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What the US Can Learn From Europe's Pollution Credit System
Al writes "Technology Review discusses what a US carbon trading scheme could learn from the flawed European experience. Advocates of carbon-trading schemes like to point to Europe's cap-and-trade program as a model worthy of emulation, but the reality has been less than perfect. A glut of pollution credits, distributed without cost during both the first, transitional phase of the program and the current working phase, drove down the value of the EUAs. As a result, Europe's carbon dioxide emissions remain priced well below 20 euros per ton. With the price of pollution so low, economists say, industries that generate and consume energy have no incentives to change their habits; it is still cheaper to use fossil fuels than to switch to technologies that pollute less. Establishing a carbon price in the US system now, and tightening the system later, could send a dangerously wrong signal to financial markets looking to invest in new energy technologies."
...a huge fraction of the economy will soon degenerate into a free-for-all of special interest group favoritism, graft, corruption, and kickbacks?
Of course, Obama and Congress know all that. That's why they're doing it...
...is that it's not progressive. So Joe Sixpack bears a much higher load in proportion to, say, Al Gore. An article by Robert Zubrin pegs this cost as $1800 for a family of four. This on top of a 9.x% unemployment rate. Huh.
The Army reading list
This particular regulatory scheme employs a market mechanism. That's not the same as The Market.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
How about NOT burdening each and every citizen with higher energy costs for some forced and flawed utopian ideal which might result in a whopping 0.2 percent carbon emmissions. further wrecking the U.S. economy and industries.
If the new technologies being talked about, worked on, etc. are not economically feasible because of the current price of other energy generation, too bad.
The solution would be to get the "new" technologies to produce energy at or below the cost of current energy generation, not taxing everyone in oblivion to artificially do this.
Sure, do all you can to help clean up the environment and to minimize or eliminate pollution. I am all for cleaner, greener, etc. I am not for more tax burdens on top of the already increased tax burdens I and many many others are now facing in this country.
The U.S. government is (and has been) in the hands of A) lunatics and B) people that couldn't run a business if their lives depended on it (the greatest majority of them, in any case).
The other important consideration is making sure you don't just shift the problem. If only a few countries, or even most of them agree to restrictions, the rest of the world will shrug its collective shoulders, and take on the fossil fuel burning and productino that the nicer countries have kept themselves from doing. Specifically, the BRIC block (Brazil, Russia, India, and China).
Any plan for such a global problem MUST take into account the actions of such "defecting" countries, or you might as well not bother. That can mean using auction revenues to sink CO2, tariffing non-compliant countries (though with blanket punitive tariff on all of their products; it's too much work to figure out the marginal CO2 impact of any one product when they're not pricing its cost in), and yes, even geoengineering.
"Unilateral disarmament" is symbolic at best.
Information theory is life. The rest is just the KL divergence.
If the goal is 'saving the Earth' Europe's carbon tax isn't working very well. But if the goal is raising taxes and growing government control then it is a success.
So it should come as no surprise that the US is eager to emulate the success of Europe's 'cap and trade' regime. The green movement is basically a watermelon, enviro green on the outside and red communist inside. The green movement was subverted and taken over back in the Soviet days when almost every group that didn't take overt efforts at resisting such a takeover was borged and used as a front.
But to their credit even Greenpeace was against the atrocity the House just passed. Because they still have enough true believers in environmentalism left that understand what the cap and trade plan moving through Congress really is. Any benefit to the environment will be a happy accident. They give away almost all of the credits in the short and medium term to political allies to allow them to pollute all they want. The point is to slowly gain CONTROL over vast swaths of the American economy.
If we really want to control carbon emissions a huge new government structure that will always throw 'free credits' out anytime there is real pain (i.e. enraged ratepayers, a plant about to close, a huge sack of campaign cash offered, etc.) so there won't be much real reduction.
No, just put a straight TAX on energy sources that you want to discourage. Personally I'm not a believer in AGW but I could get behind such an effort on the grounds of reducing our dependence on oil form countries that want us dead. But I can't support cap and trade because a) it won't work and b) is a solution worse than the problem.
Democrat delenda est
Why is the bill worded to demand that only solar/wind be advanced as renewable when for all intents and purposes Fast Breeder Nuclear Reactors are cheaper (these renewable sources are much more expensive barring an insanely good breakthrough/require MUCH LARGER areas to be anywhere near current power plant outputs) and also renewable in the fact that they burn their waste, then burn their wastes waste, etc, all the way down to burning 90+% of their waste with the remaining byproduct only being slightly hot for 5-10 years?
Politicians grabbing at money via legislation that's difficult to monitor and enforce, so that companies will invest in technologies that are inefficient or don't exist yet?
How is this a flawed system?
The easiest and cheapest way to encourage the growth of green tech is via tax credits. Make solar, wind, hydro and nuclear so attractive you'd be crazy to build any other kind of generating station. Make it so companies buying green power get tax credits. Make it so much more profitable to make and use green energy that the market embraces it. No need for expensive government investment in shaky new tech - the market takes care of all the R&D. Incentives are the way to go. Carbon markets are bullshit.
I have mod points. The reign of terror begins now.
What based life form are we?
What's irritating is that cap and trade can't even do what it's supposed to do anyway.
Consider this: a government says "Ok, we'll only sell licenses to produce 100 million tons of CO2 per year." Factories produce a net 130 million tons of CO2 that year, even though they were only licensed to produce 100 million. There is no mechanism the government can employ to enforce the licenses. They could potentially fine the "overproduction" but that doesn't actually prevent the production of the CO2.
The "credits" bit doesn't work either, and it's even worse than the inability to prevent overproduction. The way I understand it, if I do some activity that offsets CO2 production, I get a credit. The problem is that word "offset". If it was only for sequestration that would be great, but my impression is that if I create a wind farm that produces the same power as a coal plant that would produce 1 million tons, I get a 1 million ton CO2 credit that I can sell to someone else. But since it's possible to create an infinite amount of things that do not emit CO2, there is no cap here either because it doesn't actually prevent the creation of more CO2 - or whatever the target emission might be.
The only real solution is, even though it's not political, is to simply tax CO2 emissions straight up. Those who don't emit don't pay the tax, those who do pay it. For consumers it's simple - you roll it into fuel taxes because CO2 emissions are directly linked to fuel consumption. For powerplants and such you do the same, and the taxes get passed on to consumers.
This solution, I think, has the best chance of actually resulting in the desired outcome without being overly complicated or reliant on false ideas of caps that cannot be enforced.
The biggest issue I see is that CO2 is a byproduct of simply being alive, so you will get into the mess of "do you tax all CO2 emissions, or only those made by machines? What about if some farmer burns brush in his yard? What about campfires?"
In all, it's really quite a mess when at its core people try to dictate the behavior of others. If you offer an incentive and people don't take it, the solution should not be to beat them with a stick and force them to take it.
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
Markets only happen if that which is being traded is scarce. Pollution credits are not a natural commodity, and they are effectively infinite without regulation.
One of the best ways to reduce pollution is to tax it. Reducing pollution costs money. The purpose of a corporation is to generate profit for shareholders. Given the choice, no corporation would reduce pollution instead of returning a higher dividend. So, for pollution to be reduced, government has to be involved somehow. There are two possible ways:
I recommend that everyone who is interested in this topic should read The Undercover Economist by Tim Hartford, particularly chapter "Crosstown Traffic" subsection "Battling pollution on the cheap". The gist of it is that sulphur dioxide emissions were successfully reduced by taxation to the point where the tax is negligible. Initially, the corporations involved in power generation claimed that it would be impossible to do, that each ton of reduction in emissions would cost thousands of dollars. And yet, within 3 years of an auction based taxation being introduced, the cost per ton had fallen to $70.
Isn't this exactly what we all want? A market based solution to the problem, rather than overbearing government regulation?
I will probably be blasted by all the environmentalists in the group, but this simply won't work. My office is two hundred feet from a coal fired power plant. They are upgrading their pollution controls right now. They are spending over $200 million on it. There is a new plant scheduled to be online in a matter of months right next to it. This is the cheapest source of power in the area. It employs hundreds of people. My company had thousands of people last year. The cost of electricity shut us down. All of my friends are sitting at home drawing unemployment. I don't know what they are going to do when their benefits are exhausted. High electricity costs will drive jobs out of America. Power is the primary cost of many manufacturing processes. All manufacturing where power is the primary driver will be done in China, Mexico, Brazil, Iceland, etc. It will be done where there are no carbon credits to buy and the environmental laws are lax. Business goes where its cheap to operate.
You aren't saving the environment by driving out business. The president cited California as an example of good energy policy. A lot of power consumed in California comes from neighboring states that don't have such strict regulations. The government of California is broke. They may not be able to make payroll next month. Is that where we want America to go? Is that our future model?
We are going to drive our businesses overseas. These foreign countries will build power plants to supply their new found industry. They won't care much about pollution other than to pay lip service to it. By the time we are finished cleaning up America's air, we'll all be sitting on our thumbs with no jobs lamenting our plight. On the upside, the air we are breathing during this wringing of hands and gnashing of teeth may perhaps be slightly cleaner than before. If your goal is to reverse global climate change, you are sadly mistaken if you think this will fix it. Other nations will fill in the production gaps. They don't give a crap about the environment. They want power. You gain power by having a happy, well fed, and prosperous population. This is done through industry and jobs. The pollution will simply be outsourced along with your job.
A little misunderstanding? Galileo and the Pope had a little misunderstanding...
(Now there are various caveats. The really big one being the ability of nations to "outsource" their emissions by importing from nations with no such caps. But I don't think this is an argument for removing the caps --- rather, we should be finding ways to integrate the trading schemes of those nations with caps, and recover some of the carbon cost on imports from the other nations.)
This is a massive caveat. I don't think that "finding ways to integrate the trading schemes of those nations with caps, and recover some of the carbon cost on imports from the other nations" is going to work either. The long and short of it is that you'd like to impose some kind of "carbon tariff" on imports from said countries. That'll fly as well a bird with clipped wings, and will lead to retaliatory tariffs. This also says nothing about what the WTO would think about such a tariff in the first place.
Well there are these scientists to start with.
I prefer to think of it as Indulgence. Like buying a pardon from the Catholic Church for your sins against God, Carbon Offsets are forgiveness from the Church of Al Gore for your sins against Gaia.
Not that the money *can't* be used for good, but it is rather hard to trace.
"Karma can only be portioned out by the cosmos." -- Homer Simpson
It can learn that carbon trading schemes don't work, is a drain on the economy, and only enriches a few well connected that dreamed it up... while reducing total greenhouse gases by negligible amounts to none.
On the other hand, U.S. can also learn something useful from one of Europe's bigger countries, France: having large numbers of nuclear power plants that provide majority of your nation's electricity needs can be done, practically and safely. Of all the non-carbon-generating "green" energy schemes out there, nuclear is the only one that is practical and cost-competitive with fossil fuels on any sort of a large scale.
This particular regulatory scheme employs a market mechanism. That's not the same as The Market.
What is this "The Market" that you refer to with such reverent caps? Are you perhaps referring to the global energy market--- which is distorted by subsidies, national security spending, and a lack of pricing on externalities such as pollution?
So, what do you think the ideal population should be?
Frankly, I fail to see overpopulation as the problem, since our population (in the advanced countries that are actually capable of limiting pollution) is declining, and has been for years.
"I do not agree with what you say, but I will defend to the death your right to say it"
Actually the easiest way to do it is to tax oil and coal directly. Green tech boomed when gas prices got up to about $5.00 a gallon. Just tax foreign oil directly and you'll have the same effect.
Good luck getting that passed the coal lobbies and big oil lobbies though...
The problem with satirizing the right wing is that it's too easy to be mistaken for the real deal.
Not a typewriter
> That problem is overpopulation. massive overpopulation.
Nope, you are looking at a symptom not the cause. The problem is the uneven distribution of capitalism and liberty. Go look at the numbers. There is an unmistakable link between freedom, wealth and birth rate. The link is even better if you assume a two generation lag on the birth rate vs the other factors.
The solution is thus simple, bring the blessings of liberty to the huddled masses yearning to breath free. Help them establish a solid rule of law and watch them become quickly become prosperous. Yes their population will spike as improved conditions permit a population boom, but that will soon stabilize and begin to decline. The US is the only thing resembling an exception to this rule and our population would also be in decline without illegal immigration.
Democrat delenda est
This article is worthless. It ignores several critical facts: (1) the European cap-and-trade will reduce emissions over the next few years; (2) the over-allocation of initial credits is being addressed; and (3) a comparable cap-and-trade system effectively eliminated the acid rain problems in the United States due to SOx emissions in the 1990s.
In fact, I think the European experience has been enormously beneficial.
First, it has demonstrated that a carbon trading market can exist without bankrupting power producers or other emitters of carbon. The very fact that prices have remained manageable is critical to the fact that the power generation industry in the United States has largely supported the recent cap-and-trade legislation. (Full dislosure: I coincidently work for a company that happens to be part of USCAP, though I only work on climate change tangentially. The thoughts here are my own.)
Second, the EU's grand experiment has created a new industry of carbon brokers who go around the world identifying and pricing potential carbon offsets. The fact that we now have some transparency and price discovery surrounding carbon offsets is a huge benefit. It also has lead to the preliminary steps for creating fungible and verifiable carbon contracts. For example, in a market-based system, a one ton reduction in carbon emissions in China should be able to fetch the same price in Europe or the United States. However, we need set metrics to verify the reduction and to avoid double counting. The European experience has given us lots of experience in what we need to do.
Third, the European experience demonstrated the critical need to accurately quantify the carbon emitted by industry. It is no coincidence that one of the Obama administration's first actions when coming into office was to order industry to begin reporting their carbon emissions.
Finally, we cannot miss the point that Europe is reducing its emissions. Cap-and-trade programs are designed to ratchet down emissions over time. Every year, another 2 percent of the credits just disappear. So the over-allocation may have decreased the speed at which the carbon reduction occurs, but less carbon is being emitted today.
Scientists can be stupid too.
Higher levels of co2 are one of the things that keep the planet from being in a long term and rather drastic ice age. Ya know, ice miles deep extending all the way to the midwestern states, and still rather cold even beyond that south. It is precisely because we have some moderately higher levels of co2 in the atmosphere that Canada, northern and central Europe and large parts of the northern US are even habitable today. Greenland not that long ago had a more temperate climate, for example.CO2 levels are helping us right now, not hurting for the most part. If we were to lose frost free months up north, the planet would lose untold millions of tons of valuable grain production. We'd be facing some serious threats of famine right now if conditions got any colder than they are. A slightly warmer climate in other words is a LOT better than a colder one.
Cap and trade is an outright con and scheme designed to impose a trillion dollar a year tax on everyone, and transfer that money to the already rich globalist investment speculators and traders, and also as a by product, to give them more international control outside of the normal political process. It has nothing to do with fixing the climate. That's the con they are offering, the bait.
If they wanted to fix the climate (which really doesn't need much fixing right now, we are in the middle of a nice temperate period between ice ages, we just mainly need to sort out the erroneous idea that people can live in deserts with no adequate water, this reality is sinking in finally, like in California where they just *screwed* their big food production areas by denying them irrigation water, because they have just slap run out. It's a desert, it just can't support as many people who want to live there as want to given their supplies, plus have the largest winter vegetable production. Geographical reality), or just encourage somewhat cleaner industries (I'm all for energy decentralization and a more wide diversification of energy production and the mass adoption of such things as personal home solar, etc), all they would need to do is offer universal tax credits for those industries and products. No tax is needed whatsoever, no "war on carbon", and zero new governmental employees or additional expense is needed for this either, just a checkbox on your tax form and clip on the receipts if required. And it really is that easy.
Elimination of taxes encourages investments and improvements, not impositions of new taxes-even if they don't call them taxes. Forcing new artificial fees on energy products-which in turn will increase the cost of just about every single tangible product you buy, and a lot of the intangibles as well, such as digital products dependent on expensive hardware plus energy, is a defacto "new tax".
Energy companies could really not give a shit how they go about it, producing electricity for you to send you a monthly bill. They just want that check from you, that's all, it's not rocket surgery to see this. Give them a 100% tax credit to install massive windfarms and solar thermal and so on, that would be a heckuva inducement for them, you'd see them switch from coal rapidly, (as much as feasible anyway), with no "cap and trade" middleman skimming scheme needed.
Same with individuals, give them a 100% tax credit to install say a decent 2 or 3 kw sized home solar rig, perhaps at a limit of around 25 grand in cost, tax credit extending for ten years (within payback time IOW), you'd see twenty (whatever, a lot) new solar companies producing panels and the assorted gear within a few months, and untold tens of millions of panels going up all over the nation. No regressive tax needed. The tax *credit*, the "anti-tax", is the most amazing and *benevolent* tool the government can use for fair and constructive change. I like to call it the carrot method, instead of the stick or "club you over the economic head" method, which for some odd reason they always seem to prefer. Proly because they dig on forcing you to obe
Salt is not a poison. Without it you would be dead.
Now eat a few kilos of it today.
Water is not a poison. Without it you would be dead.
Now drink your own bodyweight in water today.
Actually, don't. It'll probably kill you. Just because something isn't bad (or even essential) in small amounts doesn't mean that large amounts of it won't kill you.
You are not entitled to your opinion. You are entitled to your informed opinion. -- Harlan Ellison