My Markey-Waxman query repeated: what are the climate benefits of the bill?

Barkley Rosser, who is not held in the thrall of the Cato Institute, posts in the comments:

Sorry, you are going to be disappointed. So, I just googled "Markey-Waxman bill benefits" and, big surprise, got a big fat zero. I do not think anybody has made any estimate of benefits, high, low, or medium. If they have, they are buried pretty deeply somewhere, not easily accessible. And, I do not have the time to go cook up some numbers myself (don't even try to ask). So, anyone out there who wants to either cook up some numbers themselves or go digging more deeply, good luck. But, I doubt that the question will be satisfactorily answered…Oh, I should not say I got a "big fat zero." I got lots of hits saying lots of things. But none with any estimated benefits numbers that I could see, even half-baked ones.

Maybe it's still early but this apparent gap in the literature is not encouraging.  I'll repeat my query.  What would be the climate benefits of this bill?  If you want to cite an estimate involving strategic interdependencies with China and India, fine.  But please cite something that puts forward and defends a particular estimate.

Is there a better case for this bill than: "it will raise government revenue, which I favor anyway, and raise the costs of unsavory corporations, which doesn't strike me as so terribly unjust anyway, and on the estimate of climate benefits I will just fudge it and hope for the best and claim we must do something?"  David Frum comments.

Matt Yglesias has a different argument: better to start now than never
I would phrase a related point more technically: acting now may be
keeping open a valuable option on doing more later.  Still, I wish to
know what that option is worth, noting that if major action is impossible today it may be impossible tomorrow as well.

In the comments section of this post I'm not interested in being lectured about CO2 in the time of the trilobites, corrupt scientific groupthink, hearing that geo-engineering would be cheaper, or reading that various wimps won't face up to the need for nuclear power.  I'm also not interested in hearing whether the costs of shifting to greener energy are high or low, at least not today.  I just want to see the benefit estimates on this particular policy and if you put any serious estimate forward in due time I will assess it and report back to you.

Yes it is hard to model international interdependencies and option value — two of the major potential benefits — but we try to model such complexities for other policies all the time.  Surely it's worth some group doing a 50-100 page study of what we can hope to achieve.  Then we could see how plausible is the case for the bill.

If there is such a study, I promise I won't complain about the discount rate, I won't pretend that uncertainty militates in favor of inaction, and I won't dismiss it by saying a carbon tax would be better and then refusing to judge cap and trade vs. nothing.  I want to see whether you need crazy or sensible judgments to get large aggregate benefits from proceeding.

Comments, of course, are open but subject to the above caveats.  No trilobites!


I agree that some numbers would be interesting, but I also think that economics might be demanding more than is appropriate in this situation. I could make the semi-Taleb-ian argument that GHG mitigation is about reducing uncertainty ... and that people who demand the uncertainty be quantified might not be getting it.

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Matt Yglesias has a different argument: better to start now than never. I would phrase a related point more technically: acting now may be keeping open a valuable option on doing more later.

Seems like the problem with this argument is that a bad initial bill may be worse than nothing in terms of enabling future action. Have the ill-advised subsidy programs to the corn-ethanol industry been a good first step? Or, once started, have these environmentally useless but politically valuable programs proved hard to eliminate? If your answer is 'B', you win.

We can expect a lot of path-dependency -- the initial version of cap-and-trade will have a formative and lasting influence. As of last reports, 85% of permits will be given away rather than sold, and the program includes more billions for the auto industry. If you look at the list of beneficiaries, it's quite a dog's breakfast (and almost certain to get uglier over the years as lobbyists and their friends in congress work their magic).

It seems to me that there's clear danger of this thing producing disillusionment among American voters in a few years (I'm not sure if that's a bug or feature) and little traction in negotiations with China, India, et al (they may justly point out that the U.S.'s 'bold action' is mostly a massive giveaway to special interests and produces little or no environmental benefit).

And no, I can't point to any numerical estimates of the climate benefits from this bill, and I really doubt anyone else will be able to either. That's not the way this game in Washington is being played. But I think Tyler already knows that...

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oh slocum. Come on. Ethanol isn't driven by greenhouse politics, or even energy security. Right now, it is driven by the need for oxygenated gasoline additives for Clean Air requirements. Maybe it is a mistake, but clean air isn't a bad thing. And the alternative to ethanol was even worse (MTBE)

I think we should ALL be very worried that Waxman and Markey are the named sponsors: two of the dumbest, most publicity friendly congressman out there -- and that is saying a A LOT.

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What are the benefits to taxing work and investment, as we currently do, instead of CO2?

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There is every reason to believe that the markey waxman bill will increase greenhouse gas emissions and environmental destruction.

For example look at the carbon credits for chinese hydroelectric projects

China's 'green' hydro-electic dams reveal flaws in lucrative 'carbon credit' climate-change weapon

XIAOXI, China -- The hydroelectric dam, a low wall of concrete slicing across an old farming valley, is supposed to help a power company in distant Germany contribute to saving the climate -- while putting lucrative "carbon credits" into the pockets of Chinese developers.

But in the end the new Xiaoxi dam may do nothing to lower global-warming emissions as advertised. And many of the 7,500 people displaced by the project still seethe over losing their homes and farmland.

Such projects "may allow covered entities" -- such as RWE -- "to increase their emissions without a corresponding reduction in a developing country," the U.S. Government Accountability Office (GAO) said in its December review.

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I don't see the point in doing this unless you are willing to engage in a major trade war with all of the most desperately poor countries in the world over the issue of carbon emmissions regulatory arbitrage.

Which is to say, the costs are so huge that carbon emitters will simply move offshore to countries where there are no such emissions caps or taxes of any sort.

So in the absence of a trade war, there will be zero benefit from carbon restrictions in the US as we simply offshore carbon producing activities, resulting in zero emissions gains. I simply fail to see how the alleged benefits from a slightly less warm Earth (assuming the AGW hypothesis is correct, we won't go there for Tyler's sake) would outweigh the massive pain and suffering that we unleash in China, India, Brazil, Russia, and all sorts of smaller countries that are desperately trying to escape mass poverty.

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Try these:

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You think that in principle it is possible to create some value associated with the environmental benefits. I am not sure you are wrong. What I would say is that if we keep putting carbon into the atmosphere forever the consequences will be sufficiently bad that doing detailed analysis of the matter will require more work than any benefits such an analysis could ever conceivably produce. We will start reducing CO2 emmissions either too soon or too late or not at all and I am sufficiently scared of the not at all possibility that I don't worry about whether we do it too soon or too late.

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The collapse of the carbon market in europe shows how this bill is at best do nothing to reduce GHG emissions.

The most likely result is that it will actually increase GHG emissions.

Carbon trading may be the new sub-prime, says energy boss

However, Bryony Worthington, an expert on climate change and founder of, said:

"What should have been a way to kick-start investment in much needed low-carbon, efficient technologies is now a cash redistribution exercise."

A study commissioned by the WWF environmental organisation from Point Carbon, published in March last year, estimated that "windfall profits" of between €23bn and €71bn (£20.9bn-£64.4bn) would be made under the ETS between 2008 and 2012, on the basis that the price of carbon would be between €21 and €32.

Up to €15bn could be made by British companies that were given credits they did not need.

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If you search for something subjective like "benefits" you get subjective results. Shocking. If you want estimates of emission reductions, try searching for something like "Markey-Waxman emission reductions" (which brings up the WRI study.)

Maybe I'm missing something what with all the discussion of ethanol and sticky P, but the study Tyler claims he's looking for doesn't seem that hard to find?

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For a back-of-the-envelope calculation, multiply the projected emissions reductions suggested by Vinnie's source:

By the estimate of the social costs of carbon dioxide (about $14/ton), found here (and referenced in Wikipedia!):

Discount appropriately, and voila! -- your very own estimate of the benefits of Waxman-Markey.

Given that it's a Sunday afternoon, and I'm sleepy, I'm going to nap instead of making the calculation. But do we agree it can be done relatively easily?

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"oh slocum. Come on. Ethanol isn't driven by greenhouse politics..."

Oh, of course it is -- HT to The Volokh Conspiracy for this item:

"Today, House Agriculture Committee Chairman Collin Peterson (MN) and Ranking Member Frank Lucas (OK) along with a bipartisan group of 42 Members of Congress introduced a bill to correct flawed provisions in the Renewable Fuel Standard (RFS) that are limiting the potential for clean, homegrown renewable biofuels to meet our nation’s energy needs. . .The bill eliminates the requirement that the Environmental Protection Agency consider indirect land use when calculating the greenhouse gas emissions associated with advanced biofuels."

As soon as we legislate away those inconvenient indirect effects, 'reductions' in emissions will be so much easier.

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dolo suggests:
To avoid the chance that the US economy might be leapfrogged by foreigners with new green technology, the US government should even the playing field by matching foreign governments' investments in green technologies.
That might be the correct approach if the goal is to keep the US on top of some economic niche.
But if the goal is to be able to create less-polluting energy sources, or to learn how to manipulate the climate, then the US should see what Europe is doing and then do something else thus maximizing the amount of invention and societal good.

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Poor, heartbroken little trilobites, left out of the party.

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dolo, If government-subsidized Euro tech companies make big breakthroughs, anyone in any other country can then buy that technology, but without having borne the cost of the subsidy. If subsidies don't make a difference, they're a waste. If they do make a difference, then you want someone else's taxpayers to pay, and then just enjoy the fruits. That's the "game theoretical" reason not to subsidize green technology.

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The report (see quote below) referenced above is by MIT economist Paul Jaskow, one of the leading experts on electricity pricing and electricity deregulation.


Despite a number of teething problems, the European Union’s Emissions Trading Scheme (EU ETS) is proving successful and serves as a useful guide for the United States and other nations moving towards capping and trading greenhouse gas emissions.

That’s the conclusion of analysis by Massachusetts Institute of Technology (MIT) on the three-year first phase of the EU ETS up to the end of 2007. The work was commissioned by the Pew Center for Global Climate Change.

A major mark of success, the study concludes, is that the scheme has had no noticeable adverse impact on the economy. “The notion that the carbon price would wreck the overall economy is clearly disproved for the European system,† the authors say.

"This important public policy experiment is not perfect, but it is far more than any other nation or set of nations has done to control greenhouse gas emissions, and it works surprisingly well," said Denny Ellerman, senior lecturer at MIT’s Sloan School of Management, who performed the analysis with Paul L Joskow, an MIT professor of economics.

While pollution trading systems existed well before the scheme began in 2005, the EU ETS breaks new ground with much larger scale in traded volumes and industry coverage.

Ellerman and Joskow say clear lessons to emerge from the initial trial phase are the need for accurate emissions data and efficient communications of that data to the market, and that allowing banking and borrowing of annual emissions permits from one year to the next creates a more efficient market.

The study also declares support for at least some degree of free permit allocation saying it is not unreasonable that emitters being asked to take on new liabilities are given new assets as well.

The EU ETS experience shows that setting up a perfect scheme from day one is not necessary and that starting off without all the necessary structures fully in place, despite the teething problems that may arise, is a valid approach.

Emission caps, registries, robust emissions data was not in place first up in the EU ETS. “Yet a transparent and widely accepted price for CO2 emission allowances emerged rapidly, as did a functioning market and the infrastructure to support it,† the study says.


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This paper provides an empirical assessment of CO2 emissions abatement in the UK power sector during the trial period of the EU ETS. Using an econometrically estimated model of fuel switching, it separates the impacts of changes in relative fuel prices and changes in the EUA price on the utilization and emissions of coal and natural gas-fired generating units. We find clear statistical evidence that the CO2 price did impact dispatch decisions, resulting in natural gas utilization that was from 19% to 24% higher and coal utilization that was 16% to 18% lower than would have otherwise occurred in 2005 and 2006. Abatement as a result of fuel switching in the power sector is estimated to have been between 13 million and 21 million tons of CO2 in 2005 and 14 and 21 million tons in 2006.
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This paper uses top-down trend analysis and a bottom-up power sector model to define upper and lower boundaries on abatement in Germany in the first phase of the EU Emissions Trading Scheme (2005-2007). Long-term trend analysis reveals the decoupling of economic activity and carbon emissions in Germany that has occurred since 1996 and has accelerated since 2005, in response to rising commodities prices, the introduction of a carbon trading, and other measures undertaken in Germany. Differing emission intensity trends and emissions counterfactuals are constructed using emissions, power generation, and macroeconomic data. Resulting top-down estimates set the upper bound of abatement in Phase I at 121.9 mn tons for all EU-ETS sectors and 56.7 mn tons for the power sector only. Using the tuned version of the model “E-simulate† a lower boundary of Phase I abatement is established at 13.2 million tons, based only on fuel switching in the power sector, which constitutes 61% of German ETS sector emissions. The paper characterizes abatement, critically discusses the underlying assumptions of the outcomes, and examines the impact of two main factors on power sector abatement, namely price and load.

The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system — international financial flows and institutional readiness — haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale.

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Several temperature analyses can be found at MasterResource here:

Clean Waxman-Markey:
Global buy-in with Waxman-Markey:
Dirty Waxman-Markey:
China offset to Waxman-Markey:

The climate effects of EPA's proposed CO2 initative is considered here:

The climate effects of the Kyoto Protocol were revealed to be small, reversing out less than 5% of the human influence on climate, so the use of the basically the same model by Chip Knappenberger above should not be surprising in the result.

Also, the climate effect of GHG emissions goes down as the atmosphere becomes more saturated with the same, meaning that time is working against carbon mitigation.

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MasterResource has these temp studies in reference to Waxman-Markey:

Clean Waxman-Markey:
Global buy-in with Waxman-Markey:
Dirty Waxman-Markey:
China versus Waxman-Markey:

EPA initiative:

Importantly, the climate effect of GHG emissions declines as the atmosphere becomes more saturated with the same. Emissions today have about 10% less climate impact than emissions in 1990, for example. This is another factor that economists have to keep in mind when doing their analysis.

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Barkley Rosser: "Of larger countries, it has long been accepted that the one facing the largest per capita economic losses from warming is Bangladesh, with the central IPCC forecast rising to an annual loss of 20% of GDP, which is nearly $20 billion per year."

According to MIT researchers sea levels are expected to gradually rise by 1 to 3 feet over the next century. Why does IPCC assume that Bangladesh will not be able to adapt to such a small rise in the sea level? The Netherlands was able to adapt to a rising sea level.

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Omar Rahman, Dean of the Independent University, Bangladesh, explains that Bangladesh is already adapting to climate change

"Bangladesh is a resilient country. We have shown the world that we can adapt, that we can confront things, that we are not just passive victims of disasters."

Bangladesh has:

allocated another $50 million to the country's agriculture and health budgets to help "climate-proof" certain development sectors. The nation's agricultural research centers are devising salinity-resistant strains of rice.

Leaders ... point out that the country's history with catastrophe has in some ways given Bangladesh a head start in knowing how to cope with climate change.

It makes no sense that Bangladesh would simply sit back and do nothing about a 20% loss in GDP, the loss predicted by the IPCC.

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While their recent WM modeling effort didn't account for benefits, I was told EPA has a "benefits team" working on this

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I may be an idiot, but I assume that we do have an idea about how much carbon any group of bussinesses emit. If this bill starts out at a cap lower than this and has a diminshing amount over time after that, does it matter who benifits, or what other benifits are a byproduct of this bill. I mean as ling as it accomplishes that isn't that enough. I mean if after this is enacted we find out more data, the inputs can be changed, but this was done for sulfer dioxide, why the fears that it will be done for carbon dioxide? And never if I have to read such a waste like that from Frum again, I may ask that Alex post elsewhere so I can read the maximise my time spent reading. (sorta kidding)

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Barkley Rosser

There are lots of tail events.

A sudden rise in sea level is a minor one in relative terms (unless you live on the coast of the USA, say).


- Mass species extinction.

- Drought in the US West-- if the icecaps don't replenish on the Western Cordillera, the whole region is in for serious water shortage. What's the cost of relocating the population of a state?

- Positive feedback due to methane-permafrost melt leading to another Permian-era style mass extinction.

- Nuclear war stemming from political tensions between 2 water short countries: say ones that both depend on the Hindu Kush (or the Himalayan Plateau) for water supply?

The environmental and environmental-political 'right tail' possibilities are endless. And we have no real way of putting a probability on them.

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"What would be the climate benefits of this bill?"

There can't be because there is no global warming. G.W. Bush and Fox News told us so.

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In New York spielt sich ein spektakulärer Prozess um eine verstorbene Society-Lady ab: Der Sohn soll der Alzheimer-Kranken Millionen abgeknöpft haben.

Er soll das Testament seiner Mutter gefälscht und sich um 60 Millionen Dollar bereichert haben: Anthony Marshall (rechts) vor dem Supreme Court in New York.

Nancy Kissinger, die Frau von Henry, war da und Philippe de Montebello, der ehemalige Direktor des Metropolitan Museums und John Hart, der Theater- und Filmproduzent ("Revolutionary Road") und natürlich auch Annette de la Renta, die Gattin des amerikanischen Designers Oscar de la Renta. Die Liste bekannter Namen aus der Manhattaner High Society wird täglich länger. Doch es ist kein Wohltätigkeitsball, der hier stattfindet. Und die Räumlichkeiten sind nicht zu vergleichen mit den Salons voll Samt, Gold und Marmor, in denen viele der Anwesenden kurz zuvor noch gefrühstückt haben.

Verhandelt wird hier, am New Yorker State Supreme Court, eine weniger glanzvolle Episode im Leben der Park-Avenue-Gesellschaft. Es geht um Brooke Astor, die Grande Dame der New Yorker Society, die 2007 im Alter von 105 Jahren gestorben ist, und darum, wie ihr einziger Sohn, Anthony Marshall, gemeinsam mit Astors Anwalt Francis Morrissey versuchte, ihren Reichtum zu seinem zu machen. Sie beide hätten Astors fortschreitende Alzheimer-Erkrankung ausgenützt, so der Vorwurf der Anklage, um ihr immer größere Teile des Familienerbes zu entwinden - darunter viele Millionen, die für das Metropolitan Museum, die Public Library und den Zoo vorgesehen waren, die New Yorker Institutionen, die Astor, der Familientradition treu bleibend, jahrzehntelang beschenkt hatte.

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valuethinker: "No scientist worth his or her salt would swear that there is zero probability of a West Antarctic ice sheet melt this century."

Please provide a link showing that that scientists have, in the past decade, given anything other than a minuscule probability to the West Anarctic Sheet melting within the 21st century.

As I see it, humankind faces a much, much greater risk of sharply lower standards of living due to alarmists' policies being implemented than any risk of climate change catastrophe.

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While you're doing this, don't forget to go back and look at the cost-benefit analysis done prior to the acid rain trading system of 1990.

Costs were wildly overestimated; benefits wildly underestimated. Kind of a pattern with economists and proposed regulations.

The benefits of this bill will depend on the inventiveness and entrepreneurialism of Americans as they shift from fossil-fuel energy to clean alternatives and efficiency. How is anyone supposed to predict or quantify innovation? I can't. But I believe it will happen.

On a related subject: has anyone done a historical study of the successes and failures of CGE modeling? Do economists have a good sense of when such models are accurate and when they aren't? Which way their biases point, based on actual outcomes vs. predictions? If we did find a model to spit out an estimated benefit figure, is there any reason to regard it as any more reliable than chicken entrails?

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188 Millionen Euro eingefahren. Das sei um 60 Millionen Euro besser als geplant, teilte die Landesbank für Hamburg und Schleswig-Holstein mit.

In den ersten drei Monaten des Vorjahres lag der Verlust bei 91 Millionen Euro. Zinsüberschuss und Provisionsergebnis hätten sich positiv entwickelt. Im Ergebnis vor Steuern sind nach Bankangaben 28 Millionen Euro für Restrukturierungsaufwendungen und 20 Millionen Euro für die Inanspruchnahme und Bereitstellung der Garantien des Sonderfonds Finanzmarktstabilisierung (SoFFin) enthalten.

Der Vorstandsvorsitzende Dirk Jens Nonnenmacher interpretierte Zahlen positiv: «Das Ergebnis im ersten Quartal zeigt, dass wir auf dem richtigen Weg sind. Aber es zeigt auch, dass wir nicht nachlassen dürfen, die Neuausrichtung unserer Bank mit Hochdruck und Konsequenz fortzusetzen.» Jeder Tag zähle.

Der Zins- und Provisionsüberschuss der HSH Nordbank lag in den ersten drei Monaten des Jahres mit 534 Millionen Euro deutlich über dem Vorjahreswert von 435 Millionen Euro. Demgegenüber stand eine höhere Risikovorsorge im Kreditgeschäft von 424 Millionen Euro (61 Millionen Euro im Vorjahresquartal). Kräftig gespart hat die HSH Nordbank beim Personal. Die Aufwendungen sanken um 14 Millionen Euro. Die Zahl der Mitarbeiter ging seit Dezember 2008 um 440 zurück.

Bei einer Hauptversammlung sollen die Anteilseigner der HSH Nordbank an diesem Mittwoch über eine Kapitalerhöhung von drei Milliarden Euro beschließen. Nach einem Verlust von 2,7 Milliarden Euro 2008 benötigt die Landesbank bis Ende Juni frisches Eigenkapital.

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This bill is a bunch of bull shit. People are not causing global or climate warming (which every you prefer to call it) It is exclusively due to solar storm maxima, and minimally due to human activity. Solar storms has far extended past the NASA predictions, and has proven to show a major decrease in the Earth's temperature trends....The climate is warming because of the sun not greenhouse gas. The only thing CO2 emissions have done is cause more plants to grow....which is a good thing...basic biology CO2+sunlight= plantfood....I find it funny how all of the sudden the world needs to be in a panic about climate or global warming in a time of an economic crisis.....once again the governement manipulates the people into another profit that is benificial to them instead of what is good for the people. Time for people to wake up and look at statistical facts rather than what liberal freaks want to brain wash us with.....

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