Articles by Gar Lipow

Correcting two misunderstandings

As we discuss "cap-and-steal" (aka "cap-and-trade"), "cap-and-sell" (aka "cap-and-auction"), and carbon taxes -- three ways of putting prices on carbon -- it is worth remembering that putting a price on greenhouse-gas emissions is not enough to bring them under control. Gristmill is full of posts showing ways to save carbon at a profit. David posted an interview on Recycled Energy today that points to something that has been known, but mostly ignored, for over thirty years.

I can, and have in the past, posted extensive theoretical musings on this. But the bottom line is that if we are ignoring available savings at current prices, it seems likely that we would continue to ignore savings at artificially higher prices.

This sometimes makes people jump to the opposite extreme; if (as I insist) we can cut emissions by 90 percent or more, at prices comparable to fossil fuel, why do we need to put a price on carbon alone?

The answer is while we can cut emissions at a total cost comparable to what we currently pay for fossil fuels, that does not mean that every component is individually cheaper. The existence of market imperfections does not mean that markets don't have a role to play in solving the problem.

Let's take green buildings as a concrete example. There are a fair number of green commercial buildings that consume 30 percent of the energy of the typical U.S. building, and pay back the costs of those savings in four years or less.

Fairness tradeoff?

Sven Wunder, a researcher with the Center for International Forestry Research (CIFOR), notes the following trade-off [PDF] for the kind of environmental charity where people are paid not to pollute. His conclusion: we are better off paying the moderately bad guys than the really bad guys or the good guys. I'm going to post this without further comment, because either you see hidden assumptions and problems with this, or you don't:

Give away rights or sell them?

Joseph Romm in his post on Dingell's carbon tax proposal says:

Politically, you can't raise carbon prices high enough to raise gasoline prices since even $1 a gallon -- probably the minimum to significantly change fuel economy if Europe is any evidence -- would require a carbon charge of $400 per tonne of carbon -- which would be very harsh to coal, adding more than 10 cents per kilowatt-hour to coal electricity, and politically impossible (I'll post more on this later).

Also, the reason cap-and-trade has not worked well in Europe is that the Europeans didn't have a lot of experience with it and during their trial period they issued too many permits.

I don't know If Romm noticed, but paragraph two represents exactly the same weakness for caps as paragraph one represents for a carbon tax: it is politically difficult to get a high-enough tax or a low-enough cap through. Romm also notes that the Clinton administration could not get through even a weak carbon tax. True enough, but the Clinton administration also could not get through ratification of the Kyoto treaty -- which would have included a really easily met cap, much weaker than most (though not all) of the cap-and-trade proposals now before Congress.

Greyhound gets some competition from Megabus.com

Buses, on average, get low passenger miles per gallon in the U.S., because they stop often and don't use most of their capacity. Coach buses -- providing prebooked travel between cities -- don't suffer from these limitations.

Megabus.com, a new niche player in this market, provides cheap, comfortable travel between nearby cities with travel time comparable to driving or taking commuter airlines (in a very small portion of the U.S.). Efficiency is 184 passenger miles per gallon -- without using hybrid buses or using any particular efficiency technology. They just use yield management ticket booking, where the earlier you book a ticket (relative to other passengers) the less you pay for your seat. (Thanks, Jordan Hayes for the tip.)