mlappe’s Recent Comments

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  Offsets are not Permits

  Gar is exactly right that the roll of offsets in a U.S. cap policy needs to be more widely discussed. There is a misunderstanding that any cap policy must include offsets. This doesn't have to be the case. As we learned from phase I of the EU ETS, a secondary carbon market could undermine the effectiveness of a cap. Passing an offset-free policy, however, will be politically challenging, as private industry will fight hard for the inclusion of a CDM-type program.

  A possible solution is to make offsets additional to a cap. Upstream emitters will be required to hold carbon permits for all of their emissions, and any emitter larger than a certain size will have to purchase offsets to become "carbon neutral" by a certain date. This system would include an offset market, but not at the expense of an effective cap. The system would also create two sources of revenue. The money from permit sales would be returned to citizens, and the money from the offset market would effectively go towards transferring technology to developing countries, developing projects that prevent emissions, and protecting pristine ecosystems that act as carbon sinks.

  Under this policy, large emitters will have to pay twice: once for the permits to emit, and again to offset their total emissions. This will be a tough pill to swallow, but it will also provide a doubly strong incentive to reduce emissions. The policy will provide the strong, predictable price signal  that will spur investment in clean energy technology. If we pair this system with a rapid phase-out of government subsidies to the fossil fuel industry, the playing field could finally be level enough for clean energy to compete.
  On The major differences between carbon pricing plans are political posted 1 year, 9 months ago 16 Responses

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  Political Feasibility

  Gar paints a clear outline of an effective cap and dividend policy. While we can debate the differences between a carbon tax and a cap, the key distinction will be political feasibility. We are seeing strong momentum towards implementing a cap system in the U.S. and effort should be made to ensure the cap is done right.

  We have to keep in mind that the race to beat climate change will be a marathon, not a sprint. A policy must be in place for at least forty years, or ten presidential terms. One main advantage of a cap and dividend system is that once the policy infrastructure is established, it has a strong chance of enduring any political changes. It also keeps the poor and middle class from being shafted by increased energy prices, which will help maintain popular support.
  On The major differences between carbon pricing plans are political posted 1 year, 9 months ago 16 Responses

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  Avoid the piñata

  Alan is right that any successful climate policy must consider how increased energy costs will affect households.  A carbon cap is like a regressive sales tax on necessities, regardless of whether permits are given away or auctioned.  The CBO estimates that a 15% reduction in CO2 emissions will cost the average household $1,280.    When emissions are reduced 80% or more, the costs to households will rise far above this.

  While the CBPP proposal would help protect the poorest of the population, the political disadvantages of Cap and Buffer should be take seriously.  We must keep in mind that the race to halt the planet's warming will be a marathon, not a sprint.  For a climate policy to work, it has to remain in effect for at least forty years, or ten presidential terms.  When prices climb in response to the diminishing supply of fossil fuel energy, the backlash from the public will put heat on our lawmakers to pull the plug on the program.

  Additionally, leaving 85% of auction revenue for the government to do with as it pleases is not necessarily a good thing.  According to a study by Friends of the Earth, the Lieberman-Warner Climate Security Act would return almost $400 billion in auction revenue to the fossil fuel industry, prolonging our addiction to dirty energy and making it harder for clean energy like wind and solar to compete.

  Alan's image of an exploding piñata is apt, but we want to shape policy that avoids that type of money grabbing.  A policy that returns auction revenue equally to all citizens, regardless of income level, would avoid a corporate feeding frenzy.  Furthermore, equal dividends would create a clear incentive to conserve; those families that guzzle fossil fuels will get back less than they pay, while families that conserve will come out ahead.  Creating a policy that is transparent, inclusive and fair has the greatest likelihood of success.
  On A second opportunity to make climate pricing fair posted 1 year, 9 months ago 5 Responses