Wednesday, May 4, 2016

Bernie Sanders: Standing up to Clinton Foot-Dragging and Industry Science Denial Since 1993

Bernie Sanders has a long, exceptional history of standing up to science denial and foot-dragging by politicians, industry and regulatory agencies.

Back in the Clinton Administration... 

Sanders Investigated EPA in 1993
As a second-term Congressman in 1993, Rep. Sanders (I-VT) and Rep. Mike Synar (D-OK) co-chaired the House Subcommittee on Environment, Energy, and Natural Resources.  Acting on numerous complaints, their subcommittee convened an oversight hearing on June 11, 1993, to investigate why Clinton Administration officials refused to regulate toxic chemicals emanating from styrene-butadiene latex-backed carpet, which had been installed in EPA's headquarters building and numerous other offices and homes throughout the nation.  At EPA, the new pungent-smelling carpet had triggered an epidemic of illnesses, sending me and 42 other EPA professionals to our doctors, who documented symptoms severe enough to order EPA to accommodate work outside EPA's building.

After a long struggle, EPA's professionals' union (where I served as a vice-president, while also serving as an enforcement attorney) eventually forced EPA to remove the toxic carpet.  A similar pattern had emerged in other buildings where similar carpet was installed; employees developed flu-like symptoms that advanced into neurotoxicity, central nervous system damage and chemical sensitivity (technically "toxic encephalopathy") which often proved irreversible and disabling.

At the oversight hearing, we heard from half a dozen scientists including Rosalind Anderson Ph.D., who had isolated a neurotoxin (4-phenylcylcohexene), that was vaporizing from the carpet.  She confirmed its toxicity by observing the effects on laboratory mice exposed to samples of the carpet taken from EPA's offices.  After an hour in a chamber vented with samples of carpet from EPA, the mice became erratic and markedly lethargic, indicating severe toxicity. Some mice actually died after three hours.

But science denialists got their say too.  During the hearing, Rep. Dennis Hastert (R-Il) asserted that "there is no sound scientific evidence to establish a link between carpet and adverse health effects."  And in their turn, Clinton Administration officials, along with carpet industry representatives explained and temporized -- they just couldn't act because they didn't have enough scientific "proof."

Does it all sound a little too familiar?  Eerily similar to the phony "debate" over anthropogenic global warming as painstakingly documented by Naomi Oreskes and Erik Conway in "Merchants of Doubt"?

Fast forward 23 years...

In his run for president, Senator Sanders has pointed out what virtually every economist will tell you, that we need a rising tax on carbon pollution to transmit more accurate price signals through our market economy, thereby rewarding efficiency and innovation toward lower-carbon energy, setting the stage for a global carbon pricing system.  But in response to Sanders' plea for a carbon tax, Hillary Clinton, like her husband's Administration in 1993, is standing for the status quo.  If the spin coming from her campaign manager John Podesta's "Center for American Progress" is any indication, Mrs. Clinton can be expected to push for more costly, ineffective EPA regulations on greenhouse gases, and maybe a regulatory attempt at a linked cap/trade & offset system.  Even if such regulations survive legal challenges, Bill Clinton's history of recalcitrance and weak enforcement does not bode well for a climate policy built on EPA rules and enforced by Mrs. Clinton's appointees.

All of which makes Bernie Sanders' vow to push for inclusion of a carbon tax in the Democratic Party Platform crucial.  It's becoming painfully apparent that he's not going to garner the pledged delegates to win the nomination, so the chance for "Berners" to influence policy is The Platform.  And regardless of who wins, the president won't be able to enact a carbon tax if denialists continue to hold sway in Congress.  So it's also crucial to vote out at least some vulnerable denialists in Congress.  For example, I'm thrilled that Tammy Duckworth is challenging denialist Mark Kirk for his Illinois Senate seat, and that Deborah Ross is challenging denialist Richard Burr for his in North Carolina. 

Tuesday, October 29, 2013

Could the “Green Paradox” Thwart a Carbon Tax?

by James Handley (Cross-posted from the Carbon Tax Center)

One of the best attributes of carbon taxes is that they’re fairly immune to the law of unintended consequences. No gaming or criminal mischief. No rebound effects. Just a classic downward-sloping demand curve: the fossil fuel provider pays the tax, the price of the petroleum product or coal-fired kilowatt-hour goes up, dirty energy’s market share goes down.

Could a Fast-rising Carbon Tax Accelerate Oil Production?
But there’s a lurking concern that surfaces from time to time in the literature of resource economics and “Pigovian” taxes: raising the prices of fossil fuels too rapidly might induce the owners of those resources to extract them faster in the near term, a phenomenon known as the “green paradox.” In this scenario, fossil fuel owners would flood the market to reap higher sales before the carbon tax got big enough to kill off business. This near-term fossil fuel binge would increase CO2 emissions, obviating the fuel-shifting and demand-busting that a carbon tax would otherwise induce.

The green paradox is a direct corollary of Hotelling’s rule, a bedrock principle of resource economics. It came to mind this week as we digested the new report from the 34-nation Organization for Economic Cooperation and Development, Climate and Carbon: Aligning Prices and Policies. The OECD report urges an “explicit price on carbon” as the key mechanism to reduce global CO2 emissions. The report points to the IPCC’s newly confirmed finding that atmospheric greenhouse gases must not exceed 450 parts per million CO2-equivalent. Adhering to the resulting global “carbon budget” will necessitate zeroing out net global emissions by the second half of this century, according to OECD.
Topping OECD’s list of necessary national policies are:

[e]xplicit carbon pricing mechanisms, such as carbon taxes and emissions trading systems, [which] are generally more cost-effective than most alternative policy options in creating the incentive for economies to transition towards zero carbon trajectories.

OECD adds:

[U]se of these [pricing] mechanisms is expanding in developed, emerging and developing economies, but there is considerable scope for further uptake by governments. Overcoming political opposition to putting an explicit price on carbon will often require close attention to the distributional and competitiveness implications on the domestic economy.

OECD also stresses the need for governments to eliminate fossil fuel subsidies and to enact complementary policies such as energy efficiency standards for buildings, homes and automobiles.

If, as OECD suggests, explicit carbon pricing is to drive CO2 emissions to zero by mid-century, it will have to be aggressive enough so that fossil fuels become uneconomical and are overtaken by zero-carbon alternatives. The Carbon Tax Center and a number of economists have attempted to model the price trajectory needed. While such modeling is highly speculative — it’s almost impossible to explicitly model technological innovation, for example — we estimate that the CO2 price will need to surpass $300/ton by mid-century.

That’s a hard sell politically, of course, though we often point out that a carbon tax can replace other taxes so our total tax burden need not increase. But there’s also Hotelling’s rule to consider.

In a seminal paper published in 1931, Harold Hotelling posited that exhaustible resources are a form of capital available for extraction at any time at a known cost. He showed mathematically that in a dynamic, competitive equilibrium (where sellers compete and are free to respond to changes in supply and demand), prices of such resources rise at the rate of interest. Imposing a tax that raised the price of fossil fuels faster than the interest or “discount” rate would therefore make the resource more valuable now than in the future. Thus, the “green paradox”: a carbon tax rising too fast could induce more global warming by triggering a near-term rush to extract and market fossil fuels. (Note that an expectation of rapidly rising subsidies to renewable energy could induce a similar rush to extract fossil fuels.)

Nevertheless, a new paper by Prof. Robert D. Cairns of McGill University concludes that fears of the “green paradox” are overblown in the context of oil pricing. In The Green Paradox of the Economics of Exhaustible Resources, Cairns points out that oil and gas production is limited by the drilling activity in the previous period; production from wells tends to diminish along a predictable “decline curve” reflecting diminishing hydraulic pressure in the formation. Because producers can’t cost-effectively increase production very rapidly, the assumptions of Hotelling’s rule don’t apply. Similarly, capacity to drill new wells is limited in the short term by availability of drilling rigs and related equipment; investments in additional capacity don’t pay off immediately, they must be amortized over time by expected future activity.

Cairns concludes:

Hotelling may reign but he does not rule. Models in his tradition assume free allocation of resources over time. The rule is an arbitrage condition relating the values of net price over the productive life of the reserve. Empirical evidence suggests that allocation is subtler than in the Hotelling model. The operative constraint in oil industry is that allocation over time is capped in one of a number of ways, so that arbitrage among periods is constrained. Calculations and comparisons are not simply of current costs at different time periods but of commitments, especially sunk costs, predicated on the entire future of operations.

Economic theory and empirical evidence suggest that Cairns’ conclusion isn’t limited to oil. Coal and gas extraction are also constrained by physical and capital factors that limit resource owners’ ability to accelerate production enough to overwhelm the benefits of a predictably-rising carbon price.

Like the vast majority of economists, we agree with OECD that a global carbon price is key to zeroing out global CO2 emissions. Prof. Cairns and a growing body of literature show that fears of the “green paradox” shouldn’t deter policy-makers from setting an aggressively-rising carbon tax trajectory that meets the goal of zero emissions by mid-century.

Photo: Flickr– photos of Rob

Monday, January 31, 2011

Former Fed Vice-Chair Urges — Show The CO2 Price Now! (Two Years Ahead of Time)

(Also posted at The Carbon Tax Center.)

Everyone from the President on down professes to want more hi-tech jobs and cleaner energy. Here’s a prescription for getting them: enact a gradually-rising carbon tax but delay its implementation for two years to avoid dampening the fragile economic recovery.

That’s former Fed Vice-chair and Princeton Econ. professor Alan Blinder’s message in “The Carbon Tax Miracle Cure,” broadcast today from the pulpit of free-market orthodoxy, the editorial page of the Wall Street Journal:

[A] carbon tax… should be enacted now [but] set at zero for 2011 and 2012. After that, it would ramp up gradually… What’s critical is that we lock in higher future costs of carbon today.

Once America’s entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away—and in ways that make the most economic sense… I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment. Jobs follow investment, and we need jobs now.

Blinder recommends using carbon tax revenue to reduce the deficit, but underscores the advantages of a carbon tax over other deficit reduction strategies:

[E]very realistic observer knows that closing our humongous federal budget deficit will require a mix of higher taxes and lower spending as shares of GDP. Forget about value-added taxes and other new levies you may have heard about. A CO2 tax trumps them all… reducing our trade deficit, making our economy more efficient, ameliorating global warming, and showing the world that American capitalism has not lost its edge.

Now that “hiding the price” behind cap-and-trade has crashed politically, Prof. Blinder is urging Congress to try the opposite: show the price—two years ahead of time—and let the expectation of a rising price on CO2 pollution do its job creation and climate work. As for the politics, Blinder drags out the familiar Churchill quote: “You can always count on Americans to do the right thing—after they’ve tried everything else.” It’s a cliche, all right, but it might just apply.


P.S. Check out my other recent post:
Obama’s Clean Electricity Standard: “A Menu Without Prices”

Thursday, October 14, 2010

Democrats' Trouble: They Let Republicans Con Them (Again)

Recently read Bill Galston's insightful (and short) article The Democrats' Legislative Record: Can't Run on It, Can't Run Away ...

Of the five big legislative actions of the past 2 years,

- Financial Reform
- Wall St Bailout
- GM Bailout
- Healthcare "reform"
- Stimulus,

a recent Gallup poll found that just one is popular with a majority -- financial reform. Galston concludes that...
"...a few things are clear:
  • The failure of the stimulus to produce a more hopeful job market has cast a pall over everything else.
  • The public regards the year spent debating health reform as a diversion from what it thinks should have been a sustained focus on the economy.
  • And whatever its economic merits, the failure of the financial rescue to mete out justice to the financial leaders that got us into this mess has outraged the public’s moral sense. Given its composition, the president’s economic team could not have been expected to be especially sensitive to this concern, and it wasn’t. It was the president’s job to ensure that justice was not just done, but seen to be done. The public doesn’t think he did it. [Emphasis added]

The bottom line: the majority can neither run on its record nor run away from it. Its only hope is to convince the American people that giving power to an opposition party in its angriest and least moderate mood would only make things worse."

That's about the most cogent explanation I've seen for the country's current political mood.

Obama started with a stimulus package -- he tried to get Republican votes by throwing away 40% on tax cuts that do little for employment. He garnered no Republican votes in the House and 3 in the Senate which passed it 61 -37. Having spent $787 billion, Obama can't go back for more, even thought the official 11% unemployment rate (really closer to 17%) screams for more. So now the R's are running against the bad economy that they helped assure would stay bad.

When will Dems learn that giving "half a loaf" to the Republicans just means that you only have half a loaf? The Republicans haven't cooperated for a very long time. It's as old as Lucy yanking the football out just as Charlie Brown charges up to kick it... you feel sorry for good 'ol Charlie Brown, but not too sorry for the stupid sap. Too bad the country has to endure yet another fall into a booby trap.

Thursday, December 24, 2009

Report from Copenhagen: Forget carbon targets, just set a price

Copenhagen, 19 December 2009

While the mainstream press lamented the COP15 stalemate, and delegates struggled through the night to spin their impasse over “targets” and “verification” into some semblance of progress, the scene was harmonious, even jubilant at Klimaforum, the “people’s climate summit” near Copenhagen’s main train station Friday night.

Klimaforum negotiations coordinator Mathilde Kaalund-Jørgensen proclaimed to a standing room-only audience in the main auditorium that she had been admitted to the Bella Center (off limits to most non-governmental organizations since Wednesday), only to sit through hours of “very boring” speeches by heads of state, droning on about “urgency” and “binding targets.” The UN granted Mathilde just two minutes at its plenary session to introduce the Klimaforum Declaration. The consensus Declaration calls on industrialized nations to recognize and begin to pay their “climate debt” for the Earth’s accumulated greenhouse gas pollution that is already raining destruction and death disproportionately on developing nations. The Declaration rejects carbon trading, carbon markets and offsets as false solutions and perhaps most importantly, includes a clear call for a transparent carbon tax with revenue returned to the people.

The People's Climate Forum (Klimaforum)

After Mathilde’s remarks, Klimaforum closed with a rollicking, diverse celebration, including latin, kletzmer, waltz and folk music, dance and some good laughs. One musician played an impressive solo on an oboe he’d “up-cycled” from a plastic drinking straw. A speaker warned against cynicism and its evil twin, complacency; both block action and engagement. We are all products of an unbroken chain of millions of successful ancestors, he reminded us, who, at least for a moment, felt warmly about their mates. He pointed out that we each carry within us their accumulated success in adapting, cooperating and surviving. The Danish activists who had organized and obtained funding and space for the Klimaforum handed off the effort to a new team already planning an alternative summit at COP16 in Mexico City next year. “The people must lead” they said, “We will not wait for the so-called leaders.”

An apt ending to a week’s searing contrasts between pallid UN events and the lively and productive Klimaforum. Here’s how it went for me.

For the first week and a half of COP15, I divided my time between UN events at the Bella Center and the Klimaforum. While the plenary sessions were grinding along, the UN side events offered a wealth of information and occasional inspiration: British Columbia Premier Gordon Campbell was congratulated for enacting North America’s first revenue-neutral carbon tax which led in May to his comfortable re-election. The German government detailed ambitious plans for 95% reductions in GHG emissions by 2050, pointedly including a scenario in which carbon capture and sequestration turns out not viable. And at a session on monitoring, reporting and verification (MRV) of GHG emissions, I annoyed representatives of big accounting firms by pointing out that their Herculean (and lucrative) business plans to establish baselines and monitor GHG emissions would be unnecessary under a simple upstream carbon tax.

The dynamic shifted on Wednesday. I had planned to go to Bella Center for two side events in the morning and then head to Klimaforum for an afternoon presentation on carbon taxation. I had obtained the secondary credentials the UN was using to limit the number of attendees. On the Metro to Bella Center, delegates were ordered off at the Sundby station half a mile before the center. We marched through half-a-dozen police checkpoints between dozens of idling vehicles containing barking and snarling police dogs and lines of heavily armed police. From some points, we could see and hear throngs of protestors. They had planned a symbolic meet-up uniting supportive delegates inside Bella Center with those approaching from the outside. I saw a troupe of Latina women dressed as ears of corn nearly run down in mid-dance by a police van charging at full speed. Their corn husks crunched against the van as the women dodged, barely avoiding injury.

At the final checkpoint, in line to enter Bella Center, we were serenaded by Bob Marley tunes from a PA system powered by pedalling activists. I waited with two delegates from India. Their take: “Flopenhagen.” Inside Bella Center, guards scanned my credentials. The computer rejected me, and I was brusquely escorted by police armed with Glock 45’s out to the perimeter where the Marley tunes were still playing. Meanwhile, protestors were massing outside the gates; we could hear police yelling at them.

After taking a last look at the spectacle from Sundby station, I headed back to Klimaforum, where I met Friends of the Earth delegates who had also been locked out of Bella Center. FoE had elected not to participate in the demonstrations and try to work within the UN process instead, but it and many other NGOs were excluded anyway. They felt cheated, but also appeared glad to be on the “right side” of the new line between UN insiders and outsiders.

I arrived early to the Klimaforum presentation, Carbon Taxation – A forgotten climate policy tool, by Global Utmaning (Global Challenge), an independent Swedish think-tank. I was glad to meet presenter Carl von Essen who had contacted the Carbon Tax Center about our common pursuit of transparent, predictable carbon pricing. We chatted for a few minutes; he seemed very pleased to meet a rep from CTC. Their presentation was thorough, clear and well documented, covering the advantages of direct carbon pricing in reducing emissions and encouraging alternatives. Von Essen and his colleagues pointed out in countries where carbon revenue has been used to reduce other taxes, such tax shifting has produced economic benefits.

During the Q&A, I congratulated Global Utmaning on a terrific presentation and noted the excellent attendance (150 people packed the room). I mentioned our concerns with cap-and-trade: markets, traders, offsets, lack of clear price signals… and invited listeners to a discussion that I had arranged in the nearby “meshwork” area. Eight enthusiastic participants engaged for over an hour in a very substantive discussion about carbon pricing, including nitty-gritty details like border tax adjustments and ways to make the net effects of carbon taxes income-progressive. (Carl and his colleagues had headed for the Bella Center to try to make a similar presentation there.)

Last week I also attended two Klimaforum sessions featuring prolific and influential Guardian columnist George Monbiot. He decried governments’ focus on increasing supplies of alternative energy rather than directly reducing demand for fossil fuel energy. He’s especially critical of Canada’s plans to unleash the dirtiest fossil fuel: tar sands. I treated him to tea and we had a few minutes to chat. I told him we agreed on the need to reduce energy demand and mentioned our recommended tool: carbon taxes with revenue recycling. “You’re pushing on an open door,” he said encouragingly. At his session later in the week entitled: “Are you getting the climate agreement you came for?,” Monbiot mentioned climatologist Jim Hansen’s trenchant critique of cap-and-trade and called on me during a comment period. I explained some of the flaws of carbon trading and suggested a direct carbon pricing system. Later, Monbiot picked up the point, explaining that a carbon tax is a way to reduce demand for fossil fuels and put alternatives on a stronger footing. Perhaps he’ll adopt revenue-neutral carbon taxing as a future talking point. (Click here for Monbiot’s bristling valedictory from COP15.)

What does it all mean? Like so many, I came to Copenhagen with a vague hope for a “fair and binding” agreement. I now question whether that was even a good framework to begin with. “Fair” now seems to point toward an endless struggle over allocating rights to emit carbon; and “binding” to incessant legal wrangling over monitoring and enforcement. In contrast, Klimaforum showed that leadership doesn’t have to come from the top, whether the UN or our so-called leaders. And sadly, the UN showed that it won’t.

What’s a better framework? How about one major trading bloc (e.g., the European Union or the U.S.) setting a steadily-increasing carbon tax? That would create pressure for others to follow, as the carbon-taxing countries collected (and kept) the laggards’ carbon taxes for them at the border. In effect, penalize the laggards while offering a bounty of tax revenue for those that join. The only international agreement needed — if at all — would be that every country will enact a carbon fee, along with clarification of World Trade Organization rules on border tax adjustments. Nations don’t even need to agree on the same carbon tax rate, since individual countries’ rates can be harmonized at the border.

Forget targets, verification, offsets, trading… And don’t wait for the UN. Just lead: set a carbon price. The world will follow.

Photo: Flickr / Iklimicingenclik.

Sunday, October 4, 2009

Meditation with an Apple Tree (at Earthstory)

I attended Earthstory near Petersham, Massachusetts last August where I participated in a "deep ecology" workshop inspired by Joanna Macy.

Trishki facilitated a way for each of us to listen to and connect with a tree. She suggested that we go with a question. Mine was something like this: "Why do I feel anxious about the passage of time?" Trishki said, before you choose a tree to sit with, make sure it's willing.

The first tree whose power caught my imagination was a very big, old oak tree. But as I stepped closer, I saw that the tree's base was surrounded by poison ivy. I took that to be a "no." The next tree that caught my imagination was an old, (long unpruned and wild-looking) apple tree whose trunk curved upward in an appealing, reclining way that invited me to sit with my spine, my trunk, aligned with it.

That's what I did. I snuggled until my bottom, back, neck and head were held comfortably by the tree trunk and when I'd done that, I found myself looking at one of its limbs, borne down by many green apples. The tree was holding onto the soil and rocks that my legs and feet felt below, lifting water and nutrients through its trunk behind me, up, out into its fruit, before me. A caress, of sorts.

I listened. My anxiety, it seemed, was about ego. About accomplishing. About proving something. The tree suggested, "Try this: Just be for a while. I will support you. I am strong and healthy, life is abundant here."

So this is my idea of a prayer answered. I have many "gods," alive and around me. They all will speak to me if only I listen.

Thursday, July 2, 2009

Moving Toward a Greener Economy

On July 1, the Washington Post published the following letter to the editor by Greg Ebel, President and CEO of Spectra Energy Corp., which operates natural gas pipelines and gas processing, storage and distribution facilities.
The June 26 editorial "Waxman-Markey" was right to push policymakers toward a better alternative to cap-and-trade emissions policy for addressing climate change. A straightforward, predictable carbon tax would present less room for manipulation while encouraging carbon emissions reductions.

The best carbon tax would be revenue-neutral, attaching a penalty to what we want less of (carbon emissions) while encouraging what we want more of (jobs, technological innovation and efficiency). Such a fee would directly and visibly assess the true costs associated with emissions and drive behavioral change quickly.

A tax doesn't create artificial scarcity, monopolies or rents. Without the profit potential of amassing tradeable carbon permits, industries would less incentive to try to get credits for their favored but non-competitive energy sources. That would be the likely result of the cap-and-trade bill moving through Congress.

What's more, a cap-and-trade system can be gamed. The financial derivatives associated with emissions credits would be traded in a new, hugely complex, multitrillion-dollar carbon market. Instead of turning our environment over to the traders who brought the financial system to its knees, we'd be wise to develop a far simpler system for addressing carbon emissions."