Economic Issues in a Designing a Global Agreement on Global Warming
William D. Nordhaus
Keynote Address Prepared for
Climate Change: Global Risks, Challenges, and Decisions
Copenhagen, Denmark
March 10-12, 2009
"...Virtually every human activity directly or indirectly involves the combustion of fossil fuels, producing emissions of carbon dioxide into the atmosphere. Emissions of carbon dioxide are externalities, i.e., social consequences that are not accounted for in the market place. They are market failures because people do not pay for the current and future costs of their emissions.
"If economics provides a single bottom line for policy, it is that we need to correct this market failure by ensuring that all people, everywhere, and for the indefinite future face a market price for the use of carbon that reflects the social costs of their activities. Economic participants—thousands of governments, millions of firms, billions of people, all making trillions of decisions each year—need to face realistic prices for the use of carbon if their decisions about consumption, investment, and innovation are to be appropriate.
"...Raising the market price of carbon provides strong incentives to reduce carbon emissions through four mechanisms. First, it provides signals to consumers about what goods and services produce high carbon emissions and should therefore be used more sparingly. Second, it provides signals to producers about which inputs (such as electricity from coal) use more carbon, and which inputs (such as electricity from wind) use less or none. It thereby induces producers to move to low-carbon technologies. Third, high carbon prices provide market signals and financial incentives to inventors and innovators to develop and introduce low-carbon products and processes which can eventually replace the current generation of carbon-intensive technologies. Finally, and most subtle of all, the use of carbon pricing economizes on the information requirements that market participants need to undertake each of these three tasks. Of course, placing a market price will not work magic. There remain many further externalities and market imperfections in energy and other markets. But without a strong price signal, there is simply no hope for making the vast number of decisions in a remotely efficient manner."
"Raising the price of carbon is a necessary condition for implementing carbon policies in a way that will reach the multitude of decisions and decision makers over space, time, nations, and sectors." (Emphasis added.)
Friday, May 29, 2009
Saturday, April 11, 2009
The Six Flaws of Cap/Trade and How to Fix Them
Can and Trade proposals, like the Waxman-Markey discussion draft released last week, generally contain six major flaws. Aw we remedy each of those flaws, we move closer to the "gold standard" -- a revenue-neutral carbon tax.
1) Upstream: Impose the cap (or tax) at the first point of sale. Easiest enforcement, fewest regulated entities, broadest effect. Only advantages to downstream cap or tax is lack of transparency (hide the price). Price signal will be passed down the chain of distribution anyway.
2) 100% Auction. Some cap/trade proposals (Waxman-Markey leaves this unspecified) would give allowances (pollution permits) to utilities and other large polluters in the hope that this would prevent them from passing on costs to consumers. But because those free allowances have value, utilities can be expected to charge market rates for them. This is what happened in the EU when they gave free allowances to utilities. (Like your grandmother leaving you her house. Just because you got it free doesn't mean you rent it for nothing.)
Obama has supported both of the first two fixes -- big improvements over the Lieberman-Warner bill of last year. Recent reports suggest that the Administration is considering concessions on its "100% auction" position.
3) Revenue-Neutral: "Recycle" the proceeds from auctioning carbon permits (or taxes). Rep. Chris VanHollen has a cap and "dividend" bill that would distribute auction revenue equally to households. This eliminates the overall regressive effect of a carbon tax. People who use less than average amounts of fossil fuel would get "dividends" larger than their increased fuel costs. But everyone would feel the price pull to conserve and switch to cleaner energy. NASA climate scientist, Dr. Jim Hansen favors this "dividend" approach because it's very explicit and builds political support for the program. "Tax carbon, pay people" he says.
Another option is to use auction or tax proceeds to reduce payroll taxes. Because payroll taxes are even more regresssive than a carbon tax, the net effect of a carbon tax offset by a reduction in payroll taxes is a progressive tax shift. That is, middle and low income households come out ahead. That's the approach Rep. John Larson's bill uses. Cutting payroll taxes has the added advantage of stimulating employment.
Note that in both instances, the payment isn't linked to carbon use, so the tax encourages everyone to reduce carbon use, but below average carbon users would get more back in either dividend or payroll tax reduction than their increase in fossil fuel costs.
4) No offsets. Offsets are a way for polluters to pay someone else to make reductions. If those reductions come cheaper than making their own reductions, that means we get the same net reductions at lower cost. Offsets can be a way to fund important forestry and agricultural activities that sequester carbon. But Friends of the Earth now opposes all offsets because they are extremely difficult to verify. It's difficult to establish that a project would not have been done without the offset funding. FoE is concerned about the potential for "subprime carbon" offsets infecting the whole market in the same way subprime mortgages infected the world's financial system. Greenpeace criticized Waxman's inclusion of about 1/3 of total allowances as offsets. With access to so many cheap offsets, U.S. firms would have little need or incentive to reduce emissions for decades as cheap offsets siphon off funds needed for investment in carbon reduction infrastructure here.
Even with those four "fixes," there's still a very big problem of price volatility which can discourage needed investment in alternative energy and efficiency upgrades. When investors can't predict their return on investment, they tend to choose other, more predictable investments.
5) Price Floor. Establish a minimum allowance price. If prices go too low, there's no incentive to conserve or invest in alternative energy. That's what's now happening in the EU-- low allowance prices are discouraging green investment. A floor would mean the government would have to buy allowances at that pre-determined minimum price in the event of over-supply. Similar to the way currency is managed. The Fed buys dollars when the exchange rate gets too low. A floor would assure a minimal return on green investment.
6) Price Ceiling. Establish a maximum price to avoid crashing the economy with a price spike, for example if weather or high levels of economic activity drive up carbon permit prices. Government would have to sell additional allowances at that ceiling price. This would eliminate the much touted "emissions certainty" of a cap but would prevent political upheaval in the event of a price spike.
Other ways to manage volatility include banking and borrowing of allowances.
To the extent that the floor and ceiling converge on a single price (high floor, low ceiling) and with the other 4 fixes in place, you have a revenue-neutral carbon tax. In my view, each of those six flaws could prove fatal to a cap/trade system. From what I can tell, the Waxman-Markey proposal carries all six flaws.
1) Upstream: Impose the cap (or tax) at the first point of sale. Easiest enforcement, fewest regulated entities, broadest effect. Only advantages to downstream cap or tax is lack of transparency (hide the price). Price signal will be passed down the chain of distribution anyway.
2) 100% Auction. Some cap/trade proposals (Waxman-Markey leaves this unspecified) would give allowances (pollution permits) to utilities and other large polluters in the hope that this would prevent them from passing on costs to consumers. But because those free allowances have value, utilities can be expected to charge market rates for them. This is what happened in the EU when they gave free allowances to utilities. (Like your grandmother leaving you her house. Just because you got it free doesn't mean you rent it for nothing.)
Obama has supported both of the first two fixes -- big improvements over the Lieberman-Warner bill of last year. Recent reports suggest that the Administration is considering concessions on its "100% auction" position.
3) Revenue-Neutral: "Recycle" the proceeds from auctioning carbon permits (or taxes). Rep. Chris VanHollen has a cap and "dividend" bill that would distribute auction revenue equally to households. This eliminates the overall regressive effect of a carbon tax. People who use less than average amounts of fossil fuel would get "dividends" larger than their increased fuel costs. But everyone would feel the price pull to conserve and switch to cleaner energy. NASA climate scientist, Dr. Jim Hansen favors this "dividend" approach because it's very explicit and builds political support for the program. "Tax carbon, pay people" he says.
Another option is to use auction or tax proceeds to reduce payroll taxes. Because payroll taxes are even more regresssive than a carbon tax, the net effect of a carbon tax offset by a reduction in payroll taxes is a progressive tax shift. That is, middle and low income households come out ahead. That's the approach Rep. John Larson's bill uses. Cutting payroll taxes has the added advantage of stimulating employment.
Note that in both instances, the payment isn't linked to carbon use, so the tax encourages everyone to reduce carbon use, but below average carbon users would get more back in either dividend or payroll tax reduction than their increase in fossil fuel costs.
4) No offsets. Offsets are a way for polluters to pay someone else to make reductions. If those reductions come cheaper than making their own reductions, that means we get the same net reductions at lower cost. Offsets can be a way to fund important forestry and agricultural activities that sequester carbon. But Friends of the Earth now opposes all offsets because they are extremely difficult to verify. It's difficult to establish that a project would not have been done without the offset funding. FoE is concerned about the potential for "subprime carbon" offsets infecting the whole market in the same way subprime mortgages infected the world's financial system. Greenpeace criticized Waxman's inclusion of about 1/3 of total allowances as offsets. With access to so many cheap offsets, U.S. firms would have little need or incentive to reduce emissions for decades as cheap offsets siphon off funds needed for investment in carbon reduction infrastructure here.
Even with those four "fixes," there's still a very big problem of price volatility which can discourage needed investment in alternative energy and efficiency upgrades. When investors can't predict their return on investment, they tend to choose other, more predictable investments.
5) Price Floor. Establish a minimum allowance price. If prices go too low, there's no incentive to conserve or invest in alternative energy. That's what's now happening in the EU-- low allowance prices are discouraging green investment. A floor would mean the government would have to buy allowances at that pre-determined minimum price in the event of over-supply. Similar to the way currency is managed. The Fed buys dollars when the exchange rate gets too low. A floor would assure a minimal return on green investment.
6) Price Ceiling. Establish a maximum price to avoid crashing the economy with a price spike, for example if weather or high levels of economic activity drive up carbon permit prices. Government would have to sell additional allowances at that ceiling price. This would eliminate the much touted "emissions certainty" of a cap but would prevent political upheaval in the event of a price spike.
Other ways to manage volatility include banking and borrowing of allowances.
To the extent that the floor and ceiling converge on a single price (high floor, low ceiling) and with the other 4 fixes in place, you have a revenue-neutral carbon tax. In my view, each of those six flaws could prove fatal to a cap/trade system. From what I can tell, the Waxman-Markey proposal carries all six flaws.
Monday, April 6, 2009
Rep. Inglis Engages Climate Skeptics: Tax CO2, Not Work.
Who'd have expected a Republican from South Carolina to emerge as one of the clearest voices for effective climate policy? After a trip to Antarctica where scientists showed him ice cores that record the jump in CO2 levels now warming the Earth, Congressman Bob Inglis (R-SC) is convinced: "The evidence is compelling: Global Warming is a real, human-caused problem."
Inglis addresses skeptics with a science experiment:
“This is an egg... from the grocery store that’s been sitting there in some vinegar. Vinegar, as you remember from high school science, is an acid, and when it encounters the calcium on this egg, the calcium gets dissolved by the acid of the vinegar. This is essentially the problem with carbon dioxide levels rising in the atmosphere and the ocean being a sink for that carbon dioxide.
“...CO2 levels in the atmosphere are causing the ocean to become more acidic, and potentially dissolve the shells of the calcium based plankton. We would open a hole in the bottom of the food chain, and the result would be a very serious impact in human life on this planet.
“Unlike the models which really are very complicated, this is really a very simple chemical equation, and it will happen any time you have calcium coming in contact with an acid. So it’s more certain and something that therefore should cause us to act.
Inglis points out that we can take action without hurting ourselves. Now, we dump CO2 into the air as a free good. If we price it, and use the money to reduce other taxes we can gain in three ways. Less pollution, more jobs and better national security.
He explains, "Start with a tax reduction, that’s something conservatives can warm to, and make it a payroll tax reduction, something liberals are excited about... Reduce the taxes on payroll, and then in equal amount, apply a tax on carbon dioxide, so there’s no additional take to the government. There’s no tax increase there, it’s reducing one tax, and imposing a tax on something different. It’s reducing taxes on something we want more of which is Labor, Industry and income, and imposing a tax on something we want less of, which is carbon dioxide.
“If we do that, and then apply that mixture to imported goods as well as domestically produced goods, so we’re not simply exporting jobs and exporting the problem, what we can do is change the economics, so that incumbent technologies no longer have a free good in the air, and a free pass on the national security implications of that product. If you internalize those externals, attach those external costs to the products - to the fossil fuels - then the competing technology has a chance to win.
“[W]e can do for energy what Microsoft and Apple did for the PC and the internet. We can break through to a future that’s not dependent on fossil fuels, and that uses newer, cleaner, job-creating fuels that also improve the national security of the United States. It really is the triple play of this American century... improve the national security of the United States, create jobs and clean up the air."
See the full report at Congressman Bob Inglis: How to Engage Republicans, even Skeptics, on Carbon Legislation and Inglis' NY Times op-ed with economist Arthur Laffer, An Emissions Plan Conservatives Could Warm To.
Inglis isn't the only one who's getting the idea. The House Ways & Means Committee is catching on, too: see Ways & Means Weighs Bypassing Trading, Going Straight for Carbon Price.
Inglis addresses skeptics with a science experiment:
“This is an egg... from the grocery store that’s been sitting there in some vinegar. Vinegar, as you remember from high school science, is an acid, and when it encounters the calcium on this egg, the calcium gets dissolved by the acid of the vinegar. This is essentially the problem with carbon dioxide levels rising in the atmosphere and the ocean being a sink for that carbon dioxide.
“...CO2 levels in the atmosphere are causing the ocean to become more acidic, and potentially dissolve the shells of the calcium based plankton. We would open a hole in the bottom of the food chain, and the result would be a very serious impact in human life on this planet.
“Unlike the models which really are very complicated, this is really a very simple chemical equation, and it will happen any time you have calcium coming in contact with an acid. So it’s more certain and something that therefore should cause us to act.
Inglis points out that we can take action without hurting ourselves. Now, we dump CO2 into the air as a free good. If we price it, and use the money to reduce other taxes we can gain in three ways. Less pollution, more jobs and better national security.
He explains, "Start with a tax reduction, that’s something conservatives can warm to, and make it a payroll tax reduction, something liberals are excited about... Reduce the taxes on payroll, and then in equal amount, apply a tax on carbon dioxide, so there’s no additional take to the government. There’s no tax increase there, it’s reducing one tax, and imposing a tax on something different. It’s reducing taxes on something we want more of which is Labor, Industry and income, and imposing a tax on something we want less of, which is carbon dioxide.
“If we do that, and then apply that mixture to imported goods as well as domestically produced goods, so we’re not simply exporting jobs and exporting the problem, what we can do is change the economics, so that incumbent technologies no longer have a free good in the air, and a free pass on the national security implications of that product. If you internalize those externals, attach those external costs to the products - to the fossil fuels - then the competing technology has a chance to win.
“[W]e can do for energy what Microsoft and Apple did for the PC and the internet. We can break through to a future that’s not dependent on fossil fuels, and that uses newer, cleaner, job-creating fuels that also improve the national security of the United States. It really is the triple play of this American century... improve the national security of the United States, create jobs and clean up the air."
See the full report at Congressman Bob Inglis: How to Engage Republicans, even Skeptics, on Carbon Legislation and Inglis' NY Times op-ed with economist Arthur Laffer, An Emissions Plan Conservatives Could Warm To.
Inglis isn't the only one who's getting the idea. The House Ways & Means Committee is catching on, too: see Ways & Means Weighs Bypassing Trading, Going Straight for Carbon Price.
Thursday, February 26, 2009
Dr. Hansen Warns Congress: Climate Chaos Ahead! Tax Carbon to Spur Clean Energy Revolution
Yesterday, I cycled over to the Longworth House Office building to meet my former EPA colleague, Julie Simpson, who's on a fellowship to Rep. Moran's office focusing on environmental issues. Together, we heard NASA's lead climate scientist Dr. James Hansen deliver fearsome news: our burning of fossil fuel is pushing Earth's climate into instablilty. As I reported at the Carbon Tax Center site, Dr. Hansen strongly advocated a gradually-increasing revenue-neutral carbon tax to spur a clean technology revolution. He recommends that all carbon tax revenue be directly distributed in equal "dividends" to individuals.
After the hearing, Julie and I headed downstairs for lunch, and were thrilled to find ourselves in line with Dr. Hansen and his sister. After asking, we joined them for lunch. Quite an honor to "break bread" with the world's leading climate scientist who's repeatedly stood up to those seeking to ignore or silence him. I asked Dr. Hansen's opinion of "clean coal," sharing my concerns about the vast additional coal energy needed to separate CO2 from hot flue gas and sequester it deep in the ground. Dr. Hansen is a quiet, calm professorial type, but his answer was forceful and unequivocal: "There is no such thing as clean coal, and there never will be."
Hansen will lead a peaceful protest this Monday at the U.S. Capitol power plant to call on Congress to phase out coal power, a leading cause of global warming. See Capitol Climate Action for his short video calling for action.
Staff on Capitol Hill are working long hours on a whole range of emergencies, including climate legislation. Many members of Congress are finally taking the climate threat seriously. But many still deny or minimize the crisis, and many others still seem to think "cap-and-trade" with its alluring name and hiding of the price, will magically do the trick.
Much more work ahead.
After the hearing, Julie and I headed downstairs for lunch, and were thrilled to find ourselves in line with Dr. Hansen and his sister. After asking, we joined them for lunch. Quite an honor to "break bread" with the world's leading climate scientist who's repeatedly stood up to those seeking to ignore or silence him. I asked Dr. Hansen's opinion of "clean coal," sharing my concerns about the vast additional coal energy needed to separate CO2 from hot flue gas and sequester it deep in the ground. Dr. Hansen is a quiet, calm professorial type, but his answer was forceful and unequivocal: "There is no such thing as clean coal, and there never will be."
Hansen will lead a peaceful protest this Monday at the U.S. Capitol power plant to call on Congress to phase out coal power, a leading cause of global warming. See Capitol Climate Action for his short video calling for action.
Staff on Capitol Hill are working long hours on a whole range of emergencies, including climate legislation. Many members of Congress are finally taking the climate threat seriously. But many still deny or minimize the crisis, and many others still seem to think "cap-and-trade" with its alluring name and hiding of the price, will magically do the trick.
Much more work ahead.
Thursday, February 19, 2009
Climate for Change in Washington, DC (or "Elasticity of Thermal Underwear")
Grey, chilly February morning. Sparrows, crows at my feeder -- pushing, squawking, scolding for perches above the grain trough. Competition eclipses nutrition. Or is it just sport? I recognize the game.
Slept well: cool air, warm blankets. Heat's off in my DC row house-- buffeted by a foot of attic insulation, neighbors, thick walls. Thermal underwear tops my list of global warming reduction technologies. Pays for itself daily. Feeling bouyed, reflective after two days of meetings between carbon tax coalition and Capitol Hill staff.
Our coalition is growing, bonding: Carbon Tax Center, Climate Crisis Coalition, Friends of the Earth, Friends Committee on National Legislation, Get America Working, Climate Policy Center. Dedicated, passionate local activists from adjacent Maryland and Virginia districts.
"Revenue-Neutral Carbon Tax" seems less quixotic now. Smart, urbane Hill staff ask incisive questions about pricing carbon emisssions, adjusting rates to meet scientific standards. We, carbon tax advocates are no longer the "lepers" of the environmental movement. Questions are about "how", not "why" to price CO2 emissions. About rates, revenue-recycling, payroll tax reductions, price elasticity, expectations, energy efficiency and technology substitution. We're way behind, the hour is very late, but the "denier in chief" has left town. Not a second too soon.
Debated "tax vs. cap" on Progressive Democrats of America's climate activists' conference call last evening. About 50 participants. Thoughtful questions. The word is getting out: Cap-and-trade is a hidden, volatile, regressive tax to fund favorite projects including the thermodynamically questionable "carbon capture and sequestration" a.k.a., "clean coal."
A carbon tax can be simple, quickly-implemented and fair. Most importantly, transparent prices are effective. Can't say who "won" the debate. My rival, NRDC's Dan Lashof is no lightweight. Listeners' questions made me think we're toe to toe with what was presumptive winner. Complex stuff. Someone asked how cap-and-trade can be internationalized. My answer: It's a nightmare. And India and China won't do it. Carbon tax is straightforward -- we tax other countries' goods on import. If they enact their own carbon taxes, they keep the revenue. India and China might do that.
Long list of follow-up items. Call my sweetie. Take clothes off the line. Pay the electric bill. Global warming, Congress, prices, clothespins. Advocate exponentially, act arithmetically?
Slept well: cool air, warm blankets. Heat's off in my DC row house-- buffeted by a foot of attic insulation, neighbors, thick walls. Thermal underwear tops my list of global warming reduction technologies. Pays for itself daily. Feeling bouyed, reflective after two days of meetings between carbon tax coalition and Capitol Hill staff.
Our coalition is growing, bonding: Carbon Tax Center, Climate Crisis Coalition, Friends of the Earth, Friends Committee on National Legislation, Get America Working, Climate Policy Center. Dedicated, passionate local activists from adjacent Maryland and Virginia districts.
"Revenue-Neutral Carbon Tax" seems less quixotic now. Smart, urbane Hill staff ask incisive questions about pricing carbon emisssions, adjusting rates to meet scientific standards. We, carbon tax advocates are no longer the "lepers" of the environmental movement. Questions are about "how", not "why" to price CO2 emissions. About rates, revenue-recycling, payroll tax reductions, price elasticity, expectations, energy efficiency and technology substitution. We're way behind, the hour is very late, but the "denier in chief" has left town. Not a second too soon.
Debated "tax vs. cap" on Progressive Democrats of America's climate activists' conference call last evening. About 50 participants. Thoughtful questions. The word is getting out: Cap-and-trade is a hidden, volatile, regressive tax to fund favorite projects including the thermodynamically questionable "carbon capture and sequestration" a.k.a., "clean coal."
A carbon tax can be simple, quickly-implemented and fair. Most importantly, transparent prices are effective. Can't say who "won" the debate. My rival, NRDC's Dan Lashof is no lightweight. Listeners' questions made me think we're toe to toe with what was presumptive winner. Complex stuff. Someone asked how cap-and-trade can be internationalized. My answer: It's a nightmare. And India and China won't do it. Carbon tax is straightforward -- we tax other countries' goods on import. If they enact their own carbon taxes, they keep the revenue. India and China might do that.
Long list of follow-up items. Call my sweetie. Take clothes off the line. Pay the electric bill. Global warming, Congress, prices, clothespins. Advocate exponentially, act arithmetically?
Thursday, October 9, 2008
Ingrid Jackson asks candidates THE CLIMATE QUESTION
EGROM FALCUOR!
Bravo! to Ingrid Jackson for speaking truth to power at Tuesday's Presidential "debate." After pointing out how fast Congress moved in the face of an economic crisis, Ingrid asked the candidates what they would do in their first two years to address the climate crisis and create green jobs. Interviewed afterwards, she said neither candidate responded with the sense of urgency she feels. Ingrid, I'm with you!
Obama promotes "clean" coal, technically "carbon capture and sequestration" or CCS. The idea: "capture" the CO2 released from burning coal, then pump it into empty gas formations deep in the Earth where we hope it will stay-- forever. If these processes are even possible on a large scale, we know from thermodynamic calculations that they'll require vast amounts of energy. (Think about separating gases and about pumping them long distances and deep into the Earth or the oceans.) Estimates by the Nobel-prize winning IPCC suggest that CCS would require 30 - 60% more energy than otherwise would be needed to make electricity. The additional energy and capital cost of CCS equipment would push electricity costs up roughly 80 - 120%. But right now, wind power is available to consumers in many states for about 15% more than dirty coal power. Here in DC, it's called "Power Choice." So wind is already cheaper than "clean" coal is expected to be for electricity generation. And the cost of wind energy should decline as we scale up. Conversely, capturing and sequestering carbon from "clean" coal is likely to become more costly (both in dollars and energy) as the easy and close places to store CO2 underground are filled up and we have to pump waste CO2 further and deeper.
McCain advocates drilling and nuclear. (Is nuclear better than Bush, Palin and Homer Simpson's "Nuke-you-lar"? Sorry, couldn't resist.) Nobody would operate a nuclear power plant in the US without insurance. And no insurance company writes policies to cover the huge damages of a nuclear disaster, at least not at prices utilities could profitably afford. So Congress committed our tax dollars to insure the owners of nukes. The nuclear power industry would not exist if it had to buy adequate insurance at market prices. The risk is too vast. If the insurance companies won't cover nuclear, why are we willing to take such risks? Not convinced? Read about the Chernobyl nuclear disaster.
Hats off to Ingrid. Too bad our choice is between a) Obama's "clean coal": mountaintop removal, toxic air and water with staggering costs and b) McCain's nuclear: uranium mining and processing, radioactive air and water, with the risk of accidents like Chernobyl and the intractable problem of nuclear waste disposal for a few million years. How about c) wind, solar , geothermal and conservation, please? How about pricing carbon pollution to push everyone -- the entire energy market -- towards conservation, renewables and yes, Ingrid, green jobs?
Why do candidates avoid mentioning conservation? The U.S. wastes about half the fuel we burn. What about insulating our houses, turning off lights, turning down thermostats and avoiding aggressive driving? What about flying a lot less? (A 4,000 mile round-trip produces approximately eight tons in CO2-equivalent gases per passenger. Roughly the same amount of CO2 produced yearly, per person, to power the average American car and supply heat and electricity for the average home.)
When will major party candidates level with us? As environmental scientist, ethicist and population activist Paul Erlich points out, it's time to re-think what it means to have a good life. Can't we be happier with more love, more learning, more community, and less waste, less stuff, less travel, less of everything we've been told to by advertising to buy. And what about the old idea we should only buy what we have money for?
Ingrid may be too young to have heard John Lennon's song "Gimme Some Truth" but that's what she was very earnestly asking for. We didn't hear much truth about the climate crisis in the debate, but maybe her question will remind us to keep asking. We're running out of time.
Bravo! to Ingrid Jackson for speaking truth to power at Tuesday's Presidential "debate." After pointing out how fast Congress moved in the face of an economic crisis, Ingrid asked the candidates what they would do in their first two years to address the climate crisis and create green jobs. Interviewed afterwards, she said neither candidate responded with the sense of urgency she feels. Ingrid, I'm with you!
Obama promotes "clean" coal, technically "carbon capture and sequestration" or CCS. The idea: "capture" the CO2 released from burning coal, then pump it into empty gas formations deep in the Earth where we hope it will stay-- forever. If these processes are even possible on a large scale, we know from thermodynamic calculations that they'll require vast amounts of energy. (Think about separating gases and about pumping them long distances and deep into the Earth or the oceans.) Estimates by the Nobel-prize winning IPCC suggest that CCS would require 30 - 60% more energy than otherwise would be needed to make electricity. The additional energy and capital cost of CCS equipment would push electricity costs up roughly 80 - 120%. But right now, wind power is available to consumers in many states for about 15% more than dirty coal power. Here in DC, it's called "Power Choice." So wind is already cheaper than "clean" coal is expected to be for electricity generation. And the cost of wind energy should decline as we scale up. Conversely, capturing and sequestering carbon from "clean" coal is likely to become more costly (both in dollars and energy) as the easy and close places to store CO2 underground are filled up and we have to pump waste CO2 further and deeper.
McCain advocates drilling and nuclear. (Is nuclear better than Bush, Palin and Homer Simpson's "Nuke-you-lar"? Sorry, couldn't resist.) Nobody would operate a nuclear power plant in the US without insurance. And no insurance company writes policies to cover the huge damages of a nuclear disaster, at least not at prices utilities could profitably afford. So Congress committed our tax dollars to insure the owners of nukes. The nuclear power industry would not exist if it had to buy adequate insurance at market prices. The risk is too vast. If the insurance companies won't cover nuclear, why are we willing to take such risks? Not convinced? Read about the Chernobyl nuclear disaster.
Hats off to Ingrid. Too bad our choice is between a) Obama's "clean coal": mountaintop removal, toxic air and water with staggering costs and b) McCain's nuclear: uranium mining and processing, radioactive air and water, with the risk of accidents like Chernobyl and the intractable problem of nuclear waste disposal for a few million years. How about c) wind, solar , geothermal and conservation, please? How about pricing carbon pollution to push everyone -- the entire energy market -- towards conservation, renewables and yes, Ingrid, green jobs?
Why do candidates avoid mentioning conservation? The U.S. wastes about half the fuel we burn. What about insulating our houses, turning off lights, turning down thermostats and avoiding aggressive driving? What about flying a lot less? (A 4,000 mile round-trip produces approximately eight tons in CO2-equivalent gases per passenger. Roughly the same amount of CO2 produced yearly, per person, to power the average American car and supply heat and electricity for the average home.)
When will major party candidates level with us? As environmental scientist, ethicist and population activist Paul Erlich points out, it's time to re-think what it means to have a good life. Can't we be happier with more love, more learning, more community, and less waste, less stuff, less travel, less of everything we've been told to by advertising to buy. And what about the old idea we should only buy what we have money for?
Ingrid may be too young to have heard John Lennon's song "Gimme Some Truth" but that's what she was very earnestly asking for. We didn't hear much truth about the climate crisis in the debate, but maybe her question will remind us to keep asking. We're running out of time.
Tuesday, September 23, 2008
"Fierce Urgency" of Climate Crisis compels Carbon Tax
Effective climate policy finally got a hearing on Capitol Hill last week.
The "fierce urgency" of the climate crisis compels effective action, warned Rep. John Larson (D-CT) at Thursday’s House Ways and Means Committee’s packed hearing on climate change revenue measures. Hurricane Ike’s devastation of coastal Texas imparted deeper meaning to Martin Luther King’s phrase. Witnesses pointed to storm-related damage as one of many ways in which failure to reduce the greenhouse gas emissions that drive global warming will destroy ecosystems and economies alike.
New York Mayor Bloomberg kicked off a day of testimony calling for revenue-neutral carbon tax as the most effective and transparent way to "use capitalism" to create the incentives for everyone to reduce fossil fuel use and for development and implementation of low-carbon alternatives.
Earlier in the week, a panel of politically-diverse economists recommended distributing revenue from either a cap-and-trade auction or a carbon tax to individuals rather than doling out the funds (or equivalent in pollution permits) to energy firms.
The focus on effective policy rather than the tired refrain of denial and delay felt refreshing, even inspiring. Expert panels discussed potentially effective measures like a carbon tax with a direct dividend; the discussion has moved beyond clumsy and ineffectual cap-and-trade measures that have dominated for years and which have produced no greenhouse gas reductions in Europe.
The deniers and delayers got their appearance; Heritage Foundation's David Kreutzer asserted that nothing the U.S. could do would matter and that climate legislation is too costly. Maybe that's progress; industry shills seem to have moved from denying the climate crisis to quibbling about the cost. (Gargantuan storms like Katrina and Ike are hard to ignore so they're changing the subject to money.)
The conservative / industry line on global warming closely tracks their half-century old script on smoking and lung cancer. No surprise, it's the same crowd. Their game plan:
1) Deny. "Smoking doesn't cause cancer." ("Global warming is a hoax.")
2) Generate controversy: "You can't prove smoking causes lung cancer." ("You can't prove global warming is real.")
3) Blame the victim. "It's your fault, there are warnings on the label — why did you start? You could have quit." ("It's your fault, you're addicted to oil, you should be "energy independent".)
4) Assert that it's impossibile to do anything. "Banning or restricting smoking wouldn't matter, people would smoke anyway." ("Pricing or regulating greenhouse gas emissions and developing alternatives won't matter, the Chinese and Indians will burn coal anyway.")
5) Argue cost-benefit; assert that it's too expensive to do anything. "Tobacco is very profitable. Regulation costs more than our profits and would put poor tobacco farmers out of business. ("Fossil fuels are necessary for economic growth, serious action to reduce their use would destroy our economy and hurt poor people.")
6) Bankruptcy. (Coming attractions.) "We're bankrupt and can't pay for the harm we've caused." (Bankruptcy is depolyed only after executives and the savvy "insider" shareholders have taken their money out of the company or out of the country. It's standard strategy in Superfund cases -- the polluters delay while they move their assests, then leave taxpayers stuck with the cleanup bills.)
Science will prevail, but climate change grows exponentially and irreversibly, so if industry shills like Heritage can stall for a few more years, it will be too late to save much of civilization or Earth's biodiversity.
Socrates said "There is no evil but ignorance." Heritage is doing its best to keep us in the dark. The Committee gave them their say, but maybe their script is finally wearing out.
It's not a question of whether the U.S. acts alone, it's whether the world's largest economy takes the lead in pricing carbon emissions. As Dr. Frank Ackerman of the Stockholm Environment Institute put it, “If the U.S. leads, the world will follow, but if we don’t, the worst consequences” can be expected.
The "fierce urgency" of the climate crisis compels effective action, warned Rep. John Larson (D-CT) at Thursday’s House Ways and Means Committee’s packed hearing on climate change revenue measures. Hurricane Ike’s devastation of coastal Texas imparted deeper meaning to Martin Luther King’s phrase. Witnesses pointed to storm-related damage as one of many ways in which failure to reduce the greenhouse gas emissions that drive global warming will destroy ecosystems and economies alike.
New York Mayor Bloomberg kicked off a day of testimony calling for revenue-neutral carbon tax as the most effective and transparent way to "use capitalism" to create the incentives for everyone to reduce fossil fuel use and for development and implementation of low-carbon alternatives.
Earlier in the week, a panel of politically-diverse economists recommended distributing revenue from either a cap-and-trade auction or a carbon tax to individuals rather than doling out the funds (or equivalent in pollution permits) to energy firms.
The focus on effective policy rather than the tired refrain of denial and delay felt refreshing, even inspiring. Expert panels discussed potentially effective measures like a carbon tax with a direct dividend; the discussion has moved beyond clumsy and ineffectual cap-and-trade measures that have dominated for years and which have produced no greenhouse gas reductions in Europe.
The deniers and delayers got their appearance; Heritage Foundation's David Kreutzer asserted that nothing the U.S. could do would matter and that climate legislation is too costly. Maybe that's progress; industry shills seem to have moved from denying the climate crisis to quibbling about the cost. (Gargantuan storms like Katrina and Ike are hard to ignore so they're changing the subject to money.)
The conservative / industry line on global warming closely tracks their half-century old script on smoking and lung cancer. No surprise, it's the same crowd. Their game plan:
1) Deny. "Smoking doesn't cause cancer." ("Global warming is a hoax.")
2) Generate controversy: "You can't prove smoking causes lung cancer." ("You can't prove global warming is real.")
3) Blame the victim. "It's your fault, there are warnings on the label — why did you start? You could have quit." ("It's your fault, you're addicted to oil, you should be "energy independent".)
4) Assert that it's impossibile to do anything. "Banning or restricting smoking wouldn't matter, people would smoke anyway." ("Pricing or regulating greenhouse gas emissions and developing alternatives won't matter, the Chinese and Indians will burn coal anyway.")
5) Argue cost-benefit; assert that it's too expensive to do anything. "Tobacco is very profitable. Regulation costs more than our profits and would put poor tobacco farmers out of business. ("Fossil fuels are necessary for economic growth, serious action to reduce their use would destroy our economy and hurt poor people.")
6) Bankruptcy. (Coming attractions.) "We're bankrupt and can't pay for the harm we've caused." (Bankruptcy is depolyed only after executives and the savvy "insider" shareholders have taken their money out of the company or out of the country. It's standard strategy in Superfund cases -- the polluters delay while they move their assests, then leave taxpayers stuck with the cleanup bills.)
Science will prevail, but climate change grows exponentially and irreversibly, so if industry shills like Heritage can stall for a few more years, it will be too late to save much of civilization or Earth's biodiversity.
Socrates said "There is no evil but ignorance." Heritage is doing its best to keep us in the dark. The Committee gave them their say, but maybe their script is finally wearing out.
It's not a question of whether the U.S. acts alone, it's whether the world's largest economy takes the lead in pricing carbon emissions. As Dr. Frank Ackerman of the Stockholm Environment Institute put it, “If the U.S. leads, the world will follow, but if we don’t, the worst consequences” can be expected.
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