The Climate Industrial Complex

Bjorn Lomborg had an OpEd in the WSJ yesterday with that title. The OpEd illustrates that the companies lobbying for cap and trade will benefit from the system. Well, duh. The companies that receive their permits for free, and there will be a lot of them after the lobbying is done, will receive a windfall just as they did when Europe enacted their cap and trade system.

Ronald Bailey at Reason also wrote about this last month and he's posted on it again today at their blog, Hit and Run:

A 2007 Congressional Budget Office (CBO) study reported the results of a hypothetical 23 percent cut in carbon dioxide emissions (the Waxman-Markey bill proposes a 20 percent cut by 2020). The CBO found that "giving away allowances could yield windfall profits for the producers that received them by effectively transferring income from consumers to firms' owners and shareholders." And how big would the windfall be? "If all of the allowances were distributed for free to producers in the oil, natural gas, and coal sectors, stock values would double for oil and gas producers and increase more than sevenfold for coal producers, compared with projected values in the absence of a cap," concluded the CBO report.

In 2007 Congressional testimony, then-CBO Director Peter Orszag explained, "The government could either raise $100 by selling allowances and then give that amount in cash to particular businesses and individuals, or it could simply give $100 worth of allowances to those businesses and individuals, who could immediately and easily transform the allowances into cash through the secondary market." More recently, in his March testimony before the House Budget Committee, Orszag, who is now President Obama's budget director declared, "If you didn't auction the permits it would represent the largest corporate welfare program that has ever been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits."

Being a believer in public choice theory, none of this surprises me. What does surprise me is that the allegedly intelligent people in the environmental movement didn't figure out that this would be the result of their push for more regulation. Haven't they ever heard of regulatory capture?

And why do so called liberals, who believe they know what's best for poor people (and everybody else too, the busybody motherfuckers), support policies which hurt the poor the most. First, they supported turning corn into ethanol so they could feel better about filling up their SUV. Sure it raised food prices, a large part of a poor person's budget, but hey, at least they lowered their carbon footprint. Or at least they thought they did. And now they support cap and trade which will raise energy costs, another large part of a poor person's budget. If I didn't know better, I'd think the liberals had a grudge against the poor.