2008 Maryland Global |
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We Can Do Better! Wilfred Candler After all the hard work and idealism that went into promoting The Global Warming Solutions Bill, it was very disappointing to see it wilt and fail, under the glare of seventy bussed-in steelworkers. However, this failure may be a blessing in disguise. It was, after all, a badly flawed bill. Badly flawed? Yes:
Lets look at these five flaws in greater detail, and ask what can be done about them?
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Global Warming Solution Bill (2009)
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Greenhouse Gas Emissions: The term “greenhouse gases” was coined by the IPCC (Nobel prizewinning International Panel on Climate Change) in part to emphasize that there is more than carbon dioxide involved in global warming, but also to mollify the fossil fuel interests, represented by the Global Climate Coalition, who wanted at all costs to avoid any clear and direct reference to the role of fossil fuels in causing global warming. It is not widely appreciated that the famous IPCC consensus scientific reports, are in fact diplomatically negotiated documents where the language used has, in places, been parsed beyond recognition. Yes there are a variety of greenhouse gasses, notably water vapor, carbon dioxide, methane, nitrous oxide, ozone and CFCs (Carbon Fluorocarbons). The Bills authors were in line with mainstream thinking in legislating limits on greenhouse gas emissions, and yet the above list of greenhouse gasses must surely make any read uneasy. Water vapor? But there is a ton, several billion tons in fact, of water vapor in the atmosphere and always has been. Exactly, the water vapor in the atmosphere is part of a natural cycle by which liquid water under the influence of sunshine and warm temperatures becomes (atmospheric) water vapor, that later condenses to rain, that later evaporates, and so on. (Water vapor thankfully was excluded from the Maryland Bill). By the same token most carbon dioxide (and methane) are part of a natural carbon cycle by which plants take atmospheric carbon dioxide and water and energy from the sun, and by a complex chemical process (photosynthesis) convert them to oxygen (release to the atmosphere) and plant material. The carbon is thus “fixed/sequestered” as bio-carbon until the plant dies and rots, is burnt, or eaten: Resulting in the plant material being combined with oxygen from the atmosphere to release bio-carbon dioxide to the atmosphere, water and energy (that all living animals need). This (bio) carbon cycle too has been going on for millennia, and is essential to all aerobic life. To illustrate the negotiated nature of the IPCC reports, in the last report the scientists agreed that they were 99 percent sure that global warming was caused by human activity. However the Chinese government objected to this, so the document actually says “more than 90 percent” sure. The key cause of global warming is the addition of fossil carbon (from coal, natural gas, oil and now tar-sands and shale oil) that then becomes part of the carbon cycle and permanently increases the carbon in the carbon cycle, and the concentration of atmospheric carbon dioxide. There is a small amount of fossil methane, and the other minor gases mentioned. The immediate problem is to stop the additions of fossil carbon dioxide to the atmosphere. Subsidiary programs to cope with the minor gases should be welcomed, but they should not be allowed to distract us from the problem of fossil carbon. By talking about greenhouse gasses the Bill appeared to want to reduce bio-carbon dioxide that is an integral part of the vital carbon cycle, on which all living things depend. Retargeted to focus on reducing, and then eliminating the use of fossil carbon, a new Bill would not be subject to this valid criticism. By talking about emissions, the Bill directs attention to controlling emissions themselves from electrical generating plants. Measurement is likely to be a problem (and in fact the Global Warming Solutions Bill, provided for small generating plants to be excused, and made no attempt to affect domestic emissions from home heating with natural gas or oil). It would be better to focus on delivery of electricity and natural gas to consumers. A federal program could do even better by focusing on fossil fuels at the mine or well-head or when imported. I have seen it reported that “in Maryland, we emit 109 million tons of global warming pollution every year”, I have not yet found an official source for this number, but would be very interested to see what it includes. Does it, for instance, include domestic heating and how is motor fuel accounted for?
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Targets: The trouble with “targets” is that they refer to some time in the future, and may create the illusion that by establishing a target (even if it is a “mandatory limit on emissions”) we have already made a change. Targets invite inadequate action until the target date is reached, at which stage people are likely to argue that it is “impossible” to meet the target. Better to focus on changes to be made immediately, with effect in 2009 at the latest. Another problem with targets, is that they give people the impression that they will be adequate, whereas no one knows where the tipping point that threaten to give self-reinforcing climate change will occur. It is by no means clear that we have until 2050 to achieve a 90% reduction in greenhouse gas emissions: Much better to define the problem as the elimination of fossil fuels as soon as (economically) possible.
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Industrial Emissions: The Bill’s authors were right to be concerned about industrial emissions, a ton of coal burnt in a factory (or steel works) adds as much fossil-carbon dioxide to the atmosphere, as a ton burnt at an electric-generating plant. The problem here is not with the intention, but the limit on State rights, and the guarantee of free inter-state commerce: When, eventually, a federal Global Warming Solutions Bill is introduced, it should certainly treat all fossil carbon emissions equally, whether by consumers or factories, or from coal, oil or natural gas. But the federal bill should also include tariff protection to ensure that American industry that will be subject to a carbon tax, not face competition from abroad from producers who have not been subject to the tax. Maryland cannot impose taxes on inter-state trade to compensate for extra taxes imposed on state manufacturers. Absent matching legislation in other states there was and is a real danger that carbon-intensive industries might migrate to more lightly taxed states. Better that the new Bill excuse industry, and focus on lowering domestic fossil fuel consumption (in electricity, natural gas and oil), that we can do something about.
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Caps or Fees: The Global Warming Solutions Bill was “old fashioned” in that it set quantitative upper limits (caps on allowances) on greenhouse gas emissions. It was modern in that it provided for 25% of allowances to be sold at auction (as different from being given, free of charge, to established polluters), and providing that as much as 100% of allowances could be auctioned. With this approach the quantity of allowances would be determined so as to reach target levels of emissions, with the price of allowances to be determined by the market. The alternative approach is to charge a fixed fee for allowances, and permit polluters to buy as many allowances as they want. In this case the price is set, and the market determines the quantity of allowances, and thus the level of pollution. It can be argued that it does not make much difference whether total allowances are set at 180 million tons, and sold at auction for $100 a ton, or the price of allowances is set at $100 a ton, and 180 million tons worth of allowances are purchased. Same price, same quantity! However pricing has four advantages:
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Revenues: Provided that only modest reductions in pollution are being aimed for, the price (whether set by government or an auction) of allowances is likely to be modest, as will be the total revenue form sale of allowances, as will be the impact on the price of fossil fuels. With modest revenue, and modest changes in fossil fuel prices it makes sense, as provided for in the defeated Bill, to use the revenues to subsidize/encourage introduction of fossil-free energy technologies. As the limits of fossil fuels become more stringent, the price of allowances can be expected to rise, and with it the price of fossil energy, and cost to the consumer. With high prices for allowances, the case for additional subsidies for fossil-free technologies is weakened, and the need for income relief for consumers (faced with higher energy prices) becomes more urgent: More on this below.
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Carbon Offsets: One of the best features of the defeated Bill was a strict limit on the use of carbon offsets to allow emission in excess of purchased allowances. The idea with carbon “offsets” is to pay someone to take an action that will remove as much carbon dioxide from the atmosphere, as the purchaser is allowed to add fossil carbon to the atmosphere. An example would be planting trees. The problem is that the trees remove/sequester carbon temporarily (until the tree dies or is burnt) while the fossil carbon is added permanently. A new Bill should simply eliminate the use of carbon offset, they do not work. (For a hilarious take-off on carbon offsets see www.cheatneutral.com).
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GLOBAL WARMING SOLUTION BILL (2009) We are now ready to consider the key provisions that should be built into the next version of the Global Warming Solution Bill. Limited Ambition: Let’s accept that the steelworkers were right. Absent the power to interfere with inter-state commerce, we cannot penalize dirty technologies without the probability that industry will emigrate. Sorry about that! When federal legislation is proposed, we should be ultra insistent that industry not be given a free ride, since we have a tariff remedy to compensate for carbon penalties. What we can do, is to significantly reduce domestic and transport emissions, see below. Also under limited ambitions, let’s drop the confusing reference to greenhouse gas emissions, and focus on the modest aim of eliminating the use of fossil fuels. No Targets: Let’s dispense with target, multiple years in the future, and replace it with a set of action to be taken “at once” (preferably in 2009). We should do this in a heuristic (“learning by doing”) fashion, being clear that as we perceive the impact of our initial policies we will fine tune (or “radically overhaul”) our policies if necessary. Let’s replace the targets in the 2008 Bill, by a clear policy objective of eliminating the use of fossil fuels in the home and for transport as soon as economically possible. Administrative Simplicity: Let’s not try to monitor emissions. Such monitoring is fraught. It is likely to have to rely on (perhaps suspect) data reported by polluters (admittedly with spot checks), and would likely have to excuse small scale polluters on the grounds of monitoring being too costly. A much simpler alternative is to hand, namely a fee and rebate collected and distributed by power companies as an integral part of the consumer’s monthly electrical and gas bill. No Carbon Offsets: No carbon offsets. They are not needed if we use a carbon fee, since additional pollution is permissible if the fee is paid. No Technology Subsidies: Governments are not good at “picking winners”. There are an almost infinite number of promising fossil-free technologies out there. (Google “Rocky Mountain Institute” for a good sample). If we double the price of coal-based electricity, fossil-free technologies should need no additional encouragement. Simple But Radical: I am promoting a simple fee that doubles the price of coal-based electric, with corresponding taxes on natural gas, and oil. “Global Warming: The Answer. (The Energy Dividend)” available from Amazon, or free Adobe file.
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HOW IT WORKS My proposal: For the Global Warming Solution (2009) Bill is implicit in the above discussion. To be explicit, suppose we have a carbon (pollution) fee that doubles the price of coal based electricity, (and raises natural gas prices by 80%, due to the lower carbon intensity of natural gas). My back of the envelope calculations (see book above) suggest that gasoline is already taxed at a level comparable to doubling the price of coal based electricity, an additional gasoline fee can, of course, be added to taste. Example: For purposes of exposition, I consider that there are only two consumers in Maryland (perhaps due to the drastic sea-level rise due to the rejection of the 2008 Bill) one is a carbon intensive consumer the other is a carbon sparing consumer. Before the passage of the 2009 Bill the carbon portion of the energy bills for these two consumers might look:
There really is no reason that power companies should not be required to collect the fee and distribute the rebate as a standard part of their ongoing monthly accounting to consumers. Not to belabor the point, but please let us be clear that the rebate is on a per capita base totally unrelated to the actual energy tax paid by an individual. Total rebate is equal to total fee, so that for the economy as a whole the fee does not affect disposable income. However, for the individual the fee and rebate most certainly affects disposable income: In the above example the energy intensive consumer is made $230 worse off, and the energy sparing consumer is made $230 better off. Supply-Side Effects: Looking at the fee and rebated account, we can see that fossil free energy producers could raise their price from $0.10 per unit to $0.14 and still be cost-competitive with coal based electricity. Since this 40% increase “goes straight to the bottom line”, fossil- free electricity would be vastly more profitable, bringing in venture capitalists, entrepreneurs and numerous technologies not quite profitable at $ 0.07 per unit. As fossil-free supplies increased competition might force fossil-free suppliers to lower their price to say $ 0.13 per unit, at which stage it would be “game over” for coal. If this doubling of price proved insufficient to drive out fossil energy, the fee should be raised further, as needed. Demand-Side Effects: It is widely believed that the key to eliminating fossil carbon emissions will be new, yet to be developed, technologies. As discussed in the last paragraph, these technologies would be given a huge boost by the fee. However, our extremely energy-wasteful life-style should not be overlooked. Unneeded lights, computers, TV’s are left on even when not in use, incandescent bulbs are not replaced, thermostats are set higher in winter than they are in summer (well almost!), energy inefficient appliances are not replaced, and so on. The higher energy prices could be expected to lead to major economies in energy use, and a switch to fossil-free power as its price falls below coal based power. California has held per capita energy use constant for about twenty years when the rest of the nation has increased per capita power consumption by 50%. It may well be that the initial demand-side reduction in energy use, would swamp the impact of increased availability of fossil-free energy. Skepticism: Many people, perhaps particularly legislators, will be skeptical of the above proposal, as being “too radical”. I would ask that they pause, count to ten, and then ask themselves: What is the problem? This proposal should not be rejected because it would imply a big change, rather given the problem we face that is favorable argument. What is the problem? Money taken from the consumer is promptly returned, but in such a way that incentives are radically changed to make economizing on energy use highly attractive. Well, what is the problem? The coal and other fossil energy companies would not like it? Dead right, but they do not have a big constituency in Maryland.
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STRATEGY
Legislators cannot be expected to craft good environmental legislation, if the environmental community is confused as to what is needed. Thus the first step in crafting a new bill is probably for the environmental community to have an open debate and reach some sort of consensus as to what could reasonably be achieved within the context of state legislation. Maryland has a very active environmental community including CCAN, the Sierra Club, Environment Maryland, Maryland League of Conservation Voters and numerous other, together with Alliance Maryland that provides an umbrella for literally hundreds of community groups that not primarily concerned with environmental issues, still support the legislative initiative of the lead environmental groups. Given the potential lobbying power of these groups, it will be important to find some way of mobilizing our membership to an even stronger showing than in 2008. Is it perhaps possible to have an ongoing e_debate or serious ongoing blogging? [Button to my blog page] I would like to see the big environmental players (CCAN, Sierra Club, Environment Maryland, etc) hammer out a joint proposal (preferably along the lines outline above) and then put it up for debate and blogging in the wider environmental community. This should allow the argument for key features to be refined and defined, or if found wanting, to allow modification of the proposal. Once the proposal has survived trial by blogging, Senator Paul Pinsky and Delegate Kumar Barve could be brought into the picture, since they should be invited to sponsor the 2009 legislation in view of their outstanding support for the 2008 Bill, and their public identification with the need to combat global warming. There would likely be modifications that they would feel essential to make the legislation politically appealing. With these modifications in place, the proposal could be shared (a) with the many co-sponsors of the 2008 Bill, and (b) the key opponents. It is very important for the environmental community to be aware of the sticking points of the opposition, and the basis for their opposition. I have argued above, that control of industrial (as different from electrical generation) pollution is not really feasible for states. It is a commendable aim, but ultra vires: It will have to await federal legislation. If this argument is acceptable to the environmental community, then it may also serve to dampen down the level of opposition. In contrast to pollution from manufacturing, a very substantial impact on the use of energy by consumers and retailers can be affected. Such changes will (a) leave Maryland right up with California, in reducing emissions, and (b) stand Maryland consumer in good stead, when federal legislation finally begins to catch up. What is more, the relatively modest objectives of 15% emission reduction by 2015 proposed by the 2008 Bill, would likely be exceeded with an aggressive consumer focused fee and rebate (F & R) that could easily achieve a 30 percent reduction in household emissions by 2015. |
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