The Return of Command and Control

by on February 13, 2014 at 7:32 am in Uncategorized | Permalink

I spoke earlier this week at a conference on markets and the environment at the R Street Institute (I spoke about prizes). Many of the speakers were Reagan era politicians and appointees who are proud of Reagan and Bush’s successful approach to the environment and decry the inability to make progress today.

Back then, Republican’s were willing to accept environmental goals so long as they were achieved efficiently using market means and Democrats were willing to accept markets means to achieve environmental goals. Today, the Republicans are no longer willing to accept the environmental goals regardless of the means. The result, however, hasn’t been the ending of the goals it’s been that Democrats no longer accept market means.

Jeffrey Frankel argues that the net effect has been a disastrous return to command and control.

In the United States, the highly successful cap-and-trade system for sulfur-dioxide emissions has effectively vanished. In Europe, the Emissions Trading System (ETS), the world’s largest market for carbon allowances, has become increasingly irrelevant as well. On both sides of the Atlantic, market-oriented environmental regulation has in effect been superseded over the last five years by older “command-and-control” approaches, by which the government dictates who should use which technologies, in what amounts, to reduce which emissions.

As recently as 2008, the Republican candidate for US president, Senator John McCain, had sponsored legislative proposals to use cap and trade to address emissions of carbon dioxide and other greenhouse gases.

But Republican politicians now seem to have forgotten that this approach was once their policy. In 2009, they worked to defeat climate-change legislation by relying on anti-regulation rhetoric that demonized their own creation. This left only less market-friendly alternatives – especially after court cases upheld the validity of the 1970 Clean Air Act. Though such alternatives are less efficient, they are again the operative regime.

…government attempts to address market failures can themselves fail. In the case of the environment, command-and-control regulation is inefficient, discourages innovation, and can have unintended consequences (like Europe’s growing reliance on coal).

1 CBBB February 13, 2014 at 7:46 am

Environmental policy?

When did Tabarrok go full communist?

2 prior_approval February 13, 2014 at 10:24 am

Reagan nostalgia does strange things to people. Like forgetting these Reagan era gems –

Concerning trees –

“Trees cause more pollution than automobiles do.” — Ronald Reagan, 1981

“A tree is a tree. How many more do you have to look at?” — Ronald Reagan, 1966, opposing expansion of Redwood National Park as governor of California

“The American Petroleum Institute filed suit against the EPA [and] charged that the agency was suppressing a scientific study for fear it might be misinterpreted… The suppressed study reveals that 80 percent of air pollution comes not from chimneys and auto exhaust pipes, but from plants and trees.” Presidential candidate Ronald Reagan, in 1979. (There is no scientific data to support this assertion.)

Or volcanoes –

“I have flown twice over Mt St. Helens out on our west coast. I’m not a scientist and I don’t know the figures, but I have a suspicion that that one little mountain has probably released more sulfur dioxide into the atmosphere of the world than has been released in the last ten years of automobile driving or things of that kind that people are so concerned about.” — Ronald Reagan, 1980. (Actually, Mount St. Helens, at its peak activity, emitted about 2,000 tons of sulfur dioxide per day, compared with 81,000 tons per day by cars.)

http://www.allhatnocattle.net/reagan quotes.htm

Though admittedly, in our current age of rampant American creationism, Reagan looks pretty good when looking back.

3 S.C. Schwarz February 13, 2014 at 11:23 am

“Trees cause more pollution than automobiles do.” — Ronald Reagan, 1981

This would be a nice example ofReagan’s alleged stupidity except that it is true.

‘In fact, the planet’s vegetation accounts for about two-thirds of the pollutants known as volatile organic compounds (VOCs) emitted globally.’ – USEPA

See http://www.epa.gov/ord/sciencenews/scinews_trees-and-air-pollution.htm

4 prior_approval February 13, 2014 at 12:24 pm

Do you even read what you bother to post, or are you trying to make Reagan look even worse? –

‘EPA researchers have discovered that controlling man-made sources of air pollution will have the added benefit of also reducing air pollution formed from compounds released from trees and plants.

Trees and plants release more than just oxygen into the atmosphere as a result of photosynthesis: They also release a variety of gases that contribute to air pollution. In fact, the planet’s vegetation accounts for about two-thirds of the pollutants known as volatile organic compounds (VOCs) emitted globally.

In the study, published in the May issue of Environmental Science &Technology, EPA researchers quantified for the first time how emissions from vehicles, industry and power plants interact with natural emissions from vegetation to change the composition and make-up of chemicals in the air.for the worse.

The implications of the study are considerable. “If we can control the man-made sources of emissions, we can indirectly affect the formation of these naturally derived atmospheric pollutant particles,” says Dan Costa, National Program Director for Clean Air Research at EPA.

Using computerized air quality modeling, investigators conducted simulations of natural and human-related pollution in the United States. When scientists took man-made pollutants out of the simulation, there was a 50 percent drop in pollutants from trees and plants in the Eastern United States. These pollutants, known as secondary organic aerosols (SOAs) are produced by sunlight when VOCs from trees, plants, cars or industrial emissions interact with other airborne chemicals. SOAs are important for the formation of two regulated air pollutants, particulate matter and nitrogen oxide, a greenhouse gas.

“This study suggests that roughly half of the “natural” SOA in the eastern U.S. forms only when there is enough man-made pollution around to form it,” says EPA scientist and lead author Annmarie Carlton.’

The first six paragraphs of your link, by the way.

5 J1 February 15, 2014 at 10:53 am

How does that conflict with what S.C. said?

6 TMC February 13, 2014 at 12:56 pm

So Mt. St. Helen’s is not older than 400 yrs?

7 Peter Schaeffer February 13, 2014 at 2:05 pm

p_a,

If your goal is to demonstrate the ignorance of others, you need to be careful with facts.

“Actually, Mount St. Helens, at its peak activity, emitted about 2,000 tons of sulfur dioxide per day, compared with 81,000 tons per day by cars.”

Mt. St. Helens erurpted in 1980. In that year, U.S. gasoline consumption was 2.407 billion barrels per year (a lot). That’s around 307 million U.S. tons (not metric tons). U.S. gasoline might have had around 300 PPM sulfur back then (a high estimate). That’s 92,120 tons of sulfur (elemental) per year. You can double that to get SO2 emissions. That works out to be. 504 tons of SO2 from cars per day, not 81,000 tons.

81,000 tons is a reasonable guess for total SO2 emissions from all sources (mostly power plants, then and now).

As for ‘Though admittedly, in our current age of rampant American creationism’, that’s true but not in the way you intended. Religious creationism exists in America but has zero influence on public policy and/or elite opinion (mostly the same thing). By contrast, secular creationism (the “Blank Slate” ideology of the left) is the dominant worldview of the elite and rules policy making.

As Steven Pinker makes very clear, in his book the “Blank Slate” creationism has many of the same origins as ‘age of the earth’ creationism. The difference is that the former is treated as holy gospel. The latter is laughed at.

By the way, your Mt. St. Helens numbers are off as well. Peak emissions were 1.5 million tons per day (for one day). Overall, Mt. St. Helens released around 2 million tons of SO2. Small compared to U.S. power plants, big compared to cars. Mt. Pinatubo released around 20 million tons of SO2 and changed global climate (for a while).

8 Clark Goble February 13, 2014 at 4:36 pm

“Religious creationism exists in America but has zero influence on public policy and/or elite opinion (mostly the same thing)”

People say that, but sadly it *does* affect biological education – especially in the south. I think the influence of this sort of fundamentalism is exaggerated (while Blank Slate fundamentalism is overlooked). But let’s not deny that it really does have a serious effect.

9 Peter Schaeffer February 13, 2014 at 10:31 pm

CG,

My kids went to school in the south. Pure Darwin. No creation. Not that they understood Darwin.

10 The Original D February 13, 2014 at 5:27 pm

“Religious creationism exists in America but has zero influence on public policy”

Jim Inhofe’s whacky ideas about God and the environment have no influence on public policy?

Not to mention how the Bible is used by pro-Israel fundamentalists.

11 Peter Schaeffer February 14, 2014 at 8:24 am

TOD,

Is Jim Inhofe motivated by his religious beliefs? Presumably the answer is yes. Is he motivated by the age of the earth? That’s a different matter.

I would agree that support for Israel from the religious right has had some impact on U.S. policy. Historically, Republicans were less supportive of Israel than Democrats. It is easily plausible that social conservatives flipped this around. Bush 41 and 43 provide ample evidence of the process.

However, that’s evidence for the influence of religion, not creationism.

12 The Original D February 14, 2014 at 3:09 pm

“However, that’s evidence for the influence of religion, not creationism. – See more at: http://marginalrevolution.com/marginalrevolution/2014/02/the-return-of-command-and-control.html#comments

A distinction without difference. Fundamentalists take the Bible to be the literal word of God. They don’t have to bring Adam & Even and Noah into their arguments about Israel, but the fact that they believe Genesis to be literally true is the bedrock of their world view. Do you think Pope Francis would make the same arguments they do?

13 babar February 13, 2014 at 7:47 am

contrary to alex’s lead, the article doesn’t attribute any of this to the dems. dems aren’t even mentioned in the article.

14 CBBB February 13, 2014 at 7:49 am

Both sides are always totally equal and to blame in exactly equal ways…always, always.

15 Lord February 13, 2014 at 2:06 pm

You know. Dems are responsible for everything Reps do.

16 Jan February 13, 2014 at 7:49 am

“The result, however, hasn’t been the ending of the goals it’s been that Democrats no longer accept market means.”

You saying Dems wouldn’t accept cap and trade?

17 8 February 13, 2014 at 8:01 am

I think the argument is Dems prefer command and control. Republicans force them to use market mechanisms. When the GOP doesn’t agree with the goal, be it manmade global warming/climate change or Obamacare, the Democrats do it without them. The result is bad.

18 8 February 13, 2014 at 8:02 am

As for the EU, they don’t call it EUSSR for nothing.

19 CBBB February 13, 2014 at 8:10 am

Well I don’t think anyone calls it that

20 prior_approval February 13, 2014 at 10:25 am

No, no, let the commenter indulge his fantasy without letting even a shimmer of reality intrude.

21 Das February 13, 2014 at 12:44 pm

Plenty do.

Although not in public broadcasting obviously.

22 Jan February 13, 2014 at 9:27 am

Plenty of opportunities to work on market-based solutions with Dems. I assure you they would have loved some cooperation on health care exchanges and are quite open to cap and trade. But you’re right, if the GOP has no goal related to climate change–and claims to not even believe in its existence–its a moot point.

23 Rz0 February 13, 2014 at 11:40 am

ACA is market based solution. Dems proposed cap and trade for greenhouse gases.

24 JonFraz February 13, 2014 at 11:55 am

Except that the ACA is a market-based program– a non-market program would be something like single payer.

25 Alexei Sadeski February 13, 2014 at 12:30 pm

Well the Dems controlled House, Senate, and White House on Obamacare.

Hard to pin that one on Republicans.

26 agorabum February 13, 2014 at 8:38 pm

No the argument is that Dems embraced market mechanisms (they passed ACA and cap and trade), resulting in R’s abandoning market mechanisms (deciding on a policy of no externality pricing ever, and no health care for the poor except for anti-market ‘free’ emergency rooms rather than market care). And with R’s now blocking any further attempts at market reforms, the only policy lever left is command and control.

27 mulp February 13, 2014 at 11:09 am

Minority leader Boehner rammed through cap and trade in 2009 through trickery overriding Nancy Pelosi the command and control witch who wanted to ration your electricity and gasoline???

John Boehner overrode the Pelosi command and control witch who wanted to impose evil single payer and force Obamacare to be market based using private insurers competing for health care business???

And market based Ted Cruz has attacked Obama for failing to dictate all the increased oil and gas production come only from government land by free market government dictates instead of the command and control increase on private land based on the commands of the dollar for royalties and bonuses forcing private landowners to give up their property rights???

28 Erik M. February 13, 2014 at 11:16 am

I think Jan makes a good point. Waxman-Markey (2009) shows that most Democrats are happy to use market means to advance environmental goals. It was the 2010 elections that prevented House Democrats from trying again.

On the Democratic side, the obstacle is coal-state Senators who oppose market and non-market policies that are unfriendly to a powerful home industry. The main appeal of command-and-control to Democrats today is that it’s possible for the executive branch to do something under current law.

29 Z February 13, 2014 at 12:36 pm

I think it shows Jan has a very different definition of market than its English meaning. But, that’s standard stuff for the CML. First they kill the word, then they kill the idea, then they kill the people who did not get the point.

30 8 February 13, 2014 at 7:58 am

Command and control is easier to repeal.

31 wiki February 13, 2014 at 8:18 am

If efficient approaches to environmental problems are used as a bargaining chip to keep ratcheting up regulations, from a public choice perspective, it might be rational to dump the process. Then opposition is about slowing the move to higher impositions. In that case, inefficient anti-market regulations at lower levels might be preferable to “efficient” approaches that only encourage much greater regulation. The net result is not clear for overall efficiency. It entirely depends on your views as to the nature of the externalities and the size of the deadweight losses from control.

32 mulp February 13, 2014 at 11:50 am

Obama has tried to get Republicans to return to their commitment to market solutions to climate change.

Newt agreed on the need for cap and trade and appeared with Nancy Pelosi in an ad to promote it.

McCain supported cap and trade until he lost.

Mitt Romney supported cap and trade and supported the compact among the Northeast States which did so for electric utilities with revenues going to fund investments in customer efficiency (from subsidies for CFLs and LEDs to energy audits for housing to subsidies to business lighting upgrades to renewable feed-ins).

Only after Republicans made it clear that they would deny reality and live in a fantasy world of denial did Obama finally resort to using existing Clean Air law, laws passed bipartisan before conservatives who believe conservatives have total command and control over nature took over the Republican Party.

Republicans who accept man being part of nature rather than in control of have been effectively purged from the Republican Party.

And Republicans have a bizarre idea about markets. While current Republicans see Freedom Industries as free market capitalism, a more objective view is Freedom Industries is free lunch pillage and plunder. The owner bought the assets of a company with the intent of pillage and plundering the capital while rent seeking in service of the coal industry. Once he had extracted all asset value and turned it into a huge liability, he declared bankruptcy. Meanwhile all US taxpayers are paying for his pillage and plunder – FEMA has provided emergency supplies in response to the damage that is clearly intentional neglect by the owner of Freedom Industries.

A similar case is the US owner of a rail line in Canada that was carrying oil and other goods using equipment that was not being maintained or manned properly by intention – he had been cited for violations prior to his train destroying a Canadian town and killing a dozen or more people. He simply declared bankruptcy and abandoned the rail line once he could no longer pillage the assets further.

Only free lunch economics denies nature, entropy. This is a recent trend in economic thought that has written depreciation of assets out of the economic system, replacing it with the idea that decaying assets reap capital gains and that cost of assets do not limit the price of assets in an efficient economy. But that is money for nothing without sacrifice.

33 Ryan Muldoon February 13, 2014 at 8:37 am

In the US context at least, isn’t the rise of command and control approaches more easily explainable by the fact that this is being done by regulatory agencies who only have the Clean Air Act as a means of accomplishing their goals? Democrats tried to pass a cap and trade system in 2009 – Republicans were united in thwarting it. Since no legislation can go through in the face of Republican opposition, the only remaining mechanisms are through the Court’s interpretation of the Clean Air Act as pertaining to carbon dioxide emissions.

I would be amazed if John McCain introduced his 2008 proposal and a majority of Democrats didn’t jump to support it. I think Alex mischaracterizes what’s going on. Republicans have largely decided that environmental things are what Obama and Democrats want to support, so that means they have to oppose them. And Democrats want to do something to advance environmental goals, but the only tools at their disposal make an efficient solution impossible. This isn’t a story of both parties going back to their bad old ways – Democrats have more or less adopted the view that market-based solutions are better than non-market solutions. It’s just that they have no partners on the other side to pass such legislation. They simply also have the view that it’s essential to do *something* to reduce carbon emissions, which means using regulatory power.

34 Thomas Sewell February 13, 2014 at 9:10 am

Republicans have largely decided that environmental things are what Obama and Democrats want to support, so that means they have to oppose them

In the middle of an otherwise decent comment, have you considered that perhaps the Republicans just don’t agree with Obama and the other Democrats environmental goals? That they sincerely don’t believe global warming is a problem, nor that alternative fuels should be subsidized by the government, because there isn’t a lack of regular fuels and there never will be a lack that the market won’t address?

You’ll get Republican support for Ethanol to a certain extent out of political expediency, but it appears that Republicans are generally more focused on items such as the Keystone Pipeline as energy solutions, not alternative fuels. That doesn’t have anything to do with blindly opposing Democrats.

In terms of global warming, you may not personally agree that the most effective of action is for the government to do nothing about controlling CO2 emissions, but I can assure you most Republicans believe recent temperature records, not the IPCC summaries, and conclude that even if there was some slight global warming in the future, the future will be much wealthier and able to deal with it. Sure, there are some Republicans like McCain who have always been more supportive of populist media-backed ideas like global warming, but perhaps it escaped your notice that his own State GOP recently condemned him. The Republican rank and file disagrees.

Why do some Democrats seem to have the need to characterize Republican principled opposition as blind opposition? Is there a big track record of Republicans being in favor of reducing CO2 that suddenly changed their minds when Obama was elected? The Bush Administration’s EPA said CO2 couldn’t be regulated as a pollutant. Surely that more accurately represents a consistent Republican policy stance, not blind opposition to someone who hadn’t even been elected yet.

35 Thomas Sewell February 13, 2014 at 9:11 am

BTW, somehow the block-quoting there flipped the comment… so I was responding to the top line, and my response is what is indented below it.

36 Peter Schaeffer February 13, 2014 at 10:11 am

Believe it or not, but there are some Republicans who are aware that the world doesn’t end with our Atlantic and Pacific shorelines. Some of these Republicans know that the U.S. is not the world’s leading CO2 emitter and that all of the growth in CO2 output is in developing countries (notably China) that have no intention of curbing CO2 output.

As a consequence, CO2 controls in the U.S. are an act of folly. Even if they work,,they will be far more than offset by rising emissions in Asia and elsewhere. Indeed, developing countries may simply use an reduction in U.S. emissions, to raise theirs.

Unlike NOx, SO2 or particulates, CO2 has no localized adverse impact (even on a continental scale). By contrast, the cost of reducing CO2 output is immediately felt by the potential producers (and their customers). That makes the politics and economics of reducing CO2 output very different than other smokestack gases.

Of course, a recognition of the folly of reducing CO2 output in one country is only part of why Republicans oppose controls. Many do not believe in AGW or view stopping it as worth the cost. However, that doesn’t change the fact that (some) Republican opposition is based on sound economics. A U.S. “solution” to AGW is a reverse “tragedy of the commons” and to be avoided.

37 prior_approval February 13, 2014 at 10:33 am

Ah, that pesky per capita concept –

2000 Carbon dioxide emissions (CO2), metric tons of CO2 per capita (CDIAC)

U.S. – 17.2

EU – 8.6 (2011)

China – 7.2 (2011)

http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions_per_capita

‘Some of these Republicans know that the U.S. is not the world’s leading CO2 emitter and that all of the growth in CO2 output is in developing countries (notably China) that have no intention of curbing CO2 output.’

But if it comforts you to think that the U.S. is only number two in absolute terms, fine.

38 Alexei Sadeski February 13, 2014 at 12:33 pm

Why is per capita relevant here?

The point regards US gov’t inability to influence global climate by regulating solely US emissions.

Per capita is irrelevant.

39 Peter Schaeffer February 13, 2014 at 2:24 pm

p_a,

The U.S. is richer than other countries. As a consequence we produce more CO2. Should we be poorer? Note that on a per-unit of GDP, the U.S. is inline with the world. Europe is lower and China is higher. Here is an easy quote that should help.

From http://www.carbonbrief.org/blog/2013/11/2012s-carbon-emissions-in-five-graphs/

“In 2012, developing countries like China, India and Mexico produced 59 per cent of the world’s carbon dioxide emissions, while industrialized countries and regions like the EU, US and Russia emitted 41 per cent.”

To put this in perspective, China generates $435 of GDP per ton of CO2. The U.S. generates $2,291 of GDP per ton of CO2. Note that on a PPP basis, China does better at $1,003 The PPP numbers for Canada and Australia (the countries most like the U.S.) are $2,210 and $1,919. Countries with lots of hydro-power do even better. ($6,786 for Switzerland).

40 Ryan Muldoon February 13, 2014 at 10:47 am

If this were the motivation amongst lawmakers, then there’d be genuine opportunities for negotiation.

I agree with you that as of a couple years ago, the US is no longer the world’s largest emitter of carbon pollution. It now only remains the world’s largest per capita emitter.

But, you offer a not-that-great argument for doing nothing. Given that there are cumulative effects, even if someone else is polluting, it’s better for us to reduce our emissions. We could imagine an obviously liberty-enhancing trade within US tax policy: we reduce (or even eliminate) income taxes in exchange for a carbon tax or a cap and trade system. Regardless of one’s beliefs in climate change, I don’t think there’s an argument to make that would be in favor of more carbon emissions rather than less. While we all can agree that we want to encourage work, I don’t see why we’d want to encourage non-priced negative externalities. So it seems like a smart idea to trade taxes on things that we all agree we should encourage for taxes on things that no one thinks we should have more of.

If we’re concerned about China, etc, we can just impose a carbon tax on any incoming manufactured goods that haven’t already been subject to carbon taxes in their home country. This is obviously an imperfect solution, but as far as I’m aware, it would pass WTO muster, and would prevent us from having a serious trade disadvantage. This offers some leverage for a broader international agreement on carbon reduction.

Even if one doesn’t believe in climate change, and even if one believes that it can’t only be the US doing something, we still have options that (to me at least) appear to advance the goals of strengthening property rights and promoting work, which I take to be classically liberal goals.

41 prior_approval February 13, 2014 at 12:27 pm

Um, I live in the EU – I would be thrilled in the U.S. could get to EU levels of CO2 emissions, not that I expect a company like ExxonMobil to agree. I would also be thrilled if the U.S. could even begin to approach the sort of high speed rails systems that are now routine in France, Germany, Spain, and Italy. Or approach the degree of reliable mass transit which citizens of much of the EU take for granted.

42 aaron February 13, 2014 at 2:38 pm

This is all moot given that accelerating warming is required for it to become a cost rather than benefit, and there is no evidence of that.

43 Peter Schaeffer February 13, 2014 at 10:47 pm

RM,

Taxing China’s exports will affect only a small fraction of China’s energy system. For some real perspective, see the quote below. Note the last paragraph.

From “China’s Per Capita CO2 Emissions Are Now Greater Than Europe’s”
http://theenergycollective.com/robertwilson190/329626/new-reality-chinese-capita-carbon-emissions-are-now-same-europes

“Instead of there being “no contest”, China’s per capita carbon dioxide emissions, at 7.1 tonnes, are only marginally lower than the EU average, at 7.4 tonnes. And they already are higher than France, Italy and Spain’s. China’s CO2 emissions are also rising by over 6 per cent each year, while the EU’s are falling. Therefore we can be highly confident that China will overtake the EU in per capita emissions either last year or next year. We can also be fairly certain that it will overtake the United Kingdom in per capita emissions this year In fact by the end of the decade per capita carbon dioxide emissions will be higher in China than in almost every European country, on current trends.

For various reasons people ignore the rapid growth of China’s carbon emissions – parochialism, an unwillingness to admit that the West alone cannot “save the world”, or a fear that climate change “skeptics” can use it as a talking point . However the facts are the facts.”

44 milk February 13, 2014 at 11:00 am

You really don’t dispute the point: saying that, currently, Republicans have no environmental goals distinct from extractive energy policy doesn’t explain why they once did and why they stopped. Blaming the recession, McCain losing, Obama’s bailouts, whatever, that still doesn’t explain why Gingrich felt he had to say being in the ad with Pelosi was the biggest mistake he’d made, and more broadly why it’s an absolute requirement to be have an antiscientific conspiracy theory view of the issue to be a player in conservative politics, where that wasn’t always the case.

45 Paul Zrimsek February 13, 2014 at 12:00 pm

One pretty likely explanation is that once you reach a goal, it stops being a goal– there might or might not be further goals beyond it that are worth aiming for.

Tabarrok’s apparent approval of the Frankel quote is odd. We could also use a cap-and-trade system to limit, say, the amount of soft drinks produced in this country; would a conservative be obliged to stand up and cheer? Hurrah, a market! And even if we accept the goal of limiting carbon emissions, the setting of a cap is an act of command-and-control (by comparison with a Pigouvian tax, where the level of emissions is left to the market).

46 Ryan Muldoon February 13, 2014 at 11:05 am

If this is a source of genuine disagreement, then fine. I still would argue that even if you don’t believe in climate change, there is a reason to shift taxes from income to carbon emissions. Even if you don’t believe in climate change, perhaps you can at least believe in bronchitis and other respiratory illnesses that can result from air pollution.

I think it’s a bit odd to call climate change “media backed” as if it’s only a popular media story, and not a phenomenon backed by massive amounts of evidence and overwhelming scientific consensus, with multiple lines of converging evidence across several disciplines. But, while I don’t quite understand not accepting climate change as a real phenomenon, I do understand that in some sense it doesn’t matter – this is a democracy and people’s views ought to be taken seriously regardless.

As I understand it, cap and trade was part of the RNC’s official platform in 2008. So it’s not just one guy who was a massive anomaly. And the notion of cap and trade as a mechanism is a Republican one that Democrats adopted after seeing how well it worked. So this is why I see this as Republican backsliding and response to Democratic governance. But I do take your point that within Republican circles, it’s much more common to have a genuine belief that there’s no such thing as global climate change. So perhaps my point would have been stronger without the sentence you noted. But as I understand it, we’ve seen a marked decrease in belief in global climate change (and evolution) amongst self-identified Republicans in the past decade, which I interpret as a socio-political response to Democratic support, not a purely epistemic response in light of new scientific evidence, which if anything, has been providing increasing support for both.

47 Tarrou February 13, 2014 at 7:41 pm

Perhaps you can show me the proposal to do away with income taxes? Or will this be another false flag BS argument, where the compromise only goes one way, the carbon tax joins the income tax, gets a VAT on top of it, and we just keep trucking?

Sure, we’ll do away with the income tax, after you agree to this massive tax increase……….Oops, we still need the income tax……bad luck you believed us.

48 jtf February 14, 2014 at 11:23 am

Until Australia scrapped it, its carbon pricing scheme cut income taxes based on its carbon levy. Preliminary data showed that it didn’t have a damper on economic activity, but the Liberals seemed to have scrapped it anyway. And if you’re looking for an American proposal, Greg Mankiw has been advocating a carbon tax with offsetting payroll tax cuts for decades.

49 Boonton February 14, 2014 at 11:25 am

In the middle of an otherwise decent comment, have you considered that perhaps the Republicans just don’t agree with Obama and the other Democrats environmental goals? That they sincerely don’t believe global warming is a problem,

I’ve considered it, and rejected it as a valid premise. Do you really think ‘sincere consideration’ is a more accurate model for modelling the behavior of politicians than percieved political advantage? To paraphrase a line from Game of Thrones, the Republicans would be happy to let the world burn if they could win the election to be President of the Ashes.

Not to say Democrats and other politicians don’t also operate fromt he same structure. In this case, however, Democrats interests are aligned with sanity and Republicans are aligned with insanity. Ultimately the fault lies with the electorate, a portion of which, has opted to reward insanity with electorial success.

50 JWatts February 14, 2014 at 2:05 pm

“In this case, however, Democrats interests are aligned with sanity and Republicans are aligned with insanity.”

I’ve considered and rejected this as a valid premise.

Since, this is precisely your own logic, I’m sure you have no problem accepting its underlying logic.

51 John Thacker February 13, 2014 at 10:25 am

Democrats tried to pass a cap and trade system in 2009 – Republicans were united in thwarting it.

In the House, forty-four Democrats voted against it and eight Republicans for it in the House. Couple that with the recession, which made it much less supported than before among the country as a whole, and regressions show that voting for Cap and Trade was an enormous vote loser.

52 Ryan Muldoon February 13, 2014 at 10:53 am

Another way of looking at it is that 211 Democrats voted for it compared to 8 Republicans. And that 168 Republicans voted against it versus 44 Democrats. That’s a pretty united vote against. I agree that lots of Democrats were in districts that are in coal country, and had good reasons to vote against the bill.

I in no way would claim that this was anywhere approaching a perfect bill. In fact, it was a less-good bill than it could have been because so few Republicans would sign on and work on the bill. One could have easily written the bill such that everyone just gets a check from the monies collected from the cap and trade system. Or income taxes could have been cut. Or any number of other options that should have been appealing to people open to negotiation.

53 chuck martel February 13, 2014 at 12:40 pm

But it’s still the Neanderthals’ fault, right? Aren’t we forgetting or ignoring radon gas? Jeez, who knows how many folks are even now in the first stages of lung cancer because an insufficient effort is being made to address this issue? It actually kills people, just like Lucky Strikes. Maybe printing up some T-shirts would help.

54 aaron February 14, 2014 at 8:07 am

And a tax is a far better policy. A cap is command-and-control with a market created to make cronies rich instead of bringing in revenue for the government.

But, this whole thing is about control. Democrats want a policy of control. They say “we can do this the easy way, or the hard way.” No matter that CO2 isn’t a pollutant, feedbacks don’t exist (we’d see them by now), and global warming is a good thing; we need more control to make our friends rich.

55 mofo. February 13, 2014 at 8:52 am

” In Europe, the Emissions Trading System (ETS), the world’s largest market for carbon allowances, has become increasingly irrelevant as well. ”

How is this the fault of republicans? Also, ive always heard that the European carbon market was a disaster from the start, anyone knowledgeable care to comment on that?

56 Finch February 13, 2014 at 9:46 am

I would also be interested in hearing about the European carbon market.

57 nl7 February 13, 2014 at 9:00 am

The cap and trade proposal was full of special carveouts and giveaways before it was shelved. The CARB program is a model of inefficiency. The idea that politicians will reliably broker a market based on arbitrary levels of a given activity is entirely wishful thinking. It’s also far from clear that carbon is harmful enough to justify the inevitable waste and corruption of taxing it, especially if future technologies might soon solve it anyway.

58 Zephyurs February 13, 2014 at 10:58 am

Lazy comment. You claim that waste and corruption would be more expensive than the carbon tax, without even bothering to offer an estimate of how much waste and corruption there would be. But any reasonable analysis has the amount of waste and corruption to be small. especially when compared to existing income/corporate taxes that it would replace.

The only way your comment makes sense is if you put the cost of carbon at zero. Which is, on top of being factually wrong and ascientific, is deeply cynical and evil.

59 chuck martel February 13, 2014 at 12:41 pm

You can’t make a real economic comment unless you come up with a phony number.

60 TMC February 13, 2014 at 1:26 pm

“The only way your comment makes sense is if you put the cost of carbon at zero. Which is, on top of being factually wrong and ascientific, is deeply cynical and evil.”

Also probably closest to the truth. The climate industry has not produced anything useful in several years, and most of their claims have been found very wanting for evidence. The models they use are spectacularly wrong.

I do believe that CO2 warms the earth, but not so much that we should even be bothered.
We have several doublings of CO2 before it stops having a positive effect.

61 aaron February 14, 2014 at 8:10 am

+1000

62 Zephyrus February 14, 2014 at 7:54 pm

Unfortunately, sticking your fingers in your ear and muttering to yourself “Socialist lies, socialist lies…” like a deranged homeless person and feeling really angry at scientists doesn’t change the reality of the situation.

63 Muda February 13, 2014 at 9:01 am

Evil Republicans cannot understand that unilateral carbon mitigation will stop the oceans from rising.

64 Jan February 13, 2014 at 9:31 am

You go first. No, you go first! Fine, let’s just screw the poor people living by the sea.

65 prior_approval February 13, 2014 at 10:34 am

Besides, who cares about the Dutch anyways, right?

66 Zephyurs February 13, 2014 at 11:00 am

How can you prosecute me for breaking into his house, stealing his stuff, and raping his wife? Only idiotic liberals think you can end crime by prosecuting an individual!

67 Rahul February 13, 2014 at 9:47 am

What’s the relation between command&control and Europe’s growing reliance on coal?

68 Jim February 13, 2014 at 9:52 am

Read the link.

69 Rahul February 13, 2014 at 10:11 am

I did but his argument doesn’t make sense: Say, ETS=free market & the 20% Renewables Mandate = Command&Control. He’s saying the Carbon permits are now too cheap hence industry can afford coal.

But how is this a critique of command & control. Either you can critique the market based system saying policymakers misjudged market design & over-allocated permits. Or you can say industry reduced emissions so aggressively that permit price fell, but that sort of price fall would be a success of the regime really.

Now if he’s saying because C&C requires 20% energy through renewables & therefore due to a perceived lack of emissions need permits are now cheap I fail to see how that’s bad. It’s like bemoaning a reduction in catalytic converter sales because people shifted to bicycles.

70 Tom Donahue February 13, 2014 at 2:40 pm

Europes’s “growing reliance on coal” is a consequence of Germany deciding to shut down its nuclear power plants. It has nothing to do with command and control.

As for Frankel’s “ruinously expensive” renewables policy, the wholesale price of electricity in Germany has collapsed to the point that utilities are taking new fossil fuel plants offline because they can’t compete on price. That doesn’t look “ruinously expensive” to me.

As someone who just want to solve the climate crisis, I just want to see the fossil fuel industry gone and replaced by a new infrastructure for the 21st century. I don’t care how we get there.
If market-only advocates prefer a particular path, then it’s their responsibility to propose a path and display the political will to make sure it works. As of now, they’re failing. So fail. There are other ways to get there. If you don’t want to play, you can stand by and watch, because it’s going to happen.

71 XVO February 13, 2014 at 3:17 pm

“Germany deciding to shut down its nuclear power plants. It has nothing to do with command and control.”

So you wouldn’t call the German government shutting down nuclear power plants command and control? Fun.

72 Tom Donahue February 13, 2014 at 4:15 pm

No, as a matter of fact, I would not call that command and control. It was a decision by the German people, not a decision by German bureaucrats.
This was not a choice between free-market nuclear plants and socialist nuclear plants, whatever that might mean. It was a choice for no nuclear plants. Chancellor Merkel likes to win elections, and chose to do what the people want.

I would have voted against it myself. But I can accept the results of a democratic election. Unlike those who seem to have trouble with the idea that there should be a government and the government should do what most of the people want.

73 xvo February 13, 2014 at 11:43 pm

The German people are perfectly capable of command and control or have you forgotten?

Most of the people are happy to be told they are doing good. They don’t think about it. Until the lights turn off that is….

74 XVO February 13, 2014 at 3:18 pm

Also you are a derp to think that fossil fuels can be replaced without forcing us back to the stone age.

75 Tom Donahue February 13, 2014 at 4:17 pm

Well, this is ironic. You know what would take us back to the stone age? How about the collapse of agriculture in the Central Valley, political and economic upheavals in Asia, disruption of supply chains, massive real shocks to the US economy… shall I go on? And to avoid that you want to double down on the cause the problem?
I think you should wake up and realize that your standard of living rests on a pretty fragile foundation. Don’t just assume that you’re entitled to what you have. It’s not going to take a lot to wreck it.

76 xvo February 13, 2014 at 11:31 pm

Assuming the climate does change for the worse, These are all overpopulation issues. Lack of cheap energy will cause similar problems or worse.

77 JWatts February 13, 2014 at 6:52 pm

“As for Frankel’s “ruinously expensive” renewables policy, the wholesale price of electricity in Germany has collapsed to the point that utilities are taking new fossil fuel plants offline because they can’t compete on price. ”

You can debate the semantics behind what constitutes ruinously expensive, but there’s no denying that the Germans are paying a tremendous amount of money for low efficiency renewables, shutting down their nuclear power plants and burning a large amount of low value brown coal.

The Energiewende policies look chaotic and ineffectual.

German retail price for electricity: $0.35 per kwh
US retail price for electricity: $0.12 per kwh

http://shrinkthatfootprint.com/average-electricity-prices-kwh

Capacity factor for German Windpower: 15%
Capacity factor for US Windpower: 31%

Capacity factor for German Solar power: 9% (that’s just awful)
Capacity factor for US Solar power: 18% (that’s merely bad)

Here’s an excellent article on exactly how bad the Energiewende policy is:
http://www.forbes.com/sites/quora/2013/10/04/should-other-nations-follow-germanys-lead-on-promoting-solar-power/

78 Tom Donahue February 14, 2014 at 3:38 am

“Here’s an excellent article on exactly how bad the Energiewende policy is:”

OK, he argues that it was dumb to shut down the nuclear plants. I agree! But tell that to the Germans. I live in Japan and think the 50 or so reactors here should be started up again. But they won’t be, not when every one is located over an earthquake fault.

“German retail price for electricity: $0.35 per kwh US retail price for electricity: $0.12 per kwh”

Sure, and the mistake everyone makes is to blame that on renewable energy subsidies, when the actual cause is the fivefold increase in the price of oil since 2000.

Here’s a graph showing how much German households pay per month for energy. Notice how the cost of the feed-in tariff is barely visible.
http://cleantechnica.com/2013/11/23/tiny-small-little-surcharge-costs-germany/

79 JWatts February 14, 2014 at 2:07 pm

“Sure, and the mistake everyone makes is to blame that on renewable energy subsidies, when the actual cause is the fivefold increase in the price of oil since 2000. ”

Germany doesn’t produce a significant portion of its electricity from oil.

80 JWatts February 14, 2014 at 4:19 pm

“Here’s a graph showing how much German households pay per month for energy. Notice how the cost of the feed-in tariff is barely visible.”

That’s a highly misleading graph. The feed in tariff has a significant effect on the price of electricity. That graph is a graph of total energy costs (which involves a lot of non-electrical costs). So, it artificially, makes the feed-in-tariff costs look smaller than they really are. Furthermore, they show years at the bottom, but the actual numbers are by month. So you have to multiply the numbers by 12 to get the actual yearly cost to the rate payer. That’s closer to propaganda than information.

Hey, why not throw the cost of household food in there too? And maybe homeowners insurance? Then they could make the portion of the feed in tariff shrink even further.

81 Tom Donahue February 14, 2014 at 6:43 pm

“Germany doesn’t produce a significant portion of its electricity from oil.”

In Europe and Asia, the price of natural gas is indexed to the price of oil.

82 Tom Donahue February 14, 2014 at 6:45 pm

“That’s a highly misleading graph. The feed in tariff has a significant effect on the price of electricity. That graph is a graph of total energy costs (which involves a lot of non-electrical costs).”

It’s not misleading. The graph shows that the FIT is a negligible portion of energy costs, which explains why German households are not upset about it. Despite attempts to manufacture one, there is no “rising tide of opposition and resentment” of the FIT. In every survey, it continues to enjoy broad public support.

“Furthermore, they show years at the bottom, but the actual numbers are by month. So you have to multiply the numbers by 12 to get the actual yearly cost to the rate payer.”

That seems like a pretty feeble objection. Most people pay their utility bills by the month. Isn’t that the figure they want? If you want another one, nobody is stopping you from multiplying by 12.

“Hey, why not throw the cost of household food in there too? And maybe homeowners insurance?”

At your service. I have a graph here that shows the cost of the FIT as a percentage of total household expenditures.
http://cleantechnica.com/2013/10/17/german-feed-tariff-costs-invisible-without-magnifying-glass/

As you see, it’s 0.3%. It is not “ruinously expensive” and there are no “vast sums of money” involved.

Remember, the goal here is to shut down the fossil fuel industry. And it’s working! Every month there are more announcements of fossil fuel plants being cancelled or taken offline.
It’s quite a modest investment. If I could contribute 0.3% of my income to shut down another coal plant, I would do that. It’s a lot less that what climate change is going to cost me.

83 JWatts February 15, 2014 at 4:54 pm

“That seems like a pretty feeble objection. Most people pay their utility bills by the month. Isn’t that the figure they want? If you want another one, nobody is stopping you from multiplying by 12.”

You realize that’s pretty much the definition of misleading, right? You sound like a used car salesman here, that’s been caught trying to conflate numbers.

A graph with big labels in years, but in which the figures are actually in months is misleading, no matter how you try and spin it. Sure you can just multiply by 12, but most people won’t immediately recognize it.

“Remember, the goal here is to shut down the fossil fuel industry. And it’s working!”

Well sure, except for all those coal plants they are restarting or bringing out of mothballs.

84 Tom Donahue February 15, 2014 at 7:46 pm

“A graph with big labels in years, but in which the figures are actually in months is misleading, no matter how you try and spin it.”

Sorry, maybe you don’t read German. Let me point out that the title of the graph, at the very top, in bold type, is “Euros Per Month”. I think most people will figure out that it shows euros per month.

85 Roy February 13, 2014 at 9:57 am

Since carbon limiting schemes are wildly unpopular with the general public in the US, both parties are supposed to embrace them? When do we elect a new people?

I recently read a piece from the far right wondering: Where is our Nigel Farage?
The simple answer is that the US political system is responsive enough to popular will that we have no need for a UKIP, we have both primaries for legislative office and ambitious congressman and Senators who can be independent of party structure and still quite powerful. If party leadership actively goes against the party’s base they get revolts.

Immigration genuinely splits the GOP and look at how that is going. Carbon control is probably approaching abortion, if not gun control, in popularity with the party base. If Alex wants to see the country driven even more into political polarization he could not wish for a more perfect thing.

86 John Thacker February 13, 2014 at 10:40 am

In the United States, the highly successful cap-and-trade system for sulfur-dioxide emissions has effectively vanished.

OTOH, the acid rain program, which was successful, does have not the issues of a CO2 program, in that SO2’s effects are localized enough that it makes sense to do without being concerned about free rider problems. However, the reason that the SO2 Acid Rain Program has essentially vanished is because the initial statutory goal was achieved ahead of schedule (thus resulting in a glut of credits.) The EPA (under George W. Bush) in 2005 wrote new regulations that would have revived the program, but utilities sued over the regulations and got a lot of them thrown out. Since then, Congress has failed to act to update it.

87 TMC February 13, 2014 at 1:28 pm

Also SO2 is actually a pollutant. Not so much for CO2.

88 JWatts February 13, 2014 at 7:08 pm

“OTOH, the acid rain program, which was successful,”

I think that’s the biggest reason that no new regulations have carried through. SO2 pollution is drastically lower than it was in the 1970’s.

http://www.washingtonpost.com/blogs/wonkblog/files/2014/01/so2.jpg

Here’s a chart showing the last few decades of average SO2 levels for the US:
http://www.justfacts.com/images/pollution/sulfur_dioxide_1980-2010-full.PNG

89 Brian February 13, 2014 at 10:51 am

If we acknowledge that X is a societal goal, then using a market mechanism would be the most efficient method in achieving it. Getting the center left to come to terms with this was a huge success. The pulling of the rug from underneath – the changing of the goal post and the admission that a significant portion will not agree that X is a worthy societal goal – is a frustration for governing in general.

X of course could be environmental policy, but of course it could be any number of other societal goals. Yet, I find that the tea party wing of libertarians are guilty of this kind of thinking, of shifting the goal posts. Ok, “IF” government were to be involved, this is how we would do it. But then, after doing the hard work of convincing folks who are stubborn and frankly difficult to convince about the benefits of market mechanisms, then these libertarians will shift the goal posts – well, on second thought, we actually don’t want government involved at all. Sorry! No deal whatsoever. And then we wonder why the left digs their heels in further.

But overall, thanks for posting Alex. I think this is one of the most important posts on MR in a long time, even if it won’t be received in that way.

90 PD Shaw February 13, 2014 at 11:06 am

My recollection is that the earlier support for trading systems is that they were built on top of command control requirements. Environmentalists were running into the problem that strict emissions limits had scored enormous success by picking up low-hanging fruit, but as the requirement intensified, environmental standards were more visibly causing plant foreclosures and job losses, plus some polluters like power-generators were simply politically difficult to touch. So, emissions-trading was an overlay on top of command-and-control, and complying with the market system was a significant additional expense.

91 Thor February 13, 2014 at 12:24 pm

I have benefitted from Scruton on these topics. He is strong on fanatics in both camps. Here is an eloquent excerpt.

“Like original sin, it [climate change] weighs on us all, and like original sin it might seem to require a salvationist solution. Moreover, it connects immediately with the sins that mean most to egalitarians and with which many conservatives too are far from happy: consumerism, the luxury lifestyle, the obscenities of waste. Climate change hovers above the sinner in his sports utility vehicle like a vision of judgement, and it is a vision that comprehends the whole world. Hence climate change has been not merely believed but seized upon, as a convenient way of turning a political problem into a moral and spiritual challenge, a wake-up call to mankind as a whole, which can be addressed only by action so radical as to amount to a change of life. And when people propose some less demanding response to the problem, they may be greeted with surprise and indignation, since they are undermining the faith. For the salvationists, it is only a change of life that will meet the prevailing need, which is as much a spiritual as a material one.”

Roger Scruton, “How To Think Seriously About the Planet: The Case For an Environmental Conservativism”

92 derek February 13, 2014 at 1:25 pm

Not quite sure where we got Dems not accepting market means for environmental controls…

93 Anthony Alfidi February 13, 2014 at 1:46 pm

This is another mile marker on the road to permanent gridlock. I blame the polarization of each party’s base for the abandonment of market-based solutions. The Tea Party’s ignorance has frightened the GOP away from supporting intelligent solutions. The professional activists on the Left now control the Democrats’ fundraising (away from Wall Street, of course). Whoever benefits financially from cap and trade needs to step up with campaign finance contributions before it’s all gone.

94 XVO February 13, 2014 at 3:22 pm

I blame blowing problems out of proportion and then trying to resolve them out of proportion. They say the earth will turn into a fireball, and that’s what people are afraid of. But in prehistoric times we had much higher levels of carbon dioxide. The frickin carbon dioxide trapped in fossil fuels came from the damn atmosphere to begin with.

95 msgkings February 13, 2014 at 4:42 pm

I’m not saying we will, I tend to be fairly Matt Ridley-ish about climate change, but if we go back to prehistoric levels of CO2 and prehistoric temperatures we really would have a major problem.

96 xvo February 13, 2014 at 11:37 pm

If you can get far enough to look at the prehistoric charts you’ll notice the lack of correlation between temperature and co2 levels. I’m sure a global warmest will pop in with some parroted rationalization to explain this away.

They should use their brains to make nuclear fusion or solar competitive with fossil fuels instead of memorizing one liners if they really care.

97 aaron February 14, 2014 at 8:44 am

I don’t think we can extract fossil fuels fast enough for this to be a concern.

98 DK February 13, 2014 at 4:33 pm

I’m all for blaming the republicans when it’s appropriate, but pointing to the same tendencies in Europe seems to suggest something else is at play. Maybe the whole tendency toward “Command and Control” is a feature of Western environmental policy, not a bug.

99 Art Deco February 13, 2014 at 4:40 pm

Today, the Republicans are no longer willing to accept the environmental goals regardless of the means. The result, however, hasn’t been the ending of the goals it’s been that Democrats no longer accept market means.

I do not think the latter is caused by the former. The Democratic Party’s Id is resurfacing.

100 byomtov February 13, 2014 at 4:44 pm

Let’s see. The GOP doesn’t want to do anything about the environment, cap-and-trade or otherwise. So Democrats face a choice between doing nothing and relying on older legislation. Because they actually think there’s a problem they rely on older legislation.

But somehow, in Alex-world, it’s the Democrats’ fault that market-based solutions aren’t being used.

I don’t get it.

101 The Anti-Gnostic February 13, 2014 at 7:51 pm

Cap and trade is not to benefit the environment. It is to create a contrived “market” from which certain parties can extract rents.

102 Jan February 14, 2014 at 6:05 am

Yeah, no.

103 Brian Mannix February 13, 2014 at 5:37 pm

Alex, Frankel has his history wrong, as well as his economic theory. He holds out the trading of lead in gasoline as an example of cap-and-trade. As the person who (then at OMB) designed this program and persuaded EPA to adopt it, I can assure you that it was no such thing. We introduced trading, but strongly opposed any kind of “cap.” And for good reason: we knew that cap-and-trade would incur hidden costs — the huge Tulloch rectangle of rent-seeking — that would swamp any economic or environmental benefits. The base constraint against which trading took place was 1.1 grams per gallon of leaded gasoline produced. Since there was no fixed cap, the scarcity rents were competed away to consumers in the price of gasoline, and there was no pool of allowances to allocate. The result of this (along with oil deregulation) was the closure of more than 100 refineries, and three DC law firms, who had existed only to exploit the rent-seeking opportunities that trading (and NOT “capping”) eliminated.

Since that time, cap-and-trade has become the favorite “market-based reform” of the rent seekers. To anyone who proposes this, I ask: “Why not support a Pigovian tax instead?” The typical answer is that it would be politically infeasible — meaning that the coalition will not prevail unless it gets in bed with the bootleggers (those who expect to win the fight over the distribution of the allowances). That is too high a price to pay.

Meanwhile, the other “market-based reform” that is thriving is the use of “portfolio standards” for renewable energy sources, such as the many state mandates for renewable electricity and the federal mandates for ethanol, biodiesel, etc. The federal program has turned into another massive farm subsidy, producing enormous environmental damage as well as economic losses. I am always eager to use quasi-markets to improve environmental quality, but I will always oppose the use of quasi-markets for corrupt purposes. And this has nothing to do with partisan politics.

104 Bill February 13, 2014 at 8:19 pm

+1 Nothing like a subsidy to close a plant earlier that was going to close anyway and paying the firm a bonus for doing so. Not to mention the incentive not to do anything now because in the future there may be a payment for you to do it later.

105 Brian Mannix February 14, 2014 at 8:43 am

Bill, if you are talking about cap and trade, you are right about the perverse incentives. That is one of the things we avoided by NOT putting a cap on lead. Half the refineries in the country closed in the next few years, and got no subsidy at all for doing so. It was the withdrawal of prior subsidies that caused them to close. Only five years later we were able to eliminate leaded gasoline altogether, because the rent-seekers had been squeezed out of the system. Cap and trade would have entrenched them instead.

106 We live in interesting times February 13, 2014 at 6:02 pm

Has anyone seen the 10:10 No Pressure ad shown in the UK from a few years ago? Blowback was so bad, it was pulled almost immediately. I think a link still survives via Tim Blair (Australia). Bishop’s Hill blog is also informative depending on the side you’re on.

107 The Anti-Gnostic February 13, 2014 at 7:59 pm

If CO2 above a certain atmospheric ppm is harmful, then it should be banned or its discharge should be actionable. No need for an extruded, rent-seeking scheme like cap and trade.

108 Pat February 13, 2014 at 11:14 pm

Though market mechanisms are superior to command and control, that doesn’t mean they are always efficient. A source based carbon tax (or cap and trade) distorts location decisions for energy intensive trade-exposed production. The deadweight costs of such a tax are likely to be large for the country adopting it, with the emmissions reduction benefits being shared with other jurisdictions.

109 Dan Hanson February 13, 2014 at 11:54 pm

The real fallacy here is treating cap-and-trade of CO2 as being functionally equivalent as cap-and-trade of pollutants like SO2.

Particulates like SO2 can be scrubbed from emissions relatively easily, but with varying levels of cost. The reason cap-and-trade was proposed for these was that the alternative, a mandated particulate emissions level for everyone, was horribly inefficient;.some types of production could very easily reduce their SO2 or other particulate emissions at low cost, and perhaps could have gone much farther than the mandated minimum. On the other hand, other particulate-emitting industries would have found compliance extremely expensive. So setting a level that would optimize one would bankrupt the other or leave the other emitting far more pollution that it could have easily avoided.

Cap and trade is a good solution to this particular problem – establish a market in these emissions, and the companies that can easily reduce pollution have an incentive to reduce it by as much as possible, so that they can sell the credits to other companies that can’t afford reduce their emissions.

Carbon, on the other hand, is not like that at all. Carbon is a fundamental byproduct of energy production using fossil fuels. If your energy comes from fossil fuel sources, there is no easy way to reduce your carbon output other than to reduce energy consumption. ‘Clean coal’ is a magic technology that is nowhere near being able to act as a means of reducing the carbon from burning coal. Alternative energies like wind and solar make up a tiny fraction of production and will remain a tiny fraction for decades to come. There hasn’t been a new nuclear plant in the U.S. in decades because new projects are regulated and litigated into insolvency.

Fracking and natural gas will help, as natural gas produces less CO2 for each BTU of energy. But a changeover to natural gas energy will be slow, and the regulatory burdens on new power plant production prevent a rapid changeover from coal power. Even without the regulatory burden, changing an entire region’s power source will not happen quickly. In any event, you don’t need cap and trade to cause this to happen – Natural gas is already proving cheaper than coal and that’s a main reason why coal power production is stalling. Let the market work.

So in essence, aside from a shift to natural gas in some regions, cap-and-trade of carbon might as well be called cap-and-trade of energy. And since industries already strive to be as energy efficient as possible, you might as well just call it an energy output cap. The result won’t be a healthy market in carbon that only effects industry on the margin as other particulate emission regulations do – the result would be massive dislocations in the marketplace. We would basically have to reduce the production of high-energy products like steel or their prices would skyrocket. States that are fortunate to have hydro or existing nuclear power would benefit dramatically, and states that rely on fossil fuels will be punished.

That’s assuming the price of the carbon is high enough to have a real effect on output. If it doesn’t, it’s useless. If it does, it will reduce economic activity.

And in the end, imposing carbon restrictions regionally will do nothing, other than act as a back-door wealth transfer to non-complying countries like Russia and China. Every pound of CO2 the U.S. restricts reduces the social cost of China’s CO2 emissions and reduces the pressure on them to follow suit. Every gallon of gasoline Americans choose not to burn will drive down world oil prices and stimulate consumption elsewhere as other people take advantage of the lower costs and increased supply. Industries facing higher energy costs may relocate to China and elsewhere – where lower overall energy efficiencies and lower pollution regulation may result in a higher carbon footprint and larger pollutant footprint for the products they produce.

So until there is a world wide, enforceable agreement to limit world carbon output by a significant amount, it’s a waste of time and money. And such a world agreement will never happen, since in the end countries act in their own interests and a country like Russia has nothing to gain from carbon emissions and everything to lose from taxes on one of their main exports.

Unless, of course, we’re willing to go to war over this issue. It would take hard sanctions and blockades to force compliance, and those have a habit of kicking off wars.

110 ladderff February 14, 2014 at 12:22 am

You win the thread

111 Peter Schaeffer February 14, 2014 at 12:31 am

+1

112 Dan Hanson February 14, 2014 at 3:44 am

I was going to add the reason why carbon capture and sequestration is a pipe dream:

The atomic weight of carbon is 12. The atomic weight of oxygen is 16. C02 therefore has an atomic weight of 44. A pound of coal might typically be 75-90% carbon. So when you burn a pound of coal, you get almost 4 pounds of CO2 out.

Compare that to particulate emissions which are measured in parts per million of the total volume of output.

The U.S. burns more than 2.5 million metric tons of coal per day. The infrastructure to support this has been developed over a century and includes rail, and barges. I have never seen a realistic plan for dealing with 10 million metric tons of sequestered carbon per day, or even a miniscule fraction of that. Plans include pumping into underground reservoirs and expended gas and oil wells. This increases the risk of sudden releases of large quantities of the gas. CO2 is heavier than air, and in large quantities will suffocate whatever it sits on. A while back a lake ‘burped’ a lot of CO2, and the CO2 flowed down the mountain and asphyxiated an entire town, along with all the wildlife. Needless to say, if CCS technology ever gets to the point where they’re ready to pump million of tons of the stuff into the ground, the environmental movement is going to wake up and go berserk. It’ll make fracking look like a warmup show.

The other problem is cost. Coal only works as a fuel because it’s incredibly cheap and we’ve figured out how to process massive quantities of it at low cost – $15 to $30 per ton. And even at those low prices, fuel costs are the major cost of coal plants. How much will it cost to sequester four tons of CO2? If it costs even $5, it could double the cost of coal as a fuel.

So unless we can come up with a magic way of storing all that CO2 in a completely safe way for a few pennies per ton, Carbon caps are essentially output caps, because there’s no way to reduce the carbon output of these plants without cutting back the power they generate.

113 aaron February 14, 2014 at 9:09 am

Not to mention, sequestration decreases efficiency about 15%. It’s throwing away 15% of our energy. For something that is quite evidently beneficial to society and ecology. (If warming was accelerating at rate that could plausibly cause harm, we’d see the feedbacks by now and couldn’t have the pause in warming we’ve seen.)

114 Peter Schaeffer February 14, 2014 at 11:47 am

DH,

Good posts… But…

“The atomic weight of carbon is 12. The atomic weight of oxygen is 16. C02 therefore has an atomic weight of 44”

CO2 has a molecular weight of 44. Atomic weights are for elements.

“So when you burn a pound of coal, you get almost 4 pounds of CO2 out”

Actually, it’s more like 2.1 pounds of CO2 per pound of coal. Coal contains large quantities of water, hydrogen (in covalent form), and ash. None of these yield CO2 on combustion.

“Compare that to particulate emissions which are measured in parts per million of the total volume of output”

Not exactly. A pound of coal produces around 0.63 pounds of fly ash or 63,000 PPM. Stack gas scrubbers (several kinds), capture more than 99%. However, net particulate emissions are (apparently) in the range of 200,000 tons per year. That’s equivalent to 180 PPM.

“The U.S. burns more than 2.5 million metric tons of coal per day”

2.8 million metric tons per day in 2007, 2.21 million metric tons per day in 2012.

” I have never seen a realistic plan for dealing with 10 million metric tons of sequestered carbon per day, or even a miniscule fraction of that.”

At the 2012 level of coal consumption, CO2 output per day (from coal) is around 4.55 million metric tons per day. Pumping into underground formations is easier than you are allowing for. Capturing the CO2 in the first place is not. The comparison with fracking is only partially accurate. Fracking requires the physical cracking of very low permeability formations. CO2 would be pumped into known high permeability formations.

At the temperatures and pressures required, CO2 is either a liquid or a super-fluid. As stated above, injection isn’t that hard (natural CO2 reservoirs exist). Conversely, capture is quite difficult.

115 Peter Schaeffer February 14, 2014 at 1:07 pm

Make that

“A pound of coal produces around 0.063 pounds of fly ash or 63,000 PPM”

116 Dan Hanson February 14, 2014 at 4:47 pm

Yes I should have said molecular weight for CO2, but the point remains… You wind up with more CO2 out than the coal that went in. If you think about the infrastructure required to deal with the amount of coal we use now, it should be obvious that dealing with CO2 is not anything like dealing with other particulate emissions.

The numbers I used are from the Union of Concerned Scientists, and I couched the numbers in ranges and used a lot of ‘about’ qualifiers because I realize the raw numbers change from year to year – not just with consumption but the type of coal used. Anthracite coal is over 90% carbon, for example.

And yes, under pressure the CO2 would be a liquid. But if it escaped sequestration it would become a gas. I think it’s a totally valid point that the environmental movement would have kittens if they really started to think about the volume of CO2 that was being sequestered.

In any event, it’s a gigantic amount that would be extremely hard to deal with over any reasonable timeframe. As a comparison (and again from the Union of Concerned Scientists), in one year a typical coal plant will produce 10,000 tons of Sulfur Dioxide. In that same year, it would produce 3.7 million tons of CO2 – 370 times as much. Furthermore, the S02 doesn’t have to be sequestered – the SO2 is highly reactive and can be converted into something harmless and useful. For example, coal plant scrubbers can introduce lime and convert the SO2 into gypsum, a safe, marketable product. Selling the gypsum not only gets rid of the raw materials so it doesn’t have to be stored, but it helps partially recover the cost of scrubbing.

But there are no such plans with CO2. It would have to be simply stored. Millions of tons per day.

117 aaron February 16, 2014 at 10:37 am

The decrease in efficiency also m means that much more real pollution.

118 Peter Schaeffer February 15, 2014 at 11:37 am

DH,

Anthracite does have a very high carbon content. However, anthracite is only 0.2% of U.S. coal production and has been a minor product for many years. now. Years ago, I accidentally found a piece of anthracite. Very impressive, but rare these days.

To be precise CO2 is not a liquid or super-fluid under the conditions it would be handled, but a liquid or super-critical fluid (my error). He3 is a super-fluid new absolute zero.

In my opinion, you are overestimating the difficulty of handling the CO2 and underestimating the difficulty of capturing the CO2. A few numbers should help. The U.S. natural gas system processed roughly 1 million tons of gas per day. Natural gas is lighter than air, but it is also flammable and remains in gas phase in pipelines. U.S. power plants also handle 839 million tons of water per day (.18 cubic miles). Water is of course a liquid, and neither flammable or asphyxiating.

As for capturing the CO2, that’s a different matter. Years ago I worked on projects along these lines. The results weren’t all that promising.

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