House speaker now says she wants a climate bill passed by December 10

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1. 

   Sean Casten Posted 6:18 am
   22 Jan 2009

   This doesn't sound goodBut provides further evidence that Congress cannot be relied upon to pass effective GHG legislation.  When Pelosi says:
   "I believe we have to because we see that as a source of revenue"
   She is repeating the failures of Lieberman-Warner.  Think of GHG policy as a source of revenue and you inevitably end up with a grab bag of goodies for Congressional districts that is ever-more at odds with its stated purpose.  Which is, lest we forget, to reduce GHG emissions.  There is no good reason why the proceeds from a GHG bill need to come back inside the beltway for reallocation.   That simply puts a drag on the economic and environmental efficiency of the bill, since the temptations will always be too great for Congress to use that money to fund things other than GHG abatement, at least in part.
   It is increasingly clear to me that the only way to get effective GHG policy passed is to do it through the executive branch.  Use Mass v EPA as the excuse to declare CO2 a pollutant under the Clean Air Act, subject to EPA jurisdiction, then figure out separately whether it will be regulated via mandates, taxes, cap & trade or some other measure.  I have my preferences on how to do that.  But I remain increasingly concerned that if Congress leads this effort, they will be unable to get out of their own way.

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2. 

   Max8806 Posted 7:08 am
   22 Jan 2009

   Ditto, SeanThat's a really disheartening statement by Pelosi.
   
   Max Epstein

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3. 

   davedenali Posted 7:44 am
   22 Jan 2009

   of course we need revenue from the billRevenues are absolutely necessary. A successful bill is going to require assistance to low income consumers and displaced workers.  And emissions reductions are going to require a massive investment in new renewables and efficiency. Of course we need revenues from a bill.  Moreover, in a nation that could run between a $1 and $2 trillion debt this year alone and has $40 to $50 billion in unfunded obligations, there is a desperate need for revenue from many sources -- at least in the long term. Wake up people.

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4. 

   Sean Casten Posted 8:11 am
   22 Jan 2009

   DavedenaliYou miss the point.  The purpose of a GHG bill is not to raise revenue.  It's to lower GHG emissions.  Trying to do both at the same time only guarantees that you will do both poorly.  As Lieberman-Warner ably demonstrated.
   Moreover, the need to pay for economic pain that GHG legislation causes on low-income folks is directly proportional to the amount of GHG "revenue" proceeds we spend on not reducing GHG emissions.  (Precisely because so many of the things that would be incentivized if they were compensated for their GHG reductions also lower the cost of energy, from efficiency to renewables.)  More renewables on the grid lower the variable cost of energy.  So too with efficiency.  All will be rewarded by a GHG policy that ties the economics of CO2 directly to those actions that increase or reduce CO2.  But if all we do is collect fees and then redistribute, we will end up not encouraging precisely those things that have the most environmental bang for our economic buck.
   The larger point though is that legislatures are horribly inefficient vehicles to figure out how to spend trillions of dollars - there are simply too many hands out for those allocations to be made solely (or even mostly) on the basis of the right policy decision.

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5. 

   davedenali Posted 10:04 am
   22 Jan 2009

   responseI dont miss the point at all. Of course the main goal is to put a price on carbon and lower emissions.  But no bill is going to PASS without a lot of provisions that will cost some money (such as assistance for those hurt most).  And we need a massive investment in renewables and efficiency -- from the private sector but with a governmental push.
   What matters most isnt just that I think we have to auction off rights and raise revenues.  So do many key people who will be fashioning and voting on this bill.  There will be a revenue component to a carbon markets bill.

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6. 

   davedenali Posted 10:11 am
   22 Jan 2009

   ps on lieberman-warnerYou wrote "The purpose of a GHG bill is not to raise revenue.  It's to lower GHG emissions. Trying to do both at the same time only guarantees that you will do both poorly.  As Lieberman-Warner ably demonstrated."
   
   ---------
   Anyone who thought last year's vote on Lieberman Warner was a real effort to get a bill -- and some groups apparently did -- was naive at best. I wouldn't draw many conclusions from a straw vote, and that's all that was.  And the objections to the bill did not focus on the auctioning of emission rights -- unless you mean objections from right wing nut jobs who arent going to support a climate bill if the sea starts rising in their bathrooms.

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7. 

   Sean Casten Posted 11:07 am
   22 Jan 2009

   I agree, sort ofYou're right it can't pass congress without pork doled out to districts.  But that's my point: getting GHG policy right is increasingly dependent on bypassing congress.

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8. 

   F James Handley Posted 10:31 am
   08 Feb 2009

   Truth-in-Pricing vs. SubsidiesNote Pelosi's comment: "You cap and you trade so you can pay for some of these investments in energy independence and renewables."
   Both cap-n-trade and carbon taxes are said to be mechanisms to "price carbon."  But a tax explictly uses prices to achieve emissions reductions.  Pelosi's saying a major goal of cap-n-trade is revenue for subsidies.      
   If we want to nudge conservation and innovation with fossil fuel prices that reflect more of their true climate costs, then a clear, predictable gradually-increasing price signal is key.  Revenue recycling through either a tax shift (e.g., reducing payroll taxes) or a direct distribution, would eliminate a carbon tax's "income effect," retaining the desired "substitution effect".  That's what Rep. Larson is proposing and Al Gore recommends.
   But if you're really after funding for government spending on renewables and "energy independence," a hidden tax (that bypasses the appropriations process) sure seems alluring.  Who'll notice that it's volatile and regressive?  Or that the "cap" (with allowances and offsets) isn't really a firm limit?
   The terminology is Orwellian. As currently proposed (i.e., the USCAP proposal), cap-n-trade is far more of a "tax" (and spend) than a revenue-neutral carbon tax.
   Check out "Cap Secrets" at
   
   http://stoft.com/ebooks/cap-secrets.pdf
   
   by economist Steve Stoft.

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9. 

   David Roberts Posted 10:35 am
   08 Feb 2009

   James,Do you disagree with the need for public investment in clean energy and infrastructure?
   
   grist.org

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10. 

    F James Handley Posted 12:21 pm
    08 Feb 2009

    Price Signals Nudge Everyone. David Roberts,
    Sure, we urgently need public investment in research on renewables, efficient public transportation, bike and pedestrian infrastructure, a smart grid...  But not funded by a carbon tax.
    A clear, transparent, upward-trending price on carbon would move the whole economy, not just those receiving subsidies.  There just isn't enough money around to bribe everyone to cut fossil fuel use as much as we all need to do.  Furthermore, the legislative process isn't a good way to pick technology winners; they'll emerge when they're not submerged in cheap fossil fuel energy.  
    In order to create a strong enough price signal and to sustain the necessary upward trend,  recycling carbon revenue is essential to avoid hammering poor and middle income households and dragging down the economy.  And recycling revenue builds support.  The Alaska Permanent fund is wildly popular.
    Price signals and public investment work together:  Buses and trains fill up when fuel prices rise.  Utilities (and their customers) buy wind power when coal is more costly.  
    But as Davedenali commented above, trying to do both together may mean doing neither effectively.  Senate Republicans' resistance to the stimulus bill suggests they won't sit still for cap-and-spend bill.  But at least some, e.g., Sen. Corker, show interest in a revenue-neutral carbon tax.  
    Maybe I'm dreaming, but I sense the possibility of a bipartisan revenue-neutral carbon tax this year!  And without the long implementation delays of cap-and-trade.  

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