When the Supreme Court ruled Monday that the Environmental Protection Agency can and probably should regulate carbon dioxide as a pollutant, a Washington Post news article said the majority was "siding with environmentalists."
That’s true, but a quick look at the docket in Massachusetts v. EPA reveals the liberal majority also sided with two large electric utilities that stand to profit from the decision.
In Massachusetts v. EPA, the four liberal justices plus Justice Anthony Kennedy ruled that carbon dioxide — the stuff you breathe out and plants breathe in — is pollution. This pollutant, the court added, has already demonstrably harmed the Commonwealth of Massachusetts among others, and the EPA must regulate carbon dioxide emissions unless it can demonstrate that these emissions are not harmful.
While the case dealt specifically with automobile emissions, green groups and Democratic politicians immediately pointed to the decision as cause to pass federal laws broadly limiting carbon dioxide emissions.
The attorneys general of 12 states were the plaintiffs in this case, and they got help in the form of amicus curiae (friend of the court) briefs from environmental groups, mayors, former EPA administrators, and native Alaskan groups. Joining these green-leaning groups was the Entergy Corporation.
Entergy, based in Louisiana, is a top player in the electricity industry (bringing in $11 billion in revenues last year) and the nation’s second-biggest nuclear power generator. The company supported the attorneys general in forcing the EPA to regulate carbon dioxide as a pollutant, and the company will profit if Congress does, in fact, create mandatory limits on carbon dioxide emissions.
Entergy began its amicus by declaring, "This case makes for strange bedfellows." A closer look at Entergy’s business model makes it clear there is nothing strange about finding this company in bed with environmentalists and regulation-happy politicians.
First, it’s important to note that Entergy understood this case isn’t just about cars, but it "squarely implicates the electric-generating sector’s interests, including Entergy’s," as Entergy wrote in its brief.
More to the point, any curbs on carbon dioxide would "squarely implicate" some of Entergy’s competitors. Entergy, again, is the No. 2 nuclear power producer in the country. Nuclear power plants produce virtually no carbon dioxide.
Natural gas is Entergy’s other strong suit, and while it gives off more carbon dioxide than nuclear, hydro, solar or wind power, it produces far less carbon dioxide than does coal. If the government slaps a tax on carbon dioxide, all of Entergy’s coal-fired competitors will see increased costs — a boon to Entergy and a bane to consumers.
As an added bonus, Entergy can rest comfortably in its high perch in the nuclear industry — thanks to federal regulations, not a single new nuclear power plant has been opened in 30 years. Entergy recently won approval for a new nuke reactor in Mississippi, but such plants will take at least eight years to become operational.
Even better than a carbon dioxide tax for Entergy would be a cap-and-trade scheme. Cap-and-trade means Washington grants electricity producers, factories, or even drivers a certain number of greenhouse gas credits, and if you don’t use them up, you can sell them to some over-emitting sap who must buy them or face the EPA enforcers.
Under such a scheme, Entergy’s low emission nuclear plants would give the company plenty of credits to sell. But cap-and-trade would also allow Entergy to turn the company’s voluntary "greenhouse gas reduction commitment," into real money.
On March 22, Entergy announced the firm had purchased 100,000 metric tons of "emission reduction credits" — credits that surely come cheap, seeing as they are worthless except for public relations.
Such credits gain value if Congress mandates emissions cuts. Buy a worthless credit, lobby to make it worth something, and unload it. That’s one way to buy low and sell high.
Entergy has also launched a "Green Power" initiative in the Gulf States, offering customers the option of paying an additional 2.25 cents per kilowatt-hour (about 30 percent more) in order to get electricity made from wind, solar or other renewable fuels.
Currently, this Entergy product will only really appeal to rich environmentalists. If the court’s ruling results in a cap-and-trade scheme, green power will become a way to buy emissions credits, and Entergy will have cornered a nice, new, government-created market.
Wall Street understood this. On Monday, when the EPA decision came down, Entergy stock jumped to an all-time high of $107.52 per share.
Considering the serious doubts about the true cause, extent, and effect of global warming — and the even deeper doubts that any achievable carbon dioxide reductions would change things noticeably — this Supreme Court decision looks almost like a wealth transfer from ratepayers to Entergy shareholders.
Examiner columnist Timothy P. Carney is author of "The Big Ripoff: How Big Business and Big Government steal your money."
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