What's Really reducing Carbon Emissions in America? (Hint: It's Not Obama)

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President Obama this week declared war on coal when he announced that he'll sidestep Congress and address the "manufactured" climate change crisis through regulatory fiat. He wants to establish himself as the eco-warrior to appease his left-wing environmental base.

His global warming crusade will cost the U.S. thousands of jobs and impose higher electricity bills across the land. All in the name of pandering to junk climate science.

Obama also sent the decision to build the Keystone Pipeline back to the State Department for yet another round of assessments. He ordered State Department not to approve the pipeline, which transmits Canadian Oil Sands to U.S. refineries, if it adds to net carbon emissions.

While the President is currently writing new rules that will make it harder for existing coal-fired power plants to operate, adding significant costs and effectively destroying tens of thousands of jobs in the coal sector and its supply chains, these plans are being sold as effective government action to address rising carbon emissions in the United States.

Unfortunately, for the President, he's too late. Carbon emissions produced by the U.S. today is at the same level we emitted in 1993. We've already won the climate change war.

What caused such a drastic reduction in carbon dioxide? There is another force doing more to reduce carbon emissions than the government ever could (unless the administration just completely shuts down the U.S. economy.)

And it is this force that the President should learn to embrace more often if he wants to really add to his presidential legacy.

The driving force? The Free Market.

Free Market Embraces Natural Gas, Lowers Emissions

Despite the President's goals to reduce carbon emissions internationally through "environmentally friendly" trade agreements and yet another International treaty that will do more harm than good to the U.S. economy, the administration should look to the real driver of climate adaptation: Cost effectiveness.

As we noted last week, when a new technology comes along that is cheaper, more efficient, and provides greater "bang for your buck," the market will migrate toward its use.

The same goes with sources of energy. The transition from coal to natural gas in the United States has been nothing short of staggering since the adoption of hydraulic fracturing has facilitated one of the greatest economic booms in the history of the United States.

Carbon dioxide emissions from energy sources declined by 12% between the years 2005 and 2012 and reached their lowest levels since 1992, according the Energy Information Administration.

The principle driver of this has been the transition from coal to natural gas as a primary source of electricity. In 2005, coal provided 50% of energy in the U.S. But, by the spring of 2012, that figure fell to 34%.

Natural gas prices have plummeted with the onset of fracking and it is much cleaner than coal. No surprise that this has drastically improved air quality across the country.

"There's a very clear lesson here. What it shows is that if you make a cleaner energy source cheaper, you will displace dirtier sources," Roger Pielke Jr., a climate expert at the University of Colorado, told the Associated Press.

Gosh. It's amazing how letting entrepreneurs find solutions to problems is so much more effective than top-down bureaucracy that takes years to come up with an unworkable decision. Obama has given the decision to approve an unexceptional pipeline the same media coverage that LeBron James received when he decided to play basketball in Miami.

But not only does the newer, cleaner source of energy create new jobs and fix our problems through the power of innovation, it also doesn't require the release of talking points to environmentalists in an effort to drown out the failures of government intervention in the free market.

On Monday the administration released a talking points memo (yes, we've reached that point) encouraging environmental supporters to avoid talking to Obama opponents on the economic impact of the President's decisions.

Rather than discuss the impact of jobs losses and increased government regulations, the memo encourages supporters to "inform audiences about the nature of the problem, who is at fault, and what can be done... Don't debate the increase in electricity rates. Instead pivot to health & clean air message."

The 14-page list of dos and don'ts provides opponents with every talking point necessary to hit the administration as well.

Here's one part of the memo: "Do discuss modernizing and retooling power plants and innovation that will create green jobs...Don't try to suggest net job increases."

At the onset of his Presidency, Obama promised to create 5 million green jobs. The President created a whopping 2,308 green jobs at $11 million apiece, according to the Institute of Energy Research.

Meanwhile, the Marcellus natural gas shale field alone is on pace to become the largest producing gas field in the U.S. by 2020, supporting more than 200,000 new jobs alone, and producing a fuel with half the carbon content of coal.

Given the failure of Obama's "green jobs" cause, it is somewhat shocking that the talking points didn't fall back on hyperbolic claims and personal attacks on opponents.

Surprisingly, this memo didn't ask environmentalists to encourage the opponents to "think of the children," this administration's favorite prop, or shout from the roof tops "we have to do something!" while ignoring the consequences of the rules imposed on the U.S. economy.

Bold Claims from Despite Failed Government Intervention

When President Obama leaves office in 2017, one should expect some variation of this statement to come from either himself or one of his sycophants in memoirs, speeches, or editorials.

"During Obama's Presidency, one of his finest achievements, will be looking back and knowing that carbon emissions have fallen to levels not seen since the days of the Cold War."

These sort of statements are the very type that Presidents love to attach to their names, even when they had no responsibility or tie to the overriding achievement. The reality is that the mechanisms that the President prefers, large-scale acts of government intervention coupled with greater international cooperation have failed to provide much, if any cover in reducing emissions around the world.

The United States left the Kyoto Treaty and Republicans prevented the United States from falling for the guise of the Cap and Trade Bill, which would have ushered billions, if not trillions, of dollars from the middle class to financial institutions in reverse "market" taxes on carbon emissions. Following the collapse of the carbon trading market and the exposures of fraud and horrific concessions in both the carbon markets and the Kyoto Treaty, one would expect that governments would learn to get out of the way and allow the free market to function.

Another International Treaty will likely do more harm than good both in the U.S. and abroad. In Europe, the continent has had a staggering failure in reducing emissions. In addition to a collapsed carbon market ripe with fraud, it has also failed on a massive scale to transition to alternative forms of energy given their higher costs and lower output of energy efficiency.

As a result, the continent is actually turning back to coal as a source of electricity and has effective banned natural gas development through hydraulic fracturing thanks to centralized planners who don't understand how to truly fix the massive economic, job-market, and social problems rising in their nations.

The rest of the world should take a page out of the U.S. playbook and recognize it is possible for to reduce Carbon emissions: Enable the free market to do it for them.

Unfortunately, we all know this is a lost cause on this White House.

With the Keystone pipeline decision still delayed, how about as investors we move on to where the profits really are? Here's a pipeline that could provide more upside to U.S. energy development than Keystone could - and it has completely slipped off the radar...