Comments The Cunctator has made

Is L-W a "good" bill?

The proper metrics to judge mandatory CO2-emissions-reduction legislation such as L-W are:

1. effectiveness in reducing emissions
   
2. effect on economy/society

So, how does L-W rate?

Effectiveness in Reducing Emissions

On the first, the IPCC 4th Assessment Report says that a long-term stabilization target of 2°C above pre-industrial levels is needed to have an even chance at avoiding the tipping point into catastrophic climate change.

The report also says that to achieve that target, the industrialized nations need to cut emissions to 25-40% below 1990 levels by 2020, and 80-95% below 1990 levels by 2050.

(Developing nations need to simultaneously achieve "substantial deviation from baseline" for overall reductions to be sufficient. See Box 13.7 in the 4th Assessment Report, p. 776.)

L-W is not close to either of these targets. L-W only covers 80% of emissions.  For covered sectors, it hits 1990 levels by 2020 and 65% below 1990 levels by 2050.

At Bali, the Annex I Kyoto signatories (every single industrialized nation except the US and Turkey) agreed to the IPCC targets. The EU has unilaterally committed to achieving 20% reductions from 1990 levels by 2020, and would shoot for 30% reductions if the US makes a comparable effort.

So, even assuming that the legislation is well designed and will be well implemented such that the targets in the bill will be met, if by "perfect" one means "an even chance of avoiding catastrophic climate change", L-W is not perfect in its targets.

Furthermore, its lookback and cap-adjustment provisions are heavily weighted towards short-term economic growth instead of scientific necessity or long-term economic health.

Is L-W good? Is it "strong"? ED, which did not publicly support the Sanders amendments in committee to strengthen the cap targets and lookback provisions, evidently thinks so. I'm not sure what science they're using to come up with that result.

Effect on Economy and Society

In this analysis, I am going to make two a priori assumptions:

1. Catastrophic climate change would be worse for our economy and society than doing nothing
   
2. some mandatory regulatory system will be put in place

In other words, I'm comparing L-W's economic effect against other hypothetical emissions reduction programs, not against the do-nothing scenario.

There is a well-developed consensus for some of the elements necessary to a "perfect" regulatory system, following principles of economic efficiency (maximum benefit to sector-wide industry and businesses) and economic justice (job creation, benefit to poor and middle class, etc.).

These include:

1. 100% auction of credits
   
2. Auction proceeds should go into minimizing economic disruption and investing in energy efficiency, renewable energy and other emissions-reduction technology, sustainable agriculture, and international/local mitigation/adaptation
   
3. To minimize economic disruption: Most efficient system is to make overall tax system more progressive (possibly improving other safety net systems like healthcare)
   
   1. Allocation of about 15% of auction to poorest 20% (preferably by reducing existing taxes, such as payroll taxes) protects them from harm
      
   2. About 6% of auction revenues sufficient to protect electricity producing sector from harm; can be phased out over time
      
   3. Similarly for other covered sectors
   
   
4. Energy efficiency:
   
   1. Short-term emphasis should be more on energy efficiency than new-tech investment (see Architecture 2030) -- free allocations to load-serving entities would block/slow this
      
   2. Smart grid/electranet/distributed grid should be emphasized -- support for traditional power system will block/slow this development
      
   3. Mass transit, smart growth, high-density urban planning should be emphasized -- subsidization for traditional highway system, etc. with block/slow this
      
   
   
5. Technology investment:
   
   1. no more than $8-$30 billion over 10 years needed to spur carbon-capture and sequestration technology
      
   2. Subsidization of renewable energy technology should be at least on par with subsidization for nuclear, natural gas, coal, oil. Would make sense to actually be more strongly subsidized. Would make sense to reduce/remove subsidies for gas/coal/oil that aren't emissions-reduction focused.
      
   
   
6. Agriculture:
   1. Sustainable agricultural practices (high-carbon farming, local farming, etc.) should be supported -- subsidies for industrial agriculture blocks/slows this
      
   2. Biofuels need to be locally and sustainably produced and used to be a net positive
   
   
7. International mitigation and adaptation support -- I'm not sure what the "perfect" system is here, but I know that, for example, the Nature Conservancy wants a real emphasis on preventing deforestation
   

Now, L-W is not "perfect" on any of these. In fact, it has nearly the exact opposite emphasis in most categories. Over its 4-decade span, allocates about 48% of the permits away for free, giving 22% directly to polluting entities. These giveaways are heavily frontloaded. About $350 billion is allocated to supporting CCS (also frontloaded). It lumps nuclear and "clean coal" tech with renewable energy. It allocates permits for free to load-serving entities. It allocates permits for free to state governments (guaranteed to make pricing more inefficient).

The ED and other groups like to argue that we shouldn't make the perfect the enemy of the good. It's also to remember that the bad is necessarily the enemy of the good.

It is possible to reform the existing framework in the L-W legislation, in my opinion, to arrive at a bill that is "good". It certainly wouldn't be perfect.

Perfect climate legislation requires:

1. 100% coverage of emitters, not 75-80%
   
2. Transformative reform of existing agriculture/land-use policy
   
3. Transformative reform of existing transportation policy
   
4. Transformative reform of existing tax policy
   
5. Transformative reform of existing resource extraction policy
   
6. Transformative reform of existing electricity distribution policy
   

So the best that a single cap-and-trade policy can be is "good". As Al Gore outlined a year ago, a comprehensive and effective climate policy merely starts with a strong cap-and-trade system.

By reasonable economic and scientific metrics, L-W is not a good bill unless you own coal and/or nuclear plants or belong to an investment bank.

Hill Heat

More on NRDC

NRDC on the Clear Skies Act of 2005, praising auctions for SOX and NOX:

"GRANDFATHER" THE DIRTIEST PLANTS: The Bush administration's original legislation would have required EPA to distribute some pollution "allowances," or rights to pollute, through an elaborate auction system. This market mechanism would have created incentives for the least efficient plants to undertake the most significant cleanup efforts to avoid paying more for allowances. But GCA complained that such an auction would "increase" polluting power plants' "compliance costs unnecessarily."

Again, the companies got what they wanted: The current bill does not include the auction provision. Instead, pollution allowances would be allocated according to how much fuel plants burned and how much pollution they emitted in the past, giving less efficient plants more (free) allowances, and eliminating any incentive to clean up.

Hill Heat

Not unlike Warner

John Warner seems to be following the same approach in the Senate; a long-time opponent of environmentalist issues wants his legacy to be climate change legislation.

It will definitely be an interesting fall.

Hill Heat

Not really accurate

Even Greenwire's getting this wrong.

The uncertainty in the annual temperature anomalies is at least 0.1 C, so it's never been scientists saying 1998 was the hottest or 1934 was the hottest.

In fact, the only peer-reviewed statement from Hansen's team was that 1934 was marginally warmer than 1998. From Hansen 2001 et al.:

The U.S. annual (January-December) mean temperature is slightly warmer in 1934 than in 1998 in the GISS analysis (Plate 6)... the difference between 1934 and 1998 mean temperatures is a few hundredths of a degree.

Later adjustments to normalize the US temperature record by GISS put 1998 a few hundredths of a degree above 1934, but they never trumpeted that, since it wasn't significant. And now it's been renormalized again to bring 1998 a few hundredths of a degree below 1934 again. Wow. What a news story.

What's remarkable is how every single right-winger and mainstream journalist on this story has repeated the claim that 1998 "has long been believed" to be the hottest year in the US.

And yet noone has provided any sources to back up that claim. Why? Because that claim was hardly, if ever, made.

Hill Heat

Typo

You write "The big flaw is that it gives around 25% of its permits away."

No, it gives around 75% of its permits away.

Hill Heat

Other issues with Lieberman-Warner

You are right that giving away 75% of the emissions credits is a central problem. The bill grossly violates the polluter pays principle.

There are others:

• The proposal only covers 80% of US emissions. That's a major loophole.
  
• The reduction targets are not sufficient.
  
• The proposal massively subsidizes the coal industry in particular
  
• The proposal subsidizes nuclear plant production
  
• The proposal allows borrowing against the future. It's an open question how much we can afford to do so.
  
• The proposal indicates several methods by which emissions can be increased to avoid economic harm, but it does not have methods to strengthen emissions caps to avoid environmental, economic, and societal harm
  
• Again, the proposal does not tie environmental or societal costs to implementation of the cap-and-trade system
  
• Nothing for cogeneration/decentralizing the energy grid or for renewable energy
  
• It's just a cap-and-trade system; in other words, one of the 10 planks of Gore's proposal. Where are any of the other nine?
  
• The proposal makes minimal attempts to do anything other than protect the power industry -- there's little to nothing for working people, for communities, for entrepeneurs, for job creation, for local farmers, for international efforts, for sustainable practices.

The Lieberman-Warner proposal leans entirely too far in the latter direction for my taste.

As the Sierra Club said,
"The Warner-Lieberman proposal and others are oriented toward meeting the needs of the coal, utility and auto industries. Congress should instead focus on proposals like Boxer-Sanders and Waxman that better meet the needs of communities, families, and the environment."

Hill Heat