OK, one thing the right has always known is that unity comes from giving something to the base. You don't have to do a carbon tax. But I think the minimum you need for a cap & trade to be acceptable to progressives is:

NO giveaways 100% auctioning

NO offsets.

NO escape clauses.

Permits auctioned frequently and conveniently enough that buying them directly rather through traders is real option

Permits have a life of no more than three years, and a start date no more than three years from time of auction. (So you could buy a permit that takes effect three years from now and expires three years from that).

I think with those three provisions most carbon tax advocates will accept it as second best.

If you want well designed (as opposed to acceptably designed) I add the following. I think it will work well enough without the following, but for best policy add:

Minimum prices close to the best guess as to actual cost (greatly reduces volatility).

A quarter percent tax on resale of permits. (Discourages trading and encourages direct purchasing.)

=========

In essence this is a call for a unified position. Fine, but if you want unity between different parts of the spectrum, you can't expect one faction to  do all the moving on the grounds that "you are just being big sillybillies. Grow up and to things my way".

If progressives are important enough that you are afraid their lack of support will kill something, then they are important enough to be reached out to rather than scolded.

So it's a threeway political standoff.  progressives won't go for cap n trade because it is too vulnerable to insider trading market manipulation and corruption.

Politicians can't back any kind of carbon tax, because any tax increase vote would get them swiftboated out of office next election time.

That leaves the middle opposing both cap n trade and carbon taxes on the grounds that both progressive (do not use lefty, as GOP progressives exist too, like Ahhnoldt) and politico critics are probably right.  

I say we put away the rhetorical six shooters and all embrace subsidy diversion, a tax neutral, revenue neutral, debt free way to stimulate the green economy and tax the GHG energy economy.

Take the 50 billion in industry subsidies away from oil, coal, nuclear, and agribizz corporations and give it to adopters of renewable energy and conservation technology.  

Local, state, and fedral governments can lead in fostering mass production contracts for fleet vehicles and public buildings.  The public can join in as mass production brings prices down.

Some of the 50 billion per year can go to mass transit and bike trails.  And reviving and electrifying rail roads.

This is the only compromise left after the factions weigh in.  And it would take a coalition og the extremes and the middle to beat corporate lobbying against subsidy diversion.

Corps like exxonmob give up billions?  Not very likely without a fight.  A grassroots effort like the Obama campaign would have to be mounted that mass emails and calls legislators to vote the right way, it would have to be a positive campaign.

Legislators would have to know that on voting day the grassroots would back their risk taking behaviour of opposing industry lobbying.  If we abandon them after getting them to oppose corporate power, their re-election hopes would be dashed.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

Though I think your list is too long, too strict, and too difficult to understand to serve as the basis for any kind of unified push.

Being realistic, I think progressives should unite around one or two big things that don't require expertise in climate policy. I'd pick auctioning the maximum possible number of permits and minimizing the use of offsets and off-ramps. Others will, I feel sure, disagree.

grist.org

A an acceptable bill must have a real cap, with no takebacks, and allow only real emissions cuts, no imaginary paper cuts like so-called offsets.

An acceptable bill must sell all permits, not give them away to big polluters. And it must structure that sale so that polluters mostly buy them directly. It is not acceptable to end up with our greenhouse policy run by the same financial institutions who did such a bangup job with mortgages. We don't need carbon hedge managers collecting billion dollar bonuses, or carbon derivative swaps!

So just two points. I did not exactly change my position. Then again I don't have authority to speak for progressives and you don't have authority to speak for the EDF or USCAP.  

Romm seems to think we are not going to get ANY bill in 2009. If that is the case, then the best strategy is to get a maximal bill introduced, letting the perfect be the enemy of the good, and make that the starting point for 2010 negotiations.

I'm not sure why, because some mercenaries have glommed onto a policy position they think won't be enacted, that should be an excuse to slam those who truly do want to confront the issue and sincerely believe that position to be superior.

If that's allowed to work every time, that's what they'll do any time they can to purge proposals from the debate.

Gar says:

If that is the case, then the best strategy is to get a maximal bill introduced, letting the perfect be the enemy of the good, and make that the starting point for 2010 negotiations.

That's excellent (and elementary) tactics for this bill and for any bill.

Too bad Obama already screwed that up in the case of the stimulus and tax cuts.

Hopefully he's learning a lesson from this (that appeasement doesn't work).

I think the ball is really in Obama's court. He seems to be taking baby steps and testing the waters. Let's look at his frame (from yesterday):

"But we will commit ourselves to steady, focused, pragmatic pursuit of an America that is freed from our energy dependence and empowered by a new energy economy that puts millions of our citizens to work"

No mention of C&T. Perhaps he knows he doesn't have the votes. Should he devote precious political capital to try to push C&T at this time?

I personally don't think so. I think it is untested. If he can find ways to reduce emmissions through regulation and infrastructure spending, he can watch how regional and European C&T fare over the coming year.

If he can get the votes for it, sure. But I think Greens need to rethink their frame, away from theoretical market solutions that might have worked in 1980, towards the new economic landscape and the implications of peak oil for the immediate future.

And no master strategies and false calls for unity! Let's look for the openings and adapt to them as they arise, and think on our feet. And not separate into opposing camps.

carbon tax talk is a poison pill.  And the devious motives of the rightwingers pushing a carbon tax are obvious.

on the larger point, it is all moot

the big O has zero interest in either capntrade or a carbon tax.  only capntrade that might conceivably get passed would be a Bingam@n version with an offramp so wide and fast that the whole law will be a joke

there will be no significant 2020 cap, or 2030 cap, signed by the big O.  too zany for him, because Bingam&n, Summ*rs and Ba&cus say so

move on, guys

best that you can hope for is some rear-guard action challenging permits for coal plants, and maybe some smart grid and efficiency stuff

but as the price for that small meal, get ready to give away tens or hundreds of billions to "clean coal" boondoggles and nuke power

Not sure your point about 3 year permit life, but I'd advise against that.  If you want people to invest in things, you need them to make those investments factoring in the costs and profits over the lifetime of the investment.  This is no less true for energy efficiency investments than for municipal bonds.  And no less true for investment in those capital projects to reduce CO2 emissions - of which we will need a massive volume of in order to right the ship.  Setting rules so that you only have access to three years worth of CO2 credit at the time of investment serves only to reduce the volume of investment in CO2 reduction.  

I suspect your concern on the pollution side of the equation is that you don't want to let CO2 sources pollute indefinitely into the future.  Which I understand, but keep in mind that you've got to keep visibility on the other side as well, since the goal of a good CO2 policy is not only to penalize sources, but also to reward sinks.  Three year windows simply isn't long enough to do so.

To avoid excessive trading, or excessive resale. In a 100% auctioned system the "carrot" is not buying permits in any case.

Without dredging up our on-going debate about carrots & sticks, this logic still doesn't work.  If the permit prices are only set in three year increments, how do I possibly value the "carrot" of not having to buy a permit?

Suppose, for example, that permits today are trading for $10/ton, and I am considering a $50,000 investment that would avoid the release of 1000 tons/year.  If the only visibility I have into future permit prices is the three-year contracts being signed, then I'm faced with the prospect of a $50,000 risk that is offset only by a $30,000 guaranteed savings (in avoided permit costs).  Yes, there will likely be some market in year 4, but since I don't know what the price is, I can't factor it into my calculus without taking on a lot more capital risk.  That in turn will drive all but the highest-risk investors out of the space.

(This problem is one that bedevils current "restructured" power markets, where you can only buy 5 - 10 year forward contracts on assets with 20+ year lifetimes.  This, in part is why we haven't built new power plants as fast as load has grown.  That's not an environmental issue per se, but it is a compelling example of the problems innate to short-dated contracts, to the extent that they are intended to encourage investment.)

Forget cap and trade. Forget carbon tax. Until the United States strikes a bilateral climate deal with China, it is all empty rhetoric. The abscence of a bilateral deal between the US and China, will mean that Copenhagen will end up being another Olympics of hot air, bloviating, greenwashing, and posturing. The abscense of a deal will give the green light to another failed attempt at climate legislation in Congress, as the deniers and delayers once again latch on to the China card as a excuse for inaction.

In Cleveland, we are discussing the launching of a campaign called Barack Talk to China, that will seek to do what past efforts like the push for a Test Ban Treaty did in the 1960s and the Nuclear Freeze movement did in the 1980s. Namely, mobilize a public push for diplomacy from below to remove the one big obstacle to climate progress - the US/China suicide pact.

Randy Cunningham
Cleveland, OH

Randy Cunningham

Carbon Tax, Carbon Trading, complicated dodge and loophole ridden.

Keep it simple! 20 year period to get coal fired plants as clean as an in house ventless natural gas heater. This means co2 and particulate. Benchmarks every 2 years with fines, monetary penalties if you do not meet the standard.

Tax rebates and tax incentives for power produced by Solar, wind, hydro or whatever new green technology crops us in the next 20 years. Do away with all tax incentives now for coal, oil fired powered production. Reduce Corporate tax for the alternative energy power produced.

Don't cry if they do coal gasification to the standard of our highest quality natural gas. If that is what they want to spend their money on and not tax payer money it will still be a win win if they can get the co2 and particulate to high grade natural gas standards of a ventless home heater. If they can't and have to go the wind solar route, that will be even better.

T Bone Pickens has it wrong the natural gas he wants for transportation needs to go for power production. Hybrid 4000# and up Electric for everything else until the technology catches up.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

No Offsets
No Giveaways
No Ceilings

Then you might actually have yourself a worthwhile system.

The real question then is, "What do you do with the auction money".

Dividends?
Carbon Reduction Grants?
Both?

-David Ahlport

>Suppose, for example, that permits today are trading for $10/ton, and I am considering a $50,000 investment that would avoid the release of 1000 tons/year.  If the only visibility I have into future permit prices is the three-year contracts being signed, then I'm faced with the prospect of a $50,000 risk that is offset only by a $30,000 guaranteed savings (in avoided permit costs).  

That is why you have minimum prices on permits, escalating as caps tighten. Or better yet a carbon tax that escalates according to a schedule.

Political viability is not sufficient cause for advocating cap-and-trade. If Congress passes cap-and-trade legislation based on little more than political fashion and mindless dogma, then we could end up with a $3-per-ton make-believe climate policy that accomplishes little more than business-as-usual.

The underlying policy rationale for taxes and cap-and-trade are not inherently incompatible, and both approaches can be combined to achieve common policy objectives more effectively that either operating alone. We need to get past the polarizing which-is-better debate and start looking at these as complementary policies. Whether you call the policy a "tax" or "cap-and-something" isn't important; we need to look beyond the semantics and focus on what the policy actually does.

Cap-and-trade is politically viable, and a carbon tax is not. "Carbon tax" even sounds like a phrase tailor made for Republicans to whip the media into a frenzy. You think the public doesn't care about global warming now, just wait until there's a crazy new tax for it. Forget it. Non-starter.

Let's try a thought experiment.

First, imagine Republicans demagoguing against a carbon tax. For good measure, imagine them going one further, by calling it a "green tax" and taking down the whole green movement in the process. They'll fill cable news with scare stories of working families going broke at the pump, all thanks to Al Gore's new green tax.

Now imagine Republicans on cable news, trying to argue against cap-and-trade. First they would have to explain it, and hope that the public will have a visceral response against the arcane technical details of an emissions trading regime. It's just not going to happen. The public will yawn, and the bill will pass.

A cap-and-trade plan would be highly effective, our president supports it (and even campaigned on it), and Congress won't run screaming like they would with a carbon tax.

Heck, as a bonus, McCain supports cap-and-trade; he campaigned on it too. Which means we're virtually guaranteed a filibuster proof majority on any bill that reaches the Senate.

Let's get 'er done.

How about a "fixed-price sale of emission allowances"? Call it cap-and-whatever. (It caps prices.)

Given the record of the timber, mining, drilling, grazing industries where it comes to the public lands, how they get onto the land and then ferociously fight to change it into their own de facto private property, why does everyone assume that, if a cap-and-trade was enacted, industry wouldn't turn around and try to gut the cap afterward, while ferociously defending their now-enshrined "property right" to pollute?

I know, if I were a coal-industry strategist, and I became convinced some sort of "mandatory" carbon policy was inevitable, then I'd be thinking along the lines, Let's get as weak and industry-friendly a c&t policy as we can, then shortly afterward start howling about how we can't meet the burdens, it'll drive us out of business, the economy's too lousy, the sky is falling etc..etc.., and get the (probably already anemic) cap further weakened into meaninglessness.

And meanwhile they'd still have the "asset", they'd still have the rationed property right (they could probably also use the system vs. the entry of new, perhaps putatively less-emitting competitors).

I know there are also ways to game a carbon tax, or direct regulatory controls*, but it just seems like a c&t is crying out to be manipulated.

*Why is there so little talk of replicating Bush's dual legislative-administrative assault tactic? E.g., the supreme court has already said the EPA can regulate CO2. So why not, alongside whatever legislative initiative they come up with, also draw up plans threatening to essentially shut down large-scale emitters on direct regulatory authority? Not that they'd even have to be dead serious about it - the threat itself, that if we don't get a real carbon bill in congress, we might have to go the route of bureaucratic decree, should be a salutary brace of chilling wind to the obstructionists.      

The 111th U.S. Congress is not going to pass a carbon tax. Calls for a carbon tax, to the extent they have any effect, will complicate and possibly derail passage of carbon legislation
-------

You are absolutely right about the political realities of this and I am surprised at the naivete from some very smart people - Hansen included. Al Gore proposed a BTU tax in the early 90s and it had the shortest life of any trial balloon in history -- they shot it down before he let go of the string. The evil men who lead today's Mean Southern White Guys Party -- aka the GOP -- have been enormously successful in changing the public discourse such that any discussion of taxes is politically hazardous -- especially carbon taxes that would drive up the cost of heating and driving and loafing on the internet during work hours.  Sacred stuff, that.

Dave -

There is a word for people who are fundamentally unable to acknowledge that anyone who disagrees with them on anything might be sincere in their beliefs. It's called "incivility." This affliction seems particularly rampant in the environmental movement, where if you disagree on absolutely anything, from the interpretation of a science study to the pros and cons of alternate environmental policies they resort to slander rather than reasoned response. Incivility is fundamentally destructive of people's ability to work together on anything, and simply sows discord and grievance.

Is it so hard for you to believe that people who who see cap-and-trade threatening, might offer up an alternative approach that they sincerely believe will accomplish the stated goal (whether they value it or not) without side effects of cap-and-trade they consider more destructive? Don't you find that a wee bit arrogant?

And consider the hypocrisy here: for ages, environmentalists have screamed at conservatives for not offering up positive alternatives to policies they favor. Now, when that's actually happening, they're screaming that it's an insincere tactical maneuver.

Obama has called for the return of civility, Dave: don't you think you ought to give it a try? Try allowing for the idea that someone who disagrees with you might actually be a sincere human being worthy of the basic human dignity you deny them with your incivility.

Kenneth Green Resident Scholar American Enterprise Institute (JavaScript must be enabled to view this email address) //= 0; i=i-1){ if (l[i].substring(0, 1) == ' ') output += "&#"+unescape(l[i].substring(1))+";"; else output += unescape(l[i]); } document.getElementById('eeEncEmail_AOQOuEtTvL').innerHTML = output; //]]>

KenGreen,

I have witnessed eight years in which the GOP right added seven trillion dollars to a national debt that stood at five trillion in 2000. Much of that went to reckless tax cuts for the rich. In the meantime, millions of American citizens went without desperately needed health care, shelter or heat -- often through no fault of their own.

I have seen a Republican Senate majority select a Senate Environment Chair, James Inhofe, who calls global warming a hoax.  Their majority knowingly gave us this clown.

I have seen a large portion of the last genetically wild herd of North American bison shot for no good reason. I have seen a President and a VP candidate encourage the senseless, horrible slaughter of wolves and seen a President turn over pristine public lands to his industry cronies -- now ruined for centuries.

I've seen a Republican House Committee Chair try to systematically sell off public lands.

I've seen a great leap backward in addressing climate disruption as an oil-industry-owned Republican Party gave subsidy after subsidy to fossil fuels.

You criticize me for being "uncivil" to the party of Tom DeLay, John Boehner, Richard Pombo and a pack of hundreds of industry-owned hacks who have done more harm to this country than any political party in modern history?

Let me recommend Paul Krugman's recent column "Bigger than Bush."

An "unbroken record of error" to be sure!

Except that the concept of auctioning credits was created by economists...but other than that, nothing!

Except cap and trade, which was created by economists as an alternative to technology mandates for emissions reductions (and ended up reducing SO2 faster than had been the case).

OK, except cap-and-trade and auctioning, what have economists ever given us?!

Carbon credit banking?

Oh, nevermind.

>Except cap and trade, which was created by economists as an alternative to technology mandates for emissions reductions (and ended up reducing SO2 faster than had been the case).

Not faster than Germany or a bunch of nations in Europe who used mandates to reduce emissions from higher than the U.S. to lower

Not faster than the mandates were scheduled to lower them. C&T was instituted in the U.S. as an alternative to mandates that would have been put in place otherwise. There was one year where emissions were lowered more than scheduled. But the credits were banked and came back to bite us in the ass later when a bunch of people were exposed to pollution thanks to banked credits.

Civility in the face of frustration, provocation, etc is one of the foundation elements of effective behavior, of any kind, at any time, anywhere.

Snot-nosed kids in Boot Camp are first taught to be civil, then to kill.  In Iraq, most of the 4,000 who have died, did so being civil.  Most of the perhaps several hundred thousand dead Iraqis were killed in observance of civil protocol.

The British, famous for & proud of their capacity for exceptional civility under exceptionally uncivil conditions, were given Basra for exactly that reason.

Civility is not a noble or romantic indulgence.  It is not about presenting an affectation.  It is a code of conduct by which one sets aside weaknesses & liabilities, and best-deploys strengths & assets.

To be uncivil is to be ineffective; or, a loser.

Even George W. Bush fessed up: 'I shouldn't have said 'Bring 'em On''.  That was the inadequate weenie in him coming out - and bringing him down.

Of course there are versions of a carbon tax that are just window dressing.  There are types of cap and trade that enrich polluters and don't reduce emissions.  There are also good versions of each (and Gar Lipow mentioned some design aspects: upstream, auctioning, returning revenues to consumers, etc.).

In the end, I think we will need both a quantity control (cap) and a price floor (fee, etc.).  It's not an either-or question.  It's a question of design, political feasibility, and timing.

So before we divide ourselves into ever-smaller infighting factions, let's try to get the carbon taxers and the cap-and-traders to unite behind the message of "putting a price on carbon."

OK, so the Right will distort any taxation scheme, but net-zero taxes? couldn't the newly empowered left do something on the framing front that? Everyone gets a rebate check back from the gumt, since the point of this isn't to raise $ but to direct industry away from carbon-intensive activity.

greens are...

fundamentally unable ... affliction ... rampant ... slander rather than reasoned response ... arrogant ... hypocrisy ... for ages, environmentalists have screamed ... screaming ... [denying] basic human dignity [to their political opponents]

ROFLMAO!!!!!

respectfully, of course, as i am the soul of propriety and decorum.

did you know, if you take one letter from the word "shrill," you get "shill"?

We need to work together. We could pursue both the Cap & Trade and Carbon Tax options -- and layer and interleave them for maximum effect, plus EPA top-down mandates.

Jon Warren Lentz, Inc. is a business consulting firm offering high level strategic advice to select sustainability sector companies.