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Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

October 9, 2019 by 19 Comments

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals. 

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.

Filed Under: Blog, Electric Vehicles Tagged With: , , , , , , , ,

#1: Tom & Mike on California & Trump

October 8, 2019 by Leave a Comment

In the inaugural episode of Unregulated Tom & Mike focus on the issues surrounding Trump’s battle with California over their tailpipe emissions waiver.

Links:

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Another Carbon Tax? Here’s Your Yellow Vest

October 1, 2019 by Leave a Comment

Republican lawmaker Brian Fitzpatrick (R-PA) ‘vested’ by the American Energy Alliance for proposing an energy tax increase on American families.

WASHINGTON DC (October 1, 2019) – The American Energy Alliance (AEA) has “awarded” another yellow vest to a Republican lawmaker for his proposed carbon tax legislation which ultimately will raise costs on American consumers with no significant environmental benefit.

Earlier this year, AEA issued its first yellow vest to Rep. Francis Rooney (R-FL), signaling to the lawmaker and other Members of Congress that the organization is closely watching bait-and-switch proposals that claim to reduce carbon dioxide emissions, but in reality will make energy more costly and end up restricting consumer choice. Since the U.S. House of Representatives is on a two-week recess, AEA is sending the yellow vest to the lawmaker’s District office in Langhone, PA. Thomas Pyle, AEA President, issued the following statement:

“The misleadingly titled MARKET CHOICE Act ironically reduces options for consumers. Rep. Fitzpatrick’s national energy tax will harm each and every American family by increasing their energy costs, taking away choices, and creating more government bureaucracy. A national energy tax is hardly a conservative policy. In addition to the fact that it is a new tax, it manipulates the free market and creates a preference for one energy source over another.”

Yellow-vest protesters first emerged in Paris last fall when citizens began to publicly rebel against rising fuel taxes explicitly billed by President Macron as a way to meet France’s commitments under the Paris climate accord. In order to speak out, average citizens took to the streets wearing yellow safety vests that served as a rallying symbol for French motorists. AEA’s Pyle added to his statement:

“The ferocious commitment of the yellow-vest protesters to fighting against a carbon tax ought to send a clear message to our own lawmakers. President Trump was right to pull the U.S. out of the Paris Agreement, saying he represented Pittsburgh, not Paris. My advice to Congressman Fitzpatrick is he should draw a lesson from President Trump and the yellow vest movement by looking out for the citizens of the suburbs of Philly, not France,” Pyle said.

Below is a copy of the letter included with Rep. Fitzpatrick’s yellow vest.

Dear Representative Fitzpatrick,

In solidarity with the French citizens who protested expensive climate policies in their country, we at the American Energy Alliance have provided you with a yellow vest to object to your sponsorship of a destructive national energy tax, the inaptly named “MARKET CHOICE Act,” that will raise energy costs on American families and put the U.S. in a weaker financial state.

The “Gilets Jaunes” movement that began last fall in France was in response to rising fuel taxes explicitly billed by President Macron as a way to meet France’s commitments under the Paris climate accord. In order to speak out, average citizens took to the streets wearing yellow safety vests that serve as a rallying symbol for French motorists. Just like your carbon tax, Macron’s destructive tax would have made fuel more costly and restricted consumer choice, for little or no environmental benefit.

Your tax on energy will result in higher energy prices for all Americans, disproportionally harming lower-income people. Furthermore, it will not only inflict harm on consumers and the broader U.S. economy, it would foist additional burdens on state and local governments, all while failing to make any meaningful dent in the total emissions profile worldwide. While we agree that the nation needs to focus on its infrastructure needs, this is not the way to do it.

Whether ballot initiatives in Washington state, provincial elections in Canada, or protests in France, when the people weigh in on carbon taxes the answer is always the same: Non!

On behalf of AEA’s one million grassroots activists, we hope you reverse course. Our policy experts stand by ready to assist you whenever you and/or your staff are ready.

Filed Under: Press Releases Tagged With: , , , , ,

Sorry California, You Don’t Get to Choose What Vehicles the Rest of America Can Drive

September 18, 2019 by Leave a Comment

“The Administration’s efforts to reform this ill-conceived and wickedly regressive mandate will save consumers and workers money, preserve their choices, and ensure that the federal government, and not California, sets national policy.” 

WASHINGTON DC (September 18, 2019) – The American Energy Alliance (AEA) supports President Trump’s federal action to revoke the previous administration’s decision to allow California to set fuel mandates and environmental policy for the rest of the nation.

Tom Pyle, AEA President, issued the following statement in reaction to today’s tweet thread from @RealDonaldTrump:

“We commend President Trump on his decision to ensure that consumers can make the decisions about what cars and trucks they should buy.  While there are some who would rather have those decisions made by bureaucrats in California, we believe that workers, consumers, and families can and should be trusted to make decisions that affect their lives.
 
“The Administration’s efforts to reform this ill-conceived and wickedly regressive mandate will save consumers money, preserve their choices, and ensure that the federal government, and not California, sets national fuel efficiency policy.
 
“It’s simple.  The State of California should not be able – as it has been – to determine what kinds of cars are sold in other states.  Moreover, consumers should pay for their own cars and not be compelled by a regulatory scheme to pay for the choices of others.
 
“As we have noted before, the existing unlawful mandate makes cars more expensive​.​ To meet the mandate, automakers often have to sell smaller, less desirable cars at a discount, while increasing prices on the cars people want to buy, like trucks, SUVs, and crossovers. This is a very real and regressive tax on American workers and families that makes consumers poorer and the economy weaker.

“Today’s message to California is that that they’re just like everyone else. The administration’s action puts power back into the hands of drivers, not California bureaucrats, saving American families money, and reestablishes the states’ and the federal government’s proper roles with respect to fuel efficiency.

“Reforming the CAFE mandate is not about doing a favor for automakers, it’s about looking after average American workers, consumers, and families.

Common misconceptions about California’s unlawful waiver:

  • The administration is only withdrawing the Clean Air Act (CAA) waiver for tailpipe greenhouse gas (GHG) emissions granted by the Obama administration, as well as the related approval of the state’s zero-emission vehicle (ZEV) mandate.
  • The administration is not withdrawing the numerous other CAA waivers granted over the decades applying to pollutants or other emissions sources.


This decision is well-grounded in law, in fact it was the Obama administration’s granting of the GHG tailpipe waiver that was unlawful:

  • The Corporate Average Fuel Economy (CAFE) standards, created by the Energy Policy and Conservation Act (EPCA) in 1975 in reaction to the Arab fuel embargo, mandates higher fuel efficiency for vehicles towards the goal of reducing U.S. reliance on foreign oil. The EPCA expressly preempts states from establishing their own fuel economy standards, or any regulations “relating to” fuel economy.[1]
  • The CAA, passed in 1970, includes a mandate for the regulation of tailpipe emissions of vehicles. Under the CAA, federal air standards also generally preempt state level standards. CAA does allow the state of California to seek a waiver of federal preemption in order to impose more stringent air standards under certain circumstances.[2]  This is permitted when the emissions cause a problem locally specific to California (e.g. smog in Los Angeles).
  • GHG emissions are directly related to fuel economy, practically one for one.  There is no catalytic convertor for GHGs, the only way to reduce tailpipe GHG emissions is to reduce fuel consumption.  Additionally, GHGs are not local to California, GHGs dissipate fairly uniformly throughout the atmosphere globally.Thus the CAA waiver does not apply for GHGs, rather the EPCA state preemption under CAFE standards applies.  The Bush administration correctly denied California’s CAA tailpipe GHG waiver request, and the Obama administration incorrectly reversed that decision.

This is not about state’s rights:

  • This is not a federalism issue.  Only one state, California, is permitted to make special rules under the Clean Air Act.  Those rules were then imposed on the rest of the country by the Obama administration through its merging of the Clean Air Act waiver with the federally preempted CAFE rulemaking process.
  • California’s ZEV mandate, which is only possible because of this unlawful waiver, also impacts all other states.  Because the ZEV mandate is fleet wide, carmakers sell electric vehicles at a loss in California to meet the mandate while charging the rest of the country higher prices for pick-up trucks and SUVs to cover the loss.
  • One state taxing and regulating the rest of the country is not federalism.

For more information:

  • Our July 11th coalition letter urging President Trump to stay the course on CAFE reform from 30 national and state groups can be read here.
  • For more information on the President Trump’s CAFE reform, click here.
  • To view AEA’s latest public opinion research on the topic, click here.

[1] 49 U.S.C. §32919

[2] 42 U.S.C. §7543(b)

For media inquiries please contact:
[email protected]

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Free Market Coalition Urges Trump Administration to Halt Illegal RFS Waivers and Political Favors to Ethanol Lobby

September 12, 2019 by Leave a Comment

Broken system mandates the purchase of a product most Americans don’t need or want

WASHINGTON DC (September 12, 2019) – Today, a coalition of sixteen organizations, led by the American Energy Alliance, issued a joint letter to U.S. Secretary of Agriculture Sonny Perdue, EPA Administrator Andrew Wheeler, Energy Secretary Rick Perry and OMB Director Mick Mulvaney opposing additional favors to the ethanol lobby under the Renewable Fuel Standard (RFS) after reports that the administration plans to provide even more handouts to the ethanol lobby. Thomas Pyle, AEA President and member of the Trump Presidential Transition Team, issued the following statement:

“These ethanol waivers and political favors must come to an end. President Trump has already given the ethanol lobby a major concession by allowing the year round sale of E15 and yet they are still complaining that he hasn’t done enough. This continued whining by the ethanol lobby shows just how broken the renewable fuels mandate is. Leaders within the administration have an opportunity to step up and protect American consumers by rejecting the call for more ethanol handouts. This push for more handouts is not about helping farmers – it’s about lining the pockets of the special interest ethanol lobby.”

The 15 organizations joining AEA are: Caesar Rodney Institute, Campaign for Liberty, CFACT, Civitas Action, Clear Energy Alliance, E&E Legal, Freedom Foundation of Minnesota, FreedomWorks, Heritage Action For America, Idaho Freedom Foundation, Mississippi Center For Public Policy, Rio Grande Foundation, Taxpayers Protection Alliance, Alaska Policy Forum, and Competitive Enterprise Institute.

A text version of the letter is below.

The undersigned write to object to several of the proposals under consideration regarding the Renewable Fuel Standard (RFS).  It is time for the special favors for the ethanol industry to end. The EPA has already illegally allowed E15 fuels to benefit from a year-round waiver from generally applicable clean air regulations, despite statute clearly granting such a waiver only to E10 blends.  This administration should not follow that handout with even more rule bending like the below proposals reportedly under consideration.

Reducing or rescinding small refinery exemptions (SRE):

Despite the claims of some politicians, the law is clear that exemptions for small refineries are not contingent on the size of the company that owns the refinery, the definition of small refinery only considers the size of individual refinery.  Thus the hardship calculation to determine eligibility for an SRE is made only based on the conditions of the specific small refinery facing the hardship. This makes perfect sense given that SREs were intended to prevent the closure of small refineries due to RFS compliance burdens. A large company will not simply suffer the losses from a small refinery burdened by the RFS, it will close the refinery.  Thus the exemption must be available to any small refinery, regardless of ownership, in order to achieve the purpose of the statute.

Reallocating ethanol volume obligations:

While it may be understandable that the ethanol industry and its political supporters would want to force other refiners to blend higher ethanol volumes to make up for SREs, this desire conflicts with the statutory language of the RFS.  Nowhere in the RFS statute is EPA granted authority to reallocate volume obligations to other companies. Indeed, the RFS statute expressly prohibits imposing redundant obligations on other parties. New obligations on top of existing obligations are the definition of redundant. Non-exempt refiners facing greater obligations would be punished without due process of law.

Increasing the overall RFS mandate:

Congress stated that the intent of the RFS is among other things (1) to move the United States toward greater energy independence and security, (2) to increase the production of clean renewable fuels, and (3) to protect consumers.  Increasing the RFS beyond its already high levels contradicts all three of these principles. The domestic ethanol industry does not have the capacity to meet some components of RFS mandates, meaning that biofuels are being imported to meet the mandates.  Importing biofuel does not improve US independence or security, nor does it increase the production of domestic biofuels. Additionally, given that US domestic oil production continues to rapidly increase, foreign biofuel could end up displacing domestic energy production.  As to protecting consumers, the Government Accountability Office recently determined that the RFS has raised fuel costs for most Americans.

In conclusion, the RFS is a broken system.  It mandates the purchase of a product that Americans don’t need and most don’t want.  It imposes economic costs that come at the expense of all Americans to provide support for a privileged few ethanol companies.  The proposals under consideration make this broken system even worse and should be comprehensively rejected.

The full letter and list of signatories can be read here.

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[email protected]

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Love the game of golf? Thank oil and natural gas

September 11, 2019 by Leave a Comment

Access to low-cost energy and materials has always been an important part of driving economic dynamism. Given the role that oil and natural gas play supplying our energy, people often underestimate how important oil and gas are to other things they enjoy in life, like the use of plastics. At a time when it is convenient for politicians to deride the industries that provide people access to these essential resources, it’s important to remind people just how important oil and gas are to our everyday lives.

Today, one of the best examples of economic dynamism can be found in perhaps an unlikely place: the game of golf. Over the past two decades, improvements to equipment technology have helped the best (and worst) players hit the ball farther and straighter than ever before. Additionally, in part thanks to improvements in athletic gear, the game has seen the emergence of exciting new players that bring a new class of athleticism to the game. In fact, everywhere you look, from the clothing to the technology that is deployed to maintain golf courses, there is a tremendous amount of innovation in the game of golf. It should come as no surprise then that the oil and gas industries have played a key role driving much of this innovation. From the tee to the green golf courses have been designed and maintained with advanced technologies that make use of these resources. Here, we’ve outlined some of the ways oil and gas are deployed to make the game of golf possible.

Apparel

One of the most striking changes in golf over the past few decades can be seen in apparel. The modern player isn’t forced to struggle through the summer heat in clothing made of heavy cotton. Instead, modern golf apparel makes use of synthetic technologies like polyester, which is a product that is made using petroleum and natural gas. These synthetic materials are lighter and more flexible, helping players to perform at their best in warm climates. Additionally, synthetic fibers have been used to produce better waterproof materials. These products are helpful for playing in the elements during the Open Championship, where it’s the norm to play rain or shine and high winds are an everyday occurrence. Most recently, golf apparel manufacturers have been designing sun protective clothing, which provide protection from UV radiation.

Equipment

One of the biggest stories in golf over the past two decades has been the rapid innovation in golf equipment. In fact, golf club technology has advanced so quickly that there are legitimate debates over whether or not all the new technology is making the game too easy. As is the case with golfing apparel, oil and gas have played a role in driving all of this innovation. Today, golf clubs are manufactured using a wide variety of materials including metals and plastics, all of which make use of oil and gas in their production processes. Plastics are produced primarily from natural gas and crude oil refining feedstocks, and these plastic products are used to help bind the separate parts of the club together. Club heads are milled to perfection using heat and materials supplied from petroleum and natural gas. They are then bonded to the shaft using epoxies that are also derived from petroleum. Club shafts employ a large array of materials, with the most advanced products making use of advanced plastics and graphite, which is the crystalline form of carbon. In addition to the clubs, both gas and electric golf carts derive their energy from oil and gas and many of the parts of these vehicles are constructed using plastic. Finally, golf balls are made using several different types of plastic, with the outer layer usually made up of a thermoplastic and the core designed using a petroleum-based polymer called polybutadiene. All of these technologies have helped to make the easier, allowing more people to enjoy the game. At the highest levels of competition, new equipment technology helps players to shape shots more easily, and allows the best players to routinely hit 300-yard drives.

Golf course

Nearly every part of the golf course and all of the equipment needed to maintain it rely on products that are made from oil and gas. Irrigation pumps, sprinkler heads, and piping are generally all made from plastics. The fertilizers used to keep the course in top condition and the pesticides used to protect players from insects are all made using oil and gas products. The flagsticks, cups, and hazard paints are all made using plastics or other substances derived from oil and natural gas. Finally, the lawn mowers and gardening equipment that are used to maintain the best conditions all run on oil and gas.

Conclusion

Golf began in the year 1457; since then millions have adopted the game and nearly 34,000 golf courses have been developed across the world. In the modern era, oil and gas have played a role in developing the game we all enjoy today. If we think about the role of oil and gas in providing lower transportation costs, allowing people more access to the game in remote parts of the world, it’s easy to see that golf wouldn’t be the game it is today without these industries. So next time you tee it up, take a moment to appreciate the role the oil and gas industry have played in making your round of golf possible.

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Key Votes: H.R. 205, H.R. 1146, H.R. 1941

September 10, 2019 by Leave a Comment
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The American Energy Alliance urges all members to oppose the three anti-energy development measures scheduled for votes this week.

All three of these pieces of legislation seek to prevent development of our domestic energy resources. Domestic energy production creates jobs and economic growth, provides revenue to federal and state governments, and reduces our need for imports. Congress should not be preemptively blocking possible future development.

Both H.R. 205 and H.R. 1941 suffer from similar reflexive hostility to offshore development that has been deliberately whipped up by anti-affordable energy groups. Most of the area sought to be banned by these pieces of legislation is unlikely to ever be developed. However, preventing any planning action at all in these areas is unnecessarily restrictive and forgoes any possible benefits in jobs and growth. These bills foolishly hobble American energy security and future economic growth prospects and should be rejected.

H.R. 1146 similarly reflects a dogmatic hostility to energy development rather than a considered position. Long ago Congress set aside a small area of the Arctic National Wildlife Refuge for future energy development. The development of this area was unnecessarily delayed for too many years. This small area approved for development will have minimal, if any, impact on the rest of ANWR while providing an important boost to jobs and revenues in the state of Alaska and the country as a whole. The correct decision of Congress to allow development to process should not be revisited.

The AEA urges all members to support free markets and affordable energy by voting NO on each of H.R. 205, H.R. 1146, and H.R. 1941. AEA will include these votes in its American Energy Scorecard.

AEA urges all members to support free markets and affordable energy with the above votes.  Should a vote on any of these amendments occur, AEA will include it in its American Energy Scorecard.

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AEA’s Top 10 Questions That Should (But Won’t) Be Asked at CNN’s Climate Town Hall Tonight

September 4, 2019 by Leave a Comment

WASHINGTON DC (September 4, 2019) – Today, the American Energy Alliance (AEA) delivered to CNN a list of questions it has suggested be asked during tonight’s presidential town hall focused on the issue of climate change.
 
AEA President Thomas Pyle made the following statement:

“That fact that the Democratic National Committee, the entity responsible for identifying and promoting the issues most important to the party, voted against a climate focused debate is telling. Voters continually rank the economy, rising health care costs, education, immigration – in fact just about everything else – as more important than climate change. Tonight, while American families worry about making ends meet, the Democrats running for president will be working hard to outbid each other on who can raise electricity and gasoline prices the highest, and the fastest. Since CNN is going forward with this ratings bomb anyway, AEA hopes that at least the moderators will ask the types of questions the public really wants to know.”

Here are AEA’s top ten questions for the Democratic presidential hopefuls participating in tonight’s CNN town hall:

  1. If climate change is an existential threat, do you support the rapid construction of nuclear power plants, which are a zero-emission proven technology that doesn’t suffer from problems of unreliability like wind and solar?
  2. The policies associated with addressing climate change often make energy more expensive, disproportionately harming the poor, elderly and minorities. What is your plan to keep hundreds of thousands of Americans from plunging into poverty due of the implementation of your climate plan?
  3. In his research, William Nordhaus – who won the Nobel Memorial Prize for his work on the economics of climate change policy – shows that the UN’s temperature targets would cause far more damage than benefits. Does that concern you at all? What is your ideal temperature for the globe?
  4. According to standard modeling, even if all governments (including the U.S.) met their Paris Agreement pledges, the world would still experience at least 3.0 degrees Celsius of warming, blowing well past the UN’s recommended safe range of 1.5C – 2C. At what point should we admit that President Trump was right to exit an agreement that would have caused undue economic harm to American families while doing nothing to save us from the impending catastrophe that you are warning us about?
  5.  Will you provide the public with an audit of your campaign’s carbon footprint?
  6. Are you in favor or opposed to carbon dioxide?
  7. The Washington Post reported that Cong. Alexandria Ocasio Cortez’s Chief of Staff said the Green New Deal “wasn’t originally a climate thing at all … we really think of it as a how-do-you-change-the-entire-economy thing.” Is that how you look at it? Is this actually a way to put politicians in control of consumer’s energy decisions?
  8. Technology often associated with a green energy economy, such as battery storage or renewable energy forms like solar panels, rely on rare earth minerals which must be mined. How can you be for these types of technologies, but against the industry that must produce them?
  9. If rising sea levels are a certainty, do you have a comment on why President & Mrs. Obama recently purchased a $15 million-dollar beach house on Martha’s Vineyard?  What do they know that we don’t?
  10. Given that Washington Governor Jay Inslee, who centered his presidential campaign on the issue of climate change and who has failed three times impose a carbon tax on families in his state, has already dropped out of the race, where do you rank climate change on your list of platform priorities?

The town hall is scheduled to air live on CNN at 5:00 p.m. EST and expected to last seven hours long.

For media inquiries please contact:
[email protected]

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EPA’s Proposed Air Rules Removing Expensive, Regulatory Duplication A ‘Smart Move’

August 29, 2019 by Leave a Comment

WASHINGTON DC (August 29, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued the following statement in support of the Environmental Protection Agency’s (EPA) proposed update to air regulations for the domestic oil and gas industry:

“This proposal is a smart move and directly in line with President Trump’s approach to America’s continued energy dominance. The EPA has already shown that on top of incredible economic growth, led by the domestic energy industry, the U.S. leads the world in clean air. The connection between a vibrant economy and a healthy environment are all too evident. Unfortunately, due to the doom-and-gloom rhetoric from the green left, most American’s don’t understand or realize that the environment is continually getting better.”


“Today’s proposed change focuses on removing costly and duplicative barriers while promoting market-focused solutions. Incentives to reduce emissions already exist for this industry without the heavy hand of the government and today’s announcement is a breath of fresh air from the previous administration that made every effort possible to regulate the oil and gas industry out of business.”

As noted by the EPA in their announcement, the proposal would remove regulatory duplication and save the industry millions of dollars in compliance costs each year – while maintaining health and environmental regulations on oil and gas sources that the agency considers appropriate. EPA’s regulatory impact analysis estimates that the proposed amendments would reduce regulatory red tape to the tune of $17-$19 million a year through 2025.

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August Recess Carbon Tax Roundup

August 15, 2019 by Leave a Comment

In what has become a July ritual, members of Congress—from both parties and in both chambers—introduced long-shot carbon tax bills last month. With the swamp’s summer heat as a motif, Senator Chris Coons (D-Del.) advanced the Climate Action Rebate Act and in the House of Representatives John Larson (D-Conn.), Dan Lipinski (D-Ill.), and Francis Rooney (R-Fla.) put forth the America Wins Act; the Raise Wages, Cut Carbon Act; and the Stemming Warming and Augmenting Pay Act, respectively. No matter the trappings, a carbon tax would mean less purchasing power and a lower standard of living for Americans. Nevertheless, these bills vary in their structures and, thus, have their own unique failings. Whether it be the revenue-recycling strategy, the point of taxation, or the parameters used to conjure a given bill’s social cost of carbon estimate, each carbon tax has a flaw that will prove fatal—either for the bill itself in the legislative process or, if signed into law, for the American economy.

With this post we’ll break down the highlights and lowlights from 2019’s summer carbon tax crop.

Climate Action Rebate Act — Sen. Coons

  • $15 per metric ton in 2020, increasing by $15 every year
  • Increasing by $30 following any year in which an emission reduction target is missed
  • Rebates 70 percent of net revenue to low- and middle-income Americans on a monthly basis
  • Remainder spent on government investment in energy and infrastructure projects, as well as on assistance for workers harmed by the tax

Quote from Sen. Coons: “To address this threat, we need an innovative strategy that can reduce emissions and generate economic growth, not hinder it. I’m proud that this legislation will create a cleaner environment, while investing revenue directly into workers, families, and communities—helping to spur innovation, create new jobs, and ease the transition to a cleaner energy future. I am hopeful that we will continue to have bipartisan conversations about addressing this issue.”

AEA comment: Sen. Coons’ invocation of economic growth is dubious in light of the widespread economic modeling results that show a lump-sum rebate revenue-recycling strategy to be particularly detrimental to economic performance. A carbon tax will hinder economic growth relative to baseline expectations, but not all revenue uses have the same effects. Reducing distortionary taxes elsewhere—a “tax swap”—shows the most promise for maintaining or even augmenting economic growth. Instead, the Coons plan would, in essence, be a new spending package.

America Wins Act — Rep. Larson

  • $52 per ton, rising 6 percent annually above inflation
  • Spends $1.2 trillion over 10 years on infrastructure projects including: roads, bridges, tunnels, transit, rail, aviation, sewer systems, levees, flood protection, dams, ports, waterways, drinking water systems, broadband, energy infrastructure, the electric grid, schools, healthcare, and public housing
  • Spends $44 billion on energy research
  • The remainder of the revenue would go towards rebates for low-income households and assistance including pension boosts and green jobs training for coal communities

Quote from Rep. Larson: “We cannot wait any longer to address our global climate crisis. The America Wins Act would reduce greenhouse gas emissions above and beyond our Paris Climate Accords commitments, while funding historic investments in rebuilding America’s infrastructure and combatting climate change. Over ten years, over $1 trillion would be invested in all types of needed infrastructure from transportation to clean water, while also dedicating significant funding to clean energy and climate change related programs, and supporting climate justice through assistance to frontline and carbon-reliant communities. It’s time that we make our goals a reality and save our planet.”

AEA comment: Rep. Larson, at the very least, deserves credit for his honesty. This bill is an unabashed revenue raiser that would syphon money from the private economy and utilize it towards an array of social ends, many of which are far removed from any effects climate change might have.

Raise Wages, Cut Carbon Act — Rep. Lipinski

  • $40 per ton starting in 2020
  • Increases by 2.5 percent above inflation for every year that the United States does not meet emission reduction targets
  • Coal, oil, and natural gas would all be taxed where they enter the U.S. economy—at the mine mouth, pipeline, or at the U.S. border
  • Uses 94 percent of net revenue on payroll tax cuts and increases to social security benefits
  • 5 percent on the Low-Income Home Energy Program
  • 1 percent on the Weatherization Assistance Program

Quote from Rep. Lipinski: “This bill incentivizes adoption of cleaner renewable technologies, and will break our addiction to fossil fuels that are so damaging to our environment. This bill will also be a boon to taxpayers and has the advantage of providing predictable pricing to businesses over time to encourage deployment of clean energy technologies, stimulate innovation, and mitigate global climate change. I have helped lead the charge for carbon pricing since I helped introduce the first bipartisan carbon fee bill in 2009, and will continue to be a champion for real commonsense solutions to climate change.”

AEA comment: Giving credit where it’s due, it is mildly refreshing to see a bill that would use the carbon tax’s revenue to reduce harmful taxes elsewhere. Some analysts have found that tax swaps of this sort can be economically beneficial. (Others have argued to the contrary. See: tax interaction effect.) But what must be respected is that any economic benefit of a carbon tax swap would flow entirely from the reduction of taxes elsewhere, not from the imposition of the new one. This says more about our existing tax code than it does about the merits of taxing greenhouse gas emissions.

Stemming Warming, Augmenting Pay Act — Rep. Rooney

  • $30 per metric ton starting in 2020
  • Annual increase of 5 percent above inflation
  • If in two straight years emission reductions miss targets, an automatic $3 per ton increase will be charged
  • Uses 70 percent of net revenue to reduce payroll taxes
  • 20 percent of the net revenue would be used to establish a carbon trust fund—designated for state block grants used to offset higher energy costs for low-income households and advanced research and development programs on climate adaptation and energy efficiency
  • 10 percent would be paid to Social Security beneficiaries
  • Places a 12-year moratorium on Clean Air Act regulations that can be removed if emissions targets are not met

Quote from Rep. Rooney: “Those industries that choose to pollute our environment should bear the burden of cleaning it up.  Putting a price on carbon will level the economic playing field in the energy sector, unlock market-driven innovation, and lead to the deployment of low, zero, and negative carbon technologies. It will help create millions of new jobs and slash U.S. carbon emissions dramatically, making it a powerful tool for curbing climate pollution.”

AEA comment: Like Lipinski’s bill, Rooney’s deserves credit, albeit to a lesser degree, for utilizing the tax swap approach. Further, the moratorium on Clean Air Act regulations of greenhouse gas emissions would be entirely appropriate. But the plaudits stop there.  Rep. Rooney states, “…industries that choose to pollute our environment should bear the burden of cleaning it up.” This statement is suspect in two ways.

First, industrial entities that emit greenhouse gases do so because consumers in the marketplace desire their products and services. Manufacturers, power plants, and transportation companies emit greenhouse gases because we, the customers, value what they have to offer. Their goods and services make our lives better in myriad ways. Their choosing, as the Congressman puts it, to emit greenhouse gases is precipitated by our choosing to buy from them. The suggestion that “industries that choose to pollute” can be isolated from our economy and society at large is nonsense.

Second, while a tax on greenhouse gas emissions would in theory reduce said emissions, it would not serve to “clean up” past emissions. Rooney’s statement would seem to imply that the tax ought to be used to fund direct air capture or the planting of carbon dioxide-digesting trees, but nothing of that sort is to be found.

Conclusion

This year’s carbon tax crop is sure to rot in the field, thanks to the public’s minimal appetite for energy taxation. Be that as it may, the annual rite indicates how pro-carbon tax thinking is developing and gives us the opportunity to sharpen our own argumentation. Pulling alongside the lump-sum rebate revenue-recycling approach (typically marketed as a “dividend”), the tax swap approach favored by Rooney and Lipinski has shown a resurgence and will require attention in the coming months.

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