James Pethokoukis

Politics and policy from inside Washington

Copenhagen a eulogy for US cap-and-trade

Dec 22, 2009 14:44 UTC

I have been saying for some time that I do not think Congress is going to pass cap-and-trade in 2010, or probably ever. (I think the threat of EPA action is empty given the flurry of litigation that would surely follow.) My Reuters news pals seem to agree somewhat and paint an alternate scenario:

1) But the Copenhagen Accord did not include emissions targets. This will make it difficult for lawmakers to argue that the United States should have a cap while China, the world’s top emitter of greenhouse gases, and other big polluters are not legally required to act on climate. “We were previously of the view that cap and trade was becoming an increasingly hard sell in the U.S.,” said Paul McConnell, an energy markets analyst at Wood Mackenzie. “But I think the events in Copenhagen have probably made that even more difficult.”

2) Alternatives to cap and trade will emerge, such as mandates and incentives for increasing levels of energy from low-carbon sources like solar, wind and nuclear.

3) The healthcare debate has delayed U.S. Senate action on climate, and financial industry reform legislation will likely push back the cap-and-trade debate into early next year, analysts said. The longer the delay, the harder it will be to convince undecided Democratic senators to vote for a cap-and-trade plan. “For a lot of moderate Democrats who are up for reelection, they don’t want to be seen as closely attached to this because of the concerns about job losses and higher energy prices,” said Divya Reddy, an analyst at the Eurasia Group in Washington.

4) Kerry said in Copenhagen last week that the Senate bill may not contain cap and trade, and other options are being discussed. So-called “Plan B” alternatives to cap and trade could include carbon taxes and national mandates for power generators to produce higher levelof cleaner energy sources, Reddy said. A new climate strategy could also include elements of a “cap and dividend” plan recently introduced by two senators. That aims to cut Wall Street’s role in emissions markets by auctioning permits to polluters and delivering most of the proceeds to the general public. But Kevin Book, an analyst at Clearview Energy Partners, LLC, said many senators and many companies, like oil major ConocoPhillips and power generator Duke Energy Corp, are already sold on cap and trade. Some power companies that have invested in low-carbon electricity generation feel they could compete better against companies that burn mostly coal under a cap-and-trade regime.

COMMENT

No carbon bill of any kind will be passed by congress and EPA will not attempt to enforce carbon limits. That would be political suicide for Obama. He’s stupid, but he’s not that stupid.

Posted by Bill Boudreaux | Report as abusive

US Chamber of Commerce and climate change

Oct 20, 2009 13:33 UTC

OK, here is the USCOC’s basic position on climate change from recent congressional testimony:

The Chamber supports the goals of the Committee to lower concentrations of greenhouse gases in the atmosphere, become more energy efficient, and incentivize “green” energy technologies. The Chamber does not categorically support or oppose approaches such as cap and trade or carbon tax, but rather measures all climate legislation on a bill-by-bill basis against five core principles: any legislation or regulation introduced must (1) preserve American jobs and competitiveness of U.S. industry; (2) provide an international solution that includes developing nations; (3) promote accelerated development and deployment of greenhouse gas reduction technology; (4) reduce barriers to the development of climate-friendly energy sources; and (5) promote energy conservation and efficiency.

Me: One reason so many news organizations got suckered by yesterday’s phony press release is that it seemed pretty plausible that the Chamber would come out in favor of a carbon tax.  Plenty of pro-market folks have come out in favor of such a plan, especially if it was revenue neutral, perhaps offsetting payroll taxes.

Why strong climate change legislation is dead

Sep 11, 2009 14:44 UTC

My new favorite blog, New Geography, does a fine piece of analysis that reveals why 80 percent cuts in climate change emissions are a fantasy without a radical technology breakthrough:

According to a recent poll by Rasmussen, slightly more than one-third of respondents (who provided an answer) are willing to spend $100 or more per year to reduce greenhouse gas emissions. About 2 percent would spend more than $1,000. … If we do a rough, weighted average of the Rasmussen numbers, it appears that Americans are willing to spend about $100 per household per year.  … At $100 per household, it appears that Americans are willing to spend on the order of $12 billion annually.

At $100 per household, Americans are prepared to pay just $2 per greenhouse gas ton removed. All of this is in a policy context in which the United Nations Intergovernmental Panel on Climate Change suggests that $20-$50 per greenhouse gas ton is the maximum that should be spent per ton. The often quoted McKinsey/Conference Board study says that huge reductions in greenhouse gas emissions can be achieved at $50 or less, with an average cost per ton of $17. International markets now value a ton of greenhouse gas emissions at around $20. At $2 per ton, American households are simply not on the same “planet” with the radical climate change lobby as to how much they wish to spend on reducing greenhouse gases.

COMMENT

Sorry, Drewbie, I gave you half an answer. It takes energy, energy to sort the CO2 out from the N2, O2, etc. in the atmosphere, and then, lucky you, you’ve got a load of CO2 on your hands. You could pump it underground, if you trust that idea. It uses a lot less energy to just not put it in the atmosphere in the first place. And as for plants, give them some water and fertilizer and you’re turning atmospheric CO2 into solid carbon compounds with solar energy, with little or no cost for equipment.You might be interested to know that there’s a company with a process for using electric power to turn CO2 into gasoline. They can take the CO2 from the atmosphere, but they had power plant exhaust in mind to make it cheaper. They were talking about doing this with wind power at night, when they felt there would be a great excess of wind power. But putting the wind power directly into an electric vehicle battery has got to be more efficient. And of course if you burn the gasoline, the carbon goes back into the atmosphere. The essential point is again that this process takes energy.

Posted by Pete Cann | Report as abusive

The way forward on climate change …

Sep 7, 2009 15:50 UTC

This, from Tom Barnett amplifying on a Bjorn Lomborg op-ed, seems like a policy that could actually work in the real world. Reducing economic growth is a sure loser:

Instead of CO2 cuts, why not focus on adaptation? Why cut GDP growth over the century by 12-13% when the costs of adaptation will be much lower (“the majority of economic models show that unconstrained global warming would cost rich nations around 2% of GDP and poor countries around 5% by 2100.”). And Lomborg argues that putting serious technology efforts online as part of this adaptation effort can actually make it a winning proposition.

Meanwhile, “a high carbon tax will simply hurt growth if alternative technology is not ready, making us all worse off.”

In short, spend (on technology) to save, not cut (emissions).

COMMENT

With reference to the above article, the short article below explains the scenario in the Asian Climate Change context.

“Green Energy : A Paradigm Shift in Sustainability”

Green energy is not something new since the discovery of the depletion of the ozone layer and global climate change as a direct impact of green house effect on a worldwide scale.

Various international conventions/agreements on the reduction of green house effect will remain forever on glossy papers if countries around the world are not serious in committing themselves towards real implementation within national boundary.

Political will power, or even real politics for that matter alone, is insufficient in promoting green energy as attested by the economics of reality in both developed and developing countries.

A paradigm shift is needed in forging a new instrument of international co-operation within the wider framework of Free Trade Agreements and joint conviction shared by stakeholders such as the OECD, major banking bodies(i.e. IMF, World bank, ADB) and leading industrial/corporate entities.

……………………………….
Jeong Chun-phuoc
lecturer-in-law
[an an advocate of Competitive & Strategic Environmenting]
Jeongphu@yahoo.com

Posted by JEONG CHUN PHUOC | Report as abusive

Republicans, the carbon tax and the 2010 election

Aug 26, 2009 18:15 UTC

My pal and superbrain Jon Henke got all excited for a minute when he thought that U.S. Senate candidate in Connecticut Rob Simmons was in favor of a carbon tax where the revenue would be used to eliminate payroll taxes. But then the Simmons campaign clarified the matter:

Never mind.  See the comment section at the news article, where the Simmons campaign manager says “Rob Simmons does not support a carbon tax. He does believe that supporters of “cap and trade” should be more straightforward about their intentions and propose a carbon tax if that is what they desire so the American people can make a clear judgment about the consequences of such a policy – a policy Rob opposes.”

Me:  GOP congressmen Jeff Flake and Bob Inglis have come out in favor of just such a proposal, only to get hammered by anti-tax groups in private.  But as one Republican economist told me recently, GOPers need to get into the game on climate change. And certainly this is one way of doing it that looks proactive, besides either a) denying climate change or b) calling for greater technological research. Here is a bit more from Henke:

We could eliminate the payroll tax and take this environmental issue off the table for Democrats. But no, Republicans are content to keep the payroll tax and settle for complaining about Democrats.

COMMENT

The Republican economist is right: a revenue-neutral carbon tax could and should be supported by a preponderance of Republicans. It’s a shame, really, that many seem to choose political expediency over good public policy.

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