The Core Tension of Cap and Trade
March 15th, 2009Posted by: Roger Pielke, Jr.
This quote from an anonymous White House official in The Washington Post sums up the core tension of cap and trade.
We think a well-designed cap-and-trade program will not have an adverse short-term impact on energy prices. But if we’re completely eliminating the price signal, then we’re removing the incentives for investments in energy efficiency.
No cap and trade bill can at once send a meaningful price signal while at the same time not have an adverse impact on energy prices (in short or long terms). The following description of cap and trade in the Washington Post story also reflects this core tension:
. . . climate legislation will aim to reduce emissions by putting a price on carbon, raising the cost of everything from gasoline to plastics to electricity.
Will Congress act to raise the cost of everything? I don’t think so.
March 15th, 2009 at 7:52 am
This spokesman demonstrates the core tension of trying to speak out both sides of his mouth. As often happens as a result of that tension, he ends up talking out his a**.
March 15th, 2009 at 8:00 am
“Will Congress act to raise the cost of everything? I don’t think so.”
I sure hope not, and I don’t think it will happen IF the public realizes that is what is happening. What worries me is that the sneaky politicians will con a sufficient number of people into thinking the whole scheme will not hurt the poor and middle class, because they will get a portion of the “tax” returned to them. IOW, they are using this scare as an attempt at more socialistic distribution of wealth and an increase in their voting bloc. I beleieve that BO and his angry band of far-left warriors will try their best to make it happen, even if it costs them the next election (which it probably would).
March 15th, 2009 at 8:28 am
The one aspect that gets me so upset is the level of deceitfulness. There are no data to indicate that taxes or cap-n-trade will lead to any changes at all in carbon consumption. That and the fact that the degree of reductions in carbon consumption necessary to actually result in movement toward the targets has not been sufficiently explained to the general public. And that reliance on solar and wind is so completely deceitful relative to what is required for real progress toward the targets. And those having political / sociological agendas while calling themselves scientists. And ….
It won’t surprise me that if the economy doesn’t rebound and carbon consumption decreases, the associated decreases in CO2 emissions will be attributed to the solar and wind Green ’solutions’ put into place.
March 15th, 2009 at 10:07 am
In a true market economy everything would have a price and that includes carbon emissions as well as other ‘production’ by products.
It is also feasible to have a cap and trade system that does curb consumption. This can be done purely economically by having an increasing scale of cost with higher emission levels; the cost of consumption will outweigh the benefit at some equilibrium. It can also be augmented through other regulatory aspects such as fines or the ability to stop operations of violators.
And no, none of these systems is economically easy to start, nor was reducing CFCs or stopping the dumping of raw sewage into rivers or replacing asbestos in many products, etc.
March 15th, 2009 at 10:17 am
Let’s see . . . the Obama administration seems to think Americans won’t notice massive increases in their energy bills, the huge inflation in all purchases due to energy cost driven production and distribution increases and the unreliability of their new ever-so-green electrical production system based on windmills and solar ?
No worries. If Obama et al believe this then it explains how they will now tax, contrary to election promises, employer paid health benefits.
The American populace is many things, but stupid isn’t one of the them.
March 15th, 2009 at 10:27 am
“Controlling carbon is a bureaucrat’s dream. If you control carbon, you control life.” — MIT climate scientist Dr. Richard Lindzen
Can Congress and this President resist the temptation for near total control? Could they resist the “no earmarks” earmarks?
March 15th, 2009 at 11:21 am
This would be a good place for another “Do the Math” challenge. Make the budget matching the proposed increase in government size work without massive revenue from a carbon tax.
Nah, that’s a sucker bet.
March 15th, 2009 at 2:39 pm
#4 Mj said:
“This can be done purely economically by having an increasing scale of cost with higher emission levels; the cost of consumption will outweigh the benefit at some equilibrium.”
As far as I know, this concept has never been applied to anything as necessary for health and safety for life as carbon. Especially for those for whom there are no free-choice options available. Many people can barely cover the already existing costs for their food and energy.
and
“It can also be augmented through other regulatory aspects such as fines or the ability to stop operations of violators.”
Yes, by all means let’s shut down a few base-load electricity generating facilities. And while we’re at it, let’s shut down all the operating nuclear-fueled plants; the nuclear option has in reality been taken off the table anyway.
Surely, MJ, you can’t be serious on this approach?
March 15th, 2009 at 4:04 pm
re#8
The issue at hand is not the production of carbon, but potentially dangerous levels of carbon. I would suggest that the fact that most folks buy almost all the food they consume means that economics are applied to very basic necessities. Healthcare would be another example where people pay for a life necessity. Both contain costs that are passed on to the consumer with the idea that they allow for a safer product for the consumer.
While I agree that shut downs are an extreme solution, my point applied to user as much as producers, which cap and trade should take into account. So yes I am serious and I actually think in the short term (next 50 years) that nuclear should be considered.
My guess is you do not feel that the current levels of carbon emission are a problem; if that is the case it does not matter what is proposed, it is likely you will feel it is unnecessary. So debating solutions to a problem that you feel does not exist would be moot in any case.
March 15th, 2009 at 5:07 pm
re#9
YANS + PM: Yet Another Naked Strawman plus Presumptive Motive.
Have you done any arithmetic, the very simple kind we all learned in grade school, to quantify the costs and benefits of your proposed ’solutions’? Have you, for example, estimated the costs that will be passed on to the consumers? What will be the impact on those who live from paycheck to paycheck spending the majority of their income on carbon?
But more importantly, have you estimated the real-world time line and associated changes in CO2 emissions that would result from your proposals?
It continues to amaze me, that as far as I know, not a single validated quantification of even a single approach has been presented by anyone. Just do something is not a solution, it’s a very big problem.
The reality is that nuclear has been taken off the table. President Obama, it seems to me, focuses on solar and wind, promising millions of Green jobs. Again without quantification of anything associated with the approach. Those who do the arithmetic know beyond any doubts whatsoever that this is a dead end and doomed to failure.
Just do something is doomed to failure; 100% doomed.
We can’t debate hand-arm-waving ’solutions’.
March 15th, 2009 at 5:37 pm
MJ:
“And no, none of these systems is economically easy to start, nor was reducing CFCs or stopping the dumping of raw sewage into rivers or replacing asbestos in many products, etc.”
It is exactly this type of illogical thinking that concerns me. SURELY, you don’t think these issues are comparable, in any way, to the CO2 issue!
If there is ANY sort of agreement in the US to raise the cost of carbon (tax, Cap/Trade, etc.) without comparable verifiable actions by China and India, then I will be ABSOLUTELY POSITIVE that Obama and friends’ motivation has nothing to do with the environment or “climate change” (I’am already pretty certain, anyway). Such carbon taxes will completely unravel our economic system and chase out the last bit of industry that we have. It is very frightening, indeed, because the precident set by the foolish European Community, who are now trying to pull us into the pit with them.
March 15th, 2009 at 5:40 pm
Oh, and I forgot to add that such taxes would not even decrease CO2, they would just change the emission points to China, India, etc. People that are supporting this nonsense must be (1) a fool; (2) a “new-world-order type of socialist; or (3) both.
March 15th, 2009 at 11:13 pm
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March 16th, 2009 at 4:42 am
re#10
I have done no math because I have made no proposal. I have only suggested aspects to a plan. What if I said for instance that the cap was based on present day levels plus 10%? My belief is not acting will in the end become even more costly. I also disagree with BO that nuclear should be off the table.
But I will say that I completely disagree with you that ‘just doing something’ is doomed to failure. It is likely that the first version of anything will have serious problems that need to be addressed, but doing nothing to me is the wrong answer. I think Kyoto is a completely flawed solution, but I also believe it was a flawed solution we can learn from. I know very few examples of anything in life or this world where we got it right the first time.
re#11
I don’t believe I ever said the US should act alone, but I also don’t believe some feel good measure that is signed by every UN nation is needed either. If the top 8 emitters (60% of emission based on data from http://cdiac.ornl.gov/trends/emis/meth_reg.html) would work together or the top 15 (70%), you have a better chance of getting somewhere. And no, I don’t think this is a simple problem, but I do think it is a problem.
re#10 and 11
Not sure why both of you want to label me with names, but I guess that is your prerogative. I get back to my basic question for both of you now; Do you think carbon emissions are an issue? If not I would suggest your focus needs not to be on saying a particular solution won’t work, but on saying ‘we don’t need to address the issue and here is why…’. On the other hand, if you believe it is an issue, why not focus on ‘that solution won’t work, here is why, but this would…’?
March 16th, 2009 at 5:53 am
“Do you think carbon emissions are an issue? If not I would suggest your focus needs not to be on saying a particular solution won’t work, but on saying ‘we don’t need to address the issue and here is why…’. On the other hand, if you believe it is an issue, why not focus on ‘that solution won’t work, here is why, but this would…’?”
From your comments, it looks like I was not “calling you a name,” since you don’t fit into either of the two categories I listed
Personally, I don’t think there is even one tiny shred of true scientific evidence that carbon emissions are a problem, only irrational fear. But there is all sorts of evidence that CO2 provides POSITIVE benefits. However, let’s assume there will be some problems. We should “do something” only if the costs of doing so are less than the costs of mitigation AND if “doing something” has a decent chance of making a difference. The “precautionary principle” is not enough, because it is illogical, anyway in this case. If the politicians can show clearly that their proposals will address these issues, then we should “do something.” But I have not seen them even TRY to address EITHER of the issues. THey have their collective heads stuck deeply in the sand of lies and politics. If BO is serious about getting the science out there, now is the time. And it should be done by including the “skeptics” this time.
March 16th, 2009 at 8:42 am
Jae, completely agree that both sides should ALWAYS be included. I think unfortunately even arenas like ‘scientific conferences’ have become biased towards one side or another. Some of this is driven by the reality that what may start as a ‘scientific’ debate gets pulled into the media, hyped up, folks take sides, egos and personalities get involved and …
But your comments highlight what I think is part of challenge. From the peer reviewed research I have read, I see that CO2 (amongst other things) is contributing to the current changing climate. You see the reverse and we are just two individuals. Another part of the problem is the both the interdisciplinary and global nature of this type of issue, makes working towards an agreement even that much more complex. My bigger concern is that the problem will get to a point where the economics are even more painful than trying to address the issue now. However, I agree (as mentioned in my first comment) that everything should be based as much as possible in the framework of our capitalist economy.
March 16th, 2009 at 10:23 pm
I see most of you are chasing after the red herring. Don’t be fooled!
The goal of the current administration has nothing to do with climate change. It is simply a way to redistribute wealth, a socialist panacea.
The president does not try to hide his intentions. He articulates them quite clearly and I’m amazed to see people hear the speeches but fail to listen to the words. I guess a similar phenomena happened back in Germany in the 1930’s…
I could quote the president, but i won’t. We’ve all heard the rhetoric which is readily available. The goal is to “fundamentally transform the economy”, etc.
Wake up people! The idiot majority has elected a socialist.