A Couple Things

Per the NYT:

The American Clean Energy and Security Act would, for the first time, put a price on carbon emissions. The bill has shortcomings. But we believe that it is an important beginning to the urgent task of averting the worst damage from climate change. Approval would show that the United States is ready to lead and would pressure other countries to follow. Rejection could mean more wasted years and more damage to the planet. [...]

The centerpiece of the legislation is a provision that aims to cut America’s production of greenhouse gases by 17 percent by 2020 and 83 percent by midcentury — the minimum reductions scientists say are necessary to avert the worst consequences of climate change.

Its mechanism for doing so is a cap-and-trade system that would place a steadily declining ceiling on emissions while allowing emitters to trade permits, or allowances, to give them flexibility in meeting their targets. The point is to raise the cost of older, dirtier fuels while steering investments to cleaner ones.

The two seasoned politicians behind this bill — Henry Waxman of California and Ed Markey of Massachusetts — have also insisted on provisions that would mandate more efficient buildings, require cleaner energy sources like wind power and provide subsidies for new technologies.

Political Animal has some good analysis:

The AP did a nice job putting together a Q&A with frequently asked questions about the bill. Of particular interest was its description of how the reform legislation will affect Americans’ lives: “It fundamentally will change how we use, produce and consume energy, ending the country’s love affair with big gas-guzzling cars and its insatiable appetite for cheap electricity. This bill will put smaller, more efficient cars on the road, swap smokestacks for windmills and solar panels, and transform the appliances you can buy for your home.”

This is not to say, however, that it’s nearly as progressive or as ambitious as it could be. Indeed, some of the chamber’s most liberal Democrats (see Kucinich, Dennis) will oppose the bill for not going far enough. David Roberts added, “The green world is … fluctuating between rage (kill it!), dread (we’re screwed), and resignation (it’s better than nothing).”

And even under optimistic scenarios, nearly everyone seems to agree that Waxman-Markey, if it passes the House, and if the Senate doesn’t screw it up, and if it does what it’s supposed to do, will still only be a first step in the right direction. No one is under any illusions that, if the bill becomes law, policymakers can just clap the dust off their hands and say, “Global warming? Problem solved.”

But first steps still need to be taken, and Waxman-Markey is about the best bill anyone can hope for, all things considered.

So, is thing going to pass? In a 435-member House, 218 is the minimum necessary for passage. As of late yesterday, Waxman-Markey had 184 “yes” votes, and a whole lot of “maybes,” with a lot of wrangling going on behind the scenes.

Republican leaders think the votes aren’t there for passage; Democrats think it’ll cross the finish line; and President Obama is doing his part to push those on the fence. We’ll know soon enough, but keep in mind — if the Democratic leadership is counting heads and can’t find 218, they’ll probably scrap today’s vote and reschedule.

Notice the trend-line up since the middle of the 19th century.

Yglesias makes some excellent points:

The impact of a 10 degree or more warming of the globe is simply not very well-understood. The climate science along is hard to model. It’s possible that it will set into motion feedback loops that rapidly spiral out of control. The geopolitical implications are also difficult to get a grasp on. But from a strictly selfish American-centric point of view, a lot of the correctly weighted costs of climate change come from the 5-10 percent chance that things will be much worse than expected rather than from the costs arising under the most likely scenario. More modeling of the price of inaction is still worth doing, I think, but it’s critical to keep in mind that the dominant issues have to do with the risks of utter catastrophe and with the consequences to relatively poor people—neither of which are well-captured by a simple account of the likely economic cost of inaction.

Marc Ambinder has a really good idea on how Obama can institute a relatively easy path to Cap-and-Trade, while pissing off conservatives but without having to deal with them. The relevant parts of the plan:

But there may be an easier way for Obama to institute carbon caps without exposing himself to the political downsides, without giving up much of his political capital. (Let me deal with an objection: yes of course the American people want energy independence and are very worried about global warming and support tougher rules and regs, but politicians haven’t been terribly honest with them about the short-term (and potential long-term) costs of this type of change. Major congressional action might alter the political equation a bit.)

In essence, what Obama and the Democrats could do is to use the cover of a stimulus package to spend billions to create green jobs, and then pursue the carbon-capping half of the equation administratively, using laws like Clean Air Act.

Some of Obama’s top environmental advisers have argued that the CAA gives the Environmental Protection Agency the authority to regulate already existing regional cap-and-trade regimes; the EPA would simply knit them together. Voila. National cap-n-trade. Well, yes, every state in the union would have to affiliate with a program or create one of their own, but many governors and legislatures appear ready to do this, conditioned on the federal government’s willingness to administer it.

…

If Obama decides to do this, climate change conservatives will go ape. An end-run around Congress. An illegal intervention by the executive branch. No public debate, etc. But it would work, and it would allow to tackle, say, health care, without the distraction of having to also put through another major piece of reform legislation.

I personally think this is brilliant. I don’t know what Ambinder is doing blogging; he should be working for Obama directly.

Some links to other posts about cap-and-trade below the fold.

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Economist Image: Oil Log-Rolling

Steven Taylor has it over at PoliBlog. He notes a couple of reasons why this is good and a reason it is bad:

The good news is obvious: lower energy prices are helpful, especially in the context of the problems in the economy and it should help inflationary pressures as well as be welcome news to folks who need home heating oil.

The bad news is that the main reason for the decrease in oil prices is that it reflects substantial weakening in the global economy and hence less demand, especially in the manufacturing sector.

I’ll add another bad bit of news regarding lower oil prices. If there is going to be a puish for energy independence and renewal/green energy development, I think we need high oil prices to create that incentive. The problem with low oil prices is that we, as a collective polity, forget about the pains of high oil prices and therefore forget about the need to continue development of alternatives. Cognitive scientists tell us that we’re very good at suppressing bad memories. We very much need to be reminded of bad oil prices if anything is going to happen regarding them.

World-Wide-Matel has an interesting post on the forestry perspective on carbon trading. We haven’t blogged about carbon trading too much here on A Couple Things, but it is an increasingly important area that will demand more attention in the future. As Matel notes:

We will get some form of carbon tax and/or carbon trading no matter who becomes president next year. This prospect makes carbon trading a hot topic among forest owners. Forests naturally soak up carbon dioxide and well managed forests do a better job than others.

The best and most elegant solution to problem of CO2 emissions is a simple carbon tax. A carbon tax is the way of minimum government interference in the economy and will provide the maximum benefit because it does not try to pick technologies, techniques, winners or losers. A carbon tax changes the energy equation but lets people decide on the various solutions they thing are best. This is the reason why we won’t get this solution. Politicians hate these kinds of things. It solves the problem and takes away an issue from them. It also is too simple, so they have little or no scope to provide special privileges or breaks to their supporters.

Remember the ethanol debacle? It was a great example of how government can make an experiment with a good idea into a monster than raises food prices worldwide, creates environmental stress all the while costing the taxpayers and consumers money. Expect a lot more of these sorts of things in the next few years. Sorry for the digression.

Another problem with a carbon tax, however, is that it makes U.S. industries less competitive. Why source production in the U.S. if you have to pay a carbon tax when you don’t somewhere else? A carbon tax also assumes that it is a viable option for policy-makers. Given how World Trade Organization (WTO) negotiations in goods and services work, I doubt it would be. Carbon taxes will be viewed as protectionist measures and block attempts at negotiating free trade deals. This is why the tax is not very appealing. It makes sense on the surface, but when you dig a bit deeper, it isn’t very practical.

The next idea is a carbon cap and trade system:

The next best thing to a simple carbon tax is a cap and trade system that sets the rules and then gets out of the way. Ideally the government would auction off the carbon rights and let those who wanted to use them figure out the distribution. Of course nothing is so simple. You have to define both carbon producers and carbon sinks (takes CO2 out of the air). This is complicated because the carbon cycle is one of the biggest natural processes on earth. Billions of tons of carbon are cycled through the atmosphere every day and only a very small percentage is influenced by human activities. We don’t want to allow people to get benefits or penalties just for being near a particular natural process. On the other hand, human choices can significantly affect how much carbon natural processes take out or put in. Nowhere is this truer than in forestry.

Forest destruction in places like Indonesia and Brazil put more CO2 in the air than all our transportation. On the other hand, growing forests in North America have pulled that amount out. This is a big deal, but hard to measure and assessment is complicated even more by the nature of nature. An old, established forest is near equilibrium, i.e. as much CO2 is put into the air from decay and respiration as is taken out by photosynthesis. (This is the way it has to be. The natural carbon account must balance. W/o CO2 plants cannot grow and life on earth is impossible. More CO2 makes plants grow better and healthier. CO2 is not a type of pollution in the sense we usually think of these things.) Destruction of an established forest puts carbon in the air and the establishment of a new forest takes it out. We don’t want to encourage people to destroy an established forest in order to establish a new one to get credit for the CO2 it would remove.

I have to admit that I am not really sure about this whole carbon sink idea. In the long run forests would be carbon neutral, since carbon absorbed by leaves, needles and wood would be released when those things decomposed. Growing more trees and bigger trees is good from many angles and it would buy us some time, maybe centuries, in limiting greenhouse gasses, but most of what goes into the forest will come out again.

This is a very valid concern and it relates to the “moral hazard” problem. How do we prevent the incentive to destroy an established forest in order to create a new one in order to get credit for the CO2 it removed? In forestry one can see how this could potentially have particularly harmful effects.

In any event, it will be interesting to see how this all plays out. Carbon trading is truly a new emerging market and is just starting to get some serious attention by policy-makers. We’ll continue to keep tabs on developments.