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The Best Science Writing Online 2012
Showcasing more than fifty of the most provocative, original, and significant online essays from 2011, The Best Science Writing Online 2012 will change the way...
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This December 7 the United Nations Framework Convention on Climate Change will convene a 12-day meeting in Copenhagen to confront one question: How do we respond to global warming when the five-year period for reducing carbon emissions under the Kyoto Protocol expires in 2012? The U.S. was not a party to Kyoto, but if this country balks once more, Copenhagen may fail to get productive commitments from other nations as well. That’s a recipe for climate catastrophe. To show the world leaders soon to gather in Copenhagen that this country is serious about cutting its own carbon emissions, U.S. lawmakers must raise the price on the use of fossil fuels.
Yet how to do so without hurting the little guy? For many economists, a tax imposed on end users of fossil fuels is the most direct approach. A tax high enough to be useful, however, would be dead on arrival in Congress. In his campaign last fall, President Barack Obama called for a “cap and trade” plan that would auction off carbon dioxide (CO2) emissions allowances to big carbon polluters.
In many ways, though, the continuing debate over taxes versus cap and trade is beside the point. The priority is to put a price on carbon and to do so in a way that avoids the pitfalls of the largely ineffectual European efforts under Kyoto. The cap-and-trade emissions trading system (ETS) set up by the European Union issued so many free emissions allowances that the system had virtually no effect on climate. The excessive supply of allowances led to wild fluctuations in price. Some of Europe’s worst polluters collected windfall profits.
President Obama’s initial plan for a “100 percent auction” of emissions allowances would correct many of those deficiencies. The allowances would be sold, not distributed for free. The cap would be set, ideally with expert scientific consultation, to make an appropriately deep cut in total CO2 emissions. The market, working within the cap, would minimize the pain by spreading the costs. Energy providers could buy, sell and trade their allowances—and then pass their additional expenses along to their customers.
Not surprisingly, energy providers and their supporters in Congress are digging in for a fight. Unless the government issues allowances for free, they argue, consumers will face crippling price hikes. Regrettably, the administration has signaled its willingness to cave and reconsider the 100 percent auction.
There is a way, however, to keep strong price signals on fossil fuels without emptying consumers’ wallets: send the proceeds of the auction back to citizens as rebates. Energy from fossil fuels would become more expensive, as it must, yet the rebates would help offset the extra costs to consumers. Politically, that could be enough to win passage. Peter Barnes, an entrepreneur who has promoted the mechanism for years, calls it cap and dividend.
Here’s how it might work: Next year and in each year thereafter, Congress would set an overall cap on fossil fuels extracted by upstream energy producers, which David A. Weisbach of the University of Chicago Law School identifies as “fewer than 3,000 entities”—petroleum refiners, coal mines and domestic natural gas processors—“plus imports at a few locations.” The cap would be divided into allowances that would be offered at auction, though a floor price would be set to ensure that the price signal is sent. Only the 3,000 energy producers would be eligible to purchase them. To keep the legislation simple and pork-free, the proceeds would go directly to U.S. citizens—not to research programs in alternative energy, “concept car” demonstrations, and the like.
To adjust emissions caps in the future, the allowances would expire periodically, perhaps as often as once a year. That would help the system to respond to changes in projections of total atmospheric CO2 and to offer all parties a chance to learn from the program. It would also limit some—though by no means all—of the possibilities for creating derivative securities based on the emissions allowances.
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13 Comments
Add CommentThe people living in fossil energy producing states have lived with rapid price increases for so long that we expect it. Start producing the clean enerys systems and upgrading the grids; we can live through it until the clean energy plants bring the prices back down to affordable levels.
Reply | Report Abuse | Link to thisWhether you set it up as cap and trade, cap and dividend, cap auction and dividend, it is still a loser. The bureaucracy required to run it will still be inefficient and corrupt. Guaranteed. Far better would be to tax energy, and provide income tax relief. This sends a strong price signal for energy use, and a strong incentive for people to work hard and be productive. The beauty of it is that we already have the systems in place to levy the taxes and collect them. All you have to do is change the rates! It could be done with very little effort. You could also start small and steadily increase the energy tax rate so that people can adjust to it without huge upheaval. As the energy taxes go up, lower the payroll tax or the income tax to make it revenue neutral.
Reply | Report Abuse | Link to thisThis would be even funnier if it wasn't true.
Reply | Report Abuse | Link to thisThe question should be how many civil servants does it take to write a climate change report?
None, they have their paid toady scientists tell them what they want and their paid toady scientists write what the civil servants want to hear.
http://tierneylab.blogs.nytimes.com/2009/06/18/us-climate-report-assailed/
And these are the guys you want in charge of trillions of dollars? They'd cut themselves on a rubber ball.
It will take more than a computer model for me to believe that climate change is affected by mankind.
Reply | Report Abuse | Link to thisIt does not matter if you believe in climate change caused by humanity or not. What I believe everyone can agree on is; we need high paying jobs and we need to stop paying big bucks for energy. Now is the time to exploit space power and resources. Sunlight is available in high Earth orbit 24/7, 365 days a year. We have had the technology since the late 60’s to transmit via microwave all the energy we could ever use, to Earth, from orbit. The material for constructing the space end of the system is available on the near Earth asteroids and the Moon. We the people need the government to fund the project just as the government funded World War II. Our survival as a people with liberty was threatened by mad men with weapons during WWII. Today our survival is threatened by mad men with oil. If we as a people shrink from the task at hand we will lose our liberty.
Reply | Report Abuse | Link to thisThe question concerning the Kyoto protocol is this : Will nations have fulfilled their obligations set for 2012? If not what are the chances that targets for 2020 or 2050 will be met?
Reply | Report Abuse | Link to thisYou cant have your cake and eat it too. I agree that raising the price of energy through taxes would indeed lead to less use (for the record I do not agree with the practice), but you cannot spare the consumer. When you try to remove the blow to the consumer you take away the incentive for lower energy consumption. Your proposed cap and dividend only works to inflate the price to an artificial level and create a cash flow cycle that includes the government but doesn't really provide any incentive for a person to use less. Ultimately, this whole cap and whatever will fail due to the political nature of the country. I am not talking about a debate on climate change, but rather the simple fact that no Democrat (or Republican for that matter but because they are less likely to believe in manmade global warming) will put a measure through that will raise the burden on the consumer enough to drive a reduction. It would be viewed as a tax on the poor and that would hurt the Democrats' main constituency.
Reply | Report Abuse | Link to this@ jojo
Reply | Report Abuse | Link to thisThe main flaw with you plan regarding income tax relief is that only around half (I think its actually less than half) of the country pays income tax. Unfortunately, this would leave a large group out in the cold and therefore would never work politically.
Good to hear some
Reply | Report Abuse | Link to thisIts great to see an article on Cap and Dividend.
Reply | Report Abuse | Link to this100% Auction of the "cap" keeps it visible and honest, and the dividend harness peoples/business ingenuity to reduce the best way they can. It would also telegraph unsustainable business practices to business managers and allow them to determine the rate of change they need to make.
We need to harness proven market based solution to reduce carbon emissions, and what better way than cause a predictable steady rise in price of polluting (GHG production).
Then send the money back into the economy to individuals directly. Individuals then decide if it is in their economic interests to reduce that pollution and they can make their own decisions how. The 'dividend' prevents it hitting the ordinary consumer/citizen heavily.
I'd be fascinated to see an article on estimates for the total amount of GHG produced, country by country and by specific market sectors.
Good point. Maybe payroll tax relief would work instead. That hits a lot more people.
Reply | Report Abuse | Link to thisIn the Opinion section of SciAm July 2009, you state Global warming is a reality, not an opinion.
Reply | Report Abuse | Link to thisI am not an Environmental Scientist. I dont know the truth.
Richard P. Feyman in The Pleasure of Finding Things Out page 111 states that A scientist is never certain .
Scientists who say that global warming is a reality base their opinion on computer modeling. Other scientist of a contrary view base their opinion on observation.
So what do you believe, models or observations?
I am skeptical of models (e.g. Carl Sagans Nuclear Winter). Observation is difficult, it depends on the time period sampled; the earth has been cooling since 1998. A computer model of the global climate would be very complicated involving thousands of lines of coding. It would be highly unlikely that such a complicated program would be error free.
Three of many who disagree are:
Princeton University physicist Dr. Will Happer, who says he was fired by Vice President Al Gore for failing to adhere to Gores views on global warming, has now declared that man-made warming fears are mistaken. Happer, who served as the director of Energy Research at the Department of Energy from 1990 to 1993, said, I had the privilege of being fired by Al Gore, since I refused to go along with his alarmism. I did not need the job that badly. He said in 1993, I was told that science was not going to intrude on policy."
Richard Lindzen, Alfred P. Sloan Professor of Atmospheric Science at the Massachusetts Institute of Technology and member of the National Academy of Sciences: "We are quite confident (1) that global mean temperature is about 0.5 �C higher than it was a century ago; (2) that atmospheric levels of CO2 have risen over the past two centuries; and (3) that CO2 is a greenhouse gas whose increase is likely to warm the earth (one of many, the most important being water vapor and clouds). But--and I cannot stress this enough--we are not in a position to confidently attribute past climate change to CO2 or to forecast what the climate will be in the future.
Fred Singer, Professor emeritus of Environmental Sciences at the University of Virginia: "The greenhouse effect is real. However, the effect is minute, insignificant, and very difficult to detect. Its not automatically true that warming is bad, I happen to believe that warming is good, and so do many economists.
Frank Gauntt
Bedford, MA.
In the Opinion section of SciAm July 2009, you state “Global warming is a reality, not an opinion.”
Reply | Report Abuse | Link to thisI am not an Environmental Scientist. I don’t know the truth.
Richard P. Feyman in “The Pleasure of Finding Things Out” page 111 states that “A scientist is never certain”.
Scientists who say that global warming is a reality base their opinion on computer modeling. Other scientist of a contrary view base their opinion on observation.
So what do you believe, models or observations?
I am skeptical of models (e.g. Carl Sagan’s Nuclear Winter). Observation is difficult, it depends on the time period sampled; the earth has been cooling since 1998. A computer model of the global climate would be very complicated involving thousands of lines of coding. It would be highly unlikely that such a complicated program would be error free.
Three of many who disagree are:
Princeton University physicist Dr. Will Happer, who says he was fired by Vice President Al Gore for failing to adhere to Gore’s views on global warming, has now declared that man-made warming fears are “mistaken.”Happer, who served as the director of Energy Research at the Department of Energy from 1990 to 1993, said, “I had the privilege of being fired by Al Gore, since I refused to go along with his alarmism. I did not need the job that badly.”He said in 1993, “I was told that science was not going to intrude on policy."
Richard Lindzen, Alfred P. Sloan Professor of Atmospheric Science at the Massachusetts Institute of Technology and member of the National Academy of Sciences: "We are quite confident (1) that global mean temperature is about 0.5 °C higher than it was a century ago; (2) that atmospheric levels of CO2 have risen over the past two centuries; and (3) that CO2 is a greenhouse gas whose increase is likely to warm the earth (one of many, the most important being water vapor and clouds). But--and I cannot stress this enough--we are not in a position to confidently attribute past climate change to CO2 or to forecast what the climate will be in the future.
Fred Singer, Professor emeritus of Environmental Sciences at the University of Virginia: "The greenhouse effect is real. However, the effect is minute, insignificant, and very difficult to detect. It’s not automatically true that warming is bad, I happen to believe that warming is good, and so do many economists.”
Frank Gauntt
Bedford, MA.