Sunday, April 12, 2009

Carbon taxes and cap-and-trade.

I think Peter Kelly is right over here to be suspicious of the BC Liberals' carbon tax. It certainly makes sense to revisit the policy, particularly for the NDP, whose federal party platform includes a cap-and-trade policy, not a carbon tax. (Personally, I think we should use both tools. But a non-cynical cap-and-trade is better than a cynical carbon tax any day.)

But, that aside, here is an amazingly stupid argument against the BC NDP's plan. In essence, Mason argues that a carbon tax increases the cost of heavy polluting technologies, while cap-and-trade does not.

I know it's de rigeur in some leftie circles to be economically illiterate, but come on. Cap-and-trade with a hard cap increases the cost of pollution just as a carbon tax does. Those who need to buy allowances/credits/what have you will transfer the cost to consumers; those who sell allowances/credits/what have you can reduce their prices to consumers. Consumers, insofar as they are economically rational, will pursue the latter's products and avoid the former's. Hence, exceeding the hard cap imposes an economic cost just as a carbon tax would. Indeed, a cap-and-trade system includes a reward for those who can get their emissions below the cap, while a carbon tax hits everyone regardless of levels of use. Prices of products made using polluting technologies would all go up under a carbon tax -- hence why Dion's Green Shift had various targeted tax breaks, to try to make it revenue-neutral -- while prices of products made using excessively-polluting technologies would go up under a cap-and-trade scheme.

This is basic. While there may be reasons to prefer a carbon tax to cap-and-trade, that cap-and-trade doesn't increase the cost of pollution is not one of them. This is simply wrong.

Mason's blathering about the need for a North American cap-and-trade market is similarly wrong, but for the more obvious reason that, if this were a successful argument, it would hit back on a carbon tax just as well as cap-and-trade. This is a logical issue more than anything: it's a clear non sequitur.

(I think he may have a point about the lack of detail in the BC NDP's plan, but that argument is severely undeveloped.)

10 comments:

janfromthebruce said...

Great post - I agree. I also put a comment on his article yesterday. His arguments were so weak, and that one in particular, so misrepresenting, I wondered about his "real intent" here.

ADHR said...

Well, if you look at his previous columns (here), he's hardly a doctrinaire BC Liberal. So, I think it's less an ulterior motive and more just being a bit of an idiot.

Thomas said...

Attempting to pass a carbon tax of any flavor this year will likely be a waste of time. Such a tax will not pass in the US this year because a band of 51 conservative democrats (the Blue Dogs) have said that they are opposed to any form of a carbon tax now because of the deep recession. The republicans are about to take the issue of anthropogenic caused global warming head-on. To start their assault they have compiled a report which uses quotes from 700 world class scientists who are basically saying that Gores position is based entirely on junk science which is being generated by 2500 IPCC boot licking scientists who's careers are entirely dependent upon future government research grants. The arguments against the whole premise of global warming will be particularly persuasive now since the earth has actually been cooling for a number of years.

Another political point which will also put up a strong head wind against carbon taxing is that even if Kyoto is 100% successful, the overall impact on world CO2 emissions will not amount to a hill of beans because China and India have no obligation (or intent) to reduce CO2 emissions. To view just how insignificant Kyoto will be on world CO2 emissions between now and 2050, go the following URL. The author, a retired scientist, has created a graph of CO2 which demonstrates what the net impact will be on CO2 emissions even if Kyoto is 100% successful.

http://forthegrandchildren.blogspot.com/2009/03/best-global-warming-discussion-ever.html

This strength of the Kyoto-won't-matter argument will be further amplified when Republicans start telling the American people that the U.S.- D.O.E, is forecasting that 90% of all new CO2 emissions in the next 20 years will come from developing countries – mostly China and India. If a carbon tax is shot down in the US, as it almost certainly will be, what good would it do to pass a carbon tax in Canada?

Of course another argument which will be deployed is the fact that cap and trade is not having much success in Europe or Japan.

The Republicans clearly plan to argue that any form of carbon taxing will be an expensive but completely infective attempt to solve what is starting to appear to be a non problem!

http://www.epw.senate.gov/public/index.cfm?FuseAction=Minority.Blogs&ContentRecord_id=10fe77b0-802a-23ad-4df1-fc38ed4f85e3

ADHR said...

Thomas,

The carbon tax already exists in BC. And whether the US federal government passes anything or not, the states certainly could (look up the Western Climate Initiative for an example).

Kyoto is also pretty much dead at this point, and it is also proving to be far too conservative. As you point out, if China and India aren't on board, there isn't going to be a significant impact. That doesn't mean we quit, though. That means that we try to get them on board.

As for the success of cap and trade, I'm not sure where you get the claim that it isn't working in Europe and Japan. Certainly cap and trade worked wonderfully in the US to reduce sulfur emissions that produced acid rain. There's no in principle reason I can see why an extension of that market can't work for other emissions reduction.

The claim that emissions is a "non problem" is not a serious claim, surely.

Thomas said...

As far as getting India and China on board, I doubt that we can be successful with that. I recently read a 180 page report from India on its energy policy through 2031. India's energy policy is clearly centered around coal. The report states that India does not have enough uranium ore to go the nuclear route. India has lots of coal and very little Nat Gas. The number one goal for India is to take hundreds of millions of people out of poverty which requires energy. China has already invested two trillion in its coal driven electric plants and China also has lots of coal. China already uses 2.7 billion tons of coal a year which is 600,000 tons more than the U.S and Europe combined. Between India and China, the current plan is to open roughly two new coal powered electric plants every week for the next five years. That info is straight from the U.S. - E.I.A world energy forecast. China and India are already as pro alternative energy as any country so its not a matte of conviction. Even though both counties appear to be motivated to use all sourcs of energy, the current forecast of each country is to supply only 5% to 6% of the electricity they need from alternative energy and less than 5% nuclear energy by 2030. When I look objectively at China and India, I can see no other route for them to take. Both countries have very substantial supplies of coal and limited supplies of Natural Gas. Both countries are aggressively going after hydro electric, wind, solar etc... but both countries believe that they must continue to pursue coal and petroleum to obtain the energy needed to move their people out of poverty. As a moral issue, for hundreds of millions of people in developing nations, affordable energy is the path which leads them from poverty to some form of very modest prosperity. The governments of both India and China see this as life or death issue. As a result of the plans if China, India, and the other developing nations to continually burn more fossil fuel, 94% of all future CO2 will not come from North America. That is a simple fact of life.

You might find browsing through India's energy plan to be of interest... Sorry, it is from 2006

http://planningcommission.nic.in/reports/genrep/rep_intengy.pdf

>>>The claim that emissions is a "non problem" is not a serious claim, surely.<<<

Given the plans of China and India, I truly hope that emissions turn out not to be a problem. If CO2 is a problem, unfortunately, I see little that Canada, American and Europe can do to make China and India change directions! Truthfully, we should all prey that CO2 is non an issue!

But, as a matter of fact, the matter is not yet as settled as the IPCC would like everyone to believe. In fact a 250 page report just released by the U.S Senate minority (Republicans) bluntly states that 68% of all Canadian Scientists do not believe that the question of global warming science is settled. See page 2

http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=83947f5d-d84a-4a84-ad5d-6e2d71db52d9

Also 34,000 American scientists (9,000 PhDs) have signed a petition which states … that they believe that greenhouse gasses do not cause and can not cause catastrophic heating of the earth.

http://www.oism.org/pproject/

There is a real monkey wrench in the argument that the IPCC is putting forth that CO2 used is the primary cause of AGW. The argument is a bit technical but I think that is is quite persuasive. The models relied upon by the UN and which are referenced in the IPCC reports, predict a specific heat signature if CO2 is responsible for Global Warming. If it is CO2 that is causing global warming, there should be a “hot spot” which is bounded in the range of 30deg S to 30 deg North latitude and roughly and within an altitude 8-12Km. That hot spot should be present simply because that is where most of the CO2 build up will occur. What the IPCC expected to see was heat building up much more quickly over the past decades in this hot zone than on the surface of the earth. Note, the hot zone does not describe absolute temperature. The term hot spot or hot zone refers to the rate of change of the temperature at this altitude range and between those latitudes relative to the change at the earth's surface. Since CO2 is the greenhouse gas which has seen the greatest increase in ppm since the 1960s, if it is CO2 that is responsible for global warming, than the rate of change in the amount of energy (temperature) over time should be greatest in the areas where CO2 concentrates the most. Those opposed to the idea that anthropogenic CO2 s is a primary driver of global warming also agree that this heat signature will show up if CO2 is the source of global warming. The logic here is pretty straight forward. If it is CO2 that is the cause of global warming, than the amount of energy in the region where that CO2 exists must increase simultaneously with an increase in the amount of CO2. I see no way around this. This heat signature really must show up if it is CO2 which is the cause of global warming. Well, temperature measurements from the NASA satellites and weather balloons taken since 1960, do not show even the slightest presence of this hot spot region. NASA is certain that the CO2 is this region because they have measured it. However, the CO2 in that region is not trapping additional energy at anything close to the rate that the climate modelers had forecast. So, if heat isn't being trapped by the CO2, than what role is CO2 playing in global warming? I see no way around that logic!

http://scienceandpublicpolicy.org/monckton_papers/greenhouse_warming_what_greenhouse_warming_.html

I confess to a bias here. Because I believe that the developed nations of the world can not change the path which China and India are set upon taking, for the sake of the world, I honestly hope that AGW is not really happening. If it is, there is not really much that we can do to stop it!

ADHR said...

I agree that China and India will need energy to get out of poverty. However, I don't agree that they need to rely just on what they have themselves. Strategic energy alliances with other countries could work to allow them to skip -- or quickly move through -- the fossil fuel stage and into renewable energy in a big way.

When it comes to whether AGW is happening or not, I don't trust what the Republicans say. Most Republican members of Senate have well-known ties to the oil and gas industry. Furthermore, 68% of Canadian scientists or 34,000 American scientists is uninteresting. That will include, for example, psychologists and epidemiologists -- not exactly climate experts. Not to mention that the Oregon Petition specifically has some obvious problems. (See here.)

The argument you note is not particularly persuasive, for two reasons. First, visiting the page shows that the argument does not show and is not meant to show that AGW is not happening, only that it is not as extreme as predicted. Second, if the data analysis is sound, then it should stand up to peer review and thus be published in a mainstream scientific journal. But it hasn't, which suggests to my eye that the analysis is intended to mislead amateurs.

Thomas said...

Adam wrote >>Furthermore, 68% of Canadian scientists or 34,000 American scientists is uninteresting. That will include, for example, psychologists and epidemiologists -- not exactly climate experts. <<<

This does not seem to be the case. Go to this link and you will see not only the qualifications, but the exact numbers for each science category and the names of each of the signers etc..

http://www.petitionproject.org/qualifications_of_signers.php

“”Signatories are approved for inclusion in the Petition Project list if they have obtained formal educational degrees at the level of Bachelor of Science or higher in appropriate scientific fields. The petition has been circulated only in the United States.

The current list of petition signers includes 9,029 PhD; 7,153 MS; 2,585 MD and DVM; and 12,711 BS or equivalent academic degrees. Most of the MD and DVM signers also have underlying degrees in basic science.

All of the listed signers have formal educations in fields of specialization that suitably qualify them to evaluate the research data related to the petition statement. Many of the signers currently work in climatological, meteorological, atmospheric, environmental, geophysical, astronomical, and biological fields directly involved in the climate change controversy.””

AHDR wrote >>>Second, if the data analysis is sound, then it should stand up to peer review and thus be published in a mainstream scientific journal. But it hasn't, which suggests to my eye that the analysis is intended to mislead amateurs.<<<

Following is a letter which was signed by 60 Canadian “scientists” to the Canadian Prime minister. What these scientists are seeking is simply open debate on this issue so that all can hear and judge the entirety of the evidence.

AHDR said in regards to India and China >>>>Strategic energy alliances with other countries could work to allow them to skip -- or quickly move through -- the fossil fuel stage and into renewable energy in a big way.<<<

You are a very optimistic soul. What you suggest here would cost trillions of dollars. Between China and India, as of 2008, the two consumed 3.5 Billion tons of coal and 4 Billion Barrels of oil. China has already invested over $2 trillion in coal powered electric plants. As they say, “opinions are like noses.. everyone has one and they all smell!” In my humble opinion, what you suggest here has virtually no chance of happening.

Because I believe China and India will continue to develop economies based primarily on fossil fuels in accordance with their current energy plans, any actions taken by North America and Europe to reduce CO2 emissions can not have a significant impact on the amount of CO2 which will be newly placed into the atmosphere over the next two decades. Since I believe that there is preponderance of evidence which clearly shows that global warming has slowed during the past nine years, I believe we (earthlings) have the time to better understand what is causing global warming and, of equal importance, to decide whether global warming would be a good thing or a bad thing. Regardless of what Jim Hansen and Al Gore would have us believe, there are truly thousands of scientists who, for very good reasons, still doubt the premise that the climate is behaving in a way which is at all unnatural. I leave you with this thought. I understand all of the IPCC arguments. And, if that is all I had ever seen, like you, I would believe that AWG is a reality. There are however counter arguments which have been offered up by hundreds of real scientists who dispute this. View this and you will see the author, his/her credentials and what they think in their own words. I am a democrat, but I do not think that this debate is even close to being over. Even Jim Hansen's former boss Dr. John S. Theon has come out and stated his frustration with his former employee: “Hansen was never muzzled even though he violated NASA’s official agency position on climate forecasting (i.e., we did not know enough to forecast climate change or mankind’s effect on it). Hansen thus embarrassed NASA by coming out with his claims of global warming in 1988 in his testimony before Congress,”

Dr. Theon says even more if you care to read it.

http://dailybayonet.blogs.com/the_daily_bayonet/2009/01/james-hansens-boss-a-climate-skeptic.html

If you want comments from scientists with credentials, start here. These scientists have published thousands of peer reviewed papers …. see for yourself.

http://dailybayonet.blogs.com/the_daily_bayonet/2009/01/james-hansens-boss-a-climate-skeptic.html
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=83947f5d-d84a-4a84-ad5d-6e2d71db52d9

ADHR said...

Thomas,

Did you not notice the weaseling here? Emphasis added: "All of the listed signers have formal educations in fields of specialization that suitably qualify them to evaluate the research data related to the petition statement. Many of the signers currently work in climatological, meteorological, atmospheric, environmental, geophysical, astronomical, and biological fields directly involved in the climate change controversy.”

That is, the only time we get a listing of fields that are relevant -- and I'm not sure what biology is doing there, but let's roll with it -- is in reference to many signers. When the claim talks about all signers, we get no list of what their fields of specialization are.

You state that the issue is having an "open debate". But that debate is a scientific debate, which should tehrefore happen in scientific journals. Again: if the analysis is sound, why isn't it published after surviving peer review? I think there's something in there that's intended to deceive the amateur. Otherwise, why not submit it? Practicing scientists always like more publications.

I agree it would be costly to engage China and India in energy alliances. But, if AGW is as serious a problem as I think it is, then the cost is negligible compared to the benefit.

I read those links. The first I immediately found suspicious as it defended Tim Ball in passing. Tim Ball being a Canadian scientist who is widely (and plausibly) believed to be on the payroll of the oil and gas industry. Not that that's a bad thing -- there are worse ways to make a living -- but that he won't address the issue in a conclusive way suggests he has something to hide. Furthermore, according to this, Hansen was never supervised by Theon. If even that basic claim isn't true, the more complex ones are deeply implausible. Finally, the guardians of Wikipedia -- who have extensive entries on the most obscure figures of anime imaginable -- deleted Theon's page as he had not contributed sufficiently to science to be worth considering.

As for the Senate minority report... well... it doesn't stand up well.

The first name is a physicist, Ivar Giaever, who has worked primarily on superconductors. His expertise is not relevant.

The second name, Joanne Simpson, does not dispute the recommendations of Al Gore and the IPCC. See here.

The third name, Kiminori Itoh, has published nothing in climate science, and didn't actually say what was published in the report. See here.

The fourth name, Arun D. Ahluwalia, is a geologist who has published nothing in peer-reviewed journals related to climate science. See here.

I could keep going, but I believe the pattern is obvious.

undergroundman said...

While ideally I agree that cap and trade programs reduce emissions and are likely better than carbon taxes, my understanding is that cap and trade programs can have an "overallocation" problems. See McAllister LK. (2009). The Overallocation Problem In Cap-And-Trade: Moving Toward Stringency. COLUMBIA JOURNAL OF ENVIRONMENTAL LAW http://www.columbiaenvironmentallaw.org/assets/pdfs/34.2/7._McAllister_34.2.pdf

ADHR said...

Yeah, overallocation is a big problem in designing the policy. One would hope that future designers of cap-and-trade programs would be sensitive to the problems of the earlier programs, and adjust accordingly. (One may be hoping vainly, of course!)