’s too much to ask the Chamber to actually promote sustainable commerce, as key members of its board do, rather than trying to convince the public that jump-starting the transition to a clean energy economy would be horrific.  Ironically, it is in fact the impact of unrestricted greenhouse gas emissions that would unleash incalculable horrors on future generations.

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7 Responses to U.S. Chamber of Commerce — or Echo Chamber of Horrors?

  1. Tax on carbon fuel means nothing to the atmosphere.

    Science says no more carbon emissions AND start sequestering carbon from the atmosphere. Now. We have a 40 year lag before seeing evidence of our curtailing.

    Big Carbon is just cementing it place in future commerce – when it should be disappearing completely.

    Carbon fuel combustion should only be allowed to manufacture and deploy clean energy. Then it should disappear.

  2. KJ says:

    “… gasoline prices in 2019 would be about 20 cents a gallon higher than today …”

    Is that good or bad?

    [JR: It is what it is. As I have tried to explain many times, but most people still don't get it, even a very high price for carbon simply isn't going to drive a high enough gasoline price to change behavior. The "good news," however, is that peak oil probably will. Even so, we will need very strong government policies for fuel efficiency and alternative fuel vehicles, if we want to achieve the deeper reductions that are necessary.]

    A 20 cent/gal incentive is over ten times smaller than the break-even marginal incentive, considering only the benefit of fuel savings. Besides, the incentive is only applied to fuel — not to vehicle prices, where it could have greater impact. So what’s the point of including transportation in cap-and-trade?

    The new vehicle emission standards, by contrast, would have marginal compliance costs of around $0.80/gal (if they are like the CA reg’s), and the regulatory incentive would apply directly to new vehicles. Unfortunately, because transportation is within the cap-and-trade system, the emission standards will not do anything to reduce total national emissions. Fuel refineries would just sell their surplus allowances to the coal industry. (So much for “market-based” emission reductions.)

  3. Jeff Huggins says:

    The New York Times?!

    IF it’s true that the U.S. COC, and/or its official leader, is acting against responsible climate change legislation and is diminishing the importance of the matter itself, even as (if this is true) a majority of the corporations who have members on the COC Board claim in their public messages to be taking the matter seriously, then THAT is a BIG story that The New York Times should be covering on its front page, clearly, naming names.

    This is a key time to get the media in gear. Joe, if that’s true, this is (it seems to me) another one of those issues that should be “pressed” and put “on the record” in terms of . . . “Hey NY Times, why aren’t you carrying this story?”

    Sigh.

    Jeff Huggins

  4. Susan says:

    Why oh why can’t we have a rational gas tax ($1 or more)! Don’t bother answering, but it is truly sad that we are so insane.

    Massachusetts is increasing fares and cutting service on public transit because they couldn’t get a gas tax (11 cents would have done the trick and I think 27 cents was mentioned at one point, but nothing flew). Sign again.

    Thanks for the stellar work on exposing the likes of the Chamber of Commerce, the enemies of humanity.

  5. Susan says:

    Why oh why can’t we have a rational gas tax ($1 or more)! Don’t bother answering, but it is truly sad that we are so insane.

    Massachusetts is increasing fares and cutting service on public transit because they couldn’t get a gas tax (11 cents would have done the trick and I think 27 cents was mentioned at one point, but nothing flew). Sigh again.

    Thanks for the stellar work on exposing the likes of the Chamber of Commerce, the enemies of humanity.

  6. KJ says:

    JR – Re “even a very high price for carbon simply isn’t going to drive a high enough gasoline price to change behavior”:

    Right. Trying to change behavior is hard. Changing technology is a lot easier.

    Suppose the carbon price is multiplied ten-fold, so the marginal incentive is $2/gal, not 20 cents/gal. Also suppose that the revenue is all used to subsidize fuel in proportion to energy content. So if fossil fuel makes up 90% of the market and renewable biofuel (or renewable grid-connected electricity) makes up 10%, then the net charge on conventional fossil fuel would be 20 cents/gal, while the net subsidy on renewable fuel would be $1.80 per gallon-equivalent energy unit. (The net charge on “unconventional” fuel, like tar sands, would probably be over $1/gal.) The consumer would see comparatively little price impact at the pump because fuels are blended and because competition would tend to levelize retail prices. So there would be little behavior-modification incentive, but there would be a $2/gal technology-forcing marginal incentive — roughly equivalent to $200/ton. Can you imagine any plausible scenario under which Waxman-Markey’s cap-and-trade system would create a $200/ton incentive? (For that matter, can you think of any plausible policy rationale for Waxman-Markey’s cap-and-trade system?)

  7. Mike#22 says:

    KJ says:

    “JR – Re “even a very high price for carbon simply isn’t going to drive a high enough gasoline price to change behavior”:”

    “Right. Trying to change behavior is hard. Changing technology is a lot easier”

    Easier, AND profitable. Excepting fossil fuel giants.