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Grist Wants CAP-and-trade, Not a "Poison Pill" Carbon Tax

A contributor to Grist, which advertises itself as “a blogful of leafy green goodness,”  is saying NO to a carbon tax and YES to a take-no-prisoners cap-and-trade program.  A comment on the post succintly lays out the blueprint of a stringent cap-and-trade program:

“… the minimum you need for a cap & trade to be acceptable to progressives is:

  1. NO giveaways 100% auctioning
  2. NO offsets.
  3. NO escape clauses.
  4. Permits auctioned frequently and conveniently enough that buying them directly rather through traders is real option
  5. Permits have a life of no more than three years, and a start date no more than three years from time of auction. (So you could buy a permit that takes effect three years from now and expires three years from that).

I think with those three provisions most carbon tax advocates will accept it as second best.

If you want well designed (as opposed to acceptably designed) I add the following. I think it will work well enough without the following, but for best policy add:

  1. Minimum prices close to the best guess as to actual cost (greatly reduces volatility).
  2. A quarter percent tax on resale of permits. (Discourages trading and encourages direct purchasing.)”

This is serious stuff–and reason for even the Obama Administration to postpone action on pricing carbon for not one year but longer. And by this time, everyone can wake up to the fact that mitigation it is not–far too little too late by the alarmists’ own math–and adaptation it is–the wealth-is-health approach.

For as both sides know, the science of spectroscopy concludes that man-made greenhouse gas forcing has less and less of an effect as the atmosphere fills with such emissions. Or in technical terms, the effect of GHG forcing is logarithmic, not linear.

8 comments

1 Ed Reid { 02.01.09 at 8:13 am }

Perhaps the most important requirement the Grist commenter missed, likely because the commenter is thinking like one of the controllers and not like one of the controlled, is the need for a well defined long term schedule of cap reductions with a defined end point. With that information, companies which emit carbon can plan their transition from carbon allowance purchasers to non-emitters.

In our imperfect world, it would also give those companies the opportunity to move their operations from countries which are imposing progressively declining caps to countries which have no intention of doing so. In the process, they could select plant locations several hundred feet above current sea level, as a hedge against the “fat tail”.

2 TokyoTom { 02.02.09 at 6:29 am }

Plenty of Grist commentators strongly favor carbon taxes over cap and trade, Rob. What are you trying to do, push for the worst deal possible?

3 rbradley { 02.02.09 at 4:28 pm }

Interesting TT–so I should change the title to say “Grist Commentator” rather than “Grist” if their bloggers are split between the two approaches?

I am for the best deal, which means neither cap-or-trade nor a carbon tax.

4 TokyoTom { 02.02.09 at 10:53 pm }

Rob, three points:

1. The guy you quote doesn’t represent “Grist”, and his comments are merely comments on a post of Dave Roberts, who does. What’s the point in conflating the two, especially when there is a wide and relatively healthy difference of opinion over there?

2. On the terms of the “best deal”, Exxon, Barbara Thoring, George Will, Jon Adler and others disagree with you, especially as our choice appears to be between cap-or-trade and a carbon tax, along with loads of subsidies, or, if no legislative action is taken, regulation of point sources and vehicle emisssons under the CAA (which your do nothing option appears to ignore).

Out of curiosity, though, does your “do nothing” third choice not include further economic freedom that would incentivize energy efficiency and investments in cleaner technology, such as greater utility deregulation and ending corporate income taxes?

3. “the science of spectroscopy concludes that man-made greenhouse gas forcing has less and less of an effect as the atmosphere fills with such emissions. Or in technical terms, the effect of GHG forcing is logarithmic, not linear.”

Does this mean you (1) don’t care what rising ocean pH levels do to ocean ecosystems and (2) will be happy when CO2 levels are once again those that prevailed when the Artica and Antarctic were subtropical?

5 Ed Reid { 02.03.09 at 9:40 am }

TT,

The GLOBAL CO2 emissions reduction required to halt the growth of atmospheric CO2 concentrations is ~99.95%. This estimate is based on a reduction to approximately the emissions levels at which the atmospheric concentration began to rise; ie., in ~1750.

I would estimate there is a 99.95% probability that the global community will not achieve this reduction.

6 rbradley { 02.03.09 at 12:40 pm }

As a general comment to TT, a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.

A consumer/taxpayer wealth-is-health approach is far preferable to a failing governmental approach. Political capitalism, too, must be left behind as I show in my new book, Capitalism at Work: Business, Government, and Energy.

7 TokyoTom { 02.04.09 at 12:02 am }

a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more. A consumer/taxpayer wealth-is-health approach is far preferable to a failing governmental approach.

I strongly agree, but suggest that making enemies of enviros is not the most effective way of advance your purported agenda – which is why I wonder sometimes what it is exactly that you are trying to achieve.

8 TokyoTom { 02.04.09 at 12:09 am }

The GLOBAL CO2 emissions reduction required to halt the growth of atmospheric CO2 concentrations is ~99.95%. … I would estimate there is a 99.95% probability that the global community will not achieve this reduction.

Ed, this sounds about right, but maybe you could be a little clearer on what point you are trying to make.

Should we simply throw in the towel and acknowledge that Cretaceous terraforming, along with fairly rapid changes to ocean pH, is inevitable, because we find our commons too difficult to manage?

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