Friday, October 5, 2007

House Democrats on Carbon Controls: Hold the Applause

The House Energy and Commerce Committee just issued a White Paper on carbon controls. To its credit, the report makes a reasonable case for the advantage of using permits rather than taxes as the starting point, but everything else is up in the air. It talks about a target of either 60% or 80% reduction by 2050, when the steeper cut represents the minimum acceptable amount if we are serious about stabilizing at less than 550 ppm. It meanders a bit in its discussion over where the permits should be applied, when the only feasible approach is one that goes after carbon at its point of entry into the economy. And worst of all, it speaks vaguely of “distributing” permits without even raising the possibility that they should be auctioned. It would be interesting to know whether the Democratic policy staff is simply slow to pick up on the ideas the rest of the country is talking about, or whether they think the best chance of surviving an election year is to keep their climate change plans as fuzzy as possible.

11 comments: said...

It really is too bad that Al Gore is not running, and indeed seems to have withdrawn himself from serious policy discussion to receive awards and applause. The policy discussions by the Dems seem unfortunately incoherent so far, if still better than the press conferences that Bush has now decided to hold (see his conference last week), after having spent years in just utter irresponsibility on this matter.

BTW, Peter, you deserve credit for bringing up the push for carbon taxes that seems to be emanating from a variety of influential sources in both parties. This is simply a no starter at the global level. While I am all for raising gasoline taxes here in the US, the idea that a post-Kyoto global agreement will involve "border harmonization of carbon taxes" is total nonsense. The progressive and similar Scandinavian countries have been trying to do this for several years and have failed. It is way too complicated.

I am very suspicious about the real agenda of the folks pushing carbon taxes. At least it seems that Cong. Dingell changed what was advertised to be a carbon tax proposal to something more like cap and trade.

Let me note further the politics of this at the global level. Back in the early 90s, the Europeans were pushing carbon taxes. The Clinton administration briefly attempted to push this in the Congress, without success. Following on the relative success of the SO2 trading program in the US, the US pushed cap and trade. The Europeans did not like it, but went along with it at Kyoto to be nice to the Americans. Of course we all now how the US rewarded them for their concession.

Today, the Europeans have a cap and trade system in place (since early 2005). While it has problems, it is working, and not as unreasonably as a lot of the press in the US would have you believe. But, here come the Americans now, or some of them anyway, saying "carbon taxes! carbon taxes!" Bah.

BTW, Tyler Cowen at MR recently linked to a paper (sorry, have been out of town and did not get title or author) that showed that under the right elasticities (and not too ridiculous either), it could come to pass that a carbon tax could actually increase carbon emissions. How? Reduced fossil fuel prices could lead to increased use. Even if that is an unlikely result, it is a warning and reminder of the old Weitzman result, which Peter noted earlier: a tax limits the costs of the polluters, but not their emissions. You want to get to 550 ppm, or whatever? Cap and trade is just about the only way to go.


Anonymous said...


I don't know enough to understand why cap and trade, or permits, or taxes are the only way to go.

so i hope the dems are just being fuzzy to make sure they get elected.

i have grave doubts about anything that sounds as bureaucratic as permits or cap and trade, but i guess i'll just have to hope you all know what you are talking about.

meanwhile, i'd feel better if someone put a 10 cent per gallon tax on gasoline tomorrow and let the other countries do whatever they think best. and then raise the tax another ten cents after the furor has died down. and then another ten cents... until people got the idea and got better cars or drove less. because the real problem is that everyone still thinks this can be solved without anyone changing anything about their present life style. said...


Given the attitude to taxes in the US (a matter we have discussed in another context), if you are going to raise them, then do it once big time and then leave them alone. The idea of a series of successive tax increases is simply wildly unrealistic. Indeed one of the problems with the people pushing carbon taxes is that it looks like a dodge for powerful and wealthy interests like fossil fuel companies to say they are for green policies, but then, "gosh, darn, that Congress just won't pass those carbon taxes (or gas taxes) we are just so much for!"

There is a lot of mumbling out there about "bottom up" coordination of national policies and this and that, and some of that will go on (in particular, there must be an initial move by the US to do something, anything, before anybody else will do anything, especially places like China, India, and Brazil). But that is not a general solution. It is a pile of bullshit solution.

In the end, I fear the textbooks have it right. It is either set a maximum quantity ("cap") and then establish a market to trade the rights to emit up to that amount, as the US did in 1990 with SO2 and the EU has done with CO2 since 2005, or insitute a tax. I think the former is the only way to go if we are really going to get anything seriously done on reducing global carbon emissions.


Anonymous said...


i guess i should say that in this case i wasn't advancing an opinon as much as expressing a feeling.

my own take on humans is that they wouldn't notice a penny tax and i don't know how often it could be raised another penny before they did notice

but you may be right, if we say there's a big problem out there, maybe a big tax would get through in spite of the howling.

i have seen enough, even lately, of human behavior that makes me think we as a species aren't rational enough to save ourselves.

probably my only problem with the cap is that i just don't understand it.

Michael Perelman said...

Today's Wall Street Journal has an editorial praising Dingle for his proposal, which is intended, according to the paper, to show how impractical reining in global warming will be.

At least,the paper may be lightening up on the global warming hoax line.

Anonymous said...

i don't look at the wsj much, but i have to wonder what kind of a mind would decide that it is impractical to try to avoid a global catastrophe.

is it because when you spend all day thinking of how to make money in essentially the same way your did, that you don't have time to read, much less think about, what the real scientists are saying..

and don't have the imagination to see how you can still make money in a world that does not depend on creating more and more carbon dioxide? said...


There has long been a weird disconnect between the news pages and the editorial pages of the WSJ, with the former generally of pretty high quality, while the latter has been pretty much of an insane asylum, including being one of the major bases for the supply siders, both initially and still.

What has many worried about the Rupert Murdoch takeover is that he will make the two more similar, but do so by wrecking the news pages while leaving the loonies on editorial pages alone.

BTW, folks, the reason you are not seeing any posts from me is that I seem to have fallen off the list of "invited" for this blog while I was out of the country. Hopefully this will get straightened out sooner rather than later, as I do have some posts sitting in me...

Anonymous said...


don't look now but the insane side seems to be running the country.

Myrtle Blackwood said...

I highly recommend you read an article on the carbon-trading scam created by big business in Australia.

It's at:

Here's a partial summary:
1990s – Big energy interests involved in coal and oil and including the multinational corporation Poyry (amongst others) were looking for a profitable and convincing response to climate change. They decided to establish the business of trees being used as carbon offsets. The devised the Plantation 2020 Vision for Australia. The bigger the sink, the more money it would be worth both to them and any other polluting industries. With the promise of a huge carbon sink, and they being the operators of this giant carbon estate, they were sure to become instantly wealthy. The ‘carbon estate’ that they controlled would be used to underpin carbon credits worth billions. Competition from solar and wind power was ‘unnecessary’, because ‘conventional’ energy generation by coal etc could continue. Various financial arrangements were agreed with the major political parties to assure their ongoing commitment to the program....

If you go to my website ( you will see that this industry involves the destruction of pristine areas of old-growth forest and so forth. It does NOT provide savings in carbon emissions. How can it when most of the biomass is piled up and burnt every 12-20 years?

Carbon trading. Isn't that a financial derivative? We know where they are taking us.

Anonymous said...



i am trying to stay modest here because i don't know much.

but it seems to me that with carbon permits, or carbon trading there is a huge opportunity for shennanigans, whereas a carbon tax would be pretty simple.

i can imagine some entrepreneur looking at his bought and paid for carbon credits, and looking at the price of "fiber" and saying (literally) to hell with it, clear cut and move on.

i am not at all sure i understand the arguments for the permits... but i suspect they are driven in part by the desire to avoid a "regressive" tax on the poor poor.

as one of the poor poor myself, i can assure you we can adapt. and if we don't adapt we will die.

Peter Dorman said...

Brenda's point is very well taken. There is now a large body of evidence showing that offsets rarely offset, and in fact they often do more damage than good. The only reason they exist is that they provide profitable investment opportunities, and this buys business support for environmental programs. In other words, they are a bribe. We will see the same demands as policy is debated in the US, and it's important to not get sucked in.