The cost of climate change — and getting it wrong

Coal and the Midwest lose under cap-and-trade legislation

As this magazine went to press, there was a great flap erupting about a batch of e-mails and documents leaked from the U.K.’s University of East Anglia’s Climate Research Unit. Apparently hackers—maybe someone from inside the research center—breeched the CRU, downloaded a few thousand documents and e-mails and then posted them on the Internet. Once there, the documents were gnawed at by the great pulsing beat of bloggers and Internet news addicts. Some of the leaked e-mails seemed to describe how to manipulate data. Some discussed how to keep the peer review process friendly to climate-change champions and hostile to skeptics. It was an all-hell-broke-loose moment.

These documents either offer damning evidence that shows some leading “consensus” scientists are colluding to make a trumped-up case for human-induced global warming, or the unholy ruckus caused by the leak is the sound and fury of spit-flecked global warming “deniers” cherry picking a few choice sentences. One thing you can count on is great spin from both sides.

However it turns out, the controversy’s heat was an indicator of what is at stake as we push toward increasing emissions controls and a fundamental reshaping of our economic resources.

Moreover, it shows just how jabberwocky things can get in the world. The CRU is the nerve center for a group of scientists who, over the past 20 years, have come to pull the levers on a great marionette show of activists and pliable politicians. What these scientists tell us (whether they have manipulated the data or not) is taken as unquestionable augury by many. Public perception drives public policy.

Thus, we now have legions of people in this country who would turn the lock on our coal mines and coal-burning power plants. Not that they have a better idea as to where to get our energy. “From renewables,” they’ll tell you. But which ones? Wind? Solar? Not when coal accounts for about half of our electricity production.

There are disputes about how large the U.S. coal reserve is. The federal Energy Information Administration says enough to last about 240 years under current use rates. That’s to say about a quarter of the earth’s coal supply. But, relying on that number is to make assumptions about the economics of coal extraction (some argue that there’s only half that much coal available profitably). And, the estimate assumes we’ll use a relatively steady amount of coal (some believe that use will increase as coal gas/liquification technology improves).

Either way, under proposed carbon cap-and-trade legislation like the Waxman-Markey American Clean Energy and Security Act, burning coal will become more expensive. Likewise, the cost for cleaner-burning natural gas would increase with demand. In fact, all forms of energy would grow more expensive, and as a result, our cost of living would be increased.

The Midwest, where most of base-load energy comes from coal, stands to get hurt most by such a turn of events. A study from the Brookings Institute shows annual cost-of-living increases caused by cap and trade (by 2020) would vary greatly by metro region. On the low end, families in Los Angeles would need to put down an extra $96 per household per year. But, folks in Kansas City would need to spend an additional $228. Multiply that by the couple million people that live within commuting distance to Kansas City, and you begin to understand the collective costs. Also consider what it might to do the industries that exist or might someday locate in Kansas City.

Having seen similar costs for his constituency, Indiana Governor Mitch Daniels made clear in a Wall Street Journal editorial that his state didn’t need the extra burden: “The Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke… And for what? No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world’s thermometer by so much as a tenth of a degree a half century from now.”

Right on, Governor Daniels. That could be because—thanks to the chicanery at University of East Anglia’s Climate Research Unit—there is no honest estimate.

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