Kyoto and King Noah
Kristine N has guest-posted with us before. She is a graduate student in Earth and Atmospheric Sciences at Purdue University.
Monday Jan. 22, CNN reported the Chief Executives of GE, BP, and the eight other corporations that make up the United States Climate Action Partnership (USCAP) petitioned Congress in favor of legislation designed to reduce greenhouse gas emissions. Jeff Immelt, Chairman and CEO of GE told reporters at a press conference “The time has come for constructive action that draws strength equally from business, government, and non-governmental stakeholders.” The plan endorsed by USCAP includes a “cap-and-trade” program similar to that used for controlling sulfur dioxide emissions, and similar to the one proposed in the Kyoto protocol.
I am not an economist. I have heard persuasive arguments for both cap-and-trade (basically, we know that they work) and against cap-and-trade (difficulty of parties joining after the initial offering and the massive transfers of capital to poor countries simply because they already produce almost no CO2 emissions) and in favor of taxes (ease of parties joining in at a later time, lower cost volatility). The cap-and-trade program worked well for cutting sulfur emissions, so it makes some amount of sense to pattern CO2 legislation after an already successful program. However, William Nordhaus notes in this paper that because of the inelasticity of both supply and demand for credits,
“One of the potential concerns with the current structure of the Kyoto Protocol is that it will induce great volatility in the prices of permits. The volatility can be seen in the history of SO2 permit prices, which have been much more volatile than consumer prices or even stock market prices.” (After Kyoto: alternative mechanisms to control global warming, p. 30, fig. 7)
In this same paper he lists a number of possible alternatives, arguing most persuasively in favor of a global carbon tax on emissions. He states:
“Our latest estimates in the RICE-2001 model suggest that a carbon tax of $10 per ton carbon (2001 prices) — rising rapidly over time — would appropriately balance the costs and benefits of emissions reductions. This number is slightly above the number that would stabilize the concentrations of CO2 at twice the pre-industrial level (that is, at 550 parts per million).”
Although Nordhaus’ estimate sounds wonderfully affordable, other estimates are much larger. A tax may be less variable and thus easier to plan around, but would it necessarily be less onerous? We find in our scriptures the story of King Noah and his abuses of power; a story which is often interpreted as anti-tax. I would suggest, however, it is not the taxes, but the improper use of tax money for the personal enjoyment of the rulers that is truly the issue of that story. I would also suggest the way resources are spent by a government reveal much about what is most important to that culture; from this perspective I would argue the King Noah story is as much about idol worship as it is an anti-tax sermon.
Overall, I am overjoyed leaders of industry are coming out in support of tighter controls on greenhouse gas emissions. The longer we wait to reduce greenhouse gas emissions, the faster climate change is likely to be, and the more expensive and less effective our actions will also be. By the same token, early investment in technologies to curb CO2 emissions is likely to spur innovation and create jobs that will stick around even as the climate changes around us. I think we owe it to ourselves to examine every available mechanism for instituting and enforcing carbon dioxide controls, and I think we should have a dialogue right now about what to do on a large, national and international scale. Programs, once formed, are historically difficult to change, and our response to global warming is something we should work very hard to get right the first time. What do you, with or without economic training, favor among the proposed alternatives (cap-and-trade vs. taxes, vs. simple caps a la Montreal Protocol)?
Overall, I am overjoyed leaders of industry are coming out in support of tighter controls on greenhouse gas emissions.
As am I. I would much (much) prefer to see a market-based, private-industry solution to this problem than an onerous government-mandated one. I think public perception is growing that something needs to be done, and the market is responding to consumer demand.
Comment by Mike Parker — January 30, 2007 @ 1:28 pm
Kristine:
You do understand that the reason those industry leaders came out in favor of tighter controls is because they have a financial interest in doing so, don’t you?
I work for one of those companies– one that builds and sells wind turbines and nuclear reactors– and reducing carbon emmissions adds to our bottom line. Forcing countries/businesses/individuals to make the necessary switches will ensure that my employer gets the money rather than someone else because it has already established the necessary infrastructure. Our inclusion in that list of industry leaders is purely self-serving.
Comment by endlessnegotiation — January 30, 2007 @ 1:40 pm
yes, I do recognize there are financial incentives in favor of tighter controls on greenhouse gas emissions. The fact that people are recognizing that is a pretty impressive paradigm shift–for a long time (and in fact, frequently still) people claimed you had to choose between a strong economy and environmental controls. I’m glad to see the tide is turning.
Comment by kristine N — January 30, 2007 @ 1:50 pm
Kristine, is the tide really turning? Or, more to the point, is it turning in any meaningful way that will, say, prevent the oceans from being devoid of fish in 50 years, or keep the glacier at Lake Louise from being reduced to an ice cube?
Comment by Steve Evans — January 30, 2007 @ 1:52 pm
I love that you brought King Noah into this for about 2 seconds. Is that because you wanted it to fit in with the other BCC posts? I live in an area where it has become necessary because of poor air quality during the winter to have “yellow days” and “red days” where we are supposed to cut down driving and not build wood fires in our fireplaces. I would love to see more industrial regulation as well, but as long as thousands of people are making 7 or 8 trips around town in their Hummers the air is going to keep getting worse.
Comment by jothegrill — January 30, 2007 @ 1:56 pm
The problem is that “yellow days” where we are supposed to cut down on driving are completely unenforceable and no one complies.
Comment by Matt W. — January 30, 2007 @ 2:13 pm
[...] science and religion. Of course LDS oriented blogs have discussed climate change a lot, such as today’s post at BCC or the still ongoing discussion at Mormon Mentality. This discussion of the human hand in climate [...]
Pingback by Bloggernacle Times » This Week in Science and Religion — January 30, 2007 @ 3:38 pm
USCAP’s petition to Congress has as much to do with economic and environmental well-being as the actions of any other industrial group seeking regulatory action to its favor. The point for a company like BP is to be the one left standing under stultifying conditions they help tailor to knock out less well positioned competition. The only sea change is the recognition that the mood concerning climate change can be used as a means to push through such manipulations.
Comment by John Mansfield — January 30, 2007 @ 3:49 pm
Steve–I am hopeful the tide is turning, though it is, I must admit, too early to claim too much of anything. I do get the sense people in general, and not just tree-hugger environmentalist types are more concerned about global warming than they were five or ten years ago, and as a consequence are more supportive of carbon regulation. I definitely get the sense from discussions I’ve been privy to that companies are expecting environmental legislation to come down the pike shortly. Will it be meaningful legislation that will actually prevent environmental disasters from happening? (and sorry, Lake Louise and most likely all temperate glaciers are probably doomed within 50 years, whether we stop producing CO2 or not, but we can still save the fishies) Not that I’ve elucidated this well, but that’s really the core question of this post. If we’re going to do something about global warming (and I think we will) before we make it permanent I think we should discuss all available options.
Comment by kristine N — January 30, 2007 @ 5:15 pm
jothegrill–yeah, I hate to admit it, but I threw in King Noah because I was trying to be cool like the other bcc-ers.
I actually had a discussion about bad air quality this morning. The bad air quality is produced by NOx (nitrous oxides), which are what turns the air brown in places like denver and salt lake during an inversion. They are produced by combustion and facilitate formation of ozone. They are a minor contribution to global warming, but not nearly as significant as CO2. That said, NOx and ozone are bad for your health, especially if you happen to be young, old, or if your respiratory system is compromised, so it really is a good idea for people to NOT DRIVE on yellow and red burn days.
Comment by kristine N — January 30, 2007 @ 5:23 pm
I don’t even know what Lake Louise is and I’m starting to miss it already.
Comment by gst — January 30, 2007 @ 5:37 pm
This is Lake Louise.
Comment by kristine N — January 30, 2007 @ 5:46 pm
At least two of the partners, Duke Energy and GE, have their hands full of new nuclear reactor projects planned for the coming years, as I’m sure endlessnegotiation could tell you all about.
Duke has notified the NRC of its intention to apply for combined licenses for two reactors in South Carolina and GE is involved in at least two consortia, Dominion and NuStart, who have expressed intention to apply to build three reactors and is in a partnership with Hitachi and NRG Energy for two more.
Given the gold to be found in the hills of the Nuclear Partnership 2010 and in the Energy Policy Act of 2005, which subsidizes “clean” energy, it’s no wonder they’re staking their claims early.
Comment by Peter — January 31, 2007 @ 6:28 am
I hope that when all is said and done that we don’t end up with a subsidized nookyooler power industry stealing grants and research dollars from genuinely clean sources. Maybe in twenty or thirty years we can do nuclear power right, but all it is right now is another nonrenewable resource with an even dirtier method of extraction, waste nobody wants, and a government terrified of reprocessing.
Comment by nofolete — January 31, 2007 @ 9:45 am
I enjoyed this article. No offense to my strong brothers and sisters in the eco-friendly side of the universe, but no changes will be made because businesses want to become responsible and are listening to the environmental movement. They will be made because there are good sound financial reasons to do so. Truth hurts, but should never be ignored.
So, the fact that some industries are taking a hard look at this while balancing out the bottom-line actually makes me think there is a possibility of positive change in the future.
Comment by cew-smoke — January 31, 2007 @ 11:35 am