Politics

Emails: Treasury Dept. showed interest in carbon tax data, legislation

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Michael Bastasch Energy Editor

The Obama administration has repeatedly said it has no plans to propose a tax on carbon dioxide emissions, but emails from 2012 show that U.S. Treasury Department officials were very interested in learning more about such a tax.

“The administration has not proposed a carbon tax, nor is it planning to do so,” said then Treasury Secretary nominee Jack Lew in a written response to questions from Utah Republican Sen. Orrin Hatch Feb. 25.

But emails released as part of a lawsuit by the Competitive Enterprise Institute show that Treasury officials were interested in learning more about past iterations of such policies.

According to the emails, officials looked for data concerning carbon trading legislation in South Korea, the European emissions trading system, and 2009 cap-and-trade bill that failed to clear Congress. They were also attending conferences on carbon emissions.

The released emails were Treasury’s second response to CEI, this time releasing 253 pages of documents, with records containing the word “carbon” from the Treasury Department’s offices of the Deputy Assistant Secretary for Environment and Energy and the Assistant Secretary for Legislative Affairs.

“These documents represent thoughtful advice on how to mug the American taxpayer and coerce them out of unacceptable and anti-social behavior, diverting at least 10 percent of the spoils to overseas wealth transfers,” said CEI senior fellow Chris Horner, who launched the lawsuit for the emails. “The major focus is language, how to sell it to the poor saps not by noting the cost or that it is a tax but as, for example, the way to be the leader in something like solar technology.”

When asked about the emails, a spokesperson for the Treasury Department’s international affairs office reiterated to The Daily Caller News Foundation that the Obama administration has not proposed a carbon tax and has no plans to do so.

Some emails show that Treasury Department officials were interested in learning details on South Korea’s carbon trading system, which was passed by parliament last year.

“I hope you are well. My colleagues here at the US Treasury are interested to learn more about the carbon trading legislation that was recently passed by the Korean parliament. Do you have a summary of the bill (e.g., a fact sheet) or an English-language copy of the legislation that you could pass onto us?” reads a May 7, 2012, email from Treasury Department official Daniel Hall to a representative of the Korean Ministry of Strategy and Finance.

The next month, former Deputy Assistant Secretary for Environment and Energy Gilbert Metcalf inquired about the Korean carbon trading bill, which prompted Hall to ask again for information on the Korean legislation.

“I wanted to circle back and find out if there is an update with Korea’s carbon trading legislation. What is the most recent progress of the bill? Did your colleagues have an English-language summary (or copy of the legislation) they were able to pass on?” Hall asked the Korean representative again on June 8, 2012.

Last May, South Korean lawmakers passed a carbon trading program that will begin in 2015 and cap emissions from power plants, steel plants, ship makers and large universities.

Metcalf no longer works at the Treasury Department, and is now an economics professor at Tufts University. He did not respond to The Daily Caller News Foundation’s request for comment regarding the emails.

Other released emails show that officials were discussing and looking into data regarding the European Union cap-and-trade system.

An email exchange between Metcalf and Jaffe show that the two were discussing how to access price data for the EU’s emissions trading system.

“Do we have access to current and historical allowance price data for EU ETS?” Metcalf asked Jaffe on July 25, 2012.

“I think I’m starved for data manipulation so I pulled down the data to take a look. It is striking how far allowance prices have fallen since their local peak back in April 2011. they are 60 percent below that peak for the Dec2012 allowances. Similar pattern for Dec13 allowances so this is not something peculiar to the allowances that expire this year (and they can be banked anyway for the next trading phase so they don’t really expire),” Metcalf said to Jaffe in another email.

In January 2013, the EU cap-and-trade market took a nose dive, with prices plunging 40 percent due to an excess of carbon emission permits. The excess permits drove the price down 91 percent from its record high in April 2006.

The Financial Times reported that some analysts said that carbon permits are “worthless.” The Thomson Reuters Point Carbon’s annual carbon market survey found that one in five respondents believe the EU trading system “no longer has a significant impact on emission reductions.”

The released emails also show that Treasury Department officials were discussing estimates regarding emissions reductions from the failed 2009 Waxman-Markey cap-and-trade bill. The emails compared carbon tax and emissions data from the Congressional Budget Office and the Energy Information Administration.

“We can develop a rough intuition about how big a difference there is in the MACs by comparing the results of EIA’s W-M analysis… with EIA’s $25 carbon price scenario from [Annual Energy Outlook] 2011,” Hall wrote in an May 4, 2012, email to Metcalf under the subject heading “CBO estimates.”

“I’ll focus on the electricity sector because this is where most of the total abatement is happening and where natural gas switching makes a big difference,” the email continued.

“The CBO price path is relatively close to the ‘Basic [Waxman-Markey]’ case (carbon price of $20 in 2012 rising to $31 in 2020, with CBO assuming a 5.6% annual increase in allowance prices compared to 7.45 for EIA),” Hall continued in the same email. “If CBO abatement cost projections match those from AEO2009 then the projected 2020 emissions under the cap-and-trade policy could be around 400 [million metric tons of carbon dioxide] greater than what EIA would project for 2020 emissions using the more recent AEO2011 assumptions.”

Treasury Department officials also said in emails that they would attend a meeting entitled the “Social Cost of Carbon Meeting” at the Environmental Protection Agency. A notification about the meeting was sent from Treasury Department economist Mark Heil to Jaffe and another department economist Chris Soares.

Heil told Jaffe in a subsequent email that he and Soares would both like to attend.

Metcalf was the keynote speaker at a carbon tax event in November 2012 co-hosted by the conservative American Enterprise Institute, the Brookings Institution, the International Monetary Fund and Resources for the Future.

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