A News & Observer story published Wednesday focused on an Appalachian State University Energy Center study that determined that new taxes and regulations meant to fight global warming will generate more than 300,000 jobs for the state and $14 billion in new income. But unfortunately the N&O looked no further, implying that these results should automatically have some respectable status because they came from the Energy Center, the ASU entity that produced the report.

‘Garbage in, garbage out’

Among many facts the N&O failed to explain was that the Energy Center study was not independently produced. The Energy Center was hired by the Center for Climate Strategies to analyze work that CCS is doing for the North Carolina Climate Action Plan Advisory Group (CAPAG), established by the state Division of Air Quality. The Energy Center’s contract is with CCS, not the state of North Carolina.

CCS was founded by an environmental pressure group know as the Pennsylvania Environment Council. More than 75 percent of the money CCS has at its disposal comes from both in-state and out-of-state foundations well known for funding left-wing causes. These include the Rockefeller Brothers Foundation (New York), the Z. Smith Reynolds Foundation (North Carolina), the Marisla Foundation (California), and the Surdna Foundation (New York). CCS does similar work for other states with help from other leftist foundations, including the (Teresa) Heinz Endowments and the (Ted) Turner Foundation.

The data that the Energy Center used to generate its results regarding employment and income growth was provided by CCS. These are cost estimates of the 56 proposals that CCS crafted and CAPAG delivered on Tuesday to the Legislative Commission on Global Climate Change. The problem is that the data that forms the basis of the Energy Center’s results has been thoroughly discredited. In a recent peer review of similar analysis by CCS in other states, a team of Ph.D. economists who specialize in cost/benefit analysis from the Beacon Hill Institute at Suffolk University in Boston determined:

1. “the estimates of costs leave out important factors, causing CCS to underestimate the true costs of its recommendations”
2. “when estimating economics impacts, CCS often misinterprets costs to be benefits”
3. “there are serious omissions in their estimates of program costs”
4. “CCS overestimates cost savings and underestimates the costs that will be incurred”

If the Energy Center’s jobs and income predictions are based on faulty cost data, then all of their conclusions and predictions should be called into question. Economic models are only as good as the data they are working with, so this appears to be a clear-cut case of “garbage in, garbage out.”

Why not show your work?

The N&O also failed to question the Energy Center’s calculations or models used in coming up with these results. From the perspective of economics, the Energy Center’s results are counterintuitive. Most economists would not go in to a study like this expecting to find that higher taxes and increased regulation would lead to increased prosperity. On a national level, economic analyses of virtually every proposal to reduce CO2 emissions significantly have concluded that there would be hundreds of thousands to millions of jobs lost nationally with significant reductions in gross domestic product. This includes studies by the Congressional Budget Office and the Energy Information Agency, in addition to studies out of both the University of Pennsylvania and Yale. This alone should have raised suspicion on the part of the News & Observer, given that the Energy Center at ASU is arriving at totally contrary results for the state of North Carolina.

But the N&O should not be too embarrassed by this. Apparently the Division of Air Quality hasn’t thought to ask the Energy Center to show its work, either. When Carolina Journal reporter Paul Chesser asked DAQ to provide information or documentation regarding the methods and data the Energy Center used to get its results, including specifics about the model used, DAQ told Chesser they had none. All they had were the preliminary results that were released to the media. Of course this raises only more questions about why DAQ would be willing to entertain such results, apparently without any idea how they were generated, especially in light of the fact that these results are at odds with the rest of the economic research in this area.

But maybe DAQ is not completely at fault. It appears that the Energy Center is simply not willing to share. Chesser also sent a similar request to the Energy Center asking its representatives to explain how they conducted their analysis. After two weeks of repeated requests and in spite of the fact that the Energy Center is taxpayer-funded, director Dennis Grady and technical director Jeff Tiller still refused to let outside parties scrutinize their work. This alone should cast suspicion upon the research.

As an aside, in a private conversation I asked DAQ deputy director Brock Nicholson if the agency had any plans to send the Energy Center analysis out for independent peer review. Given the fact that massive new regulations and taxes may be passed based in part on this report, including a cap–and-trade energy rationing scheme, it seems an independent peer review is the least that should be done. Nicholson’s answer was “no.”

Why no economist?

Would anyone take seriously a study in biology, purporting to be original research, that was not peer-reviewed and was written by a historian and a sociologist? Furthermore, what if this study contradicted nearly all of the peer-reviewed studies of the same issue, written by Ph.D. biologists? Or, how about a similar study in psychology written by researchers whose only degrees were in French and geography? The answer is “no.” But this is exactly the same scenario presented by the Energy Center report.

The study purports to present original economic analysis, but neither of the study’s two authors appears to have any credentials in economics. One is a graduate student in political science, and the other holds bachelor’s and master’s degrees in systems engineering. I know of no formula that suggests graduate student-level expertise in political science plus master’s degree-level expertise in systems engineering add up to any expertise at all in economics.

The University of North Carolina system has three Ph.D. programs in economics, with scores of Ph.D. economists who have published in the leading peer-reviewed economic journals in the world, yet the Energy Center turns to a graduate student in political science and a systems engineer to evaluate important economic impacts of the CCS/CAPAG recommendations.

Surely it is forgivable that a newspaper reporter might simply assume that the authors had legitimate credentials for carrying out their assignment. After all, they are affiliated with the UNC system. But the Division of Air Quality has no such excuse. DAQ officials’ judgment should be called into question once again.

First, they purport not to have any knowledge of how the Energy Center arrived at its results, and then they allow the study to proceed under the authorship of researchers who, at the very least, have credentials that are not relevant to the task. Why wouldn’t the DAQ insist that CCS hire qualified economists? When DAQ learned that no economists were among the authors, why didn’t they send the report back to the drawing board? And finally, why would they be so anxious to present these admittedly preliminary results to the Legislative Commission on Global Climate Change and the media?

Conclusion

This brings us back to the Center for Climate Strategies. As noted, CCS crafted all 56 proposals made by DAQ’s Climate Action Plan Advisory Group. CCS in turn was given the authority by DAQ to hire the Energy Center to do an economic assessment of the 56 proposals. Given their pedigree in environmental and global warming advocacy, it would be very unlikely that CCS would hire people who would do anything but validate their original recommendations.

But this result became preordained when the agreement between the Energy Center and CCS stated that the study would use as its input what has turned out to be fundamentally flawed cost data, generated by CCS’s original assessments.

And that, as Paul Harvey would say — and as the N&O ignored — is the rest of the story.