You Can't Have It Both Ways

I cannot believe I actually have to write this, but apparently there are a number of folks in Washington and the media for which this will be a surprise.  Specifically:  A carbon tax or a cap-and-trade bill must either greatly increase prices of fossil fuels and the products of their combustion, or else they will have no impact on CO2 emissions.   Placing a high cost on emissions, and then giving everyone with a modicum of lobbying power an exemption is not going to move the meter either.  All the absurd talk of stimulation from new green jobs not-withstanding, either a climate bill imposes huge new costs or it has no real impact on emissions.  One simply cannot get to an end point of obsoleting the entire US electrical generation and transportation infrastructures for free.

As someone who thinks the threat from Co2 is greatly exaggerated, this is why I have never worried overly much about American legislative efforts.  Congress will mandate something or other that will not have much effect and will impose a lot of cost, but politicians will stop way short of the draconian legislation that would be necessary to achieve their stated carbon goals (e.g. 80% reduction).  European politicians are way more committed than ours are to Co2 reductino, and Europe hasn't really done much at all either.  A legislative body that continues passing costs to our kids in the Social Security ponzi scheme and an administration that plans already to add 10 trillion to the national debt doesn't really care about future generations.  If they are unwilling to bear current pain for future benefits in fiscal policy, they certainly aren't going to do it in the much more uncertain arena of climate policy.

Postscript: Note that the costs can show up in other ways.  For example, if one puts carbon caps in place as well as price controls, the cost would appear in the form of massive shortages, lines, and blackouts.  If one tried to address the problem via command and control solutions, the cost appears in massive capital spending requirements that cannibalize from economic growth  (which are likely to be made all the worse given that the commanders will probably not mandate the best solutions -- in fact, given variations from individual to individual, they simply cannot mandate the best solution for everyone).

  • Michael

    Many of the advocates for a carbon tax or a cap-and-trade tax also say we need to offset these higher taxes on people with lower income/property taxes. If a CO2 tax raises my electric bill from $150 to $300 a month, but my property tax drops $150 a month, I'm still going to use the same amount of good old coal powered Ohio electricity.

    I agree 100% with Warren. To get the 80% CO2 reduction, energy fees would have to be raised to the point where most American will have to seriously think about the impact turning on a light will have on their household finances.

  • Frank Gas

    If the law of unintended consequences holds true, then all this activity designed to halt global warming, will actually heat things up. As a Canadian, that's a real upside. Of course the downside is that carbon trading, of course, is just a massive wealth-transfer scheme.
    Remember the corruption in oil-for-food? Child's play compared to how this is going to turn out.

  • bryan

    "A legislative body that continues passing costs to our kids in the Social Security ponzi scheme and an administration that plans already to add 10 trillion to the national debt doesn’t really care about future generations. If they are unwilling to bear current pain for future benefits in fiscal policy, they certainly aren’t going to do it in the much more uncertain arena of climate policy."

    Beautifully said. However, I am uncertain that the logic they are making decisions with is sound enough to realize the hypocrisy.

  • DaveK

    The problem with carbon cap-and-trade is that it is a dishonest approach to achieving other goals... Namely, an improvement in our efficiency, as a society, in using fossil fuels; and a way to generate revenues for the government. Either one might be worthy goals, but it deserves serious debate.

    What we have now is politicians and activists doing the equivalent of shouting "Fire!" in a packed theater, in order to panic the public into a rush for the cap-and-trade exit.

    How much of this could have been avoided if the so-called greens had actually taken a rational-critical look at nuclear power.

  • rxc

    The green movement took on the nuclear power issue as one of its first "issues" because it was easy to use to scare people. They had pictures of bombs exploding and people who suffered at Hiroshima and Nagasaki, and an on-going cold war with enormous numbers of nuclear weapons on hair-triggers. The nuclear industry did not do itself any favors, though, by expanding quickly beyond the existing construction and operational experience base, during a time when interest rates were very high.

    High costs of construction tied in with fears of the technology only needed a trigger event, and the release of "The China Syndrome" just a few weeks before(?) the TMI accident was enough to destroy the credibility of the industry. Then, industry financial people realized how risky the technology was to the well-being of a company, if an accident was to occur, and a lot of plants were cancelled.

    I think that the greens have used a lot of the techniques that they learned from the nuclear power experience in a lot of other campaigns, against GMOs, chemicals, CFCs, and now CO2. The irony in this is that one of the biggest complaints of the greens against nuclear power was that the computer codes that were used to demonstrate the safety of the plants had not been verified against an actual test. Ralph Nader was one of the people who was pushing for a real test of an emergengy core cooling system, to prove the codes worked properly. As a result, the government and the nuclear industry spent 25 years building test facilities around the world to validate those codes, and in fact they discovered that the codes were quite conservative, and the safety features were much more robust than the greens had argued.

    Now, of course, the green movement uses computer codes to "prove" the AGW crisis is real, but they base those codes on models that are just guesses (e.g., the cloud model), and which do not deal with uncertainties in any rigorous manner. I guess that they also learned that computer codes could be "useful" in making their case. They use lots of computer models to generate scare stories about everything technological, without considering the consequences of eliminating technology. But then, of course, their ultimate goal is to de-populate the planet, so a retreat from technology to a more Malthusian state would serve their purpose.

  • Danny

    >"All the absurd talk of stimulation from new green jobs not-withstanding, either a climate bill imposes huge new costs or it has no real impact on emissions."

    Well, if we go with command and control regulation, then we can increase costs and still have no impact on emissions. Its like the best of both worlds. For idiots.

  • feeblemind

    If they were really serious about dropping CO2 emissions, say 20%, why not mandate that only 80% of fuel and electrcity be sold (as measured against the chosen baseline)? Wouldn't that bring CO2 emissions down as well as showing the public the true cost of CO2 reduction?