ASSIGNMENT DESK: THE CARBON TWO-STEP.
Annon asks, "Do people generally understand that any serious global warming policy will raise energy prices quite a bit? Do you think a serious global warming policy is politically possible?"
No, and define "possible." There's a reason politicians talk about something called "cap-and-trade" rather than a carbon tax, or a gas tax. "Cap-and-trade," which limits, and then reduces, the amount of carbon companies can emit, sounds more like the son of David Ricardo and a pirate ("yeargh, I'm Cap'n Trade!") than a massive tax. Better yet, unlike a carbon tax, which simply makes carbon more expensive, cap-and-trade functions through a somewhat complicated mechanism that you have to explain before you can say that it simply makes carbon more expensive. But fundamentally, that's the plan. And no politician wants to say so.
The great bright spot for environmentalists is that John McCain won the Republican primary. Whether he knows it or not, he's got a cap-and-trade plan in his policy agenda. It's not an incredibly good cap-and-trade plan, but it's good enough that he won't be able to run against Obama by saying that Obama has a secret plan to make gasoline even more expensive, as John McCain also has a secret plan to make carbon more expensive. So both of them will try and downplay this fact, and instead talk about carbon auctions and pollution permits and the like.
But then they're going to slam into Congress. Fundamentally, I'm pretty pessimistic about our ability to do anything proportionate on global warming. The basic problem is this: Our political system isn't very good at doing things in advance. Carbon emissions need to be stopped now in order to disrupt irreversible climate consequences later. Politicians work off short-term incentives, global warming is a question of long-term incentives. The bright spot is that the Lieberman-Warner climate bill -- which was insufficient, but more than nothing -- broke 50 when it came up for a vote this year. If the Senate decides to act as a body of legislators ad have themselves a world-saving, profiles-in-courage moment, they could in fact pass a serious cap-and-trade bill with backing from a President Obama. But that's a lot to hope for. And it doesn't even get into reining in emissions from China, India, etc. So yeah, I'm a pessimist.
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COMMENTS (20)
The Congressional problem is the biggest reason why I think transit absolutely has to be a necessary precursor to any attempts to deal with carbon.
If people have to take the train to work because of high gas prices, they'll be annoyed. But if if they don't even have the option to take the train to take to work, they'll just revolt. There is absolutely no way in hell that any government action to raise the price of driving will get through Congress so long as the vast majority of transportation in this country is powered by gasoline.
Frankly, I think at least some pieces of the transit infrastructure have to actually be in place (or at least on the near horizon) before any sort of action on carbon is even remotely possible. The best way to do it would be to use deficit spending to build the infrastructure, then reserve at least some cap-and-trade proceeds to pay for it after the fact.
Posted by: NS | July 1, 2008 11:25 AM
How much of the inaction has been due to Congress itself vs. the institutionalized resistance of the Bush Administration infecting the relevant governmental organizations?
It won't be so easy for Congress to sit idly by when NOAA, NASA, the EPA, EIA, USGS, DOI, etc. aren't being headed by and staffed with fossil energy lobbyists and their reports not only reflect the urgency and capability of the US to take meaningful action while protecting our economy, but an Obama White House actually reads those emails as well and taps into a hybridized bully pulpit/social networking system to rally public support?
Posted by: Jon | July 1, 2008 11:31 AM
"Cap-and-trade," which limits, and then reduces, the amount of carbon companies can emit, sounds more like the son of David Ricardo and a pirate ("yeargh, I'm Cap'n Trade!") than a massive tax. Better yet, unlike a carbon tax, which simply makes carbon more expensive, cap-and-trade functions through a somewhat complicated mechanism that you have to explain before you can say that it simply makes carbon more expensive. But fundamentally, that's the plan. And no politician wants to say so.
I find a striking parallel between this and a smartly constructed consumer-directed health care plan to control health care costs. This is why CDH is the only way to control health care costs in the short-run.
Posted by: wisewon | July 1, 2008 12:07 PM
With cap-and-trade, we're basically saying we're going to encourage a different kind of economy by making it inaffordable for people to drive certain places and buy certain things, and making it much less affordable for other people to drive certain places and do certain things. The point of health care -- the parts of it that work, anyway -- is that we want people to be able to get it. I'm not willing to have this middle period in which we make it way more inaffordable for people to access care. Others are, and I guess I understand the reasoning, but it seems a bit cruel when there are other options for cost control.
Posted by: Ezra | July 1, 2008 2:08 PM
Ezra,
You're behind the times a bit on your thinking. A new policy paradigm is rising called Cap & Dividend.
Cap (upstream), auction 100% of permits, and return 100% of auction revenue to the public in monthly dividend checks.
The dividend has the support of Hansen, McKibbon, Lakoff, Dean Baker, Reich, etc.
Time to catch up on the policy discussion.
Posted by: Sam | July 2, 2008 11:40 AM
So, you support cap-and-trade because you think people won't realise that if it works it will be equivalent to a tax? Why do you think people are that stupid?
Are you also not worried that the political economy of such policy is such that the cap is lowered very very slowly, then the cuts fall on those who manage to make significant savings, or are bad at lobbying, rather than on the polluters?
(Of course, I don't believe in anthropogenic global warming, or indeed that the problem is yet very big at all, but bad economics is bad economics).
Posted by: Marcin Tustin | July 3, 2008 11:00 PM
Ezra, we really need folks in the media, such as yourself, to help think about this a bit differently here - in terms that demonstrate the benefits of climate change and clean energy + energy efficiency solutions to America and the world.
Consider the benefits of efficiency of reducing emissions: for the American driving about 12000 miles per year, increasing their mileage from 15 to 25 mpg will save them over $1000/yr in gas at current prices (and 6400 lbs of carbon emissions/yr), and from 25 to 35 about another $650 (and 4000 lbs of carbon). Just think of that savings multiplied across tens...hundreds of millions of people in America. It would be a broad economic boon, while also benefiting our environment, security, and public health. With more efficient vehicles, just think how much of their gas money Americans would have to spend on EVERYTHING else - clothing, electronics, home improvements, travel, and gifts for loved ones, not to mention education and charities.
Public health? One study a few years back estimated that air pollution in the Central Valley of CA alone causes $51 billion in direct+indirect economic costs per year; people getting sick and having to pay doctors (because the cost of pollution is being displaced from manufacturers and oil companies on to American families), companies having to pay workers who are home sick or working below capacity due to bad air quality)!
Also, consider what -- in the areas of clean energy, retooling Detroit for plug-ins + developing advanced battery technologies, proliferating efficient technologies, etc. -- we would have been able to accomplish with the $$hundreds of billions that's gone down the drain in Iraq, wrenching the lives of the tens of thousands of our brave soldiers who have been killed and maimed (physically and mentally), not to mention the impact on the untold millions of devastated families and friends... We could have paid for a significant proportion of the solutions needed to free America from oil dependence!
Want more details? As this is a comment, I suggest you read David Sandalow's 'Freedom From Oil'. It's just a start, but will give you a much better idea of the incredible vision of hope - touching deep into the soul of America's manifest destiny spirit - that is offered by focusing our energies on freeing ourselves from dependence on oil and fossil fuels. It's a rallying cry and vision that spans from progressive to conservative, and we need the media to do a much better job at informing the public of the true costs of fossil fuel dependence, and the monumental opportunities offered by weaning ourselves from this addiction.
P.S. With all this talk of drilling out there, we also need to quell the illusion that ANWR and drilling off the coast offer an even remotely realistic solution. Oil prices are set in a global market in which the hundreds of thousands of barrels per day offered by these areas (1) is but a drop in the bucket of the planet's 87 million barrel per day oil demand, so won't affect prices more than a few cents, and (2) won't reach the pumps for well over a decade. Not to mention the climate change considerations, and that as Sandalow makes abundantly clear, our money will be much more smartly invested in advancing the clean energy revolution.
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Senators: We strongly urge you to vote “NO” to theCap & Trade Climate and Energy Bill.
The final Climate and Energy Bill passed the House so diluted with special interest bribes that It defeats what was represented to be its original objectives. Have you read the over 1,000 pages of the bill on which you are asked to sign? Cap & Trade is a prime example of the legislation which has been rushed through from the inception of the economic downtown with dire consequences to your constituents whom you are elected to represent.
While avoiding the underlying question, the proposed legislation would have a trivial effect on global warming while imposing substantial costs to the American householders. While avoiding the underlying question, the proposed legislation would have a trivial effect on global warming while imposing substantial costs to the American householders. The Congressional Budget Office estimates that its resulting increase in consumer required to achieve l5% CO2 reduction will raise the cost of living initially by $1600 per year per household with future costs significantly higher. Higher prices will relate to every manufactured goods, companies moving offshore, resulting in fewer jobs and higher unemployment WITH LITTLE EFFECT ON GLOBAL WARMING.
What effects does Cab & Trade have?
1. It interferes with positive solutions to Global Warming/ Solving global warming means solving how to keep most remaining fossel fuels in the ground.
2. It squanders resources and ingenuity on the wrong things. t squanders resources and ingenuity on the wrong things. S. Korea, the firm of Rhodia has profited 30% more selling carbon credits with NO GAINS.
3. It requires knowledge we don’t have and interferes with positive solutions to Global Warming.. Progressive California calls carbon training a “charade to continue business as usual.” – more construction of new fossel fuel fired power plants instead of focusing on building a green economy to provide new jobs for power communities.
4. It is based on faith not experience. Carbon trading - the centerpiece of the Kyoto Protocol and Europe’s response to climate change – the EU Emissions Trading Scheme has FAILED.
5. Cap & Trade is Antidemocratic.
WHO BENEFITS? Who Benefits? Big fossel fuel using companies; hedge funds, commodities traders, banks and law firms, i.e. ENRON, WorldCom, LTCM and the subprime mortgage market.
WHO LOSES? Once again – the American people. Cap and Trade is likely to be the biggest tax in American history.
Fred and Renee DeKlotz
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