Wednesday, November 04, 2009

First response to Williams and Zabel's anti-cap-and-trade legislation

So these two EPA lawyers are making a splash, and maybe rightfully so since they oppose cap-and-trade despite being intimately involved in the existing acid-rain cap-and-trade. They propose a "fee and refund", basically a carbon tax with 100% remittance on a per-capita basis. Their op-ed is here, and the paper they've produced is here. I'm reacting to the paper.

Initial comments:

1. Our choice for this year and next year is cap-and-trade or nothing - their proposal isn't going to happen before 2011, if then. I think the right goalpost to judge their position is whether it convinces people that current proposals are worse than doing nothing, or alternatively that their proposal is so superior that doing nothing for two years with the possibility of eventually trying their idea is better than cap-and-trade.

2. They are comparing their own proposal's pre-sausage ideal with cap-and-trade legislation's mostly post-sausage reality. Waxman-Markey has passed the House, and Kerry-Boxer is designed to have a chance of getting three-fifth's vote in the Senate. (This reminds me of talking to a Swedish convert to Buddhism who compared the theoretical ethics of Buddhism taught to her by her instructors with the sordid reality of two thousand years of Christian society. We were in Thailand at the time, and I suggested that the sordid reality in Buddhist Thailand wasn't so great either.) What the WZ proposal would look like after getting through the sausage-making might not seem so much better as it does right now.

This objection has limits - we can hardly ask them to deliberately make their proposal worse. OTOH, they could show what they would do to make it more politically viable. Making it more viable without reducing the incentives to cut down emissions and without costing more would be a pretty good trick that I'd like to see.

More specifics:

Page 2 and 3: they discuss Obama's support for cap-and-trade. His original proposal would have been 100% auction and remitted 80% of revenue. Post-sausage, that's gone down a hell of a lot. One could expect something similar for their proposal.

p. 3: urgency requires a stronger approach, their own. Well, we're losing two years minimum by dropping the current approach, so this cuts both ways. (My own tangent: I've been wondering to what extent carbon-negative approaches like biochar and biomass-plus-sequestration could be used to compensate for overshooting dangerous CO2 levels. Could we hit 570 ppm by the year 2070 and then rapidly pull it down to way below 350 ppm, without relying on Pielkian dreams and armwaving? Would that be good enough to avoid disaster?)

p. 4: acid rain controls are a lot easier. Yes, but that's well known.

p. 5: "sequestration of greenhouse gas emissions has not been demonstrated to be safe or permanent and is expected to be costly." That's pretty dismissive when they say later that renewables cost three times as much as fossil fuels and they want to make renewables cheaper through carbon fees. The claims I've seen for sequestration is that it adds only 20-40% to the cost of coal, so depending on how much weight you give to those claims, it's a cheaper option. Permanence is an issue, but we have some real problems in the next two centuries that might need priority.

p. 5: standard argument against offsets, another Victor/Wara reference.

p. 7: "In addition, setting up a capand-trade system will be very complex and time consuming. Once begun, a cap-and-trade program would have a great deal of inertia. It would be difficult to dismantle and would create a variety of interest groups with investments in maintaining the program, however ineffective it proved to be for addressing climate change." Yep. And it's disconcerting because we can't possibly rely on initial legislation to solve this problem - we're going to have to make it better every 5-10 years as we get a better handle on the problem and as denialists get further marginalized. Not an easy issue, but that's the problem with sausage.

p. 10: this is the most-flawed part, I think. They want to triple the price of fossil fuels with carbon fees in ten years, and expect renewables to drop to nearly one-third the current prices. I don't see the political will to absorb the dislocation of fossil fuel increases, and the expectation that renewables would become this cheap is wrong, I think. Economies of scale work in the long run, but a gigantic push to replace all fossil fuels would increase the cost of renewables, not decrease them in the short to medium term.

That's all I've got for now, maybe I'll come back and finish later.

UPDATE: Ezra Klein:

Barack Obama wasn't on the ballot yesterday, and he won't be on the ballot in 2010. If his voters stayed home last night, many politicians will take that as proof that they'll stay home in 2010, too. That doesn't just make the map harder for Democrats. It also moves Democrats to the right, as their consultants will explain that a winning coalition requires more voters from relatively conservative blocs, like seniors and downscale independents, and thus a more centrist campaign strategy.

More reason not to expect vast political improvements. If I could wave a magic wand, there's no question I'd take the WZ proposal over the House and Senate bills, but that's not the situation we've got. Sadly.

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