Sunday, 29 November 2015

Nobel Laureates and Other Climate Experts to Paris Negotiators: Tax Carbon

A letter composed by the Carbon Tax Center calling for a carbon tax as the basis for international climate negotiations boasts of an impressive list of signatories: three Nobel Laureates in Economics, three former Cabinet Secretaries (one of whom, Steven Chu, also received the Nobel Prize in Physics), two Vice-Chairs of the Federal Reserve Board, and some other people that have done a few things in their lives, like teach Economics at Harvard.

What is perhaps most important to note about using carbon taxes as a basis for negotiating a climate treaty is that while international negotiations will always be fraught, a carbon tax treaty would at least look more like what international treaties look like: countries promising to observe some code of conduct -- human rights for prisoners of war, reducing trade barriers, and harmonizing taxation for border straddlers like me. It is much more intuitive for countries to agree to do something -- phase out subsidies and tax carbon -- than it is for countries to divvy up responsibility, a divisive exercise that led to the ill-fated Kyoto Protocol, which allowed China to triple its emissions over the time period since. The strength of such an approach is also, admittedly, a weakness: unless something is specified about the collected carbon tax proceeds, a carbon-taxing signatory would be free to somehow channel proceeds to affected fossil fuel stakeholders. But if the approach is paired with a commitment to phase out fossil fuel subsidies, then at least carbon tax proceeds are likely to be distributed in such a way as to decouple emissions from proceeds. Above all, one thing would be important about a carbon tax-based treaty: countries raise revenues, keep them, and spend them in a way that they control. That intrudes upon sovereignty concerns less than other approaches, and avoids some of the finger-pointing exercises that have plagued previous Conferences of Parties.

Monday, 23 November 2015

Alberta's Carbon Disappointment

Alberta Premier Rachel Notley announced Sunday that the province will adopt a climate policy that will replace its existing Specified Gas Emitters Regulation. Unfortunately, the new policy really does not do much more than the SGER. It appears to be a cap-and-trade program that replaces the intensity-based SGER trading program. Whereas SGER would give more permits to specified emitters (large ones) as long as they got more efficient, the new policy allocates emissions permits on the basis of output, but seems to institute a cap for each sector. (I will frequently use the words "seems" and "appears" because the plan does not completely spell out some implementation details) So the possibility of indefinitely rising emissions allowances disappears, but the initial allocation (which appears to re-set each year) is still based on productive and/or value-based efficiency (which one and when is not clear). The cap on Alberta's oil sands sector is 100 Mt, which is not a binding cap at all because current emissions are about 70 Mt. The plan does expand carbon pricing into consumer sectors, so that distributors of gasoline and heating fuels will have to have permits, too, and pass them down to end-consumers. That is a sensible step, making the carbon price as economy-wide as possible.

What is mysterious about the plan is what exactly the role of pricing is. The report refers to a ceiling price of $30 per tonne, which is consistent with a cap-and-trade program, but it also refers to price increases of 2% above inflation, "as long as emissions prices in Alberta do not significantly exceed those in comparable/competitor jurisdictions and as long as they are not above current estimates of the social cost of carbon." (p. 32 of the report). How do you increase the price if the price is determined by market trading? The mechanism seems to be that the province will reduce allocations "1-2% per year to reflect expected energy efficiency improvements." (p. 31 of the report OK, but that still seems like the province still just adjusting the cap.

In sum, this plan is a disappointment for those like myself, who were hoping for a bolder policy, especially in light of the Premier's remarks earlier this year expressing unhappiness with the SGER, and rejecting the National NDP Party's call for cap-and-trade. The plan still grandfathers a certain amount of emissions, and that is disappointing because the income effects of those freely-allocated permits will reduce the incentives to innovate. Worse still, the sector-specific caps will eliminate any market signals to re-order Alberta's economy in less carbon-intensive ways. In particular, if the oil sands sector still has 30 Mt to grow, there is no bite at all to this climate policy in terms of curbing oil sands emissions. Some of the money raised from the plan (how the plan raises the claimed $3 billion in revenue is unclear) will go towards reducing coal-fired generation and increasing renewable energy generation, but how it does it is ... you guessed it: unclear.

Tuesday, 10 November 2015

Party Before Country: The Democratic Congressional Campaign Committee Kills Moderate Republicans ... Because It Can (or thinks it can)

If you're a Democrat, and you blame the Republican Party for hyperpartisanship, maybe you should look a little closer to home. The Democratic Congressional Campaign Committee is partly to blame -- probably exactly half. The DCCC has been targeting Florida Republican Congressman Carlos Curbelo (FL-26) for all kinds of fabricated charges. Why? Because the DCCC thinks Florida's 26th district is a swing district, and they think they can win it.

But what a pyrrhic victory would it be, to wipe out one of the last of the remaining members of that most endangered species, the moderate Republican. Congressman Carlos Curbelo is an environmental hero. Curbelo was one of the eleven co-sponsors of the Gibson Resolution, the nonbinding but meaningful statement by House Republicans that climate change is really a problem, and needs addressing. It is perhaps an unfortunate thing that it takes political courage for a Republican to "come out" on climate change, but that doesn't make it less courageous. Curbelo came out early, as this Scientific American article points out.

These are precisely the kind of craven, Machiavellian shenanigans that have corrupted Washington. This is why Republicans are drawn to ignorant knaves like Donald Trump and Ben Carson. I would personally give Bernie Sanders more credit, but he draws upon the same, angry, anti-Washington sentiment that is also gaining ground in the Democratic party. The Party comes before your country.

Support, and vote for Curbelo if you live in Florida 26th. And call the office of Steve Israel, the chair of the DCCC, at 631-777-7391 or in DC at 202-225-3335, and let him know he is a schmuck.