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Taxes and public investment: less intrusive than alternatives

Occasionally, as happened on one of my posts, someone will mention the early 20th century and before as a happy era when small government was the rule. These people are confusing low taxes with small government.

Hydrogen-powered plane makes successful flight

A plane powered by hydrogen fuel cells made three successful test flights earlier this year, Boeing officials announced Thursday. The propeller-driven two-seater, carrying passengers, climbed to 3,300 feet on the power of lithium batteries, then cruised at 60 miles per hour for about 20 minutes powered solely by fuel cells. Sounds like they’ve got the […]

RPJr.’s latest achievement in getting huge news coverage for saying very little

I don’t want to get too far into the kerfuffle over the Nature commentary from Pielke Jr. et al. Just a few quick and I guess fairly cynical thoughts: • The trend toward "spontaneous" technology development and efficiency has been going on for centuries, only to pause during the last few years thanks to a […]

King Coal’s year of rejection by banks, judges, and a lot of other folks

Earth Policy Institute just released this revelatory chronology of really sad, horrible, and depressing events in the life of the coal industry since February 2007. What's next -- will Santa be switching to lumps of dirt?

Feb. 26, 2007: James Hansen, director of NASA's Goddard Institute for Space Studies and a leading climate scientist, calls for a moratorium on the construction of coal-fired power plants that do not sequester carbon, saying that it makes no sense to build these plants when we will have to "bulldoze" them in a few years.

Feb. 26, 2007: Under mounting pressure from environmental groups, TXU Corporation, a Dallas-based energy company, abandons plans for eight of 11 proposed coal-fired power plants, catalyzing the shift from coal-based to renewable energy development in Texas.

April 2, 2007: The U.S. Supreme Court rules that the U.S. Environmental Protection Agency has the authority to regulate carbon dioxide and that EPA's current rationale for not regulating this gas is inadequate.

May 3, 2007: Washington Governor Christine Gregoire signs a bill that prevents new power plants from exceeding 1,100 pounds of carbon dioxide emissions per megawatt-hour of electricity generated, creating a de facto moratorium on building new coal-fired power plants in the state.

Obama just can’t quit Gore

In response to a question about whether he’d consider Gore for a cabinet position, Obama said: I would. Not only will I, but 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. He’s somebody I talk to […]

Van Jones on Colbert Report

Am I the only one who just doesn’t much like the Colbert Report? The interviews, especially. Colbert always comes off like a dickhead — that’s his shtick — but the guests are in a catch-22 as well. They look bad if they play along and bad if they try to play it straight. It just […]

Almost always, but the reason is more subtle than you think

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.

Seattle mayor proposes fee for paper and plastic bags

Seattle Mayor Greg Nickels has proposed a 20-cent fee for both paper and plastic bags in grocery, convenience, and drug stores in the city to discourage their use. “The answer to the question ‘Paper or plastic?’ should be ‘Neither,'” Nickels said. “Both harm the environment. Every piece of plastic ever made is still with us […]

The solution: Output-based standards

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:

1. A test of good carbon policy is whether it encourages the private sector to invest capital in projects that will reduce GHG emissions.
2. "Additionality" confuses carbon policy, by preferentially shifting investment toward less economic GHG-reduction technologies.
3. 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.
4. Long-term carbon pricing is necessary to encourage private sector investment. Spots alone will not.
5. 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.

The Age of Asparagus dawned in Roman times, but the time to eat it is now

Asparagus may be associated with spring, but there’s nothing new about it. It’s been gracing tables — to the joy of some diners and the horror of others — for at least two thousand years. In the earliest known cookbook, De Re Culinaria (circa A.D. 100), proto-foodie Marcus Apicius recommends pounding asparagus tips with black […]