Cap and Trade

[We need Tom Tupa]

For those looking for more information, this paper is a good discussion of cap and trade and a couple of its variations. It's a long read, but even getting through the first third or so should be helpful:

 

http://www.aei.org/publications/filter.all.../pub_detail.asp

 

[heckofajobbrownie]

And here's another from the CBO:

 

 

"Human activities around the world—primarily fossil fuel use, forestry, and agriculture—are producing growing quantities of emissions of greenhouse gases, other gases, and particulates and are also greatly altering the Earth’s vegetative cover. A strong consensus has developed in the expert community that if allowed to continue unabated, the accumulation of those substances in the atmosphere and oceans, coupled with widespread changes in patterns of land use, will have extensive, highly uncertain, but potentially serious and costly impacts on regional climate and ocean conditions throughout the world."

[calfoxwc]

It doesn't help, Heck...

 

I understand the need to convert to better fuels...

 

but to tax the daylights out of all citizens before the new alternative energy exists,

 

or is available for practical use, is completely irresponsible.

 

It just sounds like economic blackmail or something. Or...economic extortion.

 

Conclusion: "The glorified end does not justify the economic force as a means."

[heckofajobbrownie]

You've found a rare instance where I stand with someone at AEI, Tupa.

[heckofajobbrownie]

On a somewhat related note, Tupa, did you see the corn ethanol news? Wonderful. Surprisingly bold. And a stance he probably never would have taken as a Senator from a big corn state.

 

Yay.

 

We'll see if it can survive. It's such a no-brainer that you'd hope so. But that assumes the use of brains.

[We need Tom Tupa]

I thought you'd like that AEI. ha.

 

I havent seen the ethonal news, no. Should I be excited?

[We need Tom Tupa]

I thought you'd like that AEI. ha.

 

I havent seen the ethonal news, no. Should I be excited?

http://www.chicagotribune.com/business/chi...0,4311801.story

 

wow. that's fantastic. so obvious, but fantastic.

 

edit: upon further review, I am cautiously optimistic. Smells too much like saying what everyone on opposing sides wants to hear. We've seen that before...

 

here is another article:

http://www.cbsnews.com/stories/2009/05/05/...in4992574.shtml

 

final edit: relying on major news sources for this seems like a bad idea. But that's all my 2 minutes of time allows me. Direct me to what I should be seeing here.

[heckofajobbrownie]

"...a move that sets the stage for a battle between Midwestern grain producers and environmentalists."

 

And taxpayers, and proponents of efficiency, people who don't like corporate welfare, people with brains...

[We need Tom Tupa]

Finally, a dog in the fight! I have a brain!

[choco]

lesson #1: ethanol

 

evaluate the marketability/viability/manufacturability of a product before wasting tens of billions of dollars on the product. i can't believe anyone actually bought into e84.......

 

we need better schools....

 

 

 

[heckofajobbrownie]

It's not that they can't make it or market it; it's that it doesn't achieve any of the goals it's supposed to, other than being produced domestically.

[Mr. T]

If this goes through, this is what we wil be looking at in comparison

 

Hidden Btu Tax Horrors

http://www.sepp.org/key%20issues/btutax/hiddenbtu.html

 

Once upon a time I felt sure I knew the exact definition of a Btu (British thermal unit): The energy required to heat one pound of water by one degree Fahrenheit. But that was before President Clinton unveiled his proposed Btu tax that's supposed to extract $33 billion a year from hapless citizens—$320 for the average household, and a great deal more for middle-class and rural households. It will actually net the Treasury much less, but what a honey pot for lawyers, lobbyists, accountants and—of course—politicians who want to bestow favors! All of the evils that Mr. Clinton campaigned against!

 

deja vu.

[We need Tom Tupa]

http://www.nytimes.com/2009/05/06/opinion/06price.html?_r=1

[heckofajobbrownie]

Hey, you agreeing with the NYT editorial board, me with AEI. Something is going on here.

[heckofajobbrownie]

Some more from Kevin Drum:

 

Yesterday, after reviewing the problems with a carbon tax, I asked why anyone would support going down that road vs. supporting a cap-and-trade plan. Andrew Sullivan responds:

 

Because we actually believe that a carbon tax will bring green benefits without the kind of crude regulatory scheme that could stigmatize environmentalism for a long time? Because we think it will work better?

 

This deserves some unpacking. For starters, you need to think about the kind of regulation and oversight that's required to reduce carbon emissions. Take power plants, for example. First you have to have technology in place to monitor carbon emissions from each plant, and then you have to have a regulatory bureaucracy in place to make sure the monitoring takes place properly. That's a big job. Once that's done and we know how much carbon is being emitted, plants have to either (a) pay a tax for each ton of carbon or ( buy a permit for each ton of carbon.

 

The difference there is tiny. You can pay the tax or you can buy permits on an electronic carbon exchange. From the point of view of the plant, they each require about the same amount of work.

 

The carbon exchange itself, of course, does need to be set up and kept in operation by a government agency. That's extra work compared to a tax, and it has to be done right. Still, this is hardly untrod territory. There are hundreds of electronic commodity exchanges around the world and we know how to set one up. In fact, we've done it before for other cap-and-trade programs, and the operation of the exchange itself has never been that big a deal.

 

So far from being a "crude regulatory scheme," it's actually pretty elegant. Emitters can buy permits depending on their needs while companies that make big cuts and have excess permits can sell them. In terms of overhead at the corporate level it's hardly different from a tax at all.

 

As for a tax working better than cap-and-trade, why? Both approaches put a price on carbon. That either works or it doesn't. It's true that there are some theoretical technical advantages to a tax, but there are some technical advantages to cap-and-trade too. In the real world, they probably wash out.

 

Overall, the idea that cap-and-trade requires some kind of monstrous bureaucracy that a tax avoids simply doesn't stand up to scrutiny. Most of the bureaucracy is dedicated to monitoring and enforcement, and you have that no matter what. And cap-and-trade has the advantage of setting a cap and deriving the permit price from that, rather than letting Congress set a tax rate that will (supposedly) produce a suitable cap. The former is relatively transparent, since the cap level is right in the legislation and the public knows precisely what it is. The latter isn't, since the public has to decide which expert is right about the tax level needed to reduce emissions to the desired level. The scope for fiddling and lying and delaying on this score is obviously immense.

 

As for vulnerability to loopholes and special interest breaks — well, both plans are about even on that score. It's simply naive to think that either one will be more immune than the other. Horsetrading is what politicians do, fine print is what lobbyists specialize in, and eternal vigilance is the only way to keep them under control.

 

In the real world, cap-and-trade requires Congress to set a transparent cap. It uses a mechanism that's straightforward and proven. It puts us in sync with Europe, which is already committed to cap-and-trade and has no interest in the tax approach. And it's politically feasible. Simply put, that's why it's the better approach for anyone who's serious about real-world results.

[heckofajobbrownie]

Tupa, he's pleasantly surprised us again:

 

WASHINGTON (Reuters) - President Barack Obama's $3.55 trillion budget, released on Thursday, retains his plan to cut climate-warming carbon dioxide emissions by auctioning off 100 percent of emission permits to industries.

 

That is at odds with some in Congress, including members of Obama's own Democratic Party, who are pushing for 50 percent or more of those emissions to be given away in the early stages of the plan to ease the transition to a lower-carbon economy.

 

Opponents fear that charging companies for the carbon they emit would put unnecessary pressure on an already struggling economy.

 

Selling all the emission permits is projected to bring $646 billion in revenue over the first years of the program, and White House budget director Peter Orszag said that would not change when more details about the administration's budget request are released next week.

 

"We're not going to provide the full details of what will be released on Monday, but I will say that you should anticipate no changes in our climate proposal," Orszag told reporters, when asked if the 100 percent figure would hold.

 

[heckofajobbrownie]

Now let's see if he's willing to concede something on revenue offsets. Supposedly this all ties in with health care reform, so maybe that's not in the cards. We'll see.

[We need Tom Tupa]

Now let's see if he's willing to concede something on revenue offsets. Supposedly this all ties in with health care reform, so maybe that's not in the cards. We'll see.

Boy, that's a tough sell. Then again, raising taxes in a year or two to make up the loss he would be conceding to now wouldnt be any easier.

 

I'm very impressed that they stuck to auctioning for now, and very interested to see where this goes. There are probably more ways to lose this one than to win it.

[heckofajobbrownie]

That's for sure, especially with internal fights from midwestern Dems like Bayh and Dingell.

[osusev]

could you post another link to the article it wont resolve for one reason or another.

[heckofajobbrownie]

US won't drop cap-and-trade auctions: White House

1 day ago

WASHINGTON (AFP) — The White House is committed to auctioning off polluter permits under a "cap-and-trade" system to fight climate change, a top official said Thursday in remarks likely to anger US industry.

"You should anticipate no changes in our climate proposals," Office of Management and Budget chief Peter Orszag told reporters, despite reported hints that President Barack Obama might now compromise about the auctions.

US industrial concerns including utility companies have been pushing for the government to give away some of the permits, rather than charging for them in an auction, so as to ease the transition to cap-and-trade.

Congress is now debating that system, under which companies would buy rights to emit greenhouse gases from firms that use less energy and pollute less.

Obama argues that with the future of the planet at stake, the United States must now take the lead on global warming after years of denial under the former administration of George W. Bush.

Meanwhile the head of the Congressional Budget office told a Senate panel that cap-and-trade would adversely affect both consumers and producers at a time of national economic distress.

"Under a cap-and-trade program, consumers would ultimately bear most of the costs of emission reductions," said CBO director Douglas Elmendorf in testimony to the Senate Finance Committee.

"Higher prices for energy-intensive goods and services would lead to a variety of consequences for different industries, regions of the country, and income groups," he said.

Nevertheless, "policymakers can significantly affect the distribution of costs associated with a cap-and-trade program, depending on how they decide to distribute the value of the allowance," he said.

The non-partisan CBO, which provides federal economic and budgetary analysis to Congress, estimated that a 15 percent reduction in carbon emissions would cost the average US household roughly 1,600 dollars.

The Democratic-led bill in Congress aims to cut US carbon emissions by 20 percent from their 2005 levels by 2020, and dramatically boost reliance on renewable energy.

The Obama administration says it is committed to offsetting higher energy prices associated with cap-and-trade through subsidies and tax breaks, especially for lower-income people.

And a study on Wednesday from the independent Pew Center on Global Climate Change said that cap and trade would have only a modest impact on the competitiveness of energy-hungry US industries.