Saturday, July 7, 2007

previous entry | main | next entry | TrackBack (0)

Happy Live Earth Day!!!

As the Live Earth concerts proceed today, the chairman of the House Energy and Commerce Committee appears to join Greg Mankiw's Pigou Club on how to tackle global warming. "Apears" is stressed because John Dingell might have different motives than Mankiw. The New York Times' Edmund L. Andrews explains:

A powerful House Democrat said on Friday that he planned to propose a steep new “carbon tax” that would raise the cost of burning oil, gas and coal, in a move that could shake up the political debate on global warming.

The proposal came from Representative John D. Dingell of Michigan, chairman of the House Energy and Commerce Committee, and it runs directly counter to the view of most Democrats that any tax on energy would be a politically disastrous approach to slowing global warming.

But Mr. Dingell, in an interview to be broadcast Sunday on C-Span, suggested that his goal was to show that Americans are not willing to face the real cost of reducing carbon dioxide emissions. His message appeared to be that Democratic leaders were setting unrealistic legislative goals.

“I sincerely doubt that the American people will be willing to pay what this is really going to cost them,” said Mr. Dingell, whose committee will be drafting a broad bill on climate change this fall.

“I will be introducing in the next little bit a carbon tax bill, just to sort of see how people think about this,” he continued. “When you see the criticism I get, I think you’ll see the answer to your question.”

Dingell's gambit has irritated environmentalists. Let's go to BlueClimate for a reaction:
Congressman Dingell understands that most people do not understand what cap and trade is but that they do understand a tax. By using the easier-to-understand carbon tax to impute a cost associated with climate change legislation, Dingell hopes the American people will rise up and block the plans of House Speaker Nancy Pelosi and others Democrats who favor taking stong action on climate change.

Informing people about the cost of climate change legislation is good as long as it is done honestly and people are informed at the same time about the dangers we face if we do not act to drastically reduce our emissions of greenhouse gases....

So what about the carbon tax on the merits? Is it a good idea? There are a number of sincere proponents of a carbon tax. They believe that it is easier to administer than a cap and trade program. On that point they are probably right. However I am afraid it has a fatal flaw that has nothing to do with the technical arguments of a carbon tax versus a cap and trade approach.

I have favored the cap and trade approach because I felt that a carbon tax would be too vulnerable to political attack. I am afraid that the necessity of addressing global warming will be in great danger of being lost in the noise if a carbon tax is the centerpiece of climate change legislation.

If Dingell introduces his carbon tax we may soon find out if congress will be able to discuss it in a reasonable and rationale fashion or whether the debate descends into raw bumper sticker politics. My bet is the latter. Dingell's carbon tax has the potential to derail climate change legislation in the House. Maybe that is what he wants.

Well of course that's what Dingell wants.

But BlueClimate's objection raises a big-ass warning flag for those of us in the squishy middle who are genuinely concerned about global warming but are also concerned about the overall costs of dealing with it (not to mention the distribution of those costs). If Dingell is downplaying the benefits of reducing global warming, to what extent are environmentalists like BlueClimate downplaying the costs of reducing greenhouse gas emissions? As far as I can figure, cap and trade systems differ from tax systems in that they are a) less effective; and b) more opaque in distributing the costs. Sure, Dingell is playing politics, but from the tenor of BlueClimate's post, he's not doing it differently from environmentalists.

I believe it was Daniel Patrick Moynihan who posited that broad-based reforms cannot be enacted without the consent of two-thirds of the American public. Until environmentalists realize that earning that consent will require a) being transparent about the costs and benefits of reducing greenhouse gases; and b) convincing Republicans, then there will be no progress on how to address global warming beyond some nice music concerts.

UPDATE: Mankiw frets that Dingell's ploy will destroy the Pigou Club.

posted by Dan on 07.07.07 at 09:26 AM


Well, one way to meet both conditions is to offer some sort of evenly distributed rebate in exchange for the tax. I've seen an argument for doing it via payroll rebates. That leaves out the really low income and retirees, but benefits could also be distributed through EITC and Social Security. Alternately, the government could just send out a bunch of checks, but it seems more logistically practical to use existing systems.

What's your take on that policy? Obviously it doesn't generate revenue for environmental ends but it would be quite transparent and make it easier to get support.

posted by: Greg Samders on 07.07.07 at 09:26 AM [permalink]

Why would any Republican support an evenly distributed rebate?

posted by: Hei Lun Chan on 07.07.07 at 09:26 AM [permalink]

How much should we really care about motives on this subject?

Up to now no one in Congress has proposed anything close to what Dingell says he's going to here. Carbon taxes have been off the table; he's putting them on the table. Here's the thing about carbon taxes: we have a pretty good idea what their costs will be, and we know they will work -- if by "working" we mean providing a powerful disincentive to use energy inefficiently.

We also know they would be unpopular. This is a dealbreaker for a lot of people in the environmental community. Institutions like the Sierra Club don't keep their members enthused and raise money to expand their organizations by embracing policy ideas their members dislike and their donors think will cost them money. I don't mean to single out the Sierra Club; this is just how the politics of membership-based organizations dependent on voluntary contributions work. Coincidentally electoral politics work in a similar way most of the time.

The environmental community needs a solution to climate change, the great crisis of our age, that will not be unpopular. Cap-and-trade fills that bill. Into the bargain it is consistent with the longstanding determination of mainstream environmental groups to address environmental problems by regulating "polluters" (membership-based organizations, for better or worse, also require villains).

What cap-and-trade doesn't do is offer us a very good idea of what its costs would be or whether it would work. Greenhouse gases are not SO2 -- the pollutant thought to contribute to acid rain, emissions of which were sucessfully reduced through a trading system authorized in the 1990 Clean Air Act. There are several of them, including one (carbon dioxide) emitted in vast quantities by an equally vast number of sources.

Variations of cap-and-trade have been tried as well outside the air quality field. The Bush administration has been promoting trading in the water quality area for years. Let me stipulate: it has potential. But it requires a very high degree of government knowledge, and control, of pollutant discharge from regulated sources. With respect to SO2 discharge from power plants and other point sources, we already had both knowledge and control through the Clean Air Act; in the water quality field we have it (at the present time) to a lesser degree with respect to point sources, and only in a very limited way in a very limited number of watersheds with respect to nonpoint sources. Greenhouse gases present a more complex problem than either of these.

But cap-and-trade is not unpopular. While we do not know what its costs might be, we are pretty sure they will be camouflaged from the public, or at least from the public outside Mr. Dingell's Congressional district, until the authorizing language can been slipped through Congress. The obstacles to its success appear, at this time, to be technical, not political.

But those technical obstacles are formidable, as formidable in their way as the obstacles to the development of President Bush's hydrogen-powered cars. If the temptation to look at climate change as a problem we could deal with without doing anything unpopular were not very powerful we would have dealt with it long ago; we would not have people now talking about bold initiatives on behalf of painless solutions like ethanol or new technology. What Dingell's proposal, assuming he follows through with it, would do is force people who say they think climate change is the transcendant issue of our time to show whether they are prepared to take political risks for that belief -- or whether their commitment extends only to advocating measures that won't be too hard, whether we can do more than guess if they will work or not.

posted by: Zathras on 07.07.07 at 09:26 AM [permalink]

I support a strict system of gas rationing. Fifteen gallons a week per person not per vehicle. Allow more for legitimate business use; going to and from work will not be considered a business use. Give each person a one week unlimited purchasing opportunity for vacations. The usage will be tracked by computer based on national gas purchasing ID number allocated to each driver. Everyone should drive small economy cars, NO SUVs! I'm not kidding, this is IMPORTANT!

posted by: nathan on 07.07.07 at 09:26 AM [permalink]

Nathan: no thanks.

posted by: Klug on 07.07.07 at 09:26 AM [permalink]

Worldwide energy demand will keep growing. Until energy supply is solved, global warming/climate change/or whatever its latest name cannot adequately be addressed. Why aren't we discussing building more nuclear plants(as is being done by the rest of the world - France, Germany, Japan, China & now supported by Greenpeace founder), investigating clean coal technology in addition to renewables and energy conservation programs?

Isn't this being done bass ackward?

posted by: bluhawkk on 07.07.07 at 09:26 AM [permalink]

The short answer to the last question is no.

Nuclear power plants would be going up all over the United States if the anticipated costs of designing the plants, getting them permitted, building them and operating them were dramatically less than they are -- relative to the costs of continuing to generate electricity from fossil fuels. There are some things that can be done, including policy changes, to reduce the cost in time and money it takes to brings nuclear plants on line. But as long as the cost of using fossil fuels remains low, nuclear makes little economic sense even if regulatory and other obstacles to the construction of new nuclear plants are reduced.

posted by: Zathras on 07.07.07 at 09:26 AM [permalink]

Then wouldnt it truly make the most sense to dramatically subsidize nuclear power? Would remove the need for all these complicated and contentious new protocals. As long as we're shoveling money at this problem, might as well build something that will benefit us long term. That way in 15 years when we're all chuckling about how worked up we got about a modestly impactful centuries in coming 'catastrophe' we will have something for our troubles.

posted by: Mark Buehner on 07.07.07 at 09:26 AM [permalink]

Hei Lun Chan:

I wouldn't expect an evenly distribute rebate would necessarily pick up a lot of Republican Congressional support. However, it may well get the support of Republicans in the general population. Entitlements can be quite popular. Admittedly such a system wouldn't pass under Bush, but Bush won't be around forever.

posted by: Greg Sanders on 07.07.07 at 09:26 AM [permalink]

Until thisw happened, I was ashamed to be from the same state as Dingell (and the Levins). But, the fact that ol' John stared it in the face and came up with a hatful of common sense for once, understanding that we won't stand for it, gave me an iota of faith in the system again.

Zathras--get a life, man. You have way too much free time.

posted by: Useless Sam Grant on 07.07.07 at 09:26 AM [permalink]

Post a Comment:


Email Address:



Remember your info?