Climate Climate & Energy

Costs for utilities rise faster than politically palatable rate changes can keep up

This is one for the "Things No One is Talking About But Should" file.

Greenwire has this report ($ub. req'd) from Standard & Poor's noting that the credit risk of our utilities depends in large part on their ability to recover rising fuel costs, and this ability is diminished due to the fact that:

High fuel costs translate directly to higher customer rates, but instituting constant and often significant increases is politically and socially unpalatable.

This gets it half right.

Venture capitalist John Doerr shares four lessons on climate change

I don’t know how it is that I’ve never seen this John Doerr talk from TED, but I’m glad I finally did:

Is a consumer choice necessarily the best choice?

Jim Manzi, climate change voice of non-denialist conservatives, writes: But consider this at a common-sense level: you are forcing people, through rationing, to use something like 80% less of a substance that they choose to use because they believe that it creates net economic utility (prior to externalities) as compared to any available alternative. There […]

Pray harder!

My petroleum god, why hast thou forsaken me?

Chemical in flat-screen TVs is worsening climate change

If you didn’t feel guilty about your TV habits already, here’s a new reason: a chemical used in making flat-screen televisions has been found to be a potent greenhouse gas, 17,000 times stronger than carbon dioxide. In a study published in the journal Geophysical Research Letters, atmospheric chemist Michael Prather called nitrogen trifluoride, or NF3, […]

Drought conditions in West and Southwest inspire new fireworks bans

Global warming threatens our White Chistmases with winter heatwaves. And our Halloweens with poor pumpkin crops. And our Arbor Days with record wildfires. And our immoral myopia threatens Father's Day. At this rate, the only holiday left will be the gas tax holiday -- for oil companies!

But I digress. Last year, Independence Day fireworks fizzled out for many thanks to ever worsening droughts. And MSNBC reports the droughts have done it again this year:

Authorities scared of setting off wildfires in drought conditions have imposed new bans on fireworks displays across a swath of the West and the Southwest.

Drilling offshore vs. fuel efficiency

Over at CEPR, Dean Baker makes a somewhat cutesy but still quite illustrative comparison: the barrels of oil per day we could get by 2027 through offshore drilling (when production rate will max out) vs. the oil savings we would have gotten per day if we’d continued ramping up the CAFE standard at roughly the […]

How to reduce California auto emissions faster than Pavley

Last update: 7/22/2008

In my last post I touted the benefits of a fully refunded emissions tax. Let's take a look at how it could work in California.

When it comes to a refunded tax, more money for industry doesn't mean less money for consumers. Case in point: Today's gasoline prices in California are averaging $4.58/gal, which equates¹ to $536/MT-CO2e. That's how much California drivers are currently paying to emit CO2 -- and how much they could save from fuel economy improvements.

The same approach used by the Swedish program could be applied to motivate efficiency improvements in vehicles, consumer appliances, etc., by employing feebates, which can be implemented as a kind of refunded emission tax. The tax would be applied to projected lifecycle emissions (direct or upstream) and would be refunded in proportion to some measure of economic utility (e.g. refrigeration capacity, illumination output, etc.). The tax and refund together would incentivize lower emissions per unit of economic utility. Feebates could be used as an alternative to traditional performance standards, or could be used to effectively impose a price floor on a tradable standard.

Lester Brown unveils plan for 80 percent cuts by 2020

Lester R. Brown, President of the Earth Policy Institute and author, most recently, of Plan B, Version 3.0: Mobilizing to Save Civilization, released a new study today called "Time for Plan B: Cutting carbon emissions by 80 percent by 2020." I was invited to participate in a conference call in which Lester explained many of the highlights of the plan; I will do my best to share what he said (any mistakes are my own).

First, it appears that the only comprehensive plan to cut emissions by 80 percent by 2020 is the one put out by Brown and his associates at the Earth Policy Institute. Partly this may be because Brown explicitly stated that he was not presenting what is politically feasible, but what is needed to cut emissions by 80 percent by 2020.

Cutting emissions by 80 percent by 2050, as he pointed out, is more politically comfortable because it means you don't have to do much now, but it is not what is needed. He discussed Jim Hansen's goal of getting CO2 emissions down to 350 parts per million, a goal which could be targeted after 2020, as the next step after reducing emissions by 80 percent.

A possible consensus perspective on the tax vs. cap debate

Last revised: 07/10/2008

In his recent Congressional testimony, James Hansen talked about a "perfect storm" of climatological tipping points that may soon converge to yield global cataclysm. But another kind of perfect storm is brewing: a technology storm that could rapidly displace fossil fuels and restore global climate sustainability.

Effective regulatory policy could provide the kind of incentives and stable investment climate that are needed to facilitate the clean-energy revolution. Unfortunately, the "caps and standards" approach that is currently in vogue cannot provide the economic backbone for a rapid and orderly transition to a sustainable global economy. Emission caps and performance standards are rarely if ever set at levels that represent true sustainability, and are generally biased toward extreme cost conservatism. Regulators try to second-guess markets in setting targets and schedules, while markets try to second-guess regulators; the instability and unpredictability of carbon prices deters long-term investment in clean energy.

A carbon tax like the one advocated by Dr. Hansen and many economists would provide price stability, and could theoretically be five times more cost-efficient than cap-and-trade, but taxes are politically verboten. Industry interests oppose taxes because of their alleged high regulatory costs and cap-and-traders won't let go of their hallowed "environmental certainty."

So the tax-versus-cap debate goes round and round, never resolving and never converging on a credible climate stabilization strategy. But the debate could be resolved if policy makers -- and the economics profession -- could put aside their dogmatisms and recognize several basic principles of climate policy: