Russia’s Carbon Credits Could Sink Cap-and-Trade Permit Price (NYT)
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I posted this on Streetsblog yesterday, April 22, the 50th anniversary of Earth Day. It’s NYC-centric and doesn’t mention climate change (!). But its lessons apply nationwide, and good news is always welcome, especially now. PS, there is Covid-19 content, toward the end. — CK.
On Thanksgiving Day in 1966, I was driving from my parents’ home in suburban Long Beach, NY to dinner with family friends in Forest Hills, Queens. The air seemed extra bad. My eyes were teary, my nostrils were twitching and the radio was reporting some sort of pollution episode.
At that very moment, New York Times photographer Neal Boenzi was memorializing what the air looked like from a perch high up in the Empire State Building: smog shrouding skyscrapers like Met Life, NY Life and the Flatiron Building; smoke obscuring the financial district; the Hudson and East Rivers, invisible.
Fast forward 50 years to a mid-September weekday in 2016. Former New York City government official and activist Jon Orcutt steps onto the India Street Pier in Greenpoint, Brooklyn and aims his iPhone at east Midtown. The contrast of his photo with Boenzi’s couldn’t be more stark, and not because one was black and white while the other was color and digital. Ocutt’s picture glistens with mountaintop clarity. Zoom in, and every building — every window — is distinguishable. Billowing clouds adorn the sky, multitudes of pristine blue and pellucid white.
The distance between the photos attests to the past half-century’s clean-air revolution — a vast do-over to our nation’s skies, much of it led by New York City. Through citizen activism, enlightened governance and innovative technology, pollution levels were slashed across the board. No one knows the precise extent, but my best guess is that from the late sixties to today, citywide levels of noxious pollutants like PM2.5 (tiny particulates that invade and obstruct the lungs) and photochemical smog (a gaseous soup cooked by sunlight from nitrogen oxides and volatile organic compounds) fell by over 80 percent. Another lethal pollutant, sulfur dioxide, almost certainly declined even more. (The writer-activist Bill McKibben reported this week in his weekly New Yorker magazine climate newsletter that “air pollution has dropped by more than sixty per cent across America since 1970.”)
These improvements didn’t just enhance public health and cut medical costs. They also contributed to New York City’s economic resurgence. Here, too, no one knows precisely how much; polls don’t ask if cleaner air factored into people’s decisions to settle here. But my guess is that, after reduced street crime, cleaner air has been on a par with better schools and improved public transportation in attracting and retaining residents and businesses to New York.
No single regulation or program or anti-pollution device wrought these striking gains. Rather, a multiplicity of initiatives reduced air pollution levels here. These have probably been key:
- Lowering five- to 10-fold the sulfur content of fuel oil burned for heating and power generation*
- Tailpipe and engine technologies that cut per-mile auto emissions at least 10-fold
- Cleaner fuels and engines for diesel-powered heavy vehicles (still a work in progress)
- Investments in mass transit that stanched growth in auto travel (partly undermined by Uber)
- Widespread switching of dirtier oil-fired power, furnaces and boilers to natural gas
- Decommissioning in-building incinerators
- Controls on emissions from upwind sources such as refineries and power plants
* = CTC readers will enjoy my 2009 post in Grist relating how NYC’s 1972 emergency surcharge on dirty oil — an early instance of Pigovian taxation — protected the city’s low-sulfur oil regulation from oil industry interference.
These developments didn’t happen by themselves. They were, and are, the most visible and impactful fruits of the environmental movement whose arrival 50 years ago as a political and cultural force we mark on Earth Day today. At its forefront were the Natural Resources Defense Council and NYC-based organizations such as Citizens for Clean Air (which preceded Earth Day), Straphangers Campaign and Transportation Alternatives (which came in its wake); indefatigable campaigners like Gene Russianoff, Marcy Benstock, Rich Kassel and the late Carolyn Konheim; and proactive city officials like Mayor John Lindsay, his Environment Commissioner Jerry Kretchmer, and engineering dynamo Brian Ketcham. In turn, these individuals and institutions were backed by (and often preceded and helped spark) federal environmental legislation enacted in the national upwelling of environmental activism that took full flower in the early 1970s.
It is true, and shameful, that, nationwide, communities of color today breathe dirtier air than wealthy, white areas (though in New York City there is surprising overlap between affluence and pollution). Even so, air quality has risen significantly in most environmental justice communities in recent decades, with more gains likely as ecological activism grows increasingly black- and brown-led, although that, of course, depends heavily on the outcome of the next election.
I have labored in recent years to foster appreciation of air quality progress, especially in New York City. Valorizing environmental regulations and, at least implicitly, the scientists, attorneys and activists whose labors and expertise brought them into being, isn’t just right, it’s an investment in protecting and enhancing our environment going forward.
Well, my project has a ways to go. Case in point: this statement in a recent New York Times story on a preliminary Harvard School of Public Health study linking higher levels of PM2.5 pollution with increased COVID-19 deaths:
If Manhattan had lowered its average particulate matter level by just a single unit, or one microgram per cubic meter [µg/m3], over the past 20 years, there would have been 248 fewer COVID-19 deaths in Manhattan by that point in the outbreak [April 5].
That framing is completely backwards, in my view. Rather than bemoaning the failure to reduce New York pollution levels by one hypothetical unit, we should be celebrating the reductions already accomplished. They are enormous: almost certainly more than 20 µg/m3 since 1970 (early baseline data for New York and other cities is sketchy). If the preliminary link between particulate pollution and COVID-19 mortality in the Harvard study is confirmed, then NYC’s pollution reduction since the time of Earth Day will be shown to have spared vast numbers of lives through population-level improved lung functioning.
(The linkage between polluted air and COVID-19 mortality is this, in a nutshell: the coronavirus kills primarily by ravaging people’s lungs, while chronic exposure to fine particulate matter and other air pollutants degrades lung functioning, rendering inhabitants of polluted areas more vulnerable once they’ve been infected. Conversely, the advent of cleaner air has given New Yorkers a hidden but sizable degree of immunity, relative to our susceptibility if the air had remained chronically polluted.)
It’s tempting to recast the pull-quote from the Times in terms of thousands of New York City COVID-19 deaths already averted, but I’m going to demur. For one thing, the hypothetical 248-lives figure there (which the Times article took directly from the preliminary Harvard paper) was calculated from a baseline of citywide deaths and ascribed (incorrectly) to Manhattan alone. More importantly, I’m not convinced that the correlation between PM2.5 pollution and COVID-19 mortality is as strong as the paper contends. Despite laudable effort by the authors, their county-level analysis may not have been fine-tuned enough to fully control for the 17 different possible confounding factors they included in their model such as population density and education levels.
Consider that from 2001 to 2017, a period rigorously analyzed by environmental-health experts at NYC’s Department of Health, citywide average PM2.5 levels declined from around 18 µg/m3 to around 10 (see graph). That’s a drop of 8 µg/m3 in just 16 years. If we extend that rate of improvement backwards to the three decades leading to 2001 — when many of the innovations I bulleted earlier were taking effect — the drop in PM2.5 in that period would be around 16 µg/m3. That would yield an overall reduction of 24 µg/m3 in fine particulate pollution levels from Earth Day to today.
But today, let’s lift our gaze from COVID-19 and epidemiology to New York’s clearer skies. Dear reader, please join me in toasting a half-century of scientist and activist vision and grit that has made — and continues to make — our city cleaner, healthier and more beautiful.
Did any group of incumbent politicians fare as badly in yesterday’s midterms as the Republican members of the Climate Solutions Caucus? That seems unlikely, given the staggering dimensions of the electoral debacle inflicted on them (all figures apply only to the Congressional group’s Republican members):
- 15 members lost their re-election bids (includes cliffhanger defeats of GOP incumbents Mia Love (UT-04) and Tom MacArthur (NJ-3)).
- That’s out of 35 members who were seeking re-election (another 7 stood down, 1 lost his GOP primary, and we exclude 2 members from U.S. territories).
- The loss rate for caucus members — 43 percent — wildly exceeds the roughly 10-15 percent loss rate for Republican House incumbents overall.*
- Caucus members accounted for around half of GOP incumbents’ House losses. (That total, still hard to pin down, appears to be around thirty.)
- With the 15 losses and 8 retirements, the 43-member Republican half of the caucus will dwindle in January to well under half, 20.
[* = Calculating the overall GOP incumbent loss rate isn’t simple, since it requires separating Republicans who stood down from those who ran and lost on Nov 6. District-specific results posted by the Cook Political Report by David Wasserman and Ally Flinn may help. Ditto, Ballotpedia.]
One of the defeated Congressmembers was caucus co-founder and spearhead Carlos Curbelo (FL-26), who was edged out by Democrat Debbie Mucarsel-Powell, a political newcomer.
Meanwhile, “No Democratic members of the climate caucus lost their reelection bids,” ThinkProgress reported, “although two Democratic members are retiring and one is running for a higher office.”
It is true that Republican caucus members on the whole were more vulnerable than other Republican incumbents, for two separate if complementary reasons. One, deep-red districts where climate concern is relatively low tend to be harder for Democrats to wrest from Republicans. Two, some Republicans whose electoral standing was shaky to begin with saw the caucus as a way to bolster their campaigns. For an effective price of zero, these members could signal their independence from Republican denialism and thus burnish their appeal to Democrats and so-called Independents.
These points aren’t new to readers of this blog. We first conveyed our skepticism of caucus sincerity in June, with a post, Another Carbon-Dividend Group. Will It Matter?, and followed that a month later with Last Chance to Believe In a Republican-Assisted Carbon Tax? As the midterms approached and GOP incumbents lashed themselves ever tighter to the White House denialist-in-chief, we let loose with the more cynical, “Climate Caucus” greenwashing in full force as midterms approach, in September.
In between, we gave caucus co-founder Curbelo his props with Unicorn or Harbinger? A Republican Carbon Tax Is Readied for Debut. We concluded by remarking that with Curbelo’s introduction in July of a carbon tax bill, a GOP first:
A “long national nightmare” of Republican silence and inaction on climate may be starting to end. Whether other G.O.P. lawmakers will stand with Curbelo remains to be seen. He is at least blazing a path, and for that he deserves our thanks.
Alas, Curbelo’s path was never more than a faint trail. The current Republican Party — which a year-and-a-half ago we labeled “a racket to restore patriarchy, extractionism and white supremacy” — wasn’t about to forsake Trump and the Koch Brothers and coal barons for a “unicorn” Republican Congressmember.
Whither the Climate Solutions Caucus, leaderless and downsized by half? (The disappearance of 22 caucus R’s means that 22 D’s will have to leave as well, to conform to its “Noah’s Ark” makeup whereby each Democrat requires a Republican counterpart, lest the caucus’s vaunted “bipartisan” brand be diluted.)
We expect the caucus will disappear. Not just because its membership is being cut in half but because its uselessness has been fully laid bare. In today’s tribal politics, national-level Republicans can’t evince climate concern except as a token gesture, if that. They certainly can’t act on it by, say, renouncing Trump’s renunciation of the Paris climate agreement, or calling for a national carbon tax or fee. Heresy of that sort guarantees being cast out of the party’s belly and into the political wilderness.
Shed a tear, then, for Carlos Curbelo, but only briefly. The Democratic takeover of the House is worth an eternity of Republican caucus members’ feints, signalings or even token bills. As CNN’s John Harwood tweeted today, the House vote “was an all-or-nothing binary — power or no power. [The] Dem[ocrat]s won power.”
One result: There will be fact-finding congressional hearings, on issues from Russia to climate. If we push hard enough, these will include examination of carbon taxing. Climate activists everywhere — in the U.S. and around the world — will be heartened and emboldened to demand and win real climate action, not lip service.
May 2020 addendum: Click here for Citizens Climate Lobby’s current list of Climate Solutions Caucus members. The same list but with photos is available on the Web site of CSC Democratic member Rep. Ted Deutch.
Carbon pricing is catching on around the world, but only at “a snail’s pace,” and carbon-pollution prices remain far too low to make much of a dent in emissions, says a new report from the Organization for Economic Cooperation and Development.
Effective Carbon Rates 2018: Pricing Carbon Emissions through Taxes and Emissions Trading reports that the “carbon pricing gap” — the amount that current carbon prices lag an admittedly low benchmark price — shrank from 83% in 2012 to an estimated 76.5% this year. The figures cover 42 countries with advanced economies and account for 80% of all carbon emissions.
A key pillar of globalism, the OECD grew out of the postwar Marshall Plan and is dominated by three dozen “developed” countries in North America and Europe but also includes Turkey, Chile and Japan. Its “effective carbon rate” is defined as the sum of revenues from three types of policies:
- taxes on specific fuels
- carbon taxes
- prices of tradeable emissions permits
The report compares that rate to the revenue that would be raised with economy-wide carbon prices at benchmark levels of 30 or 60 euros per metric ton (about $35/$70US at current exchange rates, or $32/$64 per “short” ton). The report didn’t count the impact of fossil fuel subsidies that lower market prices of carbon fuels, though these tend to be fairly low in the 42 countries studied.
For individual countries, the carbon pricing gap — the distance between actual pricing and the €30/tonne benchmark — ranges from 27% to 100% in 2015, the latest year for which complete individual-country data is available. The US, with a gap of 75%, ranked 31st among the 42 countries studied. Top rankings go to Switzerland (27%), Luxembourg (30%), and Norway (34%).
Russia, at the bottom of the list, has no carbon pricing at all. China ranks 39th, with a 90% shortfall from the €30/tonne benchmark, though the report notes that implementation of nationwide carbon-permit trading in China “could lead to a significant drop in the global carbon pricing gap, to 63% in the early 2020s.”
The report is upfront about its benchmark’s limitations. The World Bank–affiliated High Level Commission on Carbon Pricing warned last year that carbon prices must range from $40 to $80US per tonne by 2020 and $50-$100/tonne by 2030 to meet the emission targets of the Paris Climate Agreement. (And remember that those goals are almost universally regarded as too low.) Moreover, the 30 euro benchmark falls below even the bottom of the 2020 range. And advanced economies — which most of the countries studied are — should err toward the high end of that range, according to the Commission, to leave room for developing economies to reap at least some of the fruits of industrialization.
Applying a more realistic 60€/tonne benchmark (about $64US per short ton) casts the pricing shortfall into even sharper relief: under that benchmark the 2015 US gap would be 88%.
Perhaps surprisingly, the largest of the three contributors to OECD’s effective carbon rate is neither explicit carbon taxes nor tradeable carbon emssion permits, but taxes on specific fuels, especially in road transport. European countries, especially, began taxing gasoline and diesel fuel at high rates decades ago, not as a climate measure but to reduce car dependence in urban areas, to help rail and other public transit maintain market share, and to fund social programs. Years later, those taxation policies are now, properly, being recognized for their role in protecting climate as well.
Carbon taxing isn’t something you expect to see mentioned in What Happened, Hillary Clinton’s memoir about losing the 2016 election to Donald Trump. But deep in the book’s weeds we find a telling new window into how Clinton “blew the biggest slam dunk in the history of American politics” (as one political pro vented to New Yorker editor David Remnick; expletive deleted here).
Around p. 240* Clinton brings up carbon dividends — a form of carbon taxes — as the type of “bold, creative ideas” she says Democrats must offer Americans. She generously name-checks Peter Barnes, an avatar of carbon dividends, and points to Alaska’s “Permanent Fund” that annually divvies up North Slope oil royalties equally to all state households. Then she writes:
[S]ome Republican elder statesmen such as former U.S. Treasury Secretaries James Baker and Hank Paulson recently proposed a nationwide carbon dividend program that would tax fossil fuel use and refund all the money directly to every American … Under such a plan, working families with small carbon footprints could end up with a big boost in their incomes. [Bill and I] spent weeks working with our policy team to see if it could be viable enough to include in my campaign … Unfortunately, we couldn’t make the math work without imposing new costs on upper-middle-class families, which I had pledged not to do. (emphasis added)
Like so much with Clinton, this passage is strong on details and weak on vision.
Clinton is right that carbon dividend schemes will raise incomes of most working families. She is right that their gain will come at the expense of affluent families, whose carbon footprints are larger. Revenue distribution from a fixed revenue pie is, by its nature, zero-sum: what is disbursed to one class of recipients can’t be available to another.
Of course, any policy that transfers wealth from rich to poor is by definition income-progressive, which puts carbon dividends squarely in the Democratic Party tradition of Roosevelt, Truman and Johnson. Climate benefits aside, carbon dividends’ distributional benefits make the policy a natural for progressives, as we pointed out last week in our post, The climate solution that boosts income for over 60% of Americans — the ones who most need it.
But did Clinton’s policy team really “spend weeks” searching for the carbon-revenue equivalent of a perpetual motion machine — one that would diminish inequality without costing “affluent families” a dime? Doubtful. The impossibility would have been obvious in fifteen minutes, especially to her policy-smart husband. Besides, carbon dividends didn’t suddenly originate with James Baker et al.; they’ve been a staple of carbon tax advocacy for nearly a decade. Their distributional impacts are well-established.
What’s more likely, and as Clinton herself hints, is that her team spent weeks trying to find the messaging to sell carbon dividends to her upper-middle-class base. But that should have been easy as well; their message could have gone like this:
Carbon dividends are a policy we can put in place quickly to accelerate our country’s transition from climate-killing, health-killing fossil fuels, with no new administrative machinery, which the rest of the world can emulate. Those who are doing well will have to contribute more for the common good, but this is a way of making every American feel more connected to our country and to one another — part of something bigger than ourselves. (Bold section are Clinton’s own words, from the discussion of carbon dividends in her book; prior text is mine.)
Yes, Trump and his backers would have pilloried Clinton for backing a carbon tax. But she was being hounded anyway for a hundred other reasons, both real and ginned up. Why not take a stand? Indeed, why not take a page from Bernie Sanders’ primary campaign playbook? In his April 14, 2016 debate with Clinton, for example, Sen. Sanders unapologetically supported “a tax on carbon so that we can transit away from fossil fuel to energy efficiency and sustainable energy at the level and speed we need to do.”
Watching that debate, I imagined Americans who were tepid or worse on carbon taxing nonetheless admiring Sanders’ forthrightness. Some might even have been swept up with a new openness to the idea of carbon taxing.
To be clear, failure to back carbon taxing isn’t why Hillary Clinton lost last November. But her inability to stand for something bold like carbon dividends was indicative of her incapacity to transcend policy details and connect them to a larger vision. And that arguably cost her the election every bit as much as Comey, Russia and the other usual suspects.
* Page number from “What Happened” is approximate, as viewed on a Kindle. The conception and shape of this post benefited greatly from CTC supporter and blog contributor Rachael Sotos. Note that our original headline, “Hillary Clinton and the Missing Carbon Dividends,” has been changed.
State-level carbon taxes offer a path to the ultimate climate solution.
This post was first posted on the Huffington Post on April 26. It was co-authored with Yoram Bauman, the PhD economist who founded Carbon Washington and co-chaired the carbon tax initiative in that state last fall. Yoram was principal author of the new CTC report featured here.
The Carbon Tax Center is out with a new report timed to the surging climate movement. We surveyed all 50 U.S. states (and Washington, DC) to identify the ones with the most favorable conditions for enacting a statewide carbon tax. Joining the report is a toolkit to help advocates push for a carbon tax in their state.
Campaigns for state carbon taxes educate the public and advance the idea on the policy map. A carbon tax in one or more states will create facts on the ground that can appeal to the Left and Right alike and upend the climate stalemate.
The world’s leading climate experts agree that putting a price on carbon emissions is essential for slowing and eventually stopping global warming. The artificial marketplace advantage of unpriced carbon pollution has helped coal, oil and gas gain a stranglehold over our economic system and social structures. Charging these fuels for their climate damage is the fastest path to the clean energy future that we need to protect our cities, coasts and civilization from climate devastation.
Enacting a carbon tax in a single state can be a gateway toward the ultimate remedy: a national carbon tax. Look at Canada, where a successful carbon tax in British Columbia, that country’s third largest province, prompted Prime Minister Trudeau to commit the nation to carbon pricing starting next year.
None of the world’s five top emitters — China, United States, Russia, India, Japan — has a carbon tax covering even a province or state. Yet the grassroots movement to end the fossil fuel era has never been stronger, as evidenced by last weekend’s Marches for Science and the anticipated massive April 29 People’s Climate March.
Below are thumbnails of the eight states we determined have the best prospects for enacting carbon taxes. Our map shows another six states with carbon tax “potential” along with eleven more where only one barrier (e.g., an apparently legal impediment) stands in the way.
Residents of these states—indeed, residents of all states—must speak up, advocate, and demand that their lawmakers take action; in many states citizens can also act directly through ballot measures. Our report and toolkit explain where, why and how.
On the eve of China president Xi Jinping’s scheduled two-day visit with the U.S. president, we took a deep dive into data on China’s energy use and carbon emissions. With the help of Fordham University student (and CTC intern) Cristina Mendez, who drew on official Chinese government statistics along with outside sources including Carbon Brief, we find that China has essentially capped its carbon pollution emissions — far ahead of the 2030 date for capping CO2 to which China committed in the landmark 2014 agreement between President Xi and then-U.S. President Obama.
That agreement followed a year-long diplomatic offensive initiated by then-U.S. Secretary of State John Kerry, and effectively ended the “axis of denial” by which China and the United States, by far the world’s largest climate polluters, pointed to the other’s inaction to justify its own. The bilateral accord in turn paved the way for the December 2015 Paris climate agreement in which nearly 200 nations pledged to rein in their emissions of carbon dioxide and other climate-destroying greenhouse gases.
A naysayer could point out the divergence between U.S. and China carbon emissions since 2005 (a standard “baseline” year for comparisons over time). In that year, U.S. emissions of CO2 from burning coal, oil and gas were around 5,810 million metric tons (“tonnes”), just a shade below China’s estimated 6,160 million tonnes in the same year. Since then, U.S. emissions have fallen by around 800 million tonnes while CO2 from fossil fuel burning in China grew by over 3,000 million tonnes.
That’s a swing of nearly 4 billion tonnes between the changes in the two countries’ emissions, a huge difference that can’t be swept under the rug. Nonetheless, it is tempered by four key considerations.
1. China’s carbon emissions, though now nearly twice those of the United States, are well under half of U.S. emissions on a per capita basis. With almost 1.4 billion people, The population of China is more than four times the U.S. population of 325 million. U.S. per capita CO2 emissions, which we estimate at 15.4 metric tons last year, are nearly two-and-a-half times as great as China’s 6.4 tonnes per person.
2. A considerable part of China’s CO2 comes from electricity and direct fuel burning to manufacture goods exported to the United States. Those emissions far outstrip U.S. emissions to supply agricultural and other products to China.
3. Based on historical CO2 emissions — which determine the amount of atmospheric carbon pollution now trapping Earth’s heat, given the roughly hundred-year time scale for a carbon dioxide molecule to distintegrate — U.S. climate-damage responsibility is roughly double China’s, even without normalizing for population. (For that calculation we added the past dozen years of respective emissions to the World Resources Institute’s compilation of the world’s nations cumulative carbon emissions during 1900-2004.)
4. Most importantly, if we wish to look forward: The apparent capping of China’s CO2 emissions over the past three years marks a sea-change in that country’s previously inexorable rise in carbon pollution over the prior several decades. It was only in 1988 that China’s CO2 emissions from fossil fuels (along with cement manufacture, which is otherwise excluded from the data in this post) passed 2 billion metric tons, based on a terrific WRI times-series visualization. The implied annual growth rate to 2013, when the total (without cement) surpassed 9 billion, was greater than 6 percent per year. From 2005 to 2013, China’s compound average emissions increase rate was 5.3 percent. To bring emissions to a screeching halt since then, without war, famine or other cataclysm, is close to miraculous.
Two charts tell the story. The first, directly above, shows the overwhelming dominance of coal in China’s energy supply, but moderating since 2011 and falling since 2013. This is significant because coal is the most carbon-intensive fossil fuel, not to mention the most polluting in terms of “conventional” pollutants such as sulfur dioxide and fine particulates that kill several million Chinese people each year and sicken hundreds of millions more, as the New York Times has reported on multiple occasions. (See, for example, here, here and, perhaps most damningly, here.)
The second graph, below, highlights the changes in that supply over the past three years. Coal is down, while all other energy sources are up. In carbon terms (not shown in the graph), the combined increase in oil and gas use slightly more than offset the decline in coal burning, thus statistically creating a minuscule net estimated increase in CO2 of four-tenths of one percent from 2013 to 2016. Perhaps more importantly, energy output from carbon-free hydro-electric dams, non-hydro renewables (chiefly wind turbines and solar-photovoltaics) and nuclear power all increased, with their combined gain easily exceeding the net expansion in fossil fuel use.
The United States is not without its own climate triumph; as we pointed out in our recent “Good News” blog post and report, U.S. electricity-sector emissions (from power plants burning fossil fuels) fell 25 percent from 2005 to 2016 — a reduction equalling nearly four-fifths of the Clean Power Plan’s intended 32 percent drop in power-sector emissions from 2005 to 2030. (Note that our 25 percent figure is down slightly from the 27 percent reduction we reported in December, with preliminary 2016 data; both the post and report have been updated to reflect full-year emissions.)
But that’s electricity only — the “low-hanging fruit” for the U.S. and most other countries. U.S. emissions from transportation are up, as we’ll report shortly in a separate post. Far more worrisome, of course, is the Trump administration’s neanderthal assault not just on climate-related standards, regulations and research but on the very notion of energy efficiency and environmental stewardship.
The point of this data exercise is to underscore China’s historic achievement in flattening its carbon emissions. It may be premature to crown China as the new global leader in climate action, as some commentators have proposed lately. Let’s not forget that it was Germany’s pump-priming for renewable energy a decade or more ago that propelled the Chinese solar-PV industry down the cost curve. And lately the United Kingdom has been driving down carbon emissions at a remarkable rate.
But turning the corner on carbon emissions, as China apparently has done while providing material prosperity for well over a billion people, is no mean feat. The U.S. president will likely remain oblivious, but other Americans can acknowledge and celebrate China’s achievement.
Energy data for 2005-2015 are from BP, Statistical Review of World Energy, 2016, June 2016. We calculated 2016 energy data by applying year-on-year percentage changes in China Energy Portal, 2016 detailed electricity statistics, Jan. 20, 2017, and National Bureau of Statistics of China, Statistical Communiqué of People’s Republic Of China on the 2016 National Economic And Social Development, Feb. 28, 2017, Section XII. Resources, Environment and Work Safety, both accessed April 5, 2017. For coal, we applied the estimated 1.3% drop to 2016 in coal consumption stated in Jan Ivar Korsbakken & Glen Peters, A closer look at China’s stalled carbon emissions, March 1, 2017, posted to Carbon Brief, rather than the 4.7% drop asserted in NBS-China’s Statistical Communiqué. Emissions data are from BP Statistical Review (2005-2015), with 2016 calculated from the 0.3% rise to 2016 (excluding cement) estimated in Korsbakken & Peters.
Dozens of armed ultra-right ranchers seize a federal wildlife refuge in eastern Oregon and proclaim it “a base place for patriots from all over the country.” On the other side of the globe, Saudi Arabia goes on a rampage, subjecting neighboring Yemen to nightly bombing raids and then executing a revered Shi’ite leader named Nimr al-Nimr, prompting a furious reaction in Iran and bringing the Persian Gulf to the brink of war.
Given the immense distance separating such events, there couldn’t possibly be a connection between them — could there?
Actually, there is, and it starts with the conservative complaint about the infantilizing effects of welfare. This is the old right-wing argument that instead of making people richer, “free stuff” (to use Jeb Bush’s phrase) in the form of food stamps and aid to single mothers encourages a culture of dependency that discourages thrift and hard work and ultimately deprives recipients of the tools they need to get ahead. Rather than raising them up, government aid turns them into spoiled children who demand more and more and throw ever more violent tantrums when they don’t get it.
As George Will once said about riots in the French banlieues:
Welfare states are, paradoxically, both enervating and energizing — and infantilizing. They are enervating because they foster dependency; they are energizing because they aggravate an aggressive sense of entitlement; they are infantilizing because it is infantile to will an end without willing the means to that end, and people who desire welfare states increasingly desire relief from the rigors necessary to finance them.
Because the welfare state undermines the labor ethic, in other words, it undermines society in general, leaving the poor angrier and more impoverished than ever.
These are fighting words as far as liberals are concerned. But instead of rejecting them out of hand, when not turn them around and apply them to the real welfare chiselers, the ones truly raking in the big bucks?
Take the ranchers currently occupying the Malheur National Wildlife Refuge in southeastern Oregon. They claim a right to graze their cattle on federal lands free of charge and demand that the grasslands in question be “returned” to the states, even though the states never owned them in the first place. “It’s happening all across the United States,” explained protest leader Ammon Bundy. “We have the EPA taking properties away from American people … restricting whole industries, putting whole states and counties into economic depressions. We have a slew of other federal agencies that are doing the exact same thing and they’re doing it by controlling the land and the resources.”
But rather than removing such properties, the U.S. Bureau of Land Management has been renting them out for decades at well below the market rate — indeed, as much as 99.5 percent below according to a 1993 study. For the BLM as a whole, that amounts to an annual $11 billion giveaway, more than double what the feds provide via Temporary Assistance for Needy Families, the main welfare program for the poor. And where approximately two million families benefit from TANF funds each month, just three thousand ranchers have managed to corral half of all BLM subsidies.
This is welfare on a truly gigantic scale, yet Bundy and his followers want even more. And unless the feds give it to them, they’re going to seize government facilities at gunpoint and take it themselves.
Even greater infantilism is on display in Saudi Arabia, where the royal family claims exclusive control of a quarter of the world’s proven oil reserves. Saudi oil deposits are so extensive and so close to the surface that extraction costs are only a fraction of those in the U.S. The upshot is an income stream amounting to hundreds of billions of dollars a year in oil export, one that requires the House of Saud to do next to nothing in return.
By comparison, Ronald Reagan’s famous welfare queen, the one with “eighty names, thirty addresses, twelve Social Security cards [who] is collecting veteran’s benefits on four non-existing deceased husbands,” was a piker.
But there is bad news for the kingdom’s seven thousand or so princes. After peaking at $114 in July 2014, oil prices have plunged to less than $35 a barrel, a sickening 70 percent swoon that has left Saudi finances in tatters.
How have the Saudis responded? Exactly as George Will says French welfare recipients would respond to a massive cut in benefits, i.e. by blowing stuff up and taking out their anger on the world at large.
In March, with oil down to $60 a barrel, the Saudis vented their fury on Yemen, launching air attacks that have killed thousands of civilians and destroyed historic urban centers such as Sana’a and Saada to rubble. “Yemen after five months looks like Syria after five years,” declared Peter Maurer, head of the International Red Cross, following a mid-summer visit. With oil prices dipping another 25 percent, the kingdom followed up with a ground invasion in late August. Despite raking in trillions over the years, it pleaded poverty at the Paris climate talks in early December, claiming it could not afford to comply with mandates to present a comprehensive carbon mitigation plan.
“We developing countries don’t have the capacity to do this every five years,” a member of the Saudi delegation reportedly complained. “We are too poor. We have too many other priorities. It’s unacceptable.”
Mega-welfare in the form of lottery-level petro checks has thus left the House of Saud poorer and less self-reliant. But the ultimate tantrum came on January 2 when the kingdom ushered in the new year by executing 47 prisoners, including Nimr al-Nimr, a fiery Shi’ite preacher who had vigorously denounced the royal family’s arch-Sunni bigotry but nonetheless urged his followers to rely on “the roar of the word” rather than violence. When angry Shi’ites responded by storming the Saudi embassy in Teheran, the kingdom upped the ante by severing diplomatic relations and leaning on other Arab gulf states to do the same.
As The New York Times put it, “the Saudi government seemed willing to endure the potentially high political costs of the killings in order to deliver a warning to would-be militants, political dissidents and others that any challenge to the royal family’s rule would not be tolerated.” The more difficult its financial position, the more obdurate Saudi Arabia grows, turning its back on a growing chorus of criticism both domestic and foreign.
How would Saudi Arabia have responded if oil prices were still bouncing along in the $100 range? It is hard to imagine that they would have done the same. Despite talk about the Saudis cutting prices in order to punish Russia, Iran, and U.S. shale producers, it appears that the royal family has gotten caught in a downdraft of its own making and can’t figure a way out. As prices have plunged, the atmosphere in Riyadh has thus grown bleaker and bleaker. “The Saudis seem to be sort of in a retaliatory mood,” one Saudi watcher said regarding setbacks in Syria. A $100 billion budget-deficit, observed Rutgers professor Toby Craig Jones, “may soon force the kingdom to slash spending on social welfare programs, subsidized water, gasoline and jobs – the very social contract that informally binds ruler and ruled in Saudi Arabia.” As such ties fray, the position of the Saudi ruling family will grow more precarious rather than less.
If welfare weakens society as people like George Will maintain, then the lesson of Saudi Arabia is that super out-of-control welfare destroys it all the more decisively. The upshot is greater and greater instability, which, in the Middle East, translates into stepped-up terrorism and war.
Which brings us to carbon taxes.
The purpose of a carbon tax is to unwind a bloated welfare system that serves the interests of the oil companies, auto companies, and petro-sheikdoms rather than the poor. By internalizing the cost of climate change, it encourages society to accept responsibility for the carbon it injects into the atmosphere — not the most beleaguered segments, but society as a whole, which, in an age of galloping economic polarization, is increasingly of, by, and for the wealthy.
Tantrums thrown by the super-rich are wreaking havoc across much of the world. Conservatives have thus gotten it only half-right. It’s not welfare to those below that is leading to infantilization du monde, but the far greater welfare payments to those on top.
In theory, carbon offsets facilitate low-cost emissions reductions. In practice, they’ve done anything but.
Carbon “offsets,” a feature of most cap-and-trade systems, build on the sensible premise that emissions should be reduced wherever that can be done at the lowest cost. Offsets give CO2 emitters facing carbon caps a cost-minimizing choice: they can reduce their own (domestic) emissions through the usual means: investing in or incentivizing energy efficiency and use of lower-carbon fuels; or they can buy carbon offsets that pay for actions elsewhere — typically in less-developed countries — that reduce or avoid emissions, achieving the same net reduction.
Ideally, carbon offsets finance low-carbon energy projects (e.g., wind farms and solar arrays) or projects to reduce emissions from deforestation. Reflecting this duality, the United Nations Environment Programme administers two offset programs: the “Clean Development Mechanism” (CDM) and the “Reducing Emissions from Deforestation and Forest Degradation” (REDD) program.
The European Union’s “Emissions Trading System,” the world’s largest cap-and-trade system covering about 45% of greenhouse gas emissions from 31 countries, utilizes both CDM and REDD offsets. Similarly, California’s AB-32 cap-and-trade program, which started in 2013, includes offsets from five categories: U.S. Forest Projects, Livestock Projects, Ozone Depleting Substances Projects, Urban Forest Projects and Mine Methane Capture. Emitters can use offsets to meet up to 8% of their compliance obligations, but since California’s cap declines 2% per year, offsets could represent a large fraction of total emissions reductions under the cap for some time.
Why, and how, offsets have proven hard to evaluate and easy to game.
Offsets were a major feature of the Waxman-Markey cap-and-trade bill that passed the House in 2009 and of parallel Senate proposals in 2010. They were packaged into those bills as “cost control” measures to moderate energy price rises from steadily tightening the cap on CO2 emission permits. Offsets clearly appealed to both polluters and potential recipients of offset funding, in effect providing political “grease” to smooth passage. But in 2008, a year before Waxman-Markey came to a vote, close analysis suggested that many intended offset projects wouldn’t result in real emissions reductions. This raised concerns that a large supply of unverifiable offsets would overwhelm the emissions certainty claimed for cap-and-trade.
Later in 2008, the nonpartisan Government Accountability Office assessed the EU’s offset program under its Emissions Trading System. GAO found that over-allocation of allowances and offsets had resulted in “a price collapse.” As a result, Phase I of the ETS had “uncertain” effects on emissions in the capped countries while funding offsets of doubtful value, though GAO did hold out hope that reforms could make the system work.
The picture grew darker. GAO’s 2011 follow-up, “Options for Addressing Challenges to Carbon Offset Quality,” reported that in 2009, 81 million tons of offset credits — an estimated 59% of the ETS’s CDM offsets for that year — went to Chinese refrigerant factories to incinerate HFC-23, a chemical byproduct of refrigerant manufacturing whose per-pound greenhouse gas potency is 11,700 times that of CO2. According to GAO, the Chinese had constructed 19 new refrigerant manufacturing plants for the sole purpose of destroying the greenhouse gas byproduct in order to receive offset credits and the associated payments. According to estimates by Stanford professor Michael Wara, whereas installing equipment to capture and destroy HFC-23 at all of the facilities covered by the CDM would have cost just $100 million, these same projects were expected to generate $4.7 billion in CDM offset credits.
In 2011, EU officials finally acted to eliminate this perverse incentive, announcing plans to stop accepting offset credit for HFC-23. The Chinese government responded by threatening to vent HFC-23 straight to the atmosphere.
Similarly, in July 2015, the Stockholm Environmental Institute published a detailed analysis of offset projects to destroy HFC-23 and SF6 (sulfur hexaflouride) in Russia and the Ukraine. It concluded:
[A]ll projects abating HFC-23 and SF6 under the Kyoto Protocol’s Joint Implementation mechanism in Russia increased waste gas generation to unprecedented levels once they could generate credits from producing more waste gas. Our results suggest that perverse incentives can substantially undermine the environmental integrity of project-based mechanisms and that adequate regulatory oversight is crucial.
Poor information creates vast opportunities for manipulation.
While the HFC-23 sagas seem almost comical and are probably the most costly and egregious example of abuse of offsets, they illustrate a serious problem with practically all offsets — asymmetric information. Purveyors of offset projects know a good deal more about their “products” than do far-away “buyers.” And unlike the highly leveraged mortgages that were sliced and repackaged into intangible derivatives that helped crash global financial markets in 2008, offsets start out as intangibles.
GAO and other analysts of carbon offset markets group these information deficiencies into three categories: Additionality, Measurement, and Verification. They also raise concerns about the permanence of sequestration projects like forests that can later be burned as fuel, relinquishing the climate benefits that were bought with offset credits.
Additionality is the problem of answering a hypothetical question: what would have happened if offsets hadn’t funded this project? GAO identified many projects that got a boost from offsets, but with no clear sense as to whether they would have been built anyway without the added incentive of offset credits. Asking “What is the baseline” is inherently counterfactual, and thus untestable and unanswerable. It’s been a challenge for the UN and EU ETS to even write rules about how to review projects (which vary widely in concept, location, quality and cost), while the offset “industry” and large purveyors of offsets, particularly China, have clamored for ever more streamlined UN approvals.
A 2016 report prepared for the EU Directorate-General for Climate Action, How Additional is the Clean Development Mechanism, concluded that “the vast majority of ‘clean development’ projects [financed by carbon credits] likely fail to actually reduce emissions,” as Inside Climate News summarized in an April, 2017 story. “Given the inherent shortcomings of crediting mechanisms, we recommend focusing climate mitigation efforts on forms of carbon pricing that do not rely extensively on credits,” the report said.
Measurement is a complex accounting problem — how much CO2 was avoided by this project or process or by preserving this forest? GAO found that measurement is neither consistent nor transparent, even after a decade of effort by the UN.
Verification concerns who is checking on the projects’ completion, operation and maintenance. GAO reported that “Project developers and offset buyers may have few incentives to report information accurately or to investigate offset quality.” Everyone in the offset business – from project developers to offset sellers and buyers – wants offset values set as high as possible. GAO argues that strong, independent oversight is needed, but its report raises serious doubts about whether oversight can ever be sufficient, especially given its high administrative costs.
The 2011 GAO report confirmed critics’ fears that the global offset system places new hurdles in the path of energy-efficiency and other decarbonizing measures, in the form of perverse incentives under the CDM program:
[A]n offset program may create disincentives for policies that reduce emissions. For example, under an offset program that allows international projects, U.S. firms might pay for energy efficiency upgrades to coal-fired power plants in other nations. According to our previous work [GAO’s 2008 report on the EU ETS], this may create disincentives for these nations to implement their own energy efficiency standards or similar policies, since doing so would cut off the revenue stream created by the offset program.
For example, some wind and hydroelectric power projects established in China were reviewed and subsequently rejected by the CDM’s administrative board amid concerns that China intentionally lowered its wind power subsidies so that these projects would qualify for CDM funding. In addition, our review of the literature suggests that in some cases an offset program may unintentionally provide incentives for firms to maintain or increase emissions so that they may later generate offsets by decreasing them. This potential problem is illustrated by the CDM’s experience with industrial gas projects involving the waste gas HFC-23, a byproduct of refrigerant production. Because destroying HFC-23 can be worth several times the value of the refrigerant, plants may have had an incentive to increase or maintain production in order to earn offsets for destroying the resulting emissions.
Acknowledging that even the best oversight and management can’t assure high offset quality, GAO suggested limiting the fraction of CO2 reductions that offsets would be permitted to provide under national cap-and-trade programs:
[T]he emissions reduction program would ensure that only a fixed percentage of the emissions permits could be affected by any problems with offset quality. All existing emissions reduction programs we reviewed use this option. In the EU ETS, regulated entities are able to use CDM credits for 12 percent of their emissions cap, on average, through 2012. In contrast, a draft Senate bill [the “American Power Act”] would have allowed a greater number of offsets into the program—approximately 42 percent of the emissions cap during the first year of the program. These percentages are based on the total emissions cap, not the required emissions reduction. As a result, such limits could mean that regulated entities could use offsets for all of their required emissions reductions, assuming a sufficient supply of offsets was available.
In other words, offsets could have completely overwhelmed the Waxman-Markey bill’s cap (which only declined a few percentage points each year) for decades — precisely what Prof. Wara predicted just days before the bill passed the House in 2009.
Proponents of AB-32, California’s cap-trade-offset program, assure us that offsets won’t overwhelm its emissions cap. Yet the intrinsic problems of offset quality will require extensive and aggressive oversight.
Fraud and other crime
In cap-and-trade systems, a carbon allowance represents the right to emit a ton of CO2. Typically, allowances are auctioned or distributed to greenhouse gas emitters up to their cap levels. Thus, emitters will have surplus allowances to sell if they reduce emissions below their cap. Allowances function much like currency with attendant opportunities for fraud and manipulation. Offsets add another potential opportunity for mischief. To the extent that offsets fail to actually reduce emissions, they’re effectively a way to counterfeit money.
One of Friends of the Earth’s “Ten Ways to Game the Carbon Markets” (2011) was “carouselling,” in which carbon allowances are used to evade taxes. In 2013, Interpol issued a “Guide to Carbon Trading Crime” detailing real-world examples.
There’s no doubt that funding is needed for low-carbon energy and good forest practices in developing countries. Unfortunately, real-world experience indicates that offset markets are a questionable funding source. Offsets drive down allowance prices in carbon markets, resulting in weaker incentives for decarbonization, while uncertain offset quality undermines the certainty of emissions caps. A price floor, such as the $10/ton floor specified in California’s AB-32 program, can prevent a total collapse of allowance prices. Yet a simple, direct carbon tax offers an even clearer and more predictable price signals to CO2 emitters while creating far fewer opportunities for manipulation, fraud and crime.
Low oil prices and cheap gasoline bring a host of positives and negatives, as befits petroleum’s dual nature as a bestower of motion and light but also smog, traffic and climate change. This clash has bedeviled energy and climate policy for decades. Now we have a golden opportunity to resolve it.
Heading the good things is inexpensive oil’s boost to the economy. Cheap gas gives consumers more money to spend, and that means more jobs and better wages. Geopolitically, low oil prices are a scourge on several bad actors on the world stage, from Russia to Iran. And as drilling gets less profitable, thousands of fragile places might be left alone.
But when oil is cheap, the world gears up to use more of it, which accelerates climate change. For all we rightfully target coal, burning oil releases almost as much climate pollution. Boeing and Airbus are reportedly apprehensive that their latest fuel-efficient aircraft may go begging. And of course the faster oil usage rises, the more quickly the price rebounds, teeing up the next recession.
What’s needed is a way to safeguard the benefits of low oil prices while fending off the downsides. The trick to this feat, which should unite all sides of our fractured body politic, is to let consumers collect a tax on oil. Or rather, have government collect the tax at ports and wellheads and distribute the revenues to consumers each month, the same way Alaska distributes the revenues from its wildly popular tax on its oil flows.
Yes, we take Sarah Palin nationwide, taxing oil and disbursing the dollars — all of them — to U.S. households, the same “dividend” for each.
Because the tax dollars stay in circulation, the amount of money families have to spend doesn’t fall and the windfall to the economy persists. Most families of limited means will come out ahead because on average they spend fewer dollars on oil than they will receive in their monthly revenue check. Economic inequality eases a little, at no cost to economic activity.
Why have the tax at all, then? Answer: to simulate high fuel prices, preserving incentives to get more fuel-efficient. In this way, motorists will keep buying high-mileage cars and driving them somewhat less, manufacturers will build ever-more efficient vehicles and aircraft, and cities and counties will keep broadening their transit infrastructure. The same goes for freight movement ― goods produced nearby will be advantaged, boosting local agriculture and domestic jobs. [Read more…]