Obama's Stealth Energy Policy
If Congress won't make your electricity rates skyrocket, the EPA will.
by Michael Goldfarb
10/26/2009, Volume 015, Issue 06
In early 2008, a week after his defeat in the New Hampshire primary, Barack Obama sat down with the editorial board of the San Francisco Chronicle. "The problem is," Obama said about global warming, "can you get the American people to say this is really important and force their representatives to do the right thing?" He went on,
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, coal power plants, natural gas--you name it--whatever the plants were, whatever the industry was, they would have to retro-fit their operations.
In September, just before the election, Joe Biden went even further, telling an environmental activist that he and Obama were "not supporting clean coal." They were, Biden said, against all coal, clean or otherwise. "No coal plants here in America. Build them, if they're going to build them, over there."
A little more than a year later, you'd be hard pressed to find a Democrat willing to speak so candidly of the left's aspirational goals for America's energy policy. The preferred Democratic talking point on the cap and trade bill that passed the House this spring before stalling in the Senate is that we can save the planet for "the cost of about a postage stamp a day," in the words of Edward Markey, one of the House bill's authors.
So how did we go from skyrocketing energy prices to a postage stamp a day?
Well, Obama wasn't quite able to "get the American people to say this is really important and force their representatives to do the right thing." The House bill "funnels billions to the coal industry," said one Democratic Hill staffer. And as that bill is currently written, the allowances for carbon emissions that were supposed to be auctioned off--creating a market for carbon, putting a price on emissions, and opening a new revenue stream for the federal government--would be largely given away in the early years of the program according to a complicated formula that was carefully calibrated to win the votes of southern and rural Democratic lawmakers whose districts depend on coal for electric power. "They're not going to be bankrupted," the aide said, referring to the coal industry.
Nonetheless, Republican Shelley Moore Capito of West Virginia says that if anything resembling the House bill is signed by the president, West Virginia's economy will "be in the loser column in a big way." (West Virginia generates 98 percent of its electricity from coal.) Capito "doesn't buy" the promises coming from Democrats. "It's possible [coal-fired power plants] will have an exemption for a certain number of years, but then that goes and they're going to pass all their costs on to the rate payer." But she adds, "it wouldn't be a surprise if they stripped exemptions out in conference."
Indeed, the Kerry-Boxer cap and trade bill now moving through the Senate doesn't say anything about how they're going to allocate the allowances for carbon emissions. That was the most contentious piece of the Waxman-Markey bill in the House, and it will be handled in the Senate by Max Baucus's Finance Committee.
Another major piece of the cap and trade bill will have to go through the Agriculture Committee, now chaired by Senator Blanche Lincoln. Lincoln is facing a tough reelection campaign in 2010--a recent Rasmussen poll had her trailing potential Republican challengers, and Arkansas generates nearly half its electricity from coal. California, on the other hand, gets less than 2 percent of its electricity from coal. Cap and trade, by taxing coal and other carbon-intensive power sources, will impose a heavy burden on middle America, and that threatens the recent, majority-making revival of the Democratic party in those states.
With the coming midterm elections looking increasingly dangerous for Democrats, few in Washington believe cap and trade legislation can pass this year or next. Yet Obama billed his victory in last year's Democratic primaries as "the moment when the rise of the oceans began to slow and our planet began to heal," and his supporters are demanding immediate action on climate change. The only available option may be to have the EPA step in and do what Congress won't--regulate greenhouse gases under the 1997 Clean Air Act. But even that option is fraught with challenges, not least of which is the possibility that the wording of the act may subject nearly every business in the country to federal emissions regulations.
The EPA is already acting in coal country, "confusing the permit process" for new mining operations Capito says. "They don't approve or deny, they just keep reviewing." This, and not any grand speech on the danger of global warming, has mobilized voters. The Charleston Daily Mail reported that more than 700 people packed a hearing with the Army Corps of Engineers last week "to attack the Obama administration's crackdown on surface mining and offer dire forecasts of West Virginia without coal mining."
After an election in which elaborate schemes for energy independence were put forth by both candidates, the Obama administration and the Democratic Congress have done almost nothing to increase domestic energy production. Congress has done nothing on offshore drilling or gas drilling and undercut efforts to incentivize and expand clean nuclear power through the cap and trade bill. "They're telling us where we can't go instead of where we want to go," Capito says.
So, Obama has not succeeded in getting the American people to "force their representatives to do the right thing." But that hasn't deterred him from trying to accomplish many of the same ends by less democratic means. The question is will the American people let him?
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