- The Washington Times - Monday, July 5, 2010

ANALYSIS/OPINION:

Government plans to exploit the BP oil spill for political purposes have had the perverse result of reinforcing one of the most damaging deceptions prevailing today — that pending climate and energy legislation would reduce our dependence on oil and on oil imports. In fact, the legislation would do nothing of the kind while falsely assuring the public that energy security and the new jobs that would go with it — matters about which people care deeply — are being addressed.

For example, people pushing climate legislation being sponsored by Sens. John Kerry and Joe Lieberman boast that the independent Peterson Institute has found that the K-L bill will reduce oil imports by 40 percent by 2030, a claim repeated in Foreign Policy magazine. In fact, the Peterson study documents that K-L will be responsible at most for a 9 percent reduction, with an additional expected reduction of more than 30 percent to derive from the Corporate Average Fuel Economy (CAFE) auto-efficiency legislation enacted several years ago and recently implemented by President Obama. But you have to read a footnote in the appendix to discover this little twist.

The Environmental Protection Agency’s own analysis comes to the same conclusion — that oil use is barely affected by the pending bills. There will nevertheless be public discussion about narrowing the legislation to cover only utilities in order to make it easier to enact. But the change would also make it even less relevant to the Gulf tragedy, to reducing oil imports, or to the job creation that would follow growth in domestic energy production.

The existing CAFE rules, however, do illustrate the critical point that existing law provides huge opportunities for reducing oil dependency — if enforced properly. In addition to CAFE, there are the existing statutory provisions regarding health pollutants that should be re-examined. The White House, in fact, has recently issued a presidential memorandum requiring the EPA to revisit its air toxics regulation (or lack thereof). Since the issuance of this order, the EPA inspector general has issued a report critical of the agency’s lack of air toxics enforcement.

What do air toxics have to do with energy security? The fact is that diesel and most gasoline exhaust are, from a personal exposure point of view, the largest single source of PM 2.5, a toxic substance that causes tens of thousands of premature deaths every year. Controlling this particulate matter would create a level playing field for the entry of competing fuels like compressed natural gas, biofuels and electric cars, which today face a huge barrier to entry because they get no credit for their dramatically lower content of carbon dioxide and killer pollutants that plague gasoline and diesel.

For example, a stubborn urban myth relates the dramatic growth in biofuel use solely to tax incentives — which do exist but actually go to the oil companies, not the ethanol producers. In fact, the expansion of ethanol to 10 percent of the transportation fuel market is the result of a very modest reduction 10 years ago in air toxics that were providing key octane value, for which ethanol offered the only alternative source. Reducing these killer PM pollutants to the level required by existing law would open the door to much higher ethanol blending and the conversion of our light- and heavy-duty car and truck fleets that consume nearly half of our oil to other PM-free alternative fuels like compressed natural gas and electricity.

Promoting these health benefits by reducing gasoline and diesel in favor of domestically produced energy has the added benefit of returning energy-related jobs that have migrated abroad. Ending subsidies for oil, as the Obama White House requested at the Group of 20 summit, will also help rebuild the energy job base here.

Over the longer term, after the transport-fuel problem is addressed, it would make sense to erect a simple cap-and-trade system for utilities that would reduce carbon emissions and increase diversified sources of clean electricity from nuclear and natural gas that will someday be required for the electric cars we hope will be populating our roadways in growing numbers. But the current proposals, which supporters say are copied from the highly successful acid rain cap-and-trade system of the 1990s, should in fact follow the acid-rain model — which means stripping them of their auction/tax elements that have so poisoned that political landscape. Mr. Kerry has repeatedly said that the government “needs the money” from cap and trade, but our economy cannot survive the tax and the environment most certainly does not benefit from it either.

It is not well understood today that EPA itself can promulgate a “clean” cap-and-trade system under existing law that would avoid all the tax and other horrors of the pending legislative efforts. To be fair, existing law probably does not permit the trading of international offsets that might, for example, encourage rain forest preservation. So there is a value to some legislation — but test it against the known successes of the past before launching some vast new taxing regime we have never tried before.

C. Boyden Gray served as U.S. ambassador to the European Union.

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