Here is a question for cap-and-trade supporters. Nancy Pelosi has already said she wants to wait until 2010 (she later changed this to late 2009) to get a cap-and-trade bill through. Now maybe you can push one sooner. But to get one through soon (even by the revised late 2009 schedule) you are probably going to have to allow for substantial giveaways (grandfathering) rather than 100% (or anything like 100%) auctioning. You will probably have to give up any certainty claimed for a cap-and-trade by agreeing to a price ceiling (off-ramp/escape clause). You will probably have to allow counterfeit emissions reductions (offsets).
Right now it looks like this will be in any bill, but it will almost certainly be a condition of getting anything through in 2009. And even if you agree to all this, odds are you won’t get anything through this year.
So let me ask you: what is your limit for this sort of thing? Is there any point at which you will say, “this is not acceptable, I’ll oppose the current bill and try again later”?
[Update] Every cap-and-trade supporter I’ve run into who considers themselves “practical” about the politics says that 100% auctioning is out of the question, that no off-ramp (price ceiling) is out of the question, that no offsets are out of the question. The above assumes my experience represents the views of “players” on this issue in general. So let me modify this. Is there anyone who considers themselves knowledgeable about the practical politics, who supports cap-and-trade who disagrees with these premises?
John McCain’s troubles are the world’s troubles
George Voinovich (R-Ohio) [UPDATED]
Al Franken (D-Minn.)
Comments
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ce1907 Posted 1:16 am
02 Feb 2009
you need to step back a bit and look at the big picture. Obama is NOT SERIOUS about taking action on climate. Look at who he has surrounded himself with, and look at his whole career. Who does he admire?
see 1. No capntrade will pass without Obama. Obama, at best, will support only a weak bill with many offramps. Oh, and by the way, that whole 100% auction thing in the Iowa primary -- that was just for winning the Iowa primary. Obviously.
we are doomed. see 1 & 2.
You are winning, Gar! You want big transmission lines, to hell with NIMBYs, from giant Nevada solar to LA. You will win. Big transmission lines will be built.
the solar plants -- not so much. but there will be tax credits so the solar plants could THEORETICALLY be built
but, meanwhile, bigger and better transmission lines for energy from coal plants will be built
big $$ for CCS and nukes. Because those are things that "real men" like Ba*cus and B*ngaman want, and Obama so admires the "real men."
the last hope of the Greens (aside from Romm, who dreams of huge deals with China leading to nirvana) are the CAA regs
expect that to be attacked THIS YEAR when an energy bill surfaces with a provision preempting the clean air act
7. Gar, I know you think nothing could be worse than the L-W bill
wait. you will find out differently
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gmobus Posted 2:04 am
02 Feb 2009
When anybody wants to get serious about reducing carbon emissions, let me know. I'll be blogging about it over at Question Everything (including questioning C&T schemes).
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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ce1907 Posted 2:15 am
02 Feb 2009
but I really think we need to concede that there will be no law imposing a price on carbon. no meaningful one. no meaningful capntrade, no carbon tax
maybe, indirectly, through some CAA permits
so what is plan B?
my best guess is that we are doomed. but suspending disbelief, what should we do?
I think we need to plot a few moves ahead to set up a green energy/transportation infrastructure. this will not come voluntarily from the O camp, but it may come when the depression really sinks in and there is a public uproar for public works. maybe not. but maybe
assuming that the depression will spur a demand for public works, what do we need to do to be ready?
A. we need specifics. people are big on "fund light rail" and stuff, but when it comes to specific projects, things get all hazy and wobbly.
we need to build lists. what to do. where. for how much $$. in what priority
B. with things like smart grid, or changes to local utility regs, we need to identify hurdles early so we can be ready to build when the public demands it
C. be ready to bribe entrenched interests for a good deal
too often, we try to buy off the powerful and get nothing in return
need to negotiate better
do not think that the powerful can simply be defeated. will not happen. but we have too much at stake not to deal. pay the powerful big $$
but, for goodness sake, get something significant in the deal
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David Roberts Posted 2:30 am
02 Feb 2009
grist.org
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Miles Grant Posted 2:33 am
02 Feb 2009
http://www.nwf.org
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Gar Lipow Posted 2:42 am
02 Feb 2009
Pelosi has said she wants to wait until 2010.
When I suggested 100% auction, no offramp (among other conditions) you suggested as narrow an offramp as possible and as high a percent of permits auctioned as possible.
So let me put it another way:
Are there any absolute conditions you will insist on? Any bright lines. If you think you can get this through with some bright lines all the more reason to draw them.
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Gar Lipow Posted 2:55 am
02 Feb 2009
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amazingdrx Posted 3:08 am
02 Feb 2009
Will that be enough for CnT supporters to give up on "free" market efficiency as the best solution for averting GHG disaster?
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Tony Kreindler Posted 3:49 am
02 Feb 2009
See here.
www.edf.org
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Russ Posted 3:50 am
02 Feb 2009
Um, didn't we just go through the real-life Warner-Lieberman experience, with permit giveaways and a grab-bag of goodies for coal and nukes (and I believe offsets and an escape valve as well if I recall correctly)?
I think support or opposition right there goes some way toward answering Gar's question.
And if the argument is that the next proposal will be much better, again we have the evidence so far of the relentless Appeasement imperative of this admin and these congress dwellers.
They gave away tax cuts and all sorts of concessions to get literally nothing (zero votes) in return, just insults. And now all they can talk about is further appeasement in the Senate.
Under those circumstances, no one should be optimistic that the next carbon bill is likely to be much better than as described in this post.
That's my evidence.
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David Roberts Posted 4:31 am
02 Feb 2009
grist.org
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Jon Rynn Posted 4:48 am
02 Feb 2009
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Jon Rynn Posted 4:50 am
02 Feb 2009
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ids Posted 4:51 am
02 Feb 2009
The devil is in the details.
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Gar Lipow Posted 5:23 am
02 Feb 2009
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ce1907 Posted 5:52 am
02 Feb 2009
Or just encourage a network of amateurs to collect info.
Maybe a website with links to lots of local websites.
At each local website:
make lists of good projects
make sure the local Congresspeople are aware of the lists, and vote accordingly
keep track of the bad projects, and publicize opposition
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Hal 9000 Posted 5:57 am
02 Feb 2009
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ce1907 Posted 6:51 am
02 Feb 2009
Big O has not sent a capntrade bill to Congress
Big O has not promised to send a capntrade bill to Congress this year -- or any year
draw your own logical conclusions
campaign promises are for suckers
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Hal 9000 Posted 7:26 am
02 Feb 2009
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Jon Rynn Posted 7:52 am
02 Feb 2009
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Russ Posted 8:08 am
02 Feb 2009
I don't remember exactly, but probably the UNFCCC looked at the Montreal Protocol as a model from the start, and the idea spread from there.
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Russ Posted 8:10 am
02 Feb 2009
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Jon Rynn Posted 8:16 am
02 Feb 2009
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amazingdrx Posted 8:24 am
02 Feb 2009
Sophists who labor for corporate donations at thinks tanks like AEI and CEI and to a lesser extent CATO. CATO seems to gave ay least half authentic libertarians on staff.
From the Long Term Capital Management emergency in '98 (the cause of emergency interest rate lowering that made me and a lot of others a lot of stock gains in the tech boom)to .....derivatives and bundled mortagage instruments traded worldwide, that turned into bad paper and this credit crisis that wants to morph into a second great depression; market efficiency is still a magic concept for true believers in cap and trade.
Could someone ask a CnT proponent to aknowledge problems with hedge fund insider manipulation and how it could be prevented in the case of a US CnT system? Please preface your answer on the problems with the EU CnT system already noted, don't ignore history please? Try to learn from it and improve your CnT proposals. We might like them? Fat chance, hehey.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Pangolin Posted 8:41 am
02 Feb 2009
There is no cap and trade scheme that is going to win retail level political support where a 100% rebate carbon tax is stated as an alternative option. Cap and trade raises retail energy bills and returns nothing vs. the tax-and-rebate system.
Obama, rather than committing to a specific carbon cap or tax scheme appears to be promoting retail level energy generation and conservation as a means of mooting this debate. Given the choice of a carbon trading scheme or jobs and monies for energy savings investments at retail levels I'm not sure why we still discuss cap-and-trade. Where's the support for it in the streets?
Put the Carbon Back
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hapa Posted 12:26 pm
02 Feb 2009
handling of the econ collapse tells the story brilliantly about the future of carbon pricing in DC!
shrink the finance sector to something socially useful? "not if we can help it"
soften the landing of consumer economy in-re deleveraging? "not if we can help it"
fire the fraudsters and tax the bejeezus out of their stolen property to pay for the repairs? "not if we can help it"
invest more, borrow less, and stop robbing ordinary people with asset bubbles? "ha ha ha, you funny"
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Curtis Moore Posted 11:46 pm
02 Feb 2009
A Global Warming Trading Program
That Might Work
Curtis Moore
1. Allow either trading of only CO2, or a set of single-pollutant-only trading programs.
Reason for Program Feature
Carbon-equivalent trading has been occurring under the Clean Development Mechanism (CDM), a feature of the Kyoto Protocol that allows polluters to fund emissions reduction projects in the developing world. Brokers and others involved in trading for business reasons are most interested in profit, not environmental protection. In the cases of many CDM projects, brokers make a small investment of, say, $10 per ton, to destroy a greenhouse pollutant, say, HFC-23 which has an atmospheric lifetime of 11,700 years and a global warming potential (GWP) of the same amount. Thus the 1 ton reduction at a cost of $10 has a market value of 11,700 x the price of carbon (about $10/ton), or $117,000.
Because the profits from trading CO2 for non-CO2 greenhouse gases are so attractive, money is invested in such projects instead of wind farms, energy conservation or other measures that would move the economy towards sustainability. Moreover, because HFC-23 is a byproduct of the production of CFC-22, which will be phased out under the Montreal Protocol, these investments are merely accelerating by a few years a elimination that would occur in any event.
2. Allow trading only of emissions, not sequestration.
Reason for Program Feature
The putative purpose of a trading program is to encourage the adoption of new, low carbon technologies and practices. The effect of allowing credits for sequestration, whether by injection into oil and gas wells or the ocean, or for assimilation by forest plantations, is to encourage continued high-carbon energy and industrial practices. Moreover, resorting to practices never before tried carries the risk of unforeseen and unpleasant consequences. In the case of deep ocean injection, for example, carbon dioxide would extinguish forms of life that live near or on the ocean floor with unknown and irreversible risks. Geologic sequestration on its face would seem safe enough, but again, this has never been conducted on a widespread basis. With respect to the uptake of carbon by forest plantations, carbon dioxide is eliminated for only as long as the trees live. After death, carbon re-enters the system, so the pollutant is being merely displaced in time, not eliminated. What sequestration buys is not emission reductions but technology avoidance.
3. Restrict trading to only large sources.
Reason for Program Feature
The bulk of carbon dioxide emissions are from large sources such as coal fired power plants, cement kilns and the like. Restricting a program to these would vastly simplify it administratively, thus reducing the likelihood a system being overwhelmed. If it proved effective, smaller sources might later be included, perhaps by creating programs at the air quality management district level. Because all previous trading programs have dealt with a limited universe of sources--the largest, sulfur dioxide trading, consisted of roughly 1,200 emitters, for example--there is no experience with large numbers. In contrast, carbon dioxide trading could potentially involve sources numbering in the tens of millions sources and billions of trades. While it is true that stock exchanges handle trades of that magnitude, they have evolved over a centuries--the New York Stock Exchange, for example, was founded in 1792. In addition, trading of stock, bonds or other commodities does not require emissions monitoring, disclosure of prices and profits or other requirements associated with dealing in pollution.
4. Set the cap at 20 percent of 1990 emission levels.
Reason for Program Feature
There is a consensus in the science community that the restore the atmosphere to an undisturbed state requires an emissions reduction to 20 percent of 1990 levels. Every previous trading program has failed to achieve its stated health or environmental objectives because the limit--the cap, pool or whatever--has been set at a level that is too lenient. As a result, either the goal was not achieved (e.g. protection of sensitive ecosystems in the case of sulfur trading, elimination of lead in the case of gasoline, or the ambient air quality standards in the case of RECLAIM. In the latter two cases, the government was forced to intervene: Congress affirmatively banned lead in the 1990 Clean Air Act Amendments; and, the South Coast Air Quality Management District removed electricity generating facilities from RECLAIM and re-imposed stringent emission limits. In the case of global warming, there is unlikely to be a second chance.
5. Require real-time measurement of emissions memorialized with hard copy records.
Reason for Program Feature
One of the great flaws of other trading programs has been that information on emissions became publicly available only after the fact, sometimes years later. In the leaded gasoline program, the information was deemed business confidential and never provided to the public, while in RECLAIM only employees of the South Coast Air Quality Management District had access to the information. In the European carbon dioxide trading program, incorrect data was submitted by sources, but because there was no monitoring or record keeping, this was not discovered for several years. Public availability of such information not only minimizes the possibility of fraud, but assures that information provided will be correct. If it proves to be incorrect, records are available to prove this in support of felony prosecutions.
6. Prohibit any increases in emissions of non-CO2 pollutants or any change in the nature of the pollutant emitted (e.g. from PM10 to PM2.5) and require that the receiving source's emissions of hazardous air pollutants be reduced to virtual zero.
Reason for Program Feature
All trading programs have produced "hot spots" of air pollution. Examination of increases in fuel consumption at a Mitsubishi cement kiln in the Lucerne Valley of California show that when it increased the number of used tires burned from 1.8 million in 2001 to 2.1 million in 2003, or about 16 percent, emissions of some pollutants rose by about 240 percent. In the acid rain trading program, emissions of sulfur dioxide increased in 16 states, while recent studies have shown that some ecosystems are much more vulnerable to mercury emissions. To assure that increases in emissions of carbon dioxide associated with trading are not accompanied by higher levels of local, toxic air pollutants, these should be reduced to a virtual zero.
7. Auction emissions every two years, one year in advance for the ensuing two-year period (e.g. in 2008 and 2010 for the two-year periods starting in 2009 and 2011).
Reason for Program Feature
Previous trading programs have issued pollution rights to current emitters because they were then-current emitters. The effect of this is to convert a public good, non-polluted air, into a private good, allowing it to be consumed up to a set amount. This neither generates funds for the public nor promotes competition for the good being conveyed. By auction air quality, funds would be generated and polluters would be required to bid against one another for, thus increasing the price. In addition, trading programs have frequently failed to produce promised emission reductions because compliance was delayed until the conclusion of the reduction period. Auctioning emission privileges in two-year increments assures that interim reductions are achieved.
8. Pay auctioned income to facilities that have reduced emissions of carbon dioxide over the previous two-year period.
Reason for Program Feature
Those who purchase emission allowances are, in effecting, buying avoidance and thereby continuing to engage in activity that is harmful. To increase the efficiency of the incentives, firms that reduce their emissions should be encouraged to do so. Such feebate programs have been remarkably successful in Europe, reducing emissions substantially with a matt er of months.
9. Require annual certification by the senior corporate official of the facility holding an allowance and by the broker that handled a trade that emissions have not exceeded allowances held.
Reason for Program Feature
All major trading programs to date have experienced fraud. Requiring certification that is criminally and personally punishable would provide a powerful deterrent.
10. Subject income in excess of 300 percent to a windfall profits tax.
Reason for Program Feature
Profits being realized by emitters and their brokers can and do approach returns of $117,000 for a $10 investment. The effect of this is to encourage emitters to avoid installing, at a nominal cost, emission controls when facilities are constructed so the pollution can subsequently be sold, generating income for the polluter and trader. The purpose of a trading program is to encourage economically efficient reductions in emissions by allowing profit on desirable behavior, not reward undesirable conduct.
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Jon Rynn Posted 11:53 pm
02 Feb 2009
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Curtis Moore Posted 1:43 am
03 Feb 2009
The architects at the Carter EPA were principally David Hawkins, then AA for Air and now NRDC's advocate for cap and trade; and, Bill Drayton-- another AA, for Administration, I think--who had worked for McKinsey and Company for about ten years. Many treehuggers, especially NRDC and EDF, frustrated by their inability to overcome the political opposition of coal and electricity, embraced trading the grounds that something is better than nothing. I personally have never understood why, if your objective is to make it to Seattle, you would buy a ticket to St. Louis instead, on the grounds that it's better than nothing.
A few politicians, including Sen. Robert T. Stafford of Vermont, proposed a different solution: requiring that when power plants reached the ends of their lifetimes (they are typically depreciated for tax purposes over 25 years) that they either shut down of reduce their emissions to the level that would be required of a new plant. One of the advantages of such an approach is that it effectively would have forced the adoption of new technologies such as integrated gasification -combined cycle and pressurized fluidized bed combustion--which reduce all air pollutants, not just one, sulfur.
Several years ago, I shelled out $5,000 of my own money to have a consulting firm E.H. Pechan and Associates, to model a scenario in which IGCC/PFBC and renewable energy were phased in. The projected result, as I recall, was about a 65 percent cut in CO2, and upper 90s for SO2 and NOx and virtually 100 percent for particulate/black carbon. Using actual cost figures for these and other technologies, the projected increase in electricity rates would have been 14 percent (but, since conservation was part of the package, actual bills would go down not up, because less electricity would be consumed).
Since the new plants would also have to be replaced after 25 years, presumably by zero-polluting renewables, we would today be contemplating 100 percent reduction from individual sources starting in about 2012. Stafford preferred such an approach because it would have dealt simultaneously with not just acid rain, but also smog, global warming, toxics like mercury and all other air pollutants.
Stafford's proposal was fiercely resisted by the coal and electricity industries (reduced consumption = decreased profit) and most of the treehuggers, such as NRDC and EDF.
You can read more about these and many, many other technologies, the threats of tipping points and how the Republican Party helped bring the nation to its current sorry state at my book's website, http://www.saving-ourselves.com/.
What troubles me more than anything else is the inability of most people to accept that humanity's survival is on the line, and that cutting air pollution by 2/3s, and in many cases 100 percent, is simply not a big deal--that is, unless you're ExxonMobil or Peabody Coal. But an approach like this is inconsistent with trading because, by definition, if everyone is doing his or her level best to cut pollution as much as possible, there are no left-over emissions to trade. Hence, the sine qua non of trading is that the cap must always to placed at a level that is less than our very best and which provides fewer reductions and less protection.
To truly protect against acid rain would have required a reduction in emissions of about 14 million tons of SO2. Instead, George Mitchell and George Bush cut a back room deal in which they agreed on a program that they billed, falsely, as a 10 million ton reduction, but which in reality was closer to 8.5 or 9 million tons. NRDC and EDF, wanting to be "reasonable" so they would continue to have access to such backroom deals, bit their tongues and didn't rat out the Georges.
Polluters, who have profited handsomely from acid rain half-measures, now see the opportunity to make even more money on global warming. So, in this insane world, the public is being asked to rely on the "market" to solve a problem that the market itself created. To me this is insanity. But the bad guys have lots of money to spread around, and it is working handsomely for them.
Sorry. Long answer to a short question.
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Curtis Moore Posted 1:48 am
03 Feb 2009
I started responding to posts here on the recommendation of my son, who does some of this as part of his job. I've been so frustrated by my inability to place the book and get people to listen to my fundamental message--we're in big, big trouble, but if we will get off our collective butts this is easy to solve--that I'm grasping at straws.
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Jon Rynn Posted 2:01 am
03 Feb 2009
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amazingdrx Posted 2:17 am
03 Feb 2009
So Adam, you have been keeping these potential 11,700x profit levels under your hat? Hehey.
There's your incentive for hedge fund involvement and insider trading.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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