The Folly of Unilateral Carbon Rationing

Ronald Bailey | June 1, 2009

Last month, the House Energy and Commerce Committee issued the American Clean Energy and Security (ACES) Act which would impose a cap-and-trade carbon rationing scheme on the United States. The aim of ACES is to reduce the emissions of carbon dioxide (CO2) from burning fossil fuels that are thought to be contributing to man-made global warming. Under ACES, the U.S. would emit 17 percent less CO2 in 2020 than it did in 2005. Congressional Democrats and President Barack Obama hope to get ACES enacted into law before the United Nation's next climate change conference convenes in Copenhagen this coming December.

In today's Washington Post, Harvard University economist Martin Feldstein advises against any rush to enact ACES before the Copenhagen conference.Why?

The Congressional Budget Office recently estimated that the resulting increases in consumer prices needed to achieve a 15 percent CO2 reduction -- slightly less than the Waxman-Markey target -- would raise the cost of living of a typical household by $1,600 a year. Some expert studies estimate that the cost to households could be substantially higher. The future cost to the typical household would rise significantly as the government reduces the total allowable amount of CO2.

Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25 percent (and is projected to decline as China and other developing nations grow), a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent. Its impact on global warming would be virtually unnoticeable. The U.S. should wait until there is a global agreement on CO2 that includes China and India before committing to costly reductions in the United States. 

In a smart artcle over at National Review, Manhattan Institute fellow Jim Manzi also points out the folly of unilaterally cutting American greenhouse gas emissions:

Whenever one nation sacrifices economic growth in order to reduce emissions, the whole world can expect to benefit, because future temperature should decrease for the entire globe. Every nation’s incentive, therefore, is to free ride on everybody else. Our most obvious leverage with other emitting nations would be to offer to reduce our emissions if they reduced theirs. Giving up this leverage and hoping that our unilateral reductions would put moral pressure on China, Russia, Brazil, and similar countries to reduce their emissions reveals a touchingly sunny view of human nature, but it is a poor negotiating strategy.

Basically, under ACES, the U.S. would be imposing an energy price increase on its producers and consumers making the country less competitive compared to countries that would still be using cheaper fossil fuels. In an attempt to counteract this problem, the Federal government under ACES can award a portion of its emissions permits as a subsidy to energy intensive U.S. companies that are disadvantaged by the cap-and-trade scheme. Although the proposal was dropped in the current ACES bill, it is very likely that a countervailing carbon tariff will be included in future cap-and-trade legislation. Such subsidy and tariff provisions will likely provoke carbon trade wars. 

See whole Feldstein column here and Manzi article here. 

Comments

|6.1.09 @ 11:26AM|#

I'm hoping that cap-and-trade meets the same fate as ClintonCare, for the same reasons - too many consitituencies and localities stand to lose and the program is too incomprehensible and easily mocked.

And, of course, its just a really, really, bad idea.

a name before submitting the f|6.1.09 @ 11:27AM|#

Burning fossil fuels simply returns the CO2 into the atmosphere that was locked away when the plants that breathed in the CO2 died and became fossil fuels buried in the ground.

Since we are just returning the CO2 into the atmosphere, burning fossil fuels is environmentally neutral. Q.E.D.

Unless, of course, oil is abiotic.

|6.1.09 @ 11:31AM|#

I think its about time the US started minding its own business!

RT
www.online-privacy.vze.com

|6.1.09 @ 11:33AM|#

Here is something else to ponder:

"Global Warming Skeptic May Get French Ministry Post
French President Nicolas Sarkozy has reportedly decided to appoint France's most outspoken global warming skeptic to head the nation's super-ministry of industry and innovation.
Dr. Claude Allegre, a former believer in manmade global warming, reversed his views in recent years and mocked climate change alarmist Al Gore's Nobel Prize as "a political gimmick."
Allegre is a former French Socialist Party leader, a member of both the French Academy of Sciences and the United States National Academy of Sciences, and the recipient of numerous scientific awards.
Twenty years ago he became one of the first scientists to warn about manmade global warming, but he now argues that the cause of climate change is "unknown."
Allegre's appointment to the high post "would send political earthquakes through Europe and the rest of the world," Climate Depot's Web site observes.
His possible appointment has drawn strong protests from environmentalists, according to the Financial Times.
Putting Allegre in charge of scientific research would be tantamount to "giving the finger" to scientists, Nicolas Hulot, France's best-known environmental activist, told the Times.
Allegre has been harsh in his attacks on global warming alarmists. "The ecology of helpless protesting has become a very lucrative business for some people," he told a French publication. He also criticized the "nonsense" in Gore's 2006 documentary "An Inconvenient Truth," calling it "scandalous" and "all politics."
Oklahoma Republican Sen. James Inhofe, Ranking Member of the Environment and Public Works Committee and Capitol Hill's leading global warming skeptic, has said in a speech on the Senate floor: "I find it ironic that a free market conservative capitalist in the U.S. Senate and a French socialist scientist both apparently agree that sound science is not what is driving this debate, but greed by those who would use this issue to line their own pockets."

One of the first scientists to warn us of manmade global warming has reversed himself and now isn't sure what is causing global warming.

|6.1.09 @ 11:36AM|#

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|6.1.09 @ 11:41AM|#

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Now, THAT's what will cause global warming.

Shannon Love|6.1.09 @ 11:52AM|#

Isn't it strange that people who scream the loudest that free-trade causes U.S. jobs to be sent overseas are also the people working the hardest to make it significantly more expensive to manufacture anything in the U.S.?

Honestly, the carbon caps and alternative energy scams are just elaborate mechanisms for driving manufacturing out of the country. Modern manufacturing is basically just a means of using electricity to turn dirt into useful things. Increasing the cost of electricity increases the cost of manufacturing. Cheap energy is one of our competitive advantages in the global market place and we're going to intentionally destroy that advantage.

The worse thing is that it won't even help the environment. It will just relocate work to places with no freaking environmental oversight at all.

The real problem with this type of environmental thinking is that to many people still believe its 1950 and American controls the worlds technology. Well, we don't control technology anymore. In 1950, if we didn't do something it pretty much didn't get done. Today, if we don't do something a dozen other places will. America is no longer the technological or manufacturing center of the planet.

stuartl|6.1.09 @ 12:17PM|#

Honestly, the carbon caps and alternative energy scams are just elaborate mechanisms for driving manufacturing out of the country.

Don't worry, US jobs will be protected by bans on importing non-carbon friendly goods. Haven't you learned that inefficiency creates jobs?

|6.1.09 @ 12:59PM|#

Ron--

What would the projected (by global warming scientists) difference in temperature be in 2020 between no-action and a world that emitted 2005 minus 17% levels (and had gradually gotten to that level starting in 2010)? What if we took that out to 2050?

I haven't seen this discussed, but it seems to be a pretty key fact in deciding whether it's worth the cost to cut carbon emissions.

Russ 2000|6.1.09 @ 1:17PM|#

Giving up this leverage and hoping that our unilateral reductions would put moral pressure on China, Russia, Brazil, and similar countries to reduce their emissions reveals a touchingly sunny view of human nature,

That isn't touchingly sunny, it's martyrdom.

|6.1.09 @ 1:18PM|#

Fun fact: the amount of CO2 emitted by all the cars and light trucks in the U.S. is roughly equal to the CO2 emitted by out-of-control coal mine fires in China. Which do you think would be more cost-effective to reduce?

|6.1.09 @ 1:34PM|#

In an attempt to counteract this problem, the Federal government under ACES can award a portion of its emissions permits as a subsidy to energy intensive U.S. companies that are disadvantaged by the cap-and-trade scheme.

And here we have one of the major reasons for cap-and-trade--politically connected companies get advantages.

|6.1.09 @ 1:41PM|#

Fun fact: the amount of CO2 emitted by all the cars and light trucks in the U.S. is roughly equal to the CO2 emitted by out-of-control coal mine fires in China.

Um, nope:

http://en.wikipedia.org/wiki/Mine_fire#Environmental_impact

Did you know that 75% of statistics are made up on the spot? I sure didn't.

slutmonkey|6.1.09 @ 1:58PM|#

It irritates me to read this meaningless to talk about "reducing output by x percent by 2020". If we're going to argue about global warming, it needs to be in the context of equilibrium.

Fossil fuels are going to become scarce enough that large scale use will be impractical eventually. What is the maximum expected CO2 equilibrium? What will the global temperature be at that point?

Stop arguing about about reducing carbon emission levels by an arbitrary percentage by an arbitrary date. Emission is only half of the equation! Talk about equilibrium instead. What equilibrium level can we accept and what (if anything) do we need to get there.

|6.1.09 @ 2:56PM|#

What equilibrium level can we accept

I vote for the equilibrium of the Cambrian Era.

T|6.1.09 @ 3:45PM|#

Um, nope:

Tony, I realize you're an innumerate fuck with no common sense, but try to follow along with me. China is burning (unintentionally) between 20 and 200 million tons of coal a year. Yet this is claimed to only increase global greenhouse gas emissions by 1%. There's no range given on the second number, so it's obviously bullshit. You can't burn 200 million tons of coal and get the same GHG emissions as if you burn 20 million. The amount of coal burned changes by an order of magnitude. Logically, the emissions would change by that much, too. Since your source doesn't say between 1-10% or between .1-1%, somebody doesn't know WTF they're talking about.

Use a little critical thinking with your sources, mmkay?

T|6.1.09 @ 3:53PM|#

Incidentally, transportation accounts for 29% of US GHG emissions according to the EPA, which would make it about 7% of the global number. So coal fires may account for a larger amount than cars and trucks. Somebody'll have to nail down coal fires a bit better.

|6.1.09 @ 6:44PM|#

Tony, did you actually read the Wikipedia link you cite? It doesn't refute my point at all. Here's a Wikipedia link that confirms my point. Here are the two sources it cites: 1, 2.

martin|6.1.09 @ 6:52PM|#

I'm late to the discussion, but I still want to urge everybody to start spreading the truth about the current politicians' lies and deception and make the uninformed masses on the sidelines understand that their economic future is at stake! The Obama machine is in full motion overrunning all opposition. They are well organized down to the grassroots level.
Get involved! Get active! Start a revolt!
Or shut up and pay for it, if you still can.

Ebeneezer Scrooge|6.1.09 @ 8:37PM|#

Get involved!

In what? I'm already involved enough to be depressed.

Start a revolt!

I was just in Paris and saw some kid wearing a t-shirt that said "Stop bitching. Start a revolution."

Great theory, but how exactly is this going to work? What are people supposed to actually do?

Especially given that in very recent history our congress has been passing unpopular legislation as fast as they can (bailouts, GM and Chrysler life support, etc etc), people can be forgiven for believing that there's nothing they can do.

Write you congress creature -- for what? They voted for shit that the majority was clearly against.

Or did you plan on shooting first and asking questions later?


The problem we face is simple: politicians don't really pay any price for the things they do. No matter how bad it gets, the worst that can happen is that they get voted out.


Everybody got really really pissed at Bush and the Republicans who "deserved" to get voted out. So now we've voted in the only other option, which was The Left who (by their own admission in their own campaigns) intends to kill our economy with carbon taxes of some kind, plus they're going to finish socializing medicine, plus ratchet up affirmative action to the point that we're building a shrine to Incompetence.


I for one still say that Bush & Co. was overall a cheaper and better alternative to what we're getting today.


Before you pull the trigger martin, remember that this is exactly what the American people just fucking voted for. And the American media (plus the majority of college professors by far) hasn't stopped cheering yet.....