I will have some more substantive things to say later, but I’m a little busy at the moment. Until then, here’s some other thoughts on the issue to consider: Why we overestimate the costs of climate change legislation.
That assumes cap and trade will reduce CO2 production in the first place. If it just shifts CO2 production to China & India, it won’t do any good on the global scale while at the same time killing jobs here in the US.
The other downside of Cap & Trade is that it invents a very complex, opaque market out of whole cloth, which will end up enriching those same financiers who screwed up so badly in the real estate market recently, while punishing who actually make stuff in this country.
Anyways, a much simpler way to cut CO2 production would be simple flat tax on CO2 producing fuels (cheap to implement, since these fuels are already taxed), and per country tariffs weighted by the per capita CO2 production of that country. That would keep jobs from being exported, encourage other countries to cut CO2 production, and cut out middle man financiers.
Although I agree GDP will appear to fall as a result of carbon taxes, isn’t this a necessary consequence of recognising carbon dioxide production as a form of “negative product”? For instance, if the GDP is $14.33 trillion and the social cost of carbon dioxide emissions is $0.25 trillion, isn’t the real GDP $14.08 trillion regardless of whether the cost is paid directly or indirectly?
Isn’t the notion that requiring new investment in green industry will improve GDP an example of the Broken Windows Fallacy?
(Setting aside any questions of the other merits of this bill or of cap-and-trade in general.)
That won’t work because it will be an obvious tax that people can complain about. It will force the reality that Co2 does not cause GW when the results don’t match the money spent.
This happened in my state with the E-check system. It required people spend $10 a year per car to verifiy that an an engine monitoring computer actually does make 100 adjustments a second. Modern cars don’t need “tune-ups” because the engine is doing it continuously. It was a waste of money that more than likely increased polution with the unnecessary extra drive to the monitoring station. We ended the testing a couple of years ago.
You must live in Europe.
I don’t think so. That would assume that there is no other benefit to reducing GHG emissions or other emissions that would be co-emitted. There is very strong evidence that reducing SO2 and particulate matter has a substantial net economic benefit, and they would both be reduced under most approaches to CO2 reduction that I’ve seen. Most of the evidence also indicates that there will also be considerable benefits associated with slowing climate change, so the investments in green industries that reduce GHG emissions will have benefits well beyond simply supporting green industries.
Only true if the US cap-and-trade approach results in a 1-to-1 shift in emissions, which would imply that pretty much any incremental change in activity in the US is due to a shift to overseas production. That physically can’t happen, since there are activities that cannot be shifted (health care and other service industries, for example). The economics would not support such a shift, either, since at some point the cost of moving all those activities would cost more than keeping them here.
I agree that a carbon tax would be much easier to implement, at least in theory. But in theory, cap-and-trade is pretty straightforward as well. It’s the implementation that makes it as messy as it is. You can bet any legislation that set a carbon tax would have as many loopholes as the income tax.
Is that it will lower the avergae world temperature by a miniscule amount, perhaps 0.2 degree C, by 2050.
Is this worth the cost?
Actually, that’s pretty much the point - keep the average global temperature roughly the same as it is now. The alternative is substantially higher temperatures.
To me, this is a huge issue. I agree with the science that says that we need to reduce greenhouse gas emissions or else deal with an unacceptable increase in global temperatures. The reality of the situation is that we are going to spend a lot of money so that we don’t see any major change. If the science is correct, then we will see some significant changes, but (hopefully) not as significant as would be the case with no action. So we’ll be looking at increasing investments for CO2 control, but still seeing some temperature increases. The argument for a long time to come is that CO2 controls will continue to be necessary, and will need to be even more stringent, largely to keep from seeing the worst of the adverse impacts that we hope never happen. The other side of the argument will be, “See - we told you there was no problem! We’re just spending money for no reason.”
If the polluters have the ability to just pass along their “tariffs” to the consumer, how is that going to have a positive impact? The funds may be invested (what’s not skimmed off into someone’s pocket) into technology, but the emission levels will still be the same and the consumer’s pocket a little emptier.
If the polluter raises the price of his products to make up for the higher cost, that makes his products more expensive relative to the alternatives (like his competitors’ products or going without). If his products become more expensive relative to the alternatives, people will buy less of his product. It provides a financial incentive for the polluter to reduce his carbon emissions to avoid the carbon tax, and regardless of what he does, means that he doesn’t need to produce as many units, since there are less people willing to buy them at the new, higher price.
But emission levels won’t be the same. The “cap” part of the approach means that there is a total amount of emissions allowed, in this case on a national basis. Over time, the cap (the allowable amount of emissions) is reduced so that, nationally, there is an overall reduction.
Cap and Trade is foolish, it’s just a scheme to spread the wealth around on a global scale. If the PTB cared about reducing emissions, the would set a limit and directly invest in clean energy. The C&T smoke and mirrors approach won’t significantly reduce emissions but it will create a state of protectionism for everyone but the USA.
We as a nation have the ability to set our own emission limits and invest as much as we want in alternative energy, there’s no discernible advantage to participating with the rest of the world in a C&T scheme that lets others pollute AND takes money we’re going to need in light of our reduced manufacturing capability.
In other news, Global Warming/AGW/Climate Change is bullshit.
There’s no guarantee of anything either way. Maybe reducing pollution output will turn out to be relatively cheap. We don’t really know since companies have never had an economic incentive to do so.
Explain to me why government subsidizing an industry when it is currently unprofitable cannot reap rewards if we lead the way on technology that will inevitably be very popular. Isn’t it safe to assume that fossil fuels will only get more expensive as they become more scarce? If the US leads the industry because of our economic policy, doesn’t the economy as a whole stand to profit? Perhaps you reject the premise that government investment can make us a leader in renewable energy technologies. Is that your argument?
Your analysis also seems to ignore the damage to GDP caused by the pollution. As others have noted, even if you reject AGW, we know the damage of related pollutants is in the millions of dollars per year.
That’s not quite fair. There is some evidence for that. Private markets do a lot of things very effectively. But one of the things they don’t do is take actions that are in the nation’s interest but not in the individual corporation’s short-term interest. Putting the US economy as a whole on the leading (and unprofitable) edge of renewable energy is too risky for any individual corporation to pursue–and even if it weren’t, corporate boards are notoriously focused on the next quarter instead of the next quarter century. But if that research is subsidized now, it could still be in the nation as a whole’s greater economic interest.
This is just a generic argument against regulation. This argument applies equally well to prohibitions on child labor, or antidiscrimination laws as to environmental regulation. Indeed, it applies less well to energy regulation since much of the affected sector can’t pick up and move to Mexico, unless you want to throw that coal power plant on some flatbed trucks.
There is a whole body of economic literature on this race-to-the-bottom argument, and it turns out to be much more complicated than than some like to believe. Again, if the Heritage cost estimate is based on blind assumptions of a race to the bottom, that would be good to know.
That’s unpersuasive. If the costs of pollution are not currently accounted for, then the supply and demand is already distorted. Internalizing that cost fixes, rather than distorts the market. Instead of third parties paying for environmental clean-up, health care, etc. associated with pollution, corporations and the consumers of their goods will price those factors into their economic decisions. Market economics teaches us that the result will be more efficient, doesn’t it?
Yes, of course that’s true. What we’re debating is the premise–is the economy as a whole helped by ignoring the costs of pollution and the long-term consequences of emitting it?
I forgot to add one point. One of the beautiful things about an effort to internalize costs is that it encourages innovations without the government deciding what technology is most promising. Companies will decide that, based on the new more accurate price information regarding the cost of pollution.
I’d like to note for anyone who wasn’t aware that the Heritage Foundation is a right wing marketing firm. I’m not in a position to take too close of a look at their report at the moment, and I’m not trying to hijack this into a debate about what standard of care one should take with regards to materials and conclusions from an ultra-conservative (or ultra-liberal) lobbying group with an explicit mandate/agenda. But their contentions should be treated with at least the same scrutiny as assertions by Rush, Hannity, or the American Petroleum Institute.
That is, a corporation that has interests in promoting attitudes such as
… and …
… that espouse such simplistic denial has an equally strong interest in promoting the idea that emissions reduction programs should not be implemented — either because they will not work or be too expensive. The end goal, support for the corporate status quo of energy and related concerns, is achieved in any scenario.
Closer to the OP, there are two relevant issues that seem to have come up. First, in order to avoid price effects through unbalanced/unfair competition, unified, global action is needed. Oversimplifying, trade imbalances can be avoided only if the entire planet simultaneously implements similar emission reductions. However, this appears to be geopolitically impossible. The argument for certain leader nations/groups to take the first step involves the notion that inaction due to claims of inequality and whatnot will have a higher overall cost — both to the planet and the countries choosing not to act first — than bearing the relatively short-term costs of initial action.
Closely related is the attempt to maximize the economic efficiency of reductions. It is odd to hear ostensibly capitalistic entities decry the use of market mechanisms to achieve reduction. As I started, their agenda isn’t so much determining the cost or consideration of a particular plan, but to make it politically difficult to implement.
Though imperfect, there is yet no other proposed reduction mechanism that is less costly, more efficient, or more fair. Emission trading programs are Econ 101 material: if I can reduce my emissions by a lower cost per unit than my neighbor, then by trading emission credits the overall amount of emissions is reduced to the targeted level for the lowest cost.
Oh, and:
Actually, yes, though carbon trading has a host of other problems (and as mentioned upthread, some things that make it easier than others). Take a look at the Wiki page on emissions tradingfor an idea of how it’s been used successfully over time.
OK, so let’s apply this theory to your local utility/electricity provider in regards to their power plants. Tell me again…what alternative source are you referring to?
Assuming you’re referring to the electricity provider’s customers, their most obvious alternative is to go without. If electricity prices rise from 10 cents to 12 cents per kWh, they should simply stop using anything that they don’t think provides 12 cents per kWh of value, or replace them with more energy-efficient alternatives. This might seem simplistic, but it’s an incredibly simple question, and I feel like I’m insulting you by having to explain this.
I assume you live in a location where air conditioning is a luxury instead of a requirement.
As for optional /non-essential power usage, I suppose we could all go back to reading by oil lamps, wait…that would kind of defeat the purpose.
So because it would be too expensive for someone to keep the temperature at 68 and play their PS2 on a 60" plasma screen, we shouldn’t do anything at all about emissions reduction. Oh wait, I see what you did there. You went back to the marketing campaign of it’s too expensive therefore we shouldn’t do anything. You forgot to shout FREEDOM!!!