Written by Kalen Pruss, intern with the Energy Opportunity team at the Center for American Progress, and Brad Johnson.
A right-wing think tank that questions the reality of climate change is speciously claiming that a study of gasoline taxes in South Carolina and New York is an honest analysis of a greenhouse pollution plan in the Rocky Mountain states. Oil and coal lobbyists are continuing their desperate drive to undermine the Western Climate Initiative (WCI), an effort by 11 western states and Canadian provinces to develop a market-based cap-and-trade system to reduce greenhouse gases. A previous smear effort — headed by the Western Business Roundtable, a conservative fossil-fuel industry group that includes Peabody Coal and Shell Oil — amounted to little more than an industry-funded PR campaign. The latest attempt, by the Beacon Hill Institute (BHI) at Suffolk University, is similarly biased, sloppy, and deceptive.
BHI’s study, “The Economic Analysis of the Western Climate Initiative’s Regional Cap-and-Trade Program,” claims that WCI’s cap-and-trade program will cause severe “economic damage” to all its states. The misleading title hides the actual content of the study, which is a model of state fuel tax and fee increases, not of a cap-and-trade program. The authors gloss over this error in an appendix:
For the 100% permit auction assumption, we modeled the price increases an increase to the state fuel tax, in the case of households and the transportation sector, or a state fee, in the cases of the commercial and industrial sectors. We chose state fees and taxes because they best mirror how the cap-and-trade system that would (1) drive up electricity and fuel prices and (2) provide a stream of revenue to the participating states. For the 25% permit auction assumption we modeled the 25% of the price increase as a tax and 75% of the increase as an increase in the price index for the applicable sector.
The supposed “economic analysis” models an entirely different program — a straight-up energy tax that causes a specific price increase. In contrast, the WCI program allows the market to set the price of emissions allowances in a regional trading system. Despite the playground math of Republicans and right-wing think tanks, reputable economists have repeatedly noted that the value of a cap-and-trade market is dramatically different from its effect on consumer prices. In fact, 100% auction cap-and-trade systems enrich working and middle-class households, by rewarding work instead of pollution. The Western Climate Initiative should not (and cannot) be modeled as such by BHI’s State Tax Analysis Modeling Program (STAMP).
Furthermore, BHI doesn’t model the states that are actually part of the WCI. Arizona, California, Montana, New Mexico, Oregon, and Utah are all left out, meaning only one out of seven states in WCI is actually modeled. Instead, BHI relied on “South Carolina, New York, Indiana and Pennsylvania”:
Currently Washington is the only the WCI state that BHI has an existing STAMP model. However, BHI has recently built STAMP models for a number of states outside the WCI areas: Washington, South Carolina, New York, Indiana and Pennsylvania. We were able to utilize these models to simulate the WCI price increases and derive the percentage changes in the economic variables of interest, such as employment and investment.
The authors seem to be of two minds on Washington, counting it both as a WCI state as well as being outside of the WCI area. They also have remarkably flexible definitions for “utilize” and “simulate.” You may as well “utilize” oranges to “simulate” an apple pie.
BHI has refused to tell the Wonk Room who commissioned their report. But the organization, part of the Roe Foundation network, has produced studies attacking climate change initiatives in Maryland, Colorado, and North Carolina, as well as a wind farm in the Nantucket Sound. Many of these studies were apparently commissioned by other regional Roe think tanks such as the John Locke Foundation and the Independence Institute.
Further, the lead author of this study, David G. Tuerck, currently the executive director of BHI, is the former director of the Center for Research and Advertising at the Exxon-fueled American Enterprise Institute (AEI). He is also a former policy expert of the climate change-denying Heritage Foundation, and is a well-known critic of government action aimed at preventing climate change. It has been during his tenure at Suffolk University that the anti-climate policy studies were released by BHI, which should come as little surprise.