With the oil slick from Deepwater Horizon lapping at the shores of Louisiana, all sorts of doubts about the wisdom of offshore drilling are suddenly gushing up to the surface. Environmentalists and liberals long against offshore drilling are latching on to the disaster as hard proof that the potential costs of offshore drilling outweigh any possible benefits. In his recent op-ed for the New York Times, Paul Krugman wrote, “President Obama needs to seize the moment; he needs to take on the “Drill, baby, drill” crowd, telling America that courting irreversible environmental disaster for the sake of a few barrels of oil, an amount that will hardly affect our dependence on imports, is a terrible bargain.” Senator Ben Nelson, Democrat of Florida, agreed, saying that “Drilling too close to the coast poses too great a risk to the economy and the environment of Florida and other coastal states.” Even Governor Schwarzenegger, a Republican, has decided not to allow additional offshore drilling in California in the wake of the Deepwater Horizon spill.

Obviously, many of these reactions have more to do with politics and popularity than a sustained analysis of the costs and benefits of offshore drilling. But as my colleague John Prandato recently wrote, this is true for almost every aspect of the offshore drilling debate, which tends to be highly political rather than pragmatic in nature. (more…)

Bipartisanship is tough in an election year.  Each candidate up for election is seeking ways to differentiate him/herself from the opposition.  Particularly in primary battles, compromise is often punished.  A few examples come to mind recently of election years politics getting in the way of bipartisan compromises.  Candidates from both parties have let the politics of the moment derail sensible policy.

Senator Harry Reid (D-NV) is one Democrat who comes to mind.  After financial regulatory reform, there are two important major legislative priorities that have a chance to getting bipartisan support in this Congress – immigration reform and climate change/energy security.  The one Republican who has been willing to stick his neck out on both of these initiatives is Lindsey Graham (R-SC).  Graham has worked with Senator Schumer (D-NY) on immigration reform and Senator Kerry (D-MA) on climate change.  They had both come up with sensible compromises that had a chance of getting bipartisan support.  It wasn’t going to be easy in an election year on either of these issues, but it was a start.  The challenge for the Democrats was to maintain Graham’s support on both issues and hope to pick up some more Republicans who were willing to put aside partisan differences.  Then came Harry Reid. (more…)

Today is the 40^th anniversary of Earth Day and there’s a bipartisan gift to the planet in the works.  As Steven Pearlstein wrote in this op-ed, hopes for a bipartisan climate/energy bill getting passed have been resurrected from the dead in the past several weeks.  With a 60 vote hurdle in the Senate and fossil fuel energy producers located in both red and blue states, this has to be a bipartisan effort.  Although the bill has not been released, the sponsors of the bill – Senators Kerry (D-MA), Graham (R-SC), and Lieberman (I-CT) – have been making the necessary compromises to build a broad coalition of support.

Pearlstein describes here the rough outlines of what the bill will likely entail:

Although the Senate bill retains the cap-and-trade structure of the House bill, it would apply, at least initially, only to electric power producers, with other manufacturers coming under the regime after 2016. The oil and gas industry would be handled under a separate regime that requires refiners to buy emissions permits for all the carbon contained in the gasoline or other fuels they sell — in effect, a fee or tax on carbon. The amount of the fee would be determined by the price at which carbon emissions allowances are bought or sold by utilities on open exchanges. And while the fee would almost certainly be passed on to consumers in the form of higher fuel prices, most of it would be rebated through payroll and other tax credits. By paying more for energy and less for taxes, the idea is that Americans will use less energy and wind up with roughly the same amount of money to spend on everything else.

For some on the left, the compromises made to achieve bipartisan support will be too much.  Yes, it will be a weaker than many environmentalists would hope.  The cap and trade mechanism will not apply to the oil and gas industry.  However, the alternative proposed could be an important step forward and a real improvement over the status quo.  According to Pearlstein, it does provide for what will ultimately be a tax on carbon, which is an approach that I think is preferable to cap and trade.  I know that many on the right will cry foul at the idea of any new tax.  The important component of this tax or fee (whatever you want to call it) is that it will be refunded to consumers in the form of payroll tax reductions.  That’s good news for business because, as many on the right argue, employment taxes discourage work.  It’s also good news for lower income Americans because payroll taxes are regressive, putting a greater burden on them. (more…)

On Wednesday, President Obama announced a proposal to lift the long-standing ban on offshore oil and natural gas drilling off much of the south Atlantic and north Alaskan coasts, as well as parts of the Gulf of Mexico. The announcement has drawn the ire of critics across the political spectrum. Some on the left are outraged by Obama’s “betrayal” of his environmentalist base, and some on the right have called the extent of new offshore access insufficient. In reality, the policy he outlined will do very little to reduce our dependence on foreign oil, and it will have no effect on oil prices in the foreseeable future. And Obama knows it. From the administration’s perspective, this announcement is about one thing: building support in the Senate for comprehensive climate change and energy legislation.

Studies have shown that offshore drilling will have very little impact on domestic oil prices. In fact, not a drop of new oil from this proposal would be seen for at least seven years, and the modest uptick in production and negligible price dip would not even be felt for two decades. Offshore drilling’s impact on real prices pales in comparison to that which could result from sound financial regulatory reform to curb speculation in commodity futures exchanges, or from putting a stop to the supply manipulation routinely practiced by OPEC in response to the artificially rising demand.

Nevertheless, Republican Sen. Lindsey Graham – who is expected to introduce a bipartisan bill co-sponsored by John Kerry and Joe Lieberman within the next month – has insisted that offshore drilling be part of the energy equation of the future. Obama’s announcement on Wednesday follows similar concessions in recent months to conservative nuclear and coal interests. The administration’s Fiscal Year 2011 budget request included $36 billion for the nuclear loan guarantee program and the stimulus bill included $3.8 billion for carbon capture and sequestration (CCS) research and development. (more…)

Russia has many interesting New Year traditions, but the most famous one, at least in the Western media, is its annual bickering over energy prices with neighboring states. It was Minsk’s turn to join Moscow in upholding the tradition this year.

No sooner had Belarus finished toasting the New Year than Russia halted oil supplies to Belarusian refineries through the Druzhba, or Friendship, pipeline. Although the Kremlin quickly restored the oil flow to pacify its European customers, the dispute over pricing is far from settled. Russia and Belarus are still arguing over terms of a new agreement on export tariffs to replace the deal that expired on Dec. 31.

Having subsidized Belarus for years on end, Russia is now asking it to pay full import duties for the oil resold abroad. While Russia agreed to Belarus’ continuing to buy crude for domestic market duty-free, the Belarusian government argues that the customs union between the two states obviates the need for duty on all oil imports from Russia, including the 14.4 million tons of oil that Belarus refines and re-exports.

The oil dispute has already driven oil prices to a 15-month high and elicited strong criticism from the Europe Union, which imports thirty percent of its oil from Russia, half of it traveling through Belarus. Were the oil supplies disrupted, Germany and Poland would be hit hardest because Russian oil comprises 15 and 75 percent of their total oil consumption, respectively. (more…)

By almost any standard, the outcome of the UN Climate Change Conference in Copenhagen last week fell well short of its increasingly humble expectations. Copenhagen was considered pivotal because the “Bali Roadmap” laid out in 2007 circled this meeting on the calendar as the conclusion of the negotiating period which was to create a legally-binding post-Kyoto agreement. But by the beginning of the conference, the goal had been reduced to just establishing a politically-binding framework that would set the world on a course toward reaching a comprehensive international agreement in 2010.

Modest yet politically significant emissions reduction pledges by the US, China, and others prior to the conference contributed to a mood of cautious optimism at the outset of the two-week summit. But on just the second day, the massive rift between developed and developing countries was exposed with the leak of the so-called “Danish text” – drawn up by delegates from Denmark, Australia, the UK, and the US – which would allegedly place most of the power in the hands of developed countries at the expense of developing countries. The text was dismissed by the executive secretary of the UNFCCC, Yvo de Boer, as just an “informal” draft. But China quickly fired back with its own draft text, flipping the blame and the burden onto wealthy countries. A day later, delegates from the US and China traded barbs as the US State Department Envoy Todd Stern told reporters that “there’s no way to solve this problem by giving the major developing countries a pass,” to which Chinese Vice Foreign Minister He Yafei responded that Stern either “lacks common sense” or is “extremely irresponsible”.

The controversy stirred up in the first few days served as a precursor for the deep division between rich and poor countries that would plague the remainder of the negotiations. The next week was remarkably unproductive. Countless controversial draft texts fluttered around the Bella Center amid a walkout by African countries and thousands of angry rioters – impatient with the lack of progress – taking to the streets. With the looming arrival of over a hundred heads of state, the symbolic dichotomy of rich vs. poor countries had grown ever clearer and was threatening to derail the negotiations. (more…)

Yesterday in Copenhagen, 15,000 delegates from 192 countries filled the cavernous meeting room of the Bella Center to commence the much-anticipated UN Climate Change conference. In the months leading up to the conference, hopes were slowly lost that a legally-binding global agreement would be reached in Copenhagen. By the time the conference began, world leaders had lowered expectations – due in no small part to the stall of U.S. legislation in Congress – to merely creating a politically-binding blueprint for concluding a comprehensive international agreement in 2010.

In September, PSA released a statement signed by 33 prominent Republicans and Democrats urging Congress and the Administration to “develop a clear, comprehensive, realistic and broadly bipartisan plan to address our role in the climate change crisis.” The signatories warned that “if we fail to take action now, we will have little hope of influencing other countries to reduce their own harmful contributions to climate change, or of forging a coordinated international response.” The Senate has already failed to deliver legislation prior to the conference, but it is not too late for the U.S. to take the lead in the negotiations, especially since it will be impossible for a global consensus to emerge from Copenhagen without strong U.S. support. (more…)

On Wednesday, Barbara Boxer and John Kerry introduced the Clean Energy Jobs and American Power Act, the long-awaited Senate version of the climate change bill that squeaked through the House in June. With the UN Climate Change Conference in Copenhagen just nine weeks away, U.S. legislative action will be a key to successful global negotiations. Particularly, investment in international adaptation – the multilateral assistance to developing countries in order to withstand the impacts of climate change – is widely expected to be one of the central elements of the looming debate in Copenhagen. Whereas climate change mitigation policies aim to reduce greenhouse gas emissions, adaptation seeks to lessen the vulnerability and enhance the resilience of the most at-risk countries through disaster management and infrastructure capacity-building. Kerry has called international adaptation “part of the glue” holding together hopes of reaching a new global treaty to succeed the Kyoto Protocol. Still, investment in adaptation – at both the domestic and international levels – has been continuously overlooked.

The international security crises associated with climate change are dramatic and self-perpetuating. Drought, rising sea levels, and resource scarcity will lead to disease, mass migration, and political instability, ultimately causing fragile states to collapse into failed states. These cascading effects are intensified with the Earth’s population projected to reach nine billion by 2050. And in a cruel twist of irony, the most devastating effects will be felt in parts of the world that are least responsible for global climate change, specifically Africa, the Middle East, and South Asia.

In North Africa, subsistence farming will suffer a 20-40% reduction in crop yield due to prolonged drought and desertification. Drought will hit the Middle East hard as well, a region that is already home to 6% of the world’s population but just 2% of the Earth’s water supply. And with 60% of the Middle East’s bodies of water lying trans-boundary, the stage is set for conflict. As John Kerry said, “a demographic boom and a shrinking water supply will only tighten the squeeze on a region that doesn’t need another reason to disagree violently.” (more…)

Every February and March, a black haze descends onto mainland Southeast Asia, lowering visibility and driving thousands of people with respiratory complaints into hospital emergency rooms. The cause of this haze has been known for years- the widespread use of slash-and-burn agriculture that results in large swathes of farmland going up in flames annually. What hasn’t been known until recently, however, is the global impact that hazes like this, made up of airborne soot, has had not only on air quality but on the earth’s rising temperature. Scientists now believe that soot, more formally known as black carbon, is responsible for almost twenty percent of the increase in the earth’s temperature over the past century, making it the largest contributing factor to climate change after carbon dioxide. Through legislation aimed at further reducing domestic black carbon emissions and promoting international projects and agreements aimed at emissions cuts, Congress can take immediate, definitive steps towards reducing black carbon’s effect on the rate of climate change.

(more…)

The nation can’t seem to get enough of Sarah Palin.  Many social conservatives adore her just as many liberals seem to be giddy over her repeated missteps.  Whether one loves her or hates her, there’s no question that she draws much attention whenever she speaks.  So, like many others, I was quite interested to read her recent op-ed in the Washington Post criticizing the proposed cap and trade plan to deal with energy and global warming.

Perhaps as one of the defacto figureheads of the Republican party, this would provide an opportunity for her to present some new ideas on these vexing problems.  The reality is that there’s no free lunch when it comes to energy and the environment.  All solutions have costs and will involve some pain.  Unfortunately, rather than addressing these tradeoffs constructively, Palin chose instead to just ignore the problem.  This is not to say that she was all wrong.  She raised some important points.  It’s just that her proposed solutions are the exact opposite of what needs to be done.

Probably the most concerning aspect of Palin’s piece is its glaring omission of any serious thinking about how to deal with the environmental impact of our energy usage.  The cap and trade program addresses two interrelated issues:  energy and environment.  While Palin seems eager to speak about utilizing domestic sources of energy, she says virtually nothing about how to deal with emissions.  I was struck by Palin’s dismissal of the cap and trade program.  She wrote, “It would undermine our recovery over the short term and would inflict permanent damage.”

Yes, there will likely be some short term financial costs to this effort.  However, I’m not sure how ignoring global warming can be considered good long term planning.  It seems to me that dramatically altering our environment such that coastal regions are flooded and the nation’s agricultural output is significantly altered could be considered “permanent damage.” (more…)