Emissions Targets

March 30th, 2009

Posted by: admin

I’m sitting in the National Academies Summit on America’s Climate Choices, where Fred Krupp, of Environmental Defense, has just made an interesting statement. He is arguing that it’s not about setting the price (P) of carbon, it’s about determining the quantity (Q) of carbon we should allow in the atmosphere. He says that he does not believe any air pollution problem has ever been solved without setting a target for Q – the desired level of that pollutant in the atmosphere.

I have no expertise on this particular claim, but am skeptical. Personally, wrt climate change I think it’s about neither Price, nor Quantity, but about energy innovation, but that’s another debate. I’d be interested to hear from anyone who has experiences with case studies along these lines. What do you think about the targets claim?

16 Responses to “Emissions Targets”

  1. bend Says:

    I don’t have expertise on this myself, but it seems like a distinction without a difference. Price and quantity are strongly correlated. Define a price above the current one and the quantity goes down. Define a quantity lower than the current one and the price goes up. Of course, this simple model does not account for nonidealities (i.e. if you restrict the quantity that you allow, do you create a black market for charcoal and methane?).
    In either case, it is the increased price that leads to energy innovation and the reduced quantity that ameliorates AGW. So it’s about both… or neither… or whatever.

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  3. Ryan Meyer Says:

    thanks bend,
    I agree that it’s all interrelated.
    I’m more interested in the historical, empirical claim here (the one in italics above). Is there a case of dealing effectively with an air pollution problem that did not involve setting a target with respect to pollutant levels?

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  5. CurtFischer Says:

    The two are most definitely distinct. Prices change all the time in response to non-market factors as well as market factors.
    For example, the price of oil changes when the US$ rises or falls in international currency markets. Likewise consumer prices go up when inflation falls. In contrast, the amount of carbon in the atmosphere does not change in response to those factors, so presumably a carbon market in which Q rather than P is legally stipulated will automatically respond to currency appreciation or inflation.

    In theory Q makes a more ideal metric for guiding policy, but in practice this is not true. What I am skeptical of is that:

    1. Advocating for choosing Q over choosing P is good for the environmental movement. Arguing about Q goes straight to the heart of the uncertainties which surround climatology and the impact of AGW on society. Arguing about P leaves room for all the emitters to give up and withdraw from the argument when they talk P down to be low enough that they can afford it but still non-zero.

    2. A commitment to Q would be required to last for decades or more. Democratic political systems are not very good at such legal permanency.

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  7. CurtFischer Says:

    Err, prices go up when inflation rises. Sorry for any confusion.

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  9. Maurice Garoutte Says:

    When there is friction between technology and financial considerations, my experience has been that technology loses. Sometimes the fight made me feel better but I still lost.

    A carbon tax would provide better control of any chosen target of CO2 and would be simpler to implement. Carbon tax is the best choice for the pure of heart believers in AGW.

    However, cap and trade will cause some trillions of dollars to pass through the hands of private contributors, er I mean companies. If market forces work to our advantage the quality in terms of productivity/CO2 emissions would be improved more than with a straight tax. Cap and trade is the best choice for true believers in money and power, AGW or not.
    General Electric is one of the companies that have spent lavishly on lobbying for cap and trade. (http://www.washingtonexaminer.com/politics/Obamas-hidden-bailout-of-General-Electric_03_04-40686707.htmlO) Another company that will benefit, the Chicago Climate Exchange was sponsored by Mayor Daly and has the happy coincidence of including Maurice Strong on the Board of Directors. The exchange was originally funded by the Joyce foundation where Barack Obama was on the Board of Directors.

    My money is on cap and trade winning and the tax payer losing.

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  11. Raven Says:

    The effect of price on market demand works differently when it comes to essential goods. If people absolutely have to have a good they will divert an ever increasing portion of the income to paying for that good. What this means is the demand for the good does not go down but the demand for unrelated goods goes down because more resources are diverted to pay for the essential good.

    This is the situation we are in with CO2. We need to emit the stuff and if the governments actually put a real pricing mechanism in place we would likely see this outcome. This is why places like Norway with 10/gallon gas don’t see that much reduction in car use despite the price signals.

    On the other hand, if the government mandates concrete technologies (such as increased fuel efficiency) it will result in reduced emissions.

    Of course, CO2 is not absolutely essential in the sense that replacements theoretically exist. But it is quite likely that the replacements will not be able to meet the demand if the government put a real price on carbon and the market would match supply and demand by simply bankrupting the weaker participants.

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  13. Raven Says:

    Furthermore, price signals can have unexpected consequences.

    For example: Flatulent cows could be curtailed by fish oils

    Innovations like this could be a carbon credit market could put huge pressure on global fish stocks as demand goes up to supply sushi for cows in developing countries.

    To make matters worse, the GHGs freebies given to developing countries would likely result in a increase in cattle farming in developing countries because the potential revenue from selling carbon credits would be huge.

    The more I think about it the most I realize that making CO2 emissions a tradeable commodity is a really, really dumb idea.

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  15. solman Says:

    Voters are very sensitive to prices. Witness the US reaction to $4/gallon gas.

    On the other hand, voters love bold goals.

    It is much easier to legislate the later (The US shall reduce per capita emissions by 80% by 2050) than the former (The US shall charge a 400% tax on all non-renewable fuel sources).

    I’m sure that some advocates imagine governments in Copenhagen agreeing to bold goals, and somehow not being held to account by voters when those goals translate into serious economic consequences. Those that do, are naive.

    Its encouraging to see the more realistic view that the Obama administration is taking. European nations may talk a good game, but there is no evidence that, having committed to massive reductions, they would be able to resist the internal pressures that result when those reductions translate to serious economic harm. And if they are not able to honor their commitments, the entire endeavor will fail.

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  17. stan Says:

    This is all an argument about the contents of the script to be read by the man behind the curtain. The great OZ can issue decrees, set prices, regulate people to death all he wants, but he has no power over the weather.

    My little girl likes to play pretend with her dolls. She’s cute. Watching governments play pretend? Not so cute.

    If Diogenes were searching today, he’d be looking for a grownup.

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  19. Can Academy Shape U.S. Climate Choices? - Dot Earth Blog - NYTimes.com Says:

    [...] where they cannot just say thanks and muddle on. (Here’s an interesting observation on whether setting a hard emissions limit is the right [...]

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  21. Ryan Meyer Says:

    While this discussion of Ps and Qs is interesting, I have yet to see a response to my question, which is about the historical claim Krupp has made about emissions targets.

    Anyone have any thoughts on that?

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  23. bend Says:

    Curt, Raven,
    Thought it may be less sensitive to the law of supply and demand than, say, portable DVD players, the demand for energy and thereby carbon is not perfectly inelastic. It may have taken $4 dollar gas to slow Americans down, but people were driving less in July 2008 than they were in July 2006. If electricity prices rise, people will learn, albeit slowly, to turn lights off when they leave the room.
    As far as “concrete” actions like higher fuel efficiency standards, I believe that this is a poor example. High fuel efficiency, like lower gas prices, just encourage more driving. I, for example, am taking advantage of the low gas prices now to drive across the country to see my parents. I’ve not been there for two years due to the high price of gas. In July, my wife will take the kids and drive across country in the opposite direction to see her parents.

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  25. jae Says:

    I may be wrong, but I think the SO2 reduction programs did not have a specific target concentration or mass limits.

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  27. maxlybbert Says:

    I have yet to see a response to my question, which is about the historical claim Krupp has made about emissions targets.

    Anyone have any thoughts on that?

    I think the claim is something of a tautology. No pollution problem has been solved without being measured, and as such there has always been a “wow we have XXX p.p.m. of YY in the atmosphere, let’s lower that that to ZZZ p.p.b.”

    Then again, London has been battling smog for centuries, and some of that came at a time when pollution could not be measured.

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  29. Raven Says:


    As with any weightloss program the first 10% is relatively easy. So oil prices will always produce some drop in consumption. However, there is a limit because people will eventually cut out all non-essential trips and will be forced to pay as much as they are able for the remaining essential trips. The same rule is true for electrical consumption.

    The efficiency paradox is seperate issue that makes all energy related policies quite problematic.

    It is also worth nothing that energy already costs money so people already have an economic incentive to eliminate true waste. This means that any reduction in consumption that results from higher prices will come with a price. This price could be higher prices paid for goods because essentials are picked up at corner store instead of the local mega store. It could money lost due to lost business opportunities or it could be the capital cost of new equipment. Whatever it is there is a cost that is often forgetten.

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  31. PaddikJ Says:

    Somewhat OT, but I note with much bemusement that Krupp & others still insist on referring to CO2 as a pollutant, which, strictly speaking, it is not. The distinction becomes decidedly non-trivial when, say, the EPA decides it is a pollutant and therefore falls under their jurisdiction and authority to regulate; thereby circumventing Congress & The President while they struggle to satisfy both national and international constituencies in a tanking economy.

    The lastest ploy by the AGW crusade: Nature refuses to follow script, the global economy can’t afford its green indulgences at the moment, and the public has grown very restive. Legislation and judicial fiat aren’t producing, but we still have regulation, so voila! – it’s a pollutant.

    About that summit – any conference that announces itself by trying to palm off a trivial truism as an Urgent Issue (“Earth’s climate is changing.”) doesn’t exactly inspire confidence.