In two previous posts, I've attempted to establish that additionality is neither some strange concept relevant only to carbon offsets nor an awkward patch used to fix a defect in the design of carbon markets. Rather, the concept of additionality is applicable to any incentive system, whether subsidy, tax, or whatever. The real question is what degree of additionality is actually necessary or desirable in any given system. Put another way, when should we care enough about additionality to incur the costs of measuring and enforcing it? Those costs can be quite high, and the benefits sometimes uncertain. Let's return to one of my previous examples: the grocery store owner who offers coupons to lure new customers, even though most coupons will probably fall into the hands of old, non-additional customers. In this case, additionality is difficult to enforce, and the benefits of enforcement are low (because coupon programs don't cost much to run). High cost, low benefit: additionality isn't a concern. Now let's examine the carbon offset market. Here, the cost of measuring additionality is high, but the need is even higher. There are at least two reasons for this. The first is the obvious one: carbon offsets can be used to satisfy emission limits under a cap-and-trade program. Non-additional offsets undermine the cap. Good offset projects help to reduce the strain of carbon caps on the economy by lowering the cost of reductions. But too many bad offset projects threaten the whole system by allowing emissions to keep growing.
This is the fifth and final post in a series on the details required to get carbon policy right. See also parts one, two, three, and four. So far, I've done a lot of complaining -- which, in and of itself, is just, well ... whiny. Here, then, is a solution. First, a very brief review: A test of good carbon policy is whether it encourages the private sector to invest capital in projects that will reduce GHG emissions. "Additionality" confuses carbon policy, by preferentially shifting investment toward less economic GHG-reduction technologies. Carbon taxes provide sticks without carrots, and thereby provide no direct incentive to those who might otherwise use carbon pricing to invest in projects that lower GHG emissions. Long-term carbon pricing is necessary to encourage private sector investment. Spots alone will not. Although not covered in this series, it bears repeating that auctions trump allocation. Unfortunately, virtually all of the GHG-reduction strategies currently in existence (e.g., Kyoto, RGGI) or being contemplated (e.g., Lieberman-Warner, California AB 32) fail one or more of the prior tests. Moreover, all those actual/proposed bills are really complicated, with many moving parts that are rife for gaming -- or, more charitably, significant legislative error. Here, then, is a better approach: output-based GHG regulation.
German automaker Porsche has launched a formal legal challenge to London Mayor Ken Livingstone’s scheduled tripling of the city’s congestion fee for the most-polluting vehicles. The increase, slated to take effect in October, would raise the fee for the most-polluting vehicles entering the city center to about $50 a day from $16 now. Livingstone and the city’s transportation department have said the fee helps decrease carbon emissions and other pollution by encouraging fewer of the dirtiest cars from entering the city. Porsche argues Livingstone doesn’t have the legal authority to implement the increase and has said in court documents that …
Democratic presidential candidate Barack Obama said at a town hall meeting in Pennsylvania yesterday that he would consider asking former vice president and current climate superstar Al Gore to assume a cabinet-level position in his administration to help tackle climate change. “I will make a commitment that Al Gore will be at the table and play a central part in us figuring out how we solve this problem,” Obama said. “He’s somebody I talk to on a regular basis. I’m already consulting with him in terms of these issues.” For his part, Gore revealed back in December that he’s not …
Suppose the prestigious journal Nature published an analysis of mine that they knew many people would disagree with. How would you feel if Nature then ran accompanying commentaries for and against my analysis, including another Senior Fellow from the Center for American Progress raving about how important and brilliant it was? You'd probably think that was kind of lame of them. Now suppose the Nature article never mentioned that I was a CAP Senior Fellow or that my mysterious admirer was, too. No way, you say. No way a journal like Nature would ever do that. That would be like The New York Times asking a CAP Fellow to review my book and not mentioning the connection. Few things could be more inappropriate for a major publication. I have one word for you: "way!"
“I wouldn’t be at all surprised to see a lull in new [coal] plant development.” – Dynegy Chief Executive Officer and #5 Fossil Fool Bruce Williamson, commenting on the fact that “environmental opposition is making it more time-consuming to build coal-fueled plants.”
A new article by the Center for American Progress makes clear that the Lieberman-Warner Climate Security Act [PDF], S. 2191, would be a boon to affordable, job-creating renewable energy. The article, by CAP's Daniel J. Weiss and Alexandra Kougentakis, explains how the bill would ... ... make significant reductions in the carbon dioxide pollution that causes global warming as well as turbo charge investments in clean energy technologies such as wind, solar, and geothermal. It would provide direct assistance for renewable energy, as well as create economic incentives for utilities to invest in clean, carbon-free energy technologies instead of continued reliance on dirty fossil fuels. The boost for renewable energy would create thousands of new jobs in the clean energy industry. The article also points out this: The EPA just released a study that found that the bill's global warming pollution reductions would have almost no effect on long-term economic growth, and only a small effect on electricity prices and jobs. The same claims that opponents are making now were made about the acid rain control program 20 years ago -- claims that were all proven wrong. The CAP article discusses the bill at length and how it would affect renewable energy and job creation in this country. It is well worth reading. This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
For the interest of those who haven't given up entirely on biofuels, I humbly present the National Algae Association forum in Texas on April 10. This meeting will serve as an update on what's new in this promising branch of the nascent sustainable biofuel movement: biodiesel from cultured algae (outside of biodiesel from waste oil, that is). This week's Renewable Energy World podcast had an interesting interview with the principal of one algae-fuel company, Solix Biofuels. Like all the companies, they have a whole array of challenges to figure out, from competitor algae to stress regimes that are optimal for producing oil. It's actually tough to grow algae -- who knew?
Joe Barton (R-Texas) spoke to the U.S. Energy Association yesterday and made it clear ($ub req'd) that he's going to do everything he can to block cap-and-trade legislation from coming out of Congress: As the Democrats move to pass climate change legislation this year, Rep. Joe Barton, R-Texas, will be there to fight them, he told the U.S. Energy Assn's annual membership meeting yesterday. As a senior member of the House Energy Committee, that's not a threat to be taken lightly. So why is he opposed? As justification, he cites both his passion for economic stewardship and his scientific judgment: