from testimony before congress in feb:

‘Cap & Trade’ increases costs to the public as does ‘Tax & Dividend’, but without the dividend. Thus it should be termed ‘Tax & Trade’.10 Part of the reason for the pseudonym is to avoid the stigma of a tax, under the presumption that the public is too gullible to figure it out. Other parties support ‘Cap & Trade’ because they hope to profit – it is a give-away to special interests, who feel, based on extensive empirical evidence, that they will be able to manipulate the program through their lobbyists. Except for its stealth approach to taxing the public, and its attraction to special interests, ‘Cap & Trade’ seems to have little merit.

Of course the proponents of ‘Cap & Trade’ are not all special interests and their lobbyists, or people who hope to make millions on Wall Street from price volatility and manipulations. That is surely right. Many, without looking closely at the details, assume that the successful ‘Cap & Trade’ used to help solve the acid rain problem, might be a good model for the climate problem.

Acid rain was much simpler, partly because it was a program that required existing facilities to employ a relatively simple low-cost solution. Unlike climate change, the acid rain problem did not require massive investments in new infrastructure and innovation. Instead it required a group of existing facilities, with accurate emissions measurement, to make minor burner modifications and use readily available low-cost low sulfur coal. A few new rail lines were built and some facilities purchased more efficient scrubbers.11

Caps have not generally been applied at the mine or well-head, rather further downstream. Proponents of ‘caps’ say they will try to push them upstream. That would open up consequences that now should be unacceptable to Americans: volatility, manipulation, and trading floor millionaires. Where would the millions come from – the common person, of course, the rate payer, the public.

The abject failure of Cap & Trade was illuminated for all to see by the Kyoto Protocol, the granddaddy of all Cap & Trade schemes. Even countries that accepted the toughest emission reduction targets, such as Japan, saw their emissions actually increase. The problem is the inevitable loopholes in such complex approaches, which take years to negotiate and implement.

The Congressional Budget Office12 provides a comparison of carbon taxes to cap-and-trade. That report concludes that a given emission reduction could be achieved at a fraction of the cost via a carbon tax, as opposed to cap-and-trade. Another useful comparison is also available.13

The worst thing about cap-and-trade, from a climate standpoint, is that it will surely be inadequate to achieve the sharp reduction of emissions that is needed. Thus cap-and-trade would practically guarantee disastrous climate change for our children and grandchildren.14

from a presentation in july:

There are two competing ways to achieve the needed price on carbon emissions.

The first approach is via a direct carbon fee applied uniformly to all oil, gas and coal at the source, that is at the first sale at the mine or port of entry. In my opinion all of the money collected in this fee and dividend approach should be returned to the public on a monthly basis as an electronic deposit in their bank account or applied to their debit card.

The fee needs to increase gradually and be large enough to affect purchasing decisions. By the time the fee reaches a level of $115 per ton of CO2 it will add $1 per gallon to the price of gasoline. Given United States fossil fuel use of 2007, $115 per ton of CO2 would yield $670 billion, enough to provide a dividend (rebate) for each legal adult resident of almost $3000 per year. With half a share per child for a maximum of two children per family, the rebate would be $9000 per year for a family with two or more children. The carbon fee would provide a strong incentive to replace inefficient infrastructure. It would spur the economy. It would spur innovation.

In this fee and rebate approach, a tipping point would be reached as energy efficiency and carbon- free energies become cheaper than fossil fuels. We would then transition rapidly to the era beyond fossil fuels, leaving most remaining coal in the ground, and avoid the need to go to extreme environments to find every drop of oil. We must move beyond fossil fuels anyhow. Why not do it sooner, for the benefit of our children?

The fee rate would need to increase in time, but when gas hits $4 per gallon again most of that $4 will stay in the United States, as dividends. Our vehicles will not need as many gallons. We will be well on the way to energy independence.

The alternative approach is Cap & Trade, or perhaps more honestly Tax & Trade, because a ‘cap’ increases the price of energy, as a tax or fee does.

Other characteristics of the “cap” approach: (1) unpredictable price volatility, (2) it makes millionaires on Wall Street and other trading floors at public expense, (3) it is an invitation to blackmail by utilities that threaten “blackout coming” to gain increased emission permits, (4) it has overhead costs and complexities, inviting lobbyists and delaying implementation.

The biggest problem with this second approach is that it will not solve the problem. It may slow emissions, but because of the long lifetime of atmospheric CO2, slowing the emissions does little good. As long as fossil fuels are the cheapest form of energy they will be used eventually. There is no hope that cap and trade can get us back to 350 ppm CO2.

The overwhelming practical requirement, for the sake of future generations, humanity itself, and the other species on the planet, is phase-out of coal emissions over the next 20 years. Also we cannot heavily exploit unconventional fossil fuels such as tar shale and tar sands, and we should not be pursuing every last drop of oil on the planet.

The correct fundamental approach is a rising price on carbon emissions, as needed to achieve these objectives. The Waxman-Markey bill fails the test in the same way as the German plans: it builds in approval of new coal-fired power plants! There is no need for these plants except to enrich utility and coal special interests – they are included only because the monstrous 1400-page absurdity was hatched in Washington after energetic insemination by special interests. Fee-and-rebate, in contrast, spurs innovation and works hand-in-glove with increased building, appliance, and vehicle efficiency standards. A rising carbon fee is the best enforcement mechanism for building standards, and it provides an incentive to move to ever higher energy efficiencies and carbon-free energy sources. A tipping point soon would be reached, with rapid phase-over to future post-fossil energy sources. Tar shale would be dead and there would be no need to go to the extremes of Earth to find the last drop of oil.

Some environmental leaders have said that I am naïve to think that there is an alternative to cap-and-trade, and they suggest that I should stick to climate modeling. Their contention is that it is better to pass any bill now and improve it later. Their belief that they, as opposed to the fossil interests, have more effect on the bill’s eventual shape seems to be the pinnacle of naïveté. The proper course of action is clear, from the science and common sense. The geophysical boundary conditions dictate a course that causes coal emissions to be phased out expeditiously, although not necessarily coal use. There should be an immediate halt to construction of coal-fired power plants that do not capture all emissions, including carbon dioxide. Mountaintop removal, with its blasphemous environmental damage, should be banned – it provides only seven percent of United States coal, less than our exports.

The truth is, the climate course set by Waxman-Markey is a disaster course. It is an exceedingly inefficient way to get a small reduction of emissions. It is less than worthless, because it would delay by at least a decade or two the possibility of getting on a path that is fundamentally sound from economic and climate preservation standpoints.

Officials in the Obama administration privately admit that the science demands much more rapid emission cuts than Waxman-Markey would yield, but they say that their hands are tied by a recalcitrant Congress. Is that so? Has President Obama provided direction or guidelines for what he expects from Congress?

This is a problem that demands strong leadership.

i don’t know if i grabbed the best bits, but hopefully these will be a start. if you want more, leave me a note and i’ll spend more time on it tomorrow.

thanks for looking and thanks for asking!

How did Barbara Boxer get around the EPW’s senseless “gotta have two minority party votes” rule? Did she just — horrors! — ignore it, since the GOPs wouldn’t even show up? Can she share her spine with Harry Reid?