Peter Barnes

CASH, JOBS AND DEFICIT REDUCTION

Breaking the Gordian knot on climate legislation

The Senate is tied in knots on climate legislation. In President Obama’s view, putting an economy-wide price on carbon is the most effective way to stimulate clean energy invest­ment and jobs. Most Democrats — though not enough — agree. Roughly half a dozen Republicans, given some political cover, might go along, but the party’s leadership opposes a “national energy tax.” Sixty filibuster-proof votes are therefore not in sight. And after November, when Democrats are expected to lose seats, the prospects look even grimmer. What is to be done? The conventional wisdom is to court Senatorial votes by giving handouts and …

Why Cantwell-Collins is best — and how it just might win

As U.S. climate legislation creeps forward, Senators now have two frameworks to choose from.  One is from Sens. John Kerry (D-Mass.), Joseph Lieberman (I-Conn.) and Lindsey Graham (R-S.C.); the other is from Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine).  Both begin with descending carbon caps that, along with supplementary policies, promise to reduce carbon dioxide emissions at roughly the same rate, and both protect domestic industries by imposing fees on carbon-intensive imports from countries that don’t limit emissions. But from there the two approaches diverge markedly. The Kerry-Lieberman-Graham framework is based on the Waxman-Markey bill that narrowly passed the …

Our carbon pricing system should not be a shotgun marriage

Why two climate bills are better than one

As this is written, two House Committees — Energy and Commerce and Ways and Means — are considering climate legislation.  Both are following similar timetables, and hope to report bills by June.   In the case of Energy and Commerce, chairman Henry Waxman has released a 648-page discussion draft.  The draft creates a large and complex carbon trading system but is silent on two key questions — whether initial permits will be auctioned or given free to polluters, and how revenue from permit auctions, if any, will be used.  Despite the silence on these questions, however, it is widely expected …

Utility players

Beware utilities seeking free pollution permits

America’s electric utilities (PDF) are waging a no-holds-barred campaign to get 40% of carbon emission permits allocated free to local distribution companies and merchant coal generators. They argue that free allocation will protect consumers better than auctions and cash back. Just give us free permits, they say, and we’ll pass through the savings to our customers. Sounds appealing. But beware: this is not what happened in Europe. There, utilities got free permits and raised rates anyway, earning billions in windfall profits. See the study by the Energy Research Center of the Netherlands (PDF), which found that a significant part of …

Green unity

How Obama can revive the economy and heal the planet

A few days before the election, Barack Obama told Time‘s Joe Klein: Finding the new driver of our economy is going to be critical. There’s no better driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office. That’s exactly the right choice for numerous economic, geopolitical, and ecological reasons. By spawning “a new energy economy,” Obama can create millions of new jobs, decrease our dependence on foreign oil and avert catastrophic climate change. But the politics of launching that new energy economy — …

Why not a revenue-neutral carbon cap?

The silver-lining of Lieberman-Warner’s demise

The demise of the Lieberman-Warner climate bill may not be a bad thing if it spurs environmentalists and politicians to ask: Is this the best way to cap carbon? Let's be clear what Lieberman-Warner was. Yes, it contained a carbon cap. But mostly it was about spending or giving away trillions of dollars. It was, as Sen. Bob Corker (R-Tenn.) put it, "the mother and father of all earmarks," and every lobbyist in town was at the trough.

Creating an Earth Atmospheric Trust

A system to control climate change and reduce poverty

The following is a guest essay. ----- Stabilizing concentrations of greenhouse gases in the Earth's atmosphere at a level that will fulfill the mandate of the UN Framework Concentration on Climate Change to avoid "dangerous anthropogenic interference with the climate system" will require drastic departures from business as usual. Here we introduce one attractive response to this challenge that may seem visionary or idealistic today but that could well become realistic once we reach a tipping point regarding climate change that opens a window of opportunity for embracing major changes. No silver bullet exists capable of solving the complex and interdependent problems of climate change, sustainability, and economic development. A consensus is emerging, however, that solving these problems will require major changes in existing governance arrangements to eliminate or at least alleviate what the 2006 Stern Review (1) calls the "greatest and widest-ranging market failure ever seen" -- the failure of the market to send proper signals about the real costs of using the atmosphere as a repository for greenhouse gases. This case exhibits the defining features of market failures surrounding open-access resources (2-6). Because emitters allowed to use the atmospheric commons as a repository for the wastes associated with burning fossil fuels at no cost, they have every incentive to use as much of this free factor of production as possible. But the present and future costs to society of this practice are enormous. Estimates of these costs vary. But there is compelling evidence that the eventual costs will exceed the cost of changing our current practices to limit emissions of greenhouse gases by a large margin (1). Analysts have proposed a variety of forms of carbon taxes and cap-and-trade systems as policy measures to deal with this problem (7, 8). A few measures, like the European Emission Trading Scheme, have been implemented to some degree. But the measures under consideration at present are deeply flawed. In this article, we present an alternative system that has several attractive features, including the capacity to deal fairly with the regressive nature of most carbon taxing systems, to protect the new governance arrangements from political manipulation or corruption, and to contribute to the alleviation of global poverty. Working out the details of the general plan will be an ambitious task, but we think it is important to take the first step and propose a broad strategy having the six principles laid out below. The core of this system is the idea of a common asset trust (9, 10). Trusts are widely-used and well-developed legal mechanisms designed to protect and manage assets on behalf of specific beneficiaries (11). Extending this idea to the management and protection of a global commons, such as the atmosphere, whose owners/beneficiaries include all people alive today as well as future generations, is a new but straightforward extension of this idea. Because the atmosphere is global, the Earth Atmospheric Trust would be global in scope. Initial implementation at a regional or national scale may be necessary and appropriate, however, as we build toward a global system. We cannot examine in detail the path that implementation of the system might take, or how the many institutional, political, and administrative details would be addressed. Our purpose here is to present an integrative idea that has many positive features as the basis for further discussion in the post-Kyoto world. The trust arrangement we envision has six basic features together with four special features and precautionary measures. Basic features:

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