The Double Counting Problem
May 19th, 2009Posted by: Roger Pielke, Jr.
As I showed this morning, the Obama Administration’s new fuel economy standards result in an expected emissions reduction of about 46 million tonnes of carbon dioxide per year. Since the implementation fuel economy policy will have occurred (assuming it does indeed go forward) prior to the passage of Waxman-Markey, shouldn’t this imply that the emissions allowances in the Waxman-Markey bill should be reduced by 46 million tonnes per year? After all these emissions will no longer occur and thus no longer need to be reduced.
If the allowances are not reduced, then the cap and trade program will have 46 million extra allowances per year that might have seemed to be necessary yesterday, before we learned of the fuel economy policy, but are not needed today since those reductions are already “on the books”. And with 46 million extra allowances, the cap and trade program, ironically enough, will allow extra emissions exactly offsetting Obama’s fuel economy program, making its net effect on emissions reductions just about zero.
Cap and trade has all sorts of interesting outcomes. There will be more.
May 19th, 2009 at 3:34 pm
There you go again…trying to find logic in the workings of the US Congress. After all, we are dealing with grown, educated?, people who PRETEND to be completely oblivious to the fact that there has been no warming for over a decade, and that we may even be heading towards another ice age. Given the resources that these people have, you cannot possibly believe that they don’t know of this contradiction. Nevertheless, they are proceeding, full speed ahead, to help finish off what is left of our economy. I don’t know about you, but I cannot think of any words that are harsh enough to describe my disgust for these deceitful hypocrites.
May 19th, 2009 at 4:50 pm
I’m glad you thought of this – I think I’ll be giving my Senator and Representative a call. It’s impossible…
May 19th, 2009 at 8:06 pm
I think the policy logic works something like this:
Without the fuel economy standards, the W-M cap-and-trade system might be expected to yield some reduction of vehicle emissions, but probably much less than 46 MMT/yr. The standards will essentially force a cap-and-trade compliance mechanism on transportation, which will increase vehicle prices but lower carbon trading prices. The reason it make sense to impose this kind of “interference” on the market is that the higher vehicle prices will be more than offset by fuel savings. (If I recall, average vehicle prices are expected to increase by $1300, but fuel savings will make that up in 3.2 years.) So everyone comes out ahead.
Basically, the fuel economy standards are just that: “fuel economy”. Emission reduction is just an ancillary benefit.
The more fundamental question is this: Assuming that the W-M caps are based on some calculus of cost acceptability, then why should we use fuel economy standards to further lower carbon prices? Why not apply them to achieve further emission reductions (at whatever price congress has deemed “acceptable”)? Furthermore, if the new standards have a 3-year payback, why not create incentives for further fuel economy improvements, which would yield greater cost savings as well as more emission reductions?