The following post was originally published on The Nation's guest blog, Passing Through, where I was in residence throughout February.
It is a rudimentary introduction to cap-and-trade and the question of allocating permits, an argument (or three) in favor of auctioning permits, and a review of the political state of play around the question. The point is to get people up to speed on the crucial debate over permit auctions, which should be a central focal point for grassroots pressure on the process.
It is long. I recommend printing it out and reading it on the toilet.
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Good morning, class! Today we're going to talk about auctioning emission permits under a carbon cap-and-trade system!
[groans, sound of spitball hitting blackboard, shoes scuffling]
Wait, lemme try again:
Good morning, class! Today we're going to talk about looking out for the little guy and sticking it to The Man!
Ah, the ears perk up.
The progressive grassroots has not been fully engaged in the fight over climate legislation. There are any number of reasons for this state of affairs -- I could write volumes -- but the main one is that to most progressives, it's opaque. There are lots of arcane, wonky details involved, and not much in the way of gut feeling or visceral connection. "Save the Earth" is pretty damn abstract compared to war, government surveillance, economic inequality, and other issues you find eliciting passion on dKos et al. Those battles seem to involve animating progressive principles like fairness and personal liberty in a way that climate doesn't.
But I'm here to tell you, friends: climate policy does involve those principles. Crucially. Centrally. If progressives don't start paying attention, they're going to allow the poor to get royally, royally screwed. Again.
The climate legislation before Congress -- America's Climate Security Act (ACSA), co-sponsored by Sens. Joe Lieberman (I-Ct.) and John Warner (R-Va.), likely to be introduced to the Senate floor in April or May -- is just as much about social and economic justice as it is about the atmosphere. Billions of dollars are at play. Who pays? Who benefits?
Cap-and-trade
Let's briefly review what ACSA would do. The bill would establish what's called a cap-and-trade system, whereby the government caps the greenhouse-gas emissions permitted in a given year and then ratchets that cap down over time, toward some target. (Most greens, and scientists, favor 80 percent reductions by 2050, or even higher. Obama, Clinton, and the Congressional Dem leadership are all on board with that number as well, at least rhetorically. ACSA's target is 70 percent by 2050.)
The amount of GHGs under the cap is divided up into permits, which are distributed at the beginning of each year and can subsequently be bought and sold like any commodity. As the number of available permits declines over the years, they become more expensive and in more and more cases it will be cheaper to reduce emissions than to buy permits.
The idea is to create a market in GHG emissions, with all the attendant market efficiencies. The invisible hand will make the cheapest emission reductions first, and thus the long-term reductions will come at least possible cost. (The same basic approach worked quite well to reduce the chemicals that cause acid rain.)
Show me the money
Now, let's take a step back. Remember, the point of all this is to place a value on something (GHG emissions) that had previously been free. What happens when the government places value on an abundant commodity that was once free? Well, for one thing, there's suddenly lots and lots of money in play.
That's where progressives come in. It's our job to make sure that big corporations don't make out like bandits at the expense of the working class.
The key juncture where this plays out is in the initial allocation of the permits. There are two ways to distribute them: give them away or sell them.
The big polluters, especially coal-based utilities, think permits should be given out based on historical emissions -- i.e., that the biggest polluters should get the most. They need a shit-ton of free permits to "ease the transition" to lower-carbon technologies, you see. Not coincidentally, if this advice were taken it would amount to enormous windfall profits for those polluters.
The alternative is for the feds to sell the permits -- or more specifically, to auction them, and allow competitive bidding to establish the market price. This way, polluters pay to pollute, and instead of windfall profits for them, the money goes to the government as revenue.
(Side note: obviously, you could mix the two, giving some permits away and selling some. We'll return to that later.)
So that's the question here: who should get all this money? Industrial polluters, or government?
Economic justice
A cap-and-trade system with no auctions -- call it "cap-and-giveaway" (PDF) -- amounts to a highly regressive tax. Poor and working class families spend a greater portion of their income on energy and will be hardest hit when energy providers raise prices.
The regressivity can be reduced and even eliminated if the feds auction the permits and use the revenue wisely. One way to do so is to straight up buy people off. (A proposal called "cap-and-dividend" would simply divide up the auction revenue equally among every citizen, along the lines of Alaska's oil fund.) Another way is to reduce other regressive taxes (like the payroll tax). There are other options as well.
You might argue, as the coal industry does, that if permits are given away to utilities, they will pass the profits along to consumers in the form of lower prices. You might claim, in that sense, that giving away permits is more progressive.
You would, however, be wrong. The fact is that utilities are going to raise energy prices regardless.
It has to do with features of the electricity market -- for more on this, see Congressional testimony from Ian Bowles (PDF), Mass. Secretary of Energy & Environmental Affairs, and Dallas Burtraw, Senior Fellow at Resources for the Future. Said Bowles:
It is tempting to think that, if you make generators pay for the emissions they produce, it will drive electricity prices up, but if you give allowances away for free, it won't. But it's not true. The price impact is the same either way. (my emphasis)
This isn't a theoretical concern -- the experiment has already been run, in the European carbon trading system, and sure enough corporations profited and prices rose anyway.
To repeat: Under any system that puts a price on carbon, energy bills are going to go up. The difference is that in a system with auctions, gov't will have the resources to cushion the blow to the most vulnerable.
That is as simple and urgent a question of economic justice as you're likely to find.
Coalition building
Some folks treat permit allocation as if it's a side issue, tangential to the success of the core emission reduction system. That is extremely short-sighted. The success of a climate system depends as much on social support as it does on proper technocratic design.
If people at the low end of the income scale feel like they're getting screwed, the middle class sees their bills go up with no tangible benefit, and big corporations make out like bandits, the public will turn on the program and punish the politicians who passed or supported it.
The only way to build a broad, sustainable base of support for the climate fight is to ensure that both the costs and the benefits are distributed equitably. We've got to play the long game.
Macroeconomic impact
According to the nonpartisan Congressional Budget Office, in a report called "Approaches to Reducing Carbon Dioxide Emissions" (PDF), not only would auctioning permits serve economic justice, it would also reduce the total aggregate economic cost of meeting emission targets. Here's what CBO head Peter Orszag said in his testimony to Congress:
Selling allowances could also significantly lessen the macroeconomic impact of a CO2 cap. Evidence suggests that the macroeconomic cost of a 15 percent cut in U.S. emissions (not counting any benefits from mitigating climate change) might be more than twice as large if policymakers gave allowances away than if they sold the allowances and used the revenue to lower current taxes on labor or capital that discourage economic activity, such as income or payroll taxes. (my emphasis)
The CBO, along with many energy wonks on the left and right alike (see: Pigou Club), says that a carbon tax would be the most efficient, lowest-total-cost option for reducing emissions. At least for the time being, a carbon tax is politically impossible, so it's worth noting that a cap-and-trade system with 100 percent auctions is functionally identical to a carbon tax (at least in a perfect world -- one of the arguments for a tax is its simplicity and transparency, which a complicated system like cap-and-trade is unlikely to match).
In short: Given a cap-and-trade system, 100 percent auction is the most socially just and economically efficient option.
The political playing field
Now we leave wonkville and enter the grubby, eternally disappointing realm of politics. Let's take a look at the political state of play on the auction question.
Both Obama and Clinton have come out in favor of 100 percent auctions, and include it in the plans released by their campaigns. This is one of the great and underacknowledged acts of political chutzpah on the Democratic side of the aisle in this election, thanks largely to the trailblazing courage of John Edwards. (If you'd told me two years ago that every contender for the Democratic nomination would support 80 percent reductions by 2050 via 100 percent auctions, I would have laughed. Bitterly. It's worth pausing to note how far, how fast, the debate has moved.)
But campaign plans are not bills. In Congress, Obama and Clinton have been less coherent and less courageous. Both have signed on as co-sponsors, not only of Lieberman & Warner's relatively weak America's Climate Security Act (ACSA), but of the even weaker McCain-Lieberman bill, and simultaneously the much stronger, gold-standard Sanders-Boxer bill. They are sponsoring indiscriminately, playing all the angles.
The bill that actually has a chance of passing is ACSA, and it is at the center of a rather heated dispute in the green community. Congressional Dems, including the presidential candidates, have been virtually unanimous in their support for the bill. Sen. Sanders half-heartedly tried to strengthen the bill in committee, but expressed support for it even when his amendments were rejected. Sen. Barbara Boxer, chair of the Environment & Public Works Committee, called voting the bill out of committee "the greatest legislative accomplishment of my political career of thirty years." Given the brick wall of obstructionism the Dems have faced in the Senate, they are palpably hungry for a public victory going into campaign season. They want this bill, badly.
Greens aren't so excited, noting several serious flaws in the bill. The targets are on the low end of acceptable and the bill doesn't cover the full economy, but the main objection is that it is frontloaded with grandfathered permits and would, according to an analysis by Friends of the Earth (PDF), offer some $1 trillion in giveaways to fossil fuel industries between now and 2050.
FoE has launched an ad campaign urging legislators to Fix It or Ditch It. The group was out on its own for a while -- it even got badmouthed by Boxer -- but has recently gotten some support from the Sierra Club. Most green groups are tepid at best on the bill, except for establishment-friendly Environmental Defense, which has staunchly supported the bill (and slagged FoE behind closed doors). As for the green netroots, it's fair to say most folks oppose the bill as currently constituted and expect it to be further weakened during floor debate.
Political tactics
Here are a few key tactical questions:
- Could a better bill get through next year, when there will likely be a larger Dem majority in Congress and possibly a Dem president (or, failing that, a reasonably climate-friendly Republican)?
- Would Bush sign anything that gets through Congress this session? (Don't laugh -- lots of his big corporate contributors are getting nervous, thinking this might be the best chance they'll ever have to shape climate legislation.)
- If a weak bill is passed, what are the chances it will be revisited and revised in coming years?
Groups like ED think getting the process started is important. Legislative staffs need to study up on this stuff; the details need to be hashed out; supporters and detractors need to be sussed out and put on record. ED has argued that greens shouldn't let the perfect be the enemy of the good, that the political situation will be largely the same next year anyway, and that the price of waiting is too high (delaying the start of the program means faster, steeper cuts will be required).
Others emphasize the worst case scenario: the bill gets further weakened on the floor, to the point that Republicans are willing to pass it and Bush is willing to sign it into law. Suffice to say, it's virtually axiomatic that anything Bush would sign would be awful.
Then we'd be stuck with a crappy bill, and once climate is checked off the national priority list, it's going to be extremely difficult to work up the will to revisit it any time soon. That's why FoE and others are willing to hold the line this year and wait until next year to get a bill. It is vitally important that this bill be designed well -- we're rapidly running out of time for second chances.
One thing worth noting: Big Coal is gearing up to launch an enormous PR campaign to defeat climate legislation. The core of the campaign will be Harry & Louise-style fear mongering: a climate bill will raise your energy costs and put you out on the street, not to mention your sweet-faced elderly auntie. Meanwhile, behind closed doors coal executives -- and the legislators they own -- are lobbying heavily against auctions, the one policy mechanism that could prevent the hit to consumers. Classy.
What you should do
Sorry if all this was a little complicated and discursive. To simplify matters, here's your Enviro-Blogger Expert Advice©:
Support Friends of the Earth.
Call your legislators today and tell them you think 100 percent of the permits under a cap-and-trade system should be auctioned. If they don't know what that means, explain it. Tell them that if they cannot eliminate or at least substantially reduce the giveaways to big polluters in ACSA, they should be willing to let the bill go down to a Republican filibuster or a Bush veto. Congress can return to the issue next session, with a strengthened hand and a supportive president.
Some folks call this approach dippy idealism, willing to sacrifice tangible progress to dreams of the Perfect Bill. I admit this line of criticism confuses me. Take a step back and look at the bigger picture here: 100 percent auction in a cap-and-trade system is better for the working class, better for the general public, and, in a macroeconomic sense, cheaper. There is no substantive policy rationale for giving away permits. The only reason to do so is to buy the support of fossil-fuel industries and the legislators who represent them.
Now, I get it: politics is politics. Some bribing of big corporate players will likely end up being necessary. Compromise is part of the job ... if you're a politician.
But concerned citizens are not politicians. It's not their job to compromise, certainly not before the battle is joined. It is the job of the grassroots to push, and keep pushing -- to speak up for constituencies that have no political voice, to defend those who don't have lobbyists in D.C.
As it stands, the details of climate legislation are being hashed out by lobbyists and legislators behind closed doors. In that unhealthy situation, yes, a lot of horse trading is inevitable.
But if a genuine public groundswell arises and publicizes the issue, pushing a simple message (100 percent auctions!), the dynamic can change.
This is crunch time -- time to call your friends, your neighbors, your legislators. Time to make noise. It is long past time for the progressive grassroots to take up this fight in earnest.
Mark Warner (D-Va.)
Can EPA regulations on CO2 be blocked?
Roger Wicker (R-Miss.)
Comments
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Sean Casten Posted 2:50 am
03 Mar 2008
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Angry African Posted 4:28 am
03 Mar 2008
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PJD Posted 8:54 am
03 Mar 2008
What amongst all of the references you have discusses the job impact issue? Is there some estimate for a number of years out as to what price permits would likely cost under an auction scheme, such as with a 90% confidence interval or some such analysis? Then look at what industries would likely be unable to bear that burden and result in job losses.
Would the "progressive" environmentalists be willing to accept some sort of a relief valve cap on the auction price so that the economic effects and job loss would at least be more predictable?
Most of Europe has a much better safety net than the U.S. for dealing with displaced jobs and also health and retirement. While advocating for the working and middle class, please don't forgot that many work for and have their health and retirement benefits dependent upon "polluting" industries. Often times when someone sticks "the man" it really is those working for him that suffer. I seriously doubt that a CEO from a polluting industry is going to forgo their salary or large bonuses to pay for auctioned permits. From what I've seen in corporate America, executives give themselves performance bonuses in good times and retention bonuses when they lose money... in the latter case shipping jobs overseas as the cost cutting measure.
Being part of the working/middle/lower class, I would be more concerned with the jobs issue than the electricity issue. At least with electricity here where I live, there is a state regulatory body that approves prices and usually has some provisions for mitigating effects on those most vulnerable. Is that not true for most states? Without a job, one can't afford any electricity for very long.
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David Roberts Posted 9:30 am
03 Mar 2008
If the lack of a social safety net -- particularly universal healthcare -- is tying the hands of innovation in this country, I'd say the thing to do is strengthen the safety net, not to cling to jobs and industries that are on their way out anyway.
grist.org
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In the belly Posted 9:45 am
03 Mar 2008
Look like crocodile tears to me, shed out of convenience (apparently job losses play well to generate fear among focus groups).
There are plenty of folks like me looking for a transition within current employment to renewable energy.
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Ark Kreitman Posted 9:50 am
03 Mar 2008
Under ACSA, how often is the emissions cap going to be revised? In the EU's Emission Trading Scheme, countries' targets are revised every four years or so - and the facility is built in whereby free permits based on benchmarks can gradually transition to auctioning.
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PJD Posted 10:15 am
03 Mar 2008
But I think many in the working and middle classes are already feeling incredibly insecure. The Bush administration's economic, energy and "war" policies have been horribly inflationary. Worse, the energy and military expenditures are inflationary without necessarily having corresponding economic growth effect... hence recent rebirth of discussions about the dreaded stagflation. This hits middle, working, unemployed and retired the hardest.
With this scenario, some degree of predictability in an emissions abatement program is probably very important... at least from my perspective being one of the vulnerable.
Even accepting that there will be job churn, there are less destructive ways churn can happen and more destructive. It worries me that many environmentalists would seem to not have merely the objective of removing emissions from industries, but seem to feel "polluters" need to be punished or put out of business. If someone's job, pension or retirement savings are tied up in these old industries, it is far better for that person if those industries somehow get the support to transition into viable businesses with decarbonization.
To give a concrete example, I just found an article I read last week.
http://www.baltimoresun.com/news/local/bal-te.md.mill29fe ...
It talks about a paper mill... a pretty CO2 intensive industry. It would seem to me if they were allocated CO2 permits that reduced by a few percent each year, they could figure out what they might be able to offset with efficiency and have long term plans for how they transition the company... perhaps into higher value specialty products, or worst case just having a road map so that employees have some idea how long their jobs might last. It also would seem to give more time for such a company to persist through the period when they will be faced with overseas competition from China that doesn't have the cost of permits. If they have to buy all permits immediately (and at an unknown and potentially volatile price), they likely would not be competitive with imported paper and would likely have to shut down sooner rather than later.
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Jon Rynn Posted 10:31 am
03 Mar 2008
A broadly-based progressive agenda would also include support for unions, which would also help those with jobs now, as would encouragement of employee buyouts of firms. Even policies to rebuild cities, partly to make them greener, would help workers, particularly if it included a real policy of increased public transit.
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PJD Posted 10:33 am
03 Mar 2008
Ark... what part of the information presented did you find most compelling to convince you "auctions are 100% the way to go"? Is there something that convinced you that the jobs, pensions, retirement issues such as the ones I raised will not be problematic? I consider myself a pretty smart person and yet it seems very hard to predict the economic fallout from the various options... how are you so confident?
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David Roberts Posted 10:46 am
03 Mar 2008
http://gristmill.grist.org/story/2007/7/25/01948/0376
grist.org
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Ark Kreitman Posted 11:04 am
03 Mar 2008
Now you could argue that keeping American jobs is more important than preventing climate change - that's a seperate debate. But once you've accepted the idea that the right to pollute should be decided through a market-based system, then free permit allocations will only distort that system. Why should a company move to change its behaviour if the government is absolving it of the need to pay for what it pollutes by providing free handouts?
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Craig Allen Posted 11:23 am
03 Mar 2008
Permits be divided into two classes, leasehold (owned by the government) and privatized.
You can buy and sell privatized credits at market determined prices.
You can use leasehold credits at government determined rates.
If a competitor wants to buy your leased credits, you can only retain them by privatizing them. In which case you have to purchase them from the government and match the bid of you competitor.
At the outset, emitters are leased credits based on their actual emissions at the time the scheme commences (with stiff penalties applying to emitters who are found to have artificially inflated their emissions in the lead up to commencement).
The national/federal reserve bank in each nation, is given the responsibility for setting carbon value per credit. And is given a long term emissions target that it must strive to reach.
The emissions target must be cumulative. That is, it is the sum of all emissions over the target period.
Optionally the World Bank could be put in charge of determining and allocating global emissions credits. Nations might be allocated leased credits according to current emissions. And the credits may be reallocated between nations over time in order to enable per capita equality to eventually be achieved.
In this way, there is not a huge up front cost to industries, but neither is there a windfall profit to be made. The banks will also have another mechanism to use in controlling economies other than just the interest rate lever.
Solved!
(If this has not been thought of before, then I hereby dub it the 'Otway mechanism', after the beautiful and inspirational Otway Ranges where I live.)
Cheers
Craig Allen
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PJD Posted 11:34 am
03 Mar 2008
I suppose I can see the point that if the current baseline emissions have somehow been grossly inflated then auctioning might result in cuts even greater than would happen under a distributed scheme. This could be addressed by auctioning some sufficient amount to take care of any level of fudging that has occurred in historic numbers... such as distributing 90% and auctioning 10%. Though how will the system function at all if the assumption is that the current reporting system is not to be trusted?
Under a progressive cap system the motivation to change is that the permits given each year will diminish... no matter how they are apportioned. I'm not sure I understand why you would question that aspect of it. One could argue that an auction system might end up with even faster change if all the available permits were not purchased. Both systems put a progressively reducing cap in place and would force the change. If you're asking working people to accept more job insecurity for the potential that CO2 abatement progress might happen even faster than mandated... at least state that as the position.
Unfortunately... I've been around long enough to know that there will be corruption, accusations of favoritism, and so on... no matter what is done. I'm just trying to figure out how I, my family and people like me can make it through the transition with as little suffering as possible.
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Sean Casten Posted 12:07 pm
03 Mar 2008
I think we are down in a morass of academic details. To wit:
The only way to meaningfully increase atmospheric CO2 concentrations is to burn more fossil fuel.*
Fossil fuel costs money.
Ergo, lowering CO2 emissions saves money.
Ergo, talk of economic pain from CO2 reduction is a tad misplaced.
This math gets lost in too much of the CO2 debate, which assumes falsely that CO2 is like other pollutants. Lowering NOx means putting SCR on stacks or lowering combustion temperatures, both of which cost money. Lowering SOx means putting scrubbers on plants, or else shifting to higher cost, lower sulfur fuels. Lowering particulate means adding particulate traps. All of these are "end of pipe" solutions, and are universally inappropriate for CO2. Carbon sequestration is stupidly expensive. By comparison, driving up the efficiency with which we convert primary fuel into useful stuff is a really good idea, saving money and lowering CO2.
The only reasonable objection one might make to this approach is that it doesn't make economic sense to invest the capital in more efficient conversion and use technologies. (Which contains within, the implicit assumption that our current regulatory model is perfect and would never allow inefficient capital allocation. Does anyone believe this to be true?) But even if the regulatory model were perfect, you would still have to accept that there is a lot of antiquated generation and industrial technology out there which was installed when natural gas cost $2/MMBtu, coal was $1.50/MMBtu, oil was $20/bbl and retail electricity was 6 c/kWh. None of those conditions are remotely true anymore - so how can capital deployed under those conditions still be optimal when the fuel costs (and hence, annual savings from energy efficiency) are up by factors of 3 - 6?
Let's put this mathematically: delivered power from a new central coal plant will cost north of $100/MWh. And it will emit 1 ton of CO2 per MWh. Meaning that every ton of coal-fired power we take off the grid saves $100/ton of CO2 emissions reduction.
The idea that carbon reduction is economically painful simply doesn't pencil - and thus the thesis that there is massive economic pain associated with CO2 reduction doesn't either. (Check out the work of the folks in Arizona who have figured that they could meet some pretty aggressive total CO2 reductions at a net cost of negative$12.74/ton as evidence.)
That said, there will be wealth transfers in a system that accurately prices carbon. Fewer jobs for coal miners, more jobs for wind turbine manufacturers. But the net societal gain is positive, and accrues to everyone who consumes energy - the type of dislocation we're talking about here (provided we really do economy wide carbon pricing, and price all tons of CO2 equally - a big political challenge to be sure, but the only way to get optimal outcomes) is smaller than conventional wisdom would suggest.
* OK, or deforestation, but hopefully you get my point.
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Pangolin Posted 1:03 pm
03 Mar 2008
Each SS number holder could then go online and either auction his permit personally or let it stay in the pool where it would be sold at whatever that days index price was when purchased. The check goes straight to the person on the number. The software would be easier than E-bay.
That way people could be individually responsible and/or rewarded. If you wanted to keep your carbon allowance off this years auction that's fine but don't bitch when gas prices go through the roof.
If you sell your permit each year and buy a solar panel you'll be able to laugh all the way to the bank at the poor suckers who take their money to Wal-Mart.
Personally I think any bill in the pipeline should simply be ditched as anything you can get past GOP senators will just be an obstacle to forward motion later. It will be like selling your car to your neighbor only to have him park it in front of your driveway.
I believe that Jim Hansen is right and that 80% by 2050 is just a cruel joke to play on our children. We're already into runaway feedback mode and simply slowing our GHG emissions won't change that a bit.
Put the Carbon Back
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Ark Kreitman Posted 1:21 pm
03 Mar 2008
I agree that the fundamental driver is that the cap is tight enough to enforce real reductions. It really depends how the cap is set - even with 100% auctions the market will still collapse if too many permits are issued. I do however honestly think that auctioning provides a simple way to avoid allegations of special interest - everyone bids equally and fairly.
I'm not convinced by the argument that permits will help provide job security by allowing companies time to adapt. The reality is that some industries will suffer in a carbon constrained economy. Jobs will be lost. In other industries, the smart companies will see cap-and-trade coming in advance and will already be putting in place measures to adapt. Other companies will stall and try and buy time without really facing up to the problem; free permits is a sop to these companies. But the onus should be on companies to react to the challenge of global warming, not to ask for loopholes to be installed in the system. Allocating permits doesn't provide job security, it merely delays the inevitable for another ten years.
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PJD Posted 1:35 pm
03 Mar 2008
"Ergo, talk of economic pain from CO2 reduction is a tad misplaced."
These are two statements that make me very worried about supporting legislative opinions of those claiming to be progressive environmentalists. These statements would appear to show no concern for those vulnerable people that the "progressive" movement professes to be concerned about.
I assure you that for many people the economic fallout of CO2 abatement is going to be anything but academic. It will cause price increases, it will cause job loss (churn if you wish), it will cause real, rather than academic, problems for people. If a retired person that is dependent on some old industry company for their pension and health care has that company go bankrupt, they're not going to be able to go out and start climbing up wind turbines as a maintenance man. Saying don't worry it all averages out and someone will benefit for each person that suffers is little solace to the one suffering... not to mention that quite often the extra suffering ends up landing on the ones already shouldering an unfair burden of suffering.
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Jon Rynn Posted 2:41 pm
03 Mar 2008
The kind of arguments that PJD is advancing are similar to the "it will be economically painful" arguments that the Right and part of the center is moving toward. Without something more explicitly government-directed, in terms of industrial policy, rail networks, direct subsidies of solar/wind similar to Germany and Japan, these arguments are likely to be very effective, because something abstract like cap-and-whatever will make everybody nervous -- since it is abstract -- whereas concrete programs will make it clear that there are plenty of jobs. We should be able to walk and chew gum at the same time.
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ce1907 Posted 3:32 pm
03 Mar 2008
Inhofe has cynically made the same argument from the start. Check the record.
So what is the drumbeat? No Dem should support anything less that 100% auction immediately. Great. Effective phone banking. L-W gets a bad vote, or gets pulled from consideration.
Where are you next year?
What is the hook for journalists?
What is the alternative bill? Who are the co-sponsors? Who in industry supports it? How do you get past regional concerns?
You have no plan. You do not even understand the game. Or who the players are. And you do not try to find out. You just debate hypotheticals. Pathetic, really, if the consequences were not so severe.
If you want to slow climate disaster, you need to put together a motley coalition of powerful interests who might all support a first step toward carbon regulation for their own reasons.
Believe me, everyone in that coalition will be out to screw each other in the details.
You should be trying to find out what is possible, and try to help get the best out of the scrum.
Instead, you just amplify Inhofe's PR campaign.
How noble.
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bookerly Posted 5:10 pm
03 Mar 2008
David's post is correct in both defining the problem and offering some concrete actions. And in defining the danger of a program that would ignore the concerns of ordinary people.
PJD brings up some needed points. It should not be acceptable for progressives to say "Well, you can't make an omelet without breaking eggs." "Sometimes you have to burn a village to save it." or "It doesn't matter if some people lose as long as some people win."
David is correct that we need to strengthen our social welfare system. Alas, there is very little call for doing so at this point. (Reminds me of Reagan closing the terrible mental health dungeons in California, but, oops!!! not funding the social welfare part of the system (neighborhood treatment programs, clinics, etc.).
It would be nice if we were careful not to create more problems that we don't need to create in process of doing good.
patrick in Beijing
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Sean Casten Posted 11:54 pm
03 Mar 2008
Anyway, enough disclosure. My point was really not whether or not this is a natural progressive issue, since that is, at core, clouded by the label. Rather, it's a question of whether or not it is good economic policy to lower CO2 emissions. Since the only way to significantly lower those emissions is to burn (and purchase) less fossil fuel, and since fossil fuel is more expensive by the day, there are massive economic gains to be had from CO2 reduction. I frankly don't think this basic math is an innately progressive, conservative or fascist policy - it's just good policy. And unfortunately, far too much of the debate frames this as if carbon reduction is economically painful - and so we spend massive amounts of time theorizing about how to mitigate the pain instead of getting going on the carbon reduction. And so we fiddle with policy debates while the earth burns. We all need to get beyond that level of academic theorizing - and I see no quicker way than to come around to the fact that buying less fuel = more money in our collective pockets, and it is therefore in our economic interest to act.
All that said, there is the economic dislocation issue - and if the "progressive" movement has as one of it's pillars that all jobs are sacred, then I think it's doomed. Chemical weapons manufacturers, buggy-whip manufacturers, 12 mpg Dodge Dart manufacturers... all of those folks have employees, all of whom would be dislocated by a set of policies that drove us away from their products. Protecting those jobs is not in anyone's interest. That said, where the government was complicit in creating those jobs (as is certainly the case when it comes to coal mining), the government has a pretty clear moral obligation to ease the transition that would result from a better set of policies. But that is a very specific set of industries, and really not that difficult when you look at the total number of affected individuals. And my mathematical point was that so long as we remain cognizant of the fact that the winners vastly outnumber the losers (e.g., compare ~100,000 coal miners to 300 million electricity users who are suddenly paying less for their energy), these wealth transfer issues need not be that difficult to manage. But for goodness sake - let's get started.
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ids Posted 12:45 am
04 Mar 2008
http://www.carbontradewatch.org/durban/
A good interview with author is found in the March 3, 2008 archive here:
http://chicagopublicradio.org/Program_WV.aspx
The offsets coal will get away with in the lies and wars of climate change is ignored, and the fact that emissions will reach 1990 levels by about 2027 and L-W's future failures is being glossed over at best.
It's like nobody realized a reduction in 2008 counts as a reduction for 2009, 2010 thru like 2100, and a ton going in the air today is over our head until like 2100.
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Jason D Scorse Posted 3:31 am
04 Mar 2008
I teach environmental economics and blog at http://www.voicesofreason.info.
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ids Posted 4:13 am
04 Mar 2008
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PJD Posted 6:24 am
04 Mar 2008
Can you provide some links to the analysis of some of these economists. Ones that address the issues I've brought up in this thread would be especially appreciated. I understand some of the motivations for auctions whether it be progressives wanting revenue that could go to offset hardship on lower classes or conservatives that would love to kill income tax entirely. So I've got the motivation parts of the equation. I'm interested in whoever has addressed the issue of economic dislocations, whether they be by industry or by geography and the extent to which the auction price could be expected to be stable and how fast it would increase.
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