Monckton Misleads California Lawmakers - Now It's Personal (Part 1)

Posted on 29 March 2012 by dana1981

As Peter Hadfield noted, Monckton has used his current "very busy tour" as an excuse to avoid debating him. I attended one of the stops on Monckton's current tour at the California State Capitol on 21 March 2012 to see just what Monckton deemed more important than facing up to Hadfield's uncovering of Monckton's most recent misrepresentations of his sources. The answer: misinforming my fellow Californians, including some lawmakers, with similar climate-related misrepresentations.

I'm a proud lifelong Californian, in large part because of the leadership in environmental and public health and safety our state has shown throughout its history. Mark Hertsgaard has a good summary here. Seatbelts, unleaded gasoline, and hybrid vehicles were first introduced in California before expanding to the rest of the country. In the 1960s, California addressed its smog problem by implementing its own clean air standards, ultimately requiring catalytic converters and other cleaner technology on cars sold in the state. Due to energy efficiency measures, residential electricity consumption in California increased just 14% from 1973 to 2008, as opposed to a 60% increase in US consumption over the same period. Currently the average California resident uses 42% less electricity than the average American. Some people complain about the slightly above-national average electricity rates in California, but because of our energy efficiency, our annual per capita electric bills are actually $165 below the national average (Figure 1).

Figure 1: USA vs. California per capita electricity consumption (Source)

California also has the most aggressive renewable portfolio standard in the country, requiring that 33% of the state’s electricity to be generated from renewable sources by 2020. Automakers are required to increase the amount of Zero Emission Vehicles (electric cars, hybrids, and hydrogen-fueled vehicles) sold in California by 15% by 2025.

And perhaps most importantly, in 2006 the California State Assembly passed The Global Warming Solutions Act (a.k.a. Assembly Bill [AB] 32), which required that California reduce its greenhouse gas (GHG) emissions levels to 1990 levels by 2020. In June 2005, Governor Schwarzenegger had also signed Executive Order S-3-05 ordering that California reduce GHG emissions 80% below 1990 levels by 2050.

In 2010, a proposition (Proposition 23) which would have suspended AB 32 was placed on the ballot and was heavily financed by fossil fuel industry (primarily Valero, Tesoro, and Koch Industries), but California voters rejected it soundly by a 22% margin (61% to 39%).

In short, in keeping with our long history of environmental protection, Californians strongly support GHG emissions reductions. The California Air Resources Board (CARB) authorized a carbon cap and trade program as the main policy to meet these emissions reductions requirements. Although cap and trade systems were originally a Republican, free market concept, today's Republicans tend to oppose them, and most measures aimed to reduce GHG emissions in general.

Thus I was very concerned when I saw that California Assemblywoman Shannon Grove (who perhaps not surprisingly represents one of the regions of California with the most fossil fuel production) invited Christopher Monckton to speak before the state legislature. As Skeptical Science readers are well aware, aside from having no climate expertise whatsoever (being a political and business consultant) Monckton is a serial misinformer who constantly distorts the scientific sources he cites, as recently devastatingly demonstrated by Peter Hadfield. However, the good news is that while 120 California state legislators were invited to Monckton's talk, only 5 chose to attend.

I decided to attend the talk as well to observe what he would tell my policymakers. Monckton's presentation can be downloaded here. During the talk, he repeated many of the same climate science myths and misrepresentations that we have previously detailed on Skeptical Science. In fact it included most of the same myths we rebutted in our Monckton Misrepresents Reality series. We will discuss the scientific myths in Part 2; however, given that the purpose of the talk was to undermine California's efforts to reduce our GHG emissions, we will focus on the Monckton's California-specific comments in Part 1 - one very alarmist comment in particular.

The Costs of Cap and Trade

As noted above, California will implement a carbon cap and trade system as a result of AB 32. This bill was in fact the reason Monckton was invited to speak to California state legislators, and thus he devoted a significant part of his talk to its supposed economic impacts.

As we have previously detailed many times on Skeptical Science, economic analyses consistently show that the benefits of CO2 limits such as carbon cap and trade systems will outweigh the costs, which is why there is a consensus among economists with climate expertise that we should put a price on carbon emissions.

What about the costs of a California-specific cap and trade system? CARB was required to perform an economic analysis of their proposal, and found that AB 32 will result in less than a 0.2% change between 2007 and 2020 (either positive or negative) in Gross State Product, personal and per capita income, and labor demand compared to a business-as-usual scenario. While energy costs are expected to rise slightly, they are also predicted to be more than offset by decreased demand due to increased energy efficiency as a result of the legislation. CARB notes that their results are very similar to the low-gross domestic product (GDP) impact estimates of similar proposed federal cap and trade legislation (Figure 2).

Figure 2: Model comparisons of proposed carbon cap and trade legislation impacts on gross state and federal domestic products (gray) as compared to business as usual (BAU) (blue)

The CARB analysis was based on standard economic modeling and was peer-reviewed by several California economists. The peer-review comments did have some criticisms of the analysis, as economics is not an exact science, but generally agreed with its conclusions.

Monckton Relies on The Varshney and Tootelian Report

Monckton did not mention the CARB economic analysis in his presentation. Instead he simply asserted that according to a certain report, AB 32 would cost California $450 billion by 2020. Monckton did not cite any other economic studies or AB 32 cost estimates, essentially presenting this $450 billion figure as factual reality.

I emailed Monckton the following day to inquire as to the source of this figure, and he replied that a study by a California university (he did not recall which offhand) had put the cost of AB32 at $182 billion by 2020, which Monckton multiplied by 2.5 to include other unspecified measures to reduce GHG emissions. After much searching, I was able to identify the document in question as a report written in 2009 by Sanjay Varshney and Dennis Tootelian (V&T) - California State University at Sacramento business school dean and marketing professor, respectively.

The V&T report did indeed conclude that AB 32 would result in more than $182.6 billion loss in gross state output with a cost to California households of $3,857 per year. However, the report multiplied their estimated cost by a factor of 2.8 to account for indirect costs, and thus Monckton's further multiplication by a factor of 2.5 is duplicative and erroneous.

Additionally, Monckton may not have been aware that the V&T report has been rebutted by:

James L. Sweeney, Professor of Management Science and Engineering and Director of the Precourt Energy Efficiency Center at Stanford University

Matthew E. Kahn, Economics and Public Policy professor at the University of California at Los Angeles (UCLA)

Frank Ackerman, Economics professor at Tufts University

Frank Ackerman summarizes his findings here:

"V&T assumed that all benefits of AB 32 were too speculative to include; in effect, they estimated benefits at exactly zero. The costs caused by AB 32, on the other hand, are treated with expansive generosity. Housing costs surge upward, based on the cost of converting homes to zero net energy consumption (but with no resulting savings on utility bills). The projected fuel savings from new, high-mpg cars are treated as a cost imposed on owners of older cars (but not a savings to new car owners). Food cost increases are estimated in an entirely data-free manner. V&T then multiply everything by 2.8 to account for indirect costs."

As Ackerman notes, in one rather glaring example, V&T assumed every new home in California would include an extra $50,000 cost to become 'zero net energy consumption' homes, including a $31,500 cost for a solar panel system; however, V&T also assumed that these homeowners' energy bills would increase by $159 per year. In fact if the new homes were indeed zero net energy, their energy bills should decrease by $1565 per year (based on V&T assumptions). This glaring error alone accounts for more than half of the V&T assumed cost increase to average California families.

Sweeney and Kahn summarized their results in the Los Angeles Times and note the same glaring error:

"Over half of their stated consumer costs are based on the assumption that AB 32 will require new homes to generate as much energy as they use -- which it doesn't -- and that that would add $50,000 to the construction of each house. But once they figure that into AB 32's costs, they assume that those net-zero-energy houses provide no energy savings." [...] "It is no surprise that no-benefits, costs-only, exaggerated-cost methodology guarantees high-cost results. We conservatively estimate that the Varshney/Tootelian analysis overestimates costs by at least a factor of 10. We say "conservatively" because there are additional market drivers that add to the benefits in a fair cost/benefit analysis that Varshney and Tootelian fail to acknowledge."

In short, the V&T report contains an extremely shoddy analysis, exaggerating the costs of AB 32 by at least a factor of 10, and ignoring its economic benefits. How much will the cost actually be? As noted above, the CARB analysis estimated almost no impact on Gross State Product and household costs, and analyses of similar proposed federal cap and trade systems consistently put the costs at less than 1% of Gross Domestic Product and around $100 per average family per year, even ignoring the benefits from reduced GHG emissions.

Note: I responded to Monckton's email notifying him of the Kahn paper - he did not reply, but Monckton can no longer claim to be unaware of the fundamental errors in the V&T Report.

Jobs

V&T also estimated that AB 32 would result in more than 1 million jobs lost, and Monckton argued that it would result in jobs "leakage" (companies leaving the state). However, the CARB analysis concluded that AB 32 would result in no significant impacts to net California employment (in fact possibly a slight increase in net employment). An analysis by the UC Berkeley Center for Labor Research and Education similarly concluded:

"In the final analysis, AB 32 will, over time, significantly impact jobs in California. It will create opportunities for job growth in the construction trades, including in retrofitting and building new buildings, in building the infrastructure for renewable energy, and in efficiency improvements in manufacturing. Job loss is predicted to be small or may not occur, and dislocations can be managed with targeted assistance programs."

Monckton listed a few companies who have recently left or California or stated that they will not expand in the state, implying that these decisions were a direct result of AB 32, but provided no evidence whatsoever to support this implication. In fact, at least two of the companies listed (Intel and Apple) opposed Proposition 23 (thus supporting AB 32).

There are many more errors identified by these various reports in the V&T analysis - I encourage anyone who is interested in the actual economic impacts of the proposed system to read the reports themselves. However, as The San Francisco Chronicle summarized, the V&T analysis and associated claims by Monckton are pure fiction.

"The losses they [V&T] project would be serious economic impacts – if they were real. They are, however, entirely unreal; they should be viewed merely as daydreams of disaster."

Monckton also extrapolated the trumped-up AB 32 costs to estimate that climate mitigation will cost $454 trillion per degree Fahrenheit of warming averted - a claim which can only be described as utterly absurd alarmism.

Tragedy or Leadership?

Much concern was expressed both by Monckton and the audience that California will be "going it alone" in terms of reducing our GHG emissions, that our emissions reductions will be too small to matter, and that we will be at an economic disadvantage if we take steps to reduce them. This argument is the standard Tragedy of the Commons, and in fact was considered by CARB in its economic analysis:

"While California acting alone cannot reduce emissions sufficiently to change the course of climate change worldwide, our leadership has played and continues to play a critical role in moving federal and international climate policy forward. Successful implementation of the AB 32 Scoping Plan, in particular, has the potential to help move. federal climate policy in a positive direction during the coming years."

As discussed above, California has a long history of leading the way on public and environmental health issues, and the rest of the United States usually follows our lead. Thus, as our voters made clear by rejecting Proposition 23, we are willing to take on the minimal costs of reducing our GHG emissions in order to once again set a crucial example and lead the way in preserving public and environmental health, and Californians do not need faux experts flying in from abroad to misinform us by misrepresenting facts and reality to try and convince us otherwise.