(hamilton project paper)

I understand upstream and downstream more for refineries - upstream meant to regulate the refinery and downstream compliance meant busting down the gas stations and convenience stores.  Simple, right?  So in terms of CO2, this simple dichotomy gets really complicated.  Please explain?

But I agree that if you're going to reduce CO2 and other greenhouse gases, it will take the federal agencies a ton of words to implement the measures that the US Congress passes.  We're talking EPA, DOE, FHWA, the ag people, everything.  That's where the court fights and issues will become even more obvious, I should think.

I agree that ultimately standards based regulaton and public investment are key to fighting the climate crisis, but we do need to put a price on emissions too, which comes down to cap-and-trade or carbon tax.

Upstream or downstream is important regardless of whether you use carbon tax or cap and trade. For example between CO2, black carbon, methane and NOx fossil fuels are responsible for more greenhouse forcing than anything else. Not that other components are not critical. OK, so you can try and control this at the level of individual cars, trucks, factories and buildings and so on. Or you can  price it when the fuel is actually burned or use in various processes. Do you see that trying to control it when it is extracted or imported is getting to it when it is most concentrated in as few places as possible. Easiest to control, least room for game playing. At the refining level, or in power plants not too bad because still pretty far upstream. Still definitely a bit harder to control. But further downstream then than that much harder.

Also these sectorial limits are really disastrous, in some ways worse than a price all the way downstream. Think of the the political struggles when you try to stengthen regulations. The power sector, transportation, and industrial sectors will all say "we've done enough already, let the other sectors cut". And the "compromise" will be "you are all right. All of you have done enough. No more cuts". Whereas if the  carbon tax or permitting is done upstream you are controlling the total emissions and letting the sectors fight it out as to who cuts how much.

If you push "cap-n-trade" back upstream to the ultimate extractor, there's plenty of room to "cap" but nowhere to "trade."  So you're really advocating a tax.

I'm for that--but....

This is the United States.  It is perfectly obvious that to solve the health care problem, the simplest, fairest, cheapest solution is single payer.  We're not going to do that.  It is perfectly obvious that to solve the carbon problem, the simplest, fairest and cheapest solution would be a well-head/mine adit carbon tax.  We're not going to do that either.

The only way to do things in the US is to turn the process into a game.  A tournament wherein some people can "win" over others both by sitting on the rules committees and by cleverly working those rules in their favor.  That's what WM really is.

Yes, the game has changed.  Environmentalists need new strategies to maintain their advantage.  First off, what is their advantage?  Answer: "Is the camel's nose in the tent?"

The way to game this system is for corporations to spin-off the subsidiaries they want to shut down and then buy back their own permits.  I'm sure there's an accountant somewhere who could figure out how to turn that free money into an advantage.

Selling the permits upstream would shut down the game.  If the headwaters of the stream hold all the permits then the only way to reduce their carbon output would be to pump less oil etc.  Who wants to make that explicit and ruin the fun?

To think that the US could finally have a progressive, pro-science administration and still generate such a flawed approach to dealing with the problem...

The Republicans are screaming that cap/trade will jack up consumer costs.  CBO's numbers tell another story-- carbon prices around $26/t CO2 in ten years.  That's a whopping 26 cents a gallon of gasoline, and even smaller price effects on electricity if the free allowances to utilities really are passed through to consumers.  No price on carbon and no effect on emissions.  The Republicans are grossly exaggerating the cost of this bill, and the Democrats are exaggerating the emissions reductions cap/trade with huge offsets and a loose cap could possibly produce. 

If the Republicans want to gripe, they should complain about the federalization of the building codes.  Building codes are one size fits all.  That will REALLY cost (and hassle) consumers.  And with the Dem's insistence on keeping coal cheap, that means consumers will have a choice-- keep wasting cheap fossil fuel or blow the bank account on contractors for upgrades that won't save money.  Great way to piss off everyone and lose seats in the Senate. 

Congress should reinstate the higher RES standards, scrap cap/trade and pretty much everything else in the bill, and declare victory for this year.  Next year, a revenue-neutral carbon tax.