Call Your Mother

Go read Paul Krugman’s NYT Sunday Magazine cover story on environmental economics. Now, forward it to your parents, literate children and friends who have been known to suffer from a glazing of the eyes when you try to explain just what it is you spend your days researching, modeling, or blogging.

Courtesy: www.toothpastefordinner.com

It would surprise me if someone with the keys to this blog machine hadn’t had a beef with Kruggers in the past, but something must be said for having the gumption to explain Pigovian taxes to the masses.

Collar-poppin’

Like all climate nerds, I’m eagerly anticipating the upcoming release of the Kerry-Lieberman-Graham Tri-Partisan-Super-Moderate-Climate/Energy Cavalcade, currently scheduled to grace my computer screen around Earth Day. Since first announcing they would be working together on a new way forward on climate legislation in December, the three senators have been stingy with details, letting them dribble out from time to time. The last blast of info came in mid-March and provided enough titillating details to show that this bill won’t be massively different from Waxman-Markey (17 percent reductions of ’05 emissions levels by 2020, consumer rebates, regulating facilities that emit more than 25,000 tons of CO2).

In my excitement over this modicum of information about the bill, I missed a small phrase that probably doesn’t mean much to anyone who doesn’t take a daily swim in a metaphorical pool of climate economics. Quoth Darren Samuelsohn:

Additional layers of certainty for industry come via a “hard price collar” that limits greenhouse   gas allowances to between $10 and $30 per ton tagged to inflation, with an increase at a to-be-determined “fixed rate” over time. The legislation would also set aside a “strategic reserve” of 4 billion greenhouse gas credits that could be released into the market to help control price volatility fluctuations.

See anything wrong with that statement? Allow me to help with a brief discussion of price collars from an economist’s perspective.

A hard price collar in the world of environmental economics is one with a firm price floor and ceiling where once the market hits the price ceiling, emissions allowances are released into the market to maintain the ceiling until the price drops back down below it. There is no limit to how many allowances are released; the point is simply to drop the price.

Contrast that with a soft price collar, which is a collar that draws allowances from a pre-established reserve of allowances once the market hits the ceiling price. Again, the goal is to drop the price below the ceiling, but there is a limit on how many allowances can enter the market (the amount available in the reserve).

Now look at the quote again. It claims the bill has a hard collar, but then also says it has a strategic reserve, which would clearly make it a soft collar. The difference between the two is subtle, but it has important implications. A market with a hard collar is less desirable from an emissions control perspective because once the market hits the price ceiling, there is no way of knowing how many credits will enter, meaning the amount of extra emissions allowed is unpredictable. A hard collar puts a premium on price certainty. Conversely, a soft collar has more emissions certainty because once the reserve is exhausted, no more allowances enter the system, regardless of the allowance price. Environmentalists prefer this approach because it maintains the emissions cap.

If the KLG bill does truly have a soft collar, then it will have to take allowances from somewhere (presumably the initial allocation) to fill the strategic reserve. It will also have to develop mechanisms to replenish the reserve if it gets drawn down, possibly in a similar way to Waxman-Markey, which uses revenue from the reserve auctions and international forestry offsets. Bottom line: there will be slightly fewer allowances available to regulated firms both at the beginning of the program and throughout the life of the program than there would be with a hard collar.

So, what do the good senators mean when they (through Darren) say a “hard price collar?” Well, if I could read legislators’ minds, I would probably have a different job. Based on the context of the statement, however, my guess is that they are using hard collar to mean that the collar prices will increase at some fixed rate over time. This is a different approach from Waxman-Markey, which keeps collar prices 60 percent above a rolling 36-month average of daily allowance prices. Increasing the price collar at a fixed rate is better for firms as it provides more price certainty over time and protects against a steeply rising price ceiling. It’s a good idea, but it’s not a hard price collar.

Will Courts Set Climate Policy through Nuisance Suits?

Nathan Richardson was kind enough to not only share this with the world of Weathervane (BTW, you checked it out lately? It’s pretty boss) but also give me the go-ahead to repost it here. In case you’ve missed it, he’s written a slew of other posts about the intersection of the EPA, Congress and the Clean Air Act.  

A polluter emits something that hurts people in a community. These people get together and sue the polluter. Courts then side with the victims under the common-law tort of nuisance, and award damages (or an injunction shutting down the polluter). Before the era of modern environmental regulation, all pollution-related disputes were solved this way.

Regulation has made environmental nuisance suits much less common and less necessary, but they have not disappeared completely. The problems presented by climate change are broadly similar—polluters emit greenhouse gases (GHGs) that ultimately cause harm. In the absence of government regulation of GHGs, can nuisance suits be used to force polluters to reduce emissions or to compensate for adaptation costs?

Suits seeking answers to these questions exist and are making their way through courts now. Some of them have made headlines, such as that filed by Kivalina, Alaska—a town on a barrier island formerly protected by Arctic sea ice, but which now faces increasing erosion. The New York Times reported on the case in an article that also discusses some similar cases, including perhaps the most widely-reported, Connecticut v. AEP.  In that case a group of states and private conservationist landowners are suing power companies under a similar nuisance theory.

So are these cases going to end up with major judgments that effectively set policy? Is big tobacco going to be the model for redressing harms from climate change? If tobacco is the model, I wouldn’t get your hopes up. But it is likely that these lawsuits will end up playing a big role in the policy process.

Despite the relatively high-profile coverage of some of the cases, there is not much for advocates of GHG regulation to be excited about. No climate nuisance case (that I know of) has been successful. The biggest “victory” so far has been in Connecticut v. AEP. Still in that case, the Second Circuit simply reversed a lower court’s comprehensive dismissal of the plaintiffs’ claims.  The appellate court ruled that courts could decide the case in principle (it was not a “political question”) and that the states did have standing to sue over climate harms. This says almost nothing about the plaintiffs’ likelihood of success on the merits of the case. Causation and damages will be big hurdles for the states when the lower court reaches the merits.

It’s also possible that EPA action could preempt these suits. The Second Circuit ruled that the lack of EPA GHG regulation left the field open for nuisance suits, but strongly implied that any EPA regulation would preempt them. Connecticut was decided just before the EPA released its endangerment finding for mobile sources in December. It’s likely that any nuisance suit aimed at auto manufacturers would fail for preemption reasons now that the EPA has committed to regulating mobile-source GHGs. If the EPA, as many expect, moves to regulate stationary-source GHGs, then Connecticut itself would presumably be preempted also.

This link between EPA regulation and nuisance lawsuits, however, creates a lever through which those suits might still have a big effect on how climate policy gets made—as Jonathan Zasloff at UCLA has pointed out. As nuisance suits proceed, they will put increasing pressure on the EPA to regulate to preempt them since regulation is generally perceived as a superior approach (especially by the EPA itself, one expects). Both nuisance suits and EPA regulation put pressure on Congress to enact climate legislation.

Opponents of action on climate are effectively stuck playing whack-a-mole – if they succeed in blocking action in Congress and through the EPA (possibly by getting a Murkowski-style resolution passed), nuisance suits will proceed with unpredictable results. If they quietly let the EPA regulate, those suits go away, along with a lot of pressure on Congress. But Clean Air Act regulation is a bitter pill to swallow. The most likely long-term result seems to be congressional action—opponents can’t push for inaction forever with the twin threats of EPA regulation and nuisance suits.

In short, nuisance suits make business-as-usual on climate much less likely, even if they are not themselves very likely to succeed. This should be cause for some optimism about the long term if you are frustrated by the current inability of Congress to enact climate legislation.

Nathan Richardson is a Visiting Scholar at RFF.

Et tu Lindsey?

South Carolina Sen. Lindsey Graham—the R in the D/R/I Senate’s tripartisan climate bill sandwich known as Kerry, Graham and Lieberman—is declaring the death of cap and trade in this New York Times article:

“Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,” said Senator Lindsey Graham, Republican of South Carolina, who is trying to fashion a bipartisan package of climate and energy measures. “They’re not business-friendly enough, and they don’t lead to meaningful energy independence.”

Mr. Graham said the public was demanding that any energy legislation from Washington focus on creating jobs, whether by drilling for offshore oil or building wind turbines.

“What is dead is some massive cap-and-trade system that regulates carbon in a fashion that drives up energy costs,” he said.

Not ready to let that be the last word, Sen. John Kerry told a clean energy forum cap and trade’s obituary is premature:

We have not scaled back our goals, they are the same,” Kerry said. “We have not recalibrated some lesser approach that is only energy or only this or that … We have to price carbon in order to get the marketplace moving properly.

According to the Reuters story, Graham is scheduled to speak later today at the same event. Talk about your all-time awkward greenroom chit-chat.

Making Lemonade out of Climate Lemons

ClimateWire (via NYT) has a sneak peek of a forthcoming MoMA exhibit created by architects attempting to replace New York City’s infrastructure with one that could withstand sea level rises of more than two feet.

The architects aren’t asked to paint sea level rise as a positive thing, but instead to propose ways for the city to make the city more resilient and to make the best out of a bad situation. The teams acknowledge that if predictions of a rise of 2 feet or more over the next several decades prove correct, large chunks of the city that are now populated will have to be permanently abandoned to the ocean. But allowing the sea to once again creep into city space doesn’t necessarily have to be all negative, they say.

So what does this hypothetical post-climate-change NYC Look like?

Well, maybe not exactly. (But who isn’t looking forward to drinking their own urine?)

Ideas on display in “Rising Currents: Projects for New York’s Waterfront” would make certain parts of lower Manhattan Venice-like, allowing water in during high tide and convert Battery Park into wetlands. And, apparently, rising sea levels might help revive the long-extinct oyster industry. I find it difficult to believe the edibility of the tiny, slimy boogers on the half-shell delicacies could be improved by NYC waters, but stranger things have happened.

Compelling late night/early morning reading – 12/16/09

Technically, since I published it here first, this didn’t originally appear on Weathervane, RFF’s climate policy blog, but it’s over there too.

Yesterday (Wed. the 16th) was the last day for on-the spot reporting at the Bella Center. NGO access has been severely restricted due to security concerns from potential invading protestors and the critical mass of heads of states with their extensive entourages. According to the UN Secretariat, 7000 delegates from NGOs were supposed to be allowed to enter the Bella Center yesterday. Much less than that actually got in because security cut off access to the NGOs about mid-morning, even if they had the proper documentation to get in. Today and tomorrow (Thursday and Friday), only 300 NGO delegates are allowed in. According to UN officials at a briefing this blogger attended last night, Yvo de Boer argued vigorously with Denmark security officials for more access for civil society, but ended up with only 300. Needless to say, in my humble opinion, civil society has got the shaft over the pat few days. Security concerns typically trump everything (and rightfully so), but the NGOs are a major part of these proceedings and have every right to be consistently engaged in the discussions at the COP. It’s hard to be part of the discussion, however, when you’re locked outside. On with the show…

Messy (I) -  Last night, talks hit another major snag, or as UN climate guru Yvo de Boer called it, “an unexpected stop.” Delegates apparently needed more time to discuss the basis of further talks, which is in theory what they have been doing the past two weeks. de Boer remained optimistic, but underlined that the next 24 hours are absolutely critical.

Messy (II) – Connie Hedegaard, Denmark’s Environmental Minister, resigned as president of the Conference yesterday morning, handing the keys to Prime Minister Lars Rasmussen. There are two ways to look at this development. One is Hedegaard was simply following protocol, which says that when heads of state arrive at the conference, it should be led by a head of state. The second is that Hedegaard’s resignation signals how much trouble the COP is in, especially with rumors about her unhappiness with the negotiating language Denmark is developing. Hedegaard remains in the thick of talks and will be there until the end.

Messy (III) – If you think the negotiators are happy, you should see some of the other folks around here. More protestors were arrested as they tried to storm the Bella Center, resulting in violent clashes with police. Inside the Center, indigenous peoples demanded more rights and larger voices with a march through the halls. Some demonstrators were removed. On top of all that, 60 members of NGOs held a sit-in at the entrance gates to protest their exclusion from the proceedings. There are not a lot of happy people in Copenhagen right now.

One bright spot – If you’re looking for some good news, or you like forests, you’re in luck. Some major developed countries, including the US, pledged serious money to help protect international forests from deforestation. US Department of Agriculture Secretary Tom Vilsack pledged $1 billion in support over the next three years. Combined with commitments from Japan, France, Norway, Australia and Britain, $3.5 billion will go into rainforest preservation over the next three years. Once again, forests are the thing on which people can agree.

REDD Dawn

This post originally appeared on Weathervane, RFF’s climate policy blog.

COPENHAGEN — If there is one topic at the COP that gets people excited, it is the issue of international forests. Many people I’ve talked to, from delegate members of developing countries to negotiators for major corporations, see a lot of potential for REDD (reducing emissions from deforestation and forest degradation) to have a major impact on the negotiations. For those not in the know, REDD programs basically would pay people to keep the carbon currently locked up in the trees and soil of forests.  Truth be told, if had I to make everyone at this event decide on something slightly more scandalous than the statement “chocolate is tasty,” it would be “REDD is a vital part of any climate agreement.”

With that in mind, the RFF team has been scouring many of the REDD-related meetings over the past couple days. Though the side events and presentations have been varied, a couple of consistent themes have cropped up:

• Stakeholders – working with people who are on the ground, especially indigenous groups who can benefit from REDD schemes (paying people to protect their forested land), is a critical component of a successful project. The indigenous people here at the COP are very skeptical about the ability of REDD to improve their lives or protect their lands. This was especially evident in one side event that focused on the social and environmental standards necessary for REDD projects hosted by Nepal. After a series of presentations about how best to involve people living in forests and the importance of their rights, a number of indigenous representative stood up and lamented how no one appreciates their rights and they are not being involved. Ensuring indigenous rights (and convincing them they are a part of the process) will be key for any tropical forest carbon program.
• Equity – similar to the stakeholder issues, equity among all involved parties in REDD programs is something people here are hammering home. People receiving payments need to be treated fairly for them to maintain standing forests.
• National strategies – Coordinated national strategies are important, but no one knows quite how to do them yet. The solution, reiterated in multiple events, is to take lessons learned from small-scale projects and eventually upgrade them to the national scale. While it’s not a perfect strategy, options are currently limited.
• Upfront investment – REDD is not a slow-boil proposition, something you can just sit back and let develop slowly. Without robust investment in critical components (capacity building, monitoring, etc) from the beginning, REDD programs will likely fail. National governments are the only entities with the resources to fully deploy everything necessary to make REDD succeed.

Forestry issues are one of the least contentious issues being negotiated here, but there are still a lot of important considerations and problems to be solved. Don’t count on them being solved in the next ten days.

Compelling late night reading – Dec. 15

This post originally appeared on Weathervane, RFF’s climate policy blog.

COPENHAGEN — Things started to heat up both inside and outside the Bella Center yesterday as negotiators prepared for the arrival of environmental ministers.

Interior protests – The African countries were true to their word yesterday when they led a boycott of the negotiations and were supposed by all 135 developing countries, including China and India. Their major concern was that the industrialized countries were conspiring to kill the Kyoto Protocol, which the developing countries value due to its many beneficial programs, such as the Clean Development Mechanism. By the end of the end, however, negotiations were back on as the developing countries receive enough assurances that Kyoto would be killed to come back to the table.

Get it together – There were multiple calls for negotiators to get their work done ahead of the arrival of senior government officials and heads of state. UN Secretary-General Ban Ki-moon asked nations to stop blaming each other and get something done before various heads of state reach the conference. India was more specific, saying that ministers and heads of state can’t negotiate, so something has to be done by Tuesday night. The clock is ticking.

Exterior protests – Protestors continue to swarm Copenhagen, and last night they confronted police with molotov cocktails in the Freetown Christiania area, just north of the COP meeting in the Bella Center. After street barricades were lit on fire and tear gas was used to disperse crowds, nearly 200 protestors were arrested, though most were released by early this morning.

SUPER SPECIAL MID-DAY 12/15 UPDATE: You knew it would come to this – The Chinese are accusing the developed world, namely the United States, of not taking responsibility for historical emissions and stalling on a climate deal. The U.S. and China are at loggerheads about an agreement for monitoring, reporting and verification of emissions reduction, something the U.S. views as critical. With time growing shorter, it remains to be seen what a potential deal will look like …

Forests and Climate? Just Google It

This post originally appeared on Weathervane, RFF’s climate policy blog.

COPENHAGEN — Yesterday at the COP, Google was in the air (if you’re wondering, Google in the air smells faintly like mint). First, Copenhagen managed to conquer the most frequently search term list. Tiger Woods is no longer no.1, on the Internet or in our hearts. Second, Google threw delightful side events where they unveiled a new tool that could be a game changer for monitoring the world’s forests and could put Google on the map in the climate change philanthropy world.

Since its inception in 2004, Google.org has been using 1 percent of Google’s total revenues to address issues like global health, but it has concentrated mainly on investing in products to reduce energy usage and commercialize electric vehicles, all the while challenging the world to create renewable energy that costs less than coal.

These seeds have yet to blossom, because as powerful as Google is, its engineers haven’t yet figured out how to completely redesign the world’s energy systems. Google is not an energy company, it is an information company. If they are incredibly innovative in the information business, it stands to reason they might have a better chance of being innovative in information philanthropy than in other things.

But yesterday Google finally accepted what we knew all along: that they’re not an engineering firm, an automaker, a public health center, or a policymaker. They’re facilitators. The business model for the profitable arm of Google is based on a superior ability to facilitate the transfer of information. They’re finally applying this skill set to climate change in the form of a new forest monitoring tool. Utilizing the amazing capability of the “Google cloud,” scientists can use an online platform to take satellite imagery data compiled over time and use it to track changes in forests. This tool is a major step forward in identifying areas of deforestation and reforestation, and may help solve some of the current problems with forest monitoring and measurement. A full rundown of the tool is here. See what happens when Google tries to do something it’s good at?

Thanks to Virginia Kromm for her insights into the inner workings of Google.

You Can Say That Again: Climategate Edition

Despite what you may think if you read only this blog, there’s stuff going on in the US this week too. Apparently, Sarah Palin wrote something. It wasn’t in Danish, so I couldn’t understand. Luckily, Tiff Clements, the talented and industrious editor of Weathervane, is on the case and published the following editorial gem. As of this moment, she is an official contributor to CT:

Sometime between eating my last piece of pumpkin pie and snapping out of my tryptophan coma this story turned into a full-blown “gate”. And just when I thought it couldn’t seem any more like the premise of the next Jack Ryan movie, Sarah Palin jumped into the fray.

With the CT All Stars off on an exotic solstice cruise around the 50th parallel I decided I should take it upon myself—captain of the blogging b squad—to suit up, flex my Alaskology skills and step in on this. But then I got distracted last night baking sugar cookies and yelling at my television, hoping to convince Hannity’s Great American Panel that I was right and it was wrong. The combination of icing and ire really tired me out.

So when, shortly after coming to at my keyboard this morning, I came across this rebuttal to the former governor’s  piece from the publisher of the journal Science, I figured it was probably a good opportunity to avoid an inefficient duplication of work.

Alan Leshner takes issue with Palin’s assertion that a handful of internal emails, shared between colleagues can undermine the entire foundation of the science used by the United Nations to plan its policy response, writing:

The public and policymakers should not be confused by a few private e-mails that are being selectively publicized and, in any case, remain irrelevant to the broad body of diverse evidence on climate change. Selected language in the messages has been interpreted by some to suggest unethical actions such as data manipulation or suppression … it is wrong to suggest that apparently stolen emails, deployed on the eve of the Copenhagen climate summit, somehow refute a century of evidence based on thousands of studies.

Palin chooses to paint, in one broad stroke, centuries of study and research as tainted by 160 MB of emails and data. Her quixotic characterization of the messages and their implications moves quickly from demonstrating a lack of consensus to “strong doubt” to “fraudulent scientific practices” to a justification for President Obama to take his negotiating ball and go home.  She distorts out-of-context collegial discussion and debate into grounds for inaction.

But Leshner point out there is hardly justification:

Doubters try to leverage any remaining points of scientific uncertainty about the details of warming trends to cast doubt on the overall conclusions shared by traditionally cautious, decidedly non-radical science organizations such as the National Academy of Sciences and the American Association for the Advancement of Science, which represents an estimated 10 million individual scientists through 262 affiliated societies. Doubters also make selective use of the evidence, noting that the warming of the late 1990s did not persist from 2001 to 2008, while ignoring the fact that the first decade of the 21st century looks like it will be the warmest decade on record.

Doubters, deniers and skeptics build their arguments on a selective acceptance of facts sprinkled with alterations of half-truths. Inaction on the premise of doubt has been U.S. climate policy for the last decade. It hasn’t worked out that well, keeping our economy on a dead-end path and severely tarnishing our reputation abroad. Plus, doesn’t keeping that up mean we’re going with the flow? I could have sworn only dead fish go with the flow.

If strategic positioning for the Kamchatka Defense is foreign policy experience, then living in Anchorage for a year makes me an Alaska expert. With those credentials in hand I beg the question of a woman with America’s best interests at heart and  who stepped down from her leadership role to “do what’s best for Alaskans”:  As their villages and livelihoods disappear into the seas, do the Alaskans you care about really have the time for you, and the world, to delay?

Compelling late night reading – 12/09/09

This post originally appeared on Weathervane, RFF’s climate policy blog.

COPENHAGEN — A late batch of links is better than none at all. Here is a collection of some of the compelling stories from Dec. 09 in Copenhagen.

Tuvalu takes a stand – The developing countries are starting to squabble among themselves and their row helped bring negotiations to halt yesterday. Tuvalu, a small island nation in the Pacific, called for a new legally-binding protocol to complement an amended version of the Kyoto Protocol. The Association of Small Island States (AOSIS) and other developing nations supported the plan, but some major developing nations, including China and India balked at the idea. After some contentious back and forth, Tuvalu asked for the negotiations to be suspended until a solution could be reached. It got what it wanted, setting up another tense day of work to follow.

Paying for forests can pay dividends – A new report released by the Center for International Forestry Research (CIFOR) sees forests a winning issue for the Copenhagen negotiations. Implementing financial schemes to pay countries for reducing their emissions from deforestation and forest degradation (REDD). Harnessing benefits from REDD will require in-country reforms, including governance, land use tenure, and monitoring. While many project have not succeeded in the past, the report says financial backing for REDD could provide the political will to implement it.

The big kids are getting feisty – Head U.S. Negotiator Todd Stern said he doesn’t think China needs help cutting its emissions, and it certainly doesn’t need U.S. taxpayer money. As soon as he arrived in Copenhagen yesterday, he called for China to increase its emissions reductions. Funny thing that, because China said the same thing earlier in the week. The world’s two biggest emitters will continue to trade blows as the negotiations progress.

Counting Forests Not As Easy as 1,2,3…

[This post originally appeared in Weathervane, RFF's climate policy blog...]

If you’ve recently had a conversation about the world’s forests and climate change, then you’ve probably heard the figure “20 percent” thrown around. That number represents the amount of worldwide emissions currently attributed to deforestation and forest degradation.

If tropical rainforests have been a frequent topic of discussion in your social circles, maybe someone told you that more than 10 million hectares of rainforest were permanently logged or destroyed every year from 2000 to 2005. These figures represent important metrics for policymakers to understand the role forests play in environmental policy issues. Their widespread use is partially based on the assumption that scientists have accurate and consistent measurements of forest attributes from which they can derive such figures.

Forest measures and inventories, however, may not be as accurate and precise as scientists and policymakers would like. In his RFF discussion paper, Paul Waggoner highlights such discrepancies and uncertainties embedded in current forest measures. “Without accuracy, appraisals of timber will be discredited, assays of biomass will be deceptive, and claims of sequestered carbon may be fraudulent,” he writes in “Forest Inventories: Discrepancies and Uncertainties.”

His analysis comes at an opportune time as the Senate gears up to consider climate legislation and agencies like the Commodity Futures Trading Commission look to more closely regulate the nation’s carbon markets. As a major component of H.R. 2454, forest offsets will face more scrutiny about their veracity and quality in the coming months.

Waggoner showcases eleven different cases of major discrepancies in forest measures across the globe, including some within IPCC forest carbon accounting guidelines. One of the reasons for such uncertainty, he writes, is related to how forests are defined. The definition Waggoner cites—the Forest Identity—consists of four measures: area, growing stock density, biomass, and carbon. Uncertainties exist in each of these attributes and as they are combined to form the Forest Identity, their uncertainties aggregate and can result in significantly inaccurate final numbers.

So what’s the solution? Forest measures will never be perfect, nor will they have 0 percent uncertainty, but that is not why it is worthwhile to point out discrepancies. The point is to push toward acceptable levels of uncertainty in forest measures. As Waggoner points out:

Although perfect accuracy might seem the goal, it is not—at least not in the real world of affairs. Rather, the cost of improving accuracy makes good enough the goal. If the costs of surveying, monitoring, and verification exceed the consequent benefit or profit, regulation will fail and transactions abort in the long run…Thus the discrepancies and uncertainties in forest surveys must next be evaluated against standards of good enough for, say, scientific debates, timber sales, or carbon credits. Then economical methods for meeting those standards must be established.

In the mad rush toward using forest offsets to solve the world’s climate problems, voices of warning like Waggoner’s should not get lost in the din.

did we miss anything?

Hey all,

Did anything interesting happen over the summer? Oh, right. Well, we over here at CT Central got a little distracted by a combination of a malaise induced by the derailemtn of climate legislation and other interesting stuff related to our jobs. Blogging is fun, but it doesn’t pay the billz, unless you believe this. I’m not sure what it says, I haven’t had time to read it. Regardless, we are back and ready to rock the intertubes once more. Stay tuned to for more marginally insightful and entertaining blog posts to come. In the meantime, more about tubes below:

Amidst Conflicting Reports, China’s Emissions Message Sets Positive Tone

Originally posted at Weathervane, RFF’s climate policy blog.

Given the history of global climate negotiations, it is no surprise that a lack of trust remains between developing and developed nations in ongoing discussions for a new international agreement. In the context of the U.S. domestic policy debate, this distrust has—rightly or wrongly—been concentrated on China, and has led to calls for strong measurement, reporting, and verification (MRV) provisions in U.S. climate legislation and international agreements. It even led lawmakers to include a provision in the House bill that would require the EPA to report on emissions in China and India (Title V, Sec. 3).

It doesn’t help matters when major media outlets publish conflicting reports so close together (The Financial Times here and China Daily here) about a crucial component to U.S. domestic and international agreements: China’s emissions peaking date. Given the pace of China’s growth this number is arguably much more important than the U.S mid-term target for protecting the global climate, and it is certainly just as important for reaching a new agreement in Copenhagen. It’s also a critical step on the path toward setting a long-term collective global goal.

So climate change and China watchers had a collective heart attack when they read the Financial Times article in which high-level Chinese official Su Wei said China’s emissions would not peak until 2050. This is the equivalent of Deputy Special Envoy on Climate Change Jonathan Pershing stating that the United States will reduce emissions 0 percent instead of 17 percent by 2020. It would basically kill any chance of a global deal.

Thankfully, China Daily followed-up shortly highlighting a recent report by influential Chinese climate policy scholars arguing that the country could and should reach its emissions peak in 2030. Everyone breathed a sigh of relief. The United States and other developed nations will and should ask for more, but this number is likely to be within the range that they could accept as part of a global agreement. Although it was not an official government position, it’s the next best thing in China. The think tanks that published this report are close government advisers. The fact that they were quoted and featured on one of the nation’s leading English-language news websites indicates that this is a message the government wants the world to receive. China is moving ahead on clean energy with or without you, and is willing to put strong climate goals on the table if others are. An even more recent article indicates that China’s top legislative body will consider a draft resolution on climate change next week lends further credibility to this position.

This is not the first and will certainly not be the last time conflicting reports come out of China on climate or other issues. Since it is in both of their best interests, one would expect that both the media and the Chinese government will continue to improve their MRV procedures inside and outside of a climate agreement. However, it’s important to take the time to sort through the facts and recognize that, in the end, the preponderance of evidence continues to show that China will both do what it takes to be seen as a responsible global citizen on climate change, and will give everything it has to win the race on developing clean energy industries of the future.

Gentlemen, start your wind turbines.

Confidential Memo Intercepted by Common Tragedies

CT has just intercepted this confidential memo….

From: The Patriot Freedom America Puppies Alaska Coalition (PFAPAC)

To: Grassroots Conservative activists

First, I want to thank you for your efforts so far in derailing the President’s drive to push through a government takeover of Medicare and Medicaid. I want to offer a few notes for upcoming town hall meetings on the so-called “cap-and-tax” legislation that is coming before the Senate this fall.

1) Death panels. We have been getting a lot of questions about this, and yes, the American Clean Energy, Security and Death Panel Act of 2009 does include death panels (section 1289, page 1567 of the bill). It reads, “Sometimes the tree of socialism needs to be watered with the blood of polluters”. These death panels are concentrated in Midwestern states where population reductions can achieve the greatest impact on U.S. greenhouse gas emissions reductions. They will be made up entirely of people from California, Massachusetts, and New York, because, according to the bill “they know what’s good for you”. Again according to the bill, if population in coal-using states gets too low, immigrants from China and Kenya will be allowed to replace them in a deal brokered by President Obama. Say ni hao to your new neighbors!

2) Jobs. This is one point we don’t need to worry about, because a little-known provision in the bill calls for Soviet-style “re-education” employment for those who lose their jobs or are not in compliance. These re-education camps would teach people the virtues green living, including not bathing or showering, not eating tasty animals, and generally not having any fun. “Students” will be paid handsomely in granola and tree bark, and when finished will return home to a job in a Chinese-owned wind factory. Although this is perhaps not ideal, our arguments about the bill sending jobs overseas will be more difficult with this new provision.

3) Global government. Along with the death panels, this will be one of our primary talking points to arouse fear in the American people about the ACESDPA. The bill calls for a long-term goal of an 80% reduction in greenhouse gas emissions and gross domestic product by 2050 from the United States, while China, India, and other major developing countries will be allowed to increase both their emissions and GDP by 80%. These mandates will be enforced by United Nations peacekeepers who will have the authority to come into your living room and turn off your TV after the 8th hour of the Glenn Beck marathon. Thousands of them will also be stationed in communities all across America to generally scowl and wag their fingers at people when they drive by in SUVs.

Please target your attacks on climate legislation at these provisions, which we believe are an unacceptable intrusion that goes against all that is good about this country. Although we can’t openly condone violence, we encourage everybody attending town hall meetings to exercise their 2nd amendment rights in case your well-being is endangered by radical liberal activists. Please keep dialogue rational by limiting your rants to 30 seconds or less, which is the average attention span of an American watching a youtube clip.

Thank you, and good luck,

Your friends at PFAPAC

Climate Bill Success Can Equal Treaty Success, Even With Border Measures

Originally posted at Weathervane, RFF’s climate policy blog.

President Obama and leaders of the U.S. Chamber of Commerce have spoken out against incorporating border adjustment measures in U.S. climate policy. Though there is great uncertainty about the economic and diplomatic value of leveling fees against nations who may not price carbon, 10 conservative Senate Democrats recently told the president such measures will be integral to their support of climate legislation.  The challenge now is walking the fine line between the objective of these senators—not just maintaining, but strengthening the House measures—and respecting the concerns of the administration and Chamber about potential trade wars and international ill-will threatening the success of global climate cooperation.  It will be a delicate balance, but one that can be achieved with a few key modifications. 

The House bill (H.R. 2454) takes a three-fold approach to ensuring the global environmental integrity of U.S. climate policy by preventing emissions leakage. It  exempts vulnerable industries from the first two years of the cap-and-trade program, provides output-based rebates until 2035, and introduces a border adjustment system in 2020 only if a multilateral agreement that meets certain conditions is not in place by 2018 and Congress and the president concur that border adjustments are necessary (with Congress given final authority). 

The border adjustments are also intended to create leverage, by encouraging major-exporting and emitting developing nations to join an international agreement.  Although the adjustments’ primary targets—China and India—have spoken out against this goal, South Korea actually cited it as one reason for being the first non-Annex I Kyoto country to announce a national target.  Some have taken an optimistic view of the relationship between these measures and international agreements, while others are more skeptical. 

While the House bill represents a compromise on border measures that most people could live with despite not being truly satisfied, the Senate is likely to push for making the measures stronger.  In light of this political reality, the following changes could be introduced to both strengthen the measures and ensure they still reinforce, and are reinforced by, international agreements:

Provide incentives for a real negotiation.  Large, developing countries are much more likely to accept the “sticks” (border measures) of U.S. climate legislation if they come with real “carrots” (financing and mitigation commitments) attached.  Funding for adaptation and technology transfer in the House bill is well below what most estimates say is truly needed to solve the global climate problem.  Although it is clearly concerned about upsetting domestic support, increasing recognition of the necessity for a global solution in Congress indicates the administration may be able to push further on these incentives, if they are properly structured and conditioned.

Improve the likelihood of World Trade Organization consistency.  Border adjustments are likely to survive challenge in the WTO if they only enter into force after serious multilateral negotiations have failed, are targeted as clearly as possible at an environmental objective, and/or are backed by an agreement among several nations.  Therefore, providing greater incentives for a real negotiation to take place—as discussed above—would likely improve the prospects in this area.  Ensuring there are no references to specific countries or competitiveness concerns are also essential in the Senate bill.  Finally, support from the nations of the European Union and other developed nations to adopt similar measures would also be helpful when standing before the WTO.  These modifications should be in the interest of both those who want to see the measures implemented and those looking to avoid a trade war.

Make negotiating objectives flexible.  From a global cooperation perspective, the worst thing Congress could do is to provide negotiating instructions that would be impossible to achieve, thereby ensuring a repeat of Kyoto.  This means making them general enough—as the House bill does—that U.S. negotiators have flexibility about how, under what body, and with what conditions they will negotiate an international agreement on trade and climate, as long as it meets certain minimum requirements.  Since the primary thing 100 Senators can agree upon is that they do not like the House bill, it is likely that some will want to make these objectives stronger.  Instead of inserting additional specifics or calling for an explicit deal on border measures in Copenhagen, a more effective approach could be greater conditioning for U.S. financing and technology transfer on participation in an international agreement. 

Adopt a “do no harm” approach on border measures in Copenhagen.  From the perspective of U.S. domestic climate policy and global cooperation, the best possible outcome from Copenhagen on border measures is likely that nations do not condemn or even move to prevent them.  In the unlikely event that a trade and climate agreement is struck within the UNFCCC or the UN, the issue is contentious enough that it will not come until the final stages of negotiations a few years off.  The U.S.’ primary objectives for Copenhagen are likely to be gaining agreement on a long-term global goal, a broad framework for international financing, and potentially a recognition that all major emitters need to take legally binding actions if not now by a date certain.  Throwing border measures into the mix will seriously threaten those already tenuous objectives.

Overall, by strengthening the House bill with more robust incentives, targeted framing, effective negotiating objectives, and realistic expectations the “hammer” of border measures desired by conservative Democrats can be compatible with the prospects for a new global agreement in Copenhagen.

Senators and Climate, a Mixed Bag

I was at the senate finance committee’s hearing on allowance distribution under climate change legislation earlier this week.  It was really interesting to see how engaged the senators were considering how much of their attention health care is taking.

There was one moment, however, which was not so proud.  Check out the video here (go to the 80^th minute) of Senator Kerry talking about a carbon tax.

To put it succinctly, Senator Kerry was …misguided.  As Mr. Viard responded, a carbon tax and a cap and trade program can do the exact same thing.  While a carbon tax is a political non starter these days, no one really debates that it could accomplish a similar goal.

Much to his credit, later on in the hearing Senator Kerry asked a number of questions which were very perceptive and showed a deep understanding of the issue.

He also brought up one of the underlying issues that is driving the climate debate, the EPA endangerment finding.  Most politicians won’t come out and say it as forcefully as he did (minute 111), so it was impressive to hear.  Lets just hope that everyone gets on board so we don’t end up in command and control land.

Allocation Mechanisms – The Details Really Matter

A few days ago I received an e-mail from a reader asking about allowance distribution mechanisms in Waxman-Markey.  As I wrote a response, I thought it would make more sense to make a post out of it.

As it stands in Waxman-Markey, allowances will be distributed to LDCs based on a 50/50 split of their emissions and deliveries.  This is often overlooked, but it is important as to where in the country allowance value is allocated, and ultimately how prices will change.  Below i’ve listed three allocation mechanisms, their benefits and some of the problems.  Keep in mind that a “benefit” in this discussion has to do with receiving more allowances ($) and hence has to do with more consumption/emissions (which we usually consider bad).

Consumption based – This metric benefits those who consume a lot of electricity, and are really inefficient at doing so. This is bad for states like California who have invested a lot in demand side energy efficiency.  Consumption weighting also benefits those regions that already generate a lot of electricity from low carbon sources.  If you could imagine a region that only generated electricity from zero carbon sources, they would get a whole lot of free permits, and they could turn around and sell them for pure profits.  Some might argue this is unfair, but personally I think this can almost be seen as a reward for states which have spent the money to make low carbon generation investments.

Emission based – This metric is great for those states who haven’t invested money in low carbon sources of power.  Think the Midwest and the Southeast.  Some might argue that these are the states that need the most help, and that climate policy is going to hurt them the most in percentage terms.  While I think that it is important to protect coal states, it is also important to acknowledge the expensive investments some states have made in low carbon generation.

Population based – This is not a part of Waxman-Markey, but I think it deserves a bit of discussion.  This clearly would benefit those states with a high population.  In some ways, this is the fairest system since one might assume that more energy is consumed in higher population areas.  It does, however, disadvantage low population states that emit a lot of carbon.  For example, Wyoming [remember this?] with its high emissions per capita would receive a very small amount of allowances even though it emits a ton of carbon.

At the end of the day, which system you pick depends on what you think is important.  Personally (if you can’t tell already), I think it makes sense to reward those states that have already invested in lower carbon sources of power.  These states typically face much higher electricity prices than the rest of the country.  My personal feelings aside, there is an equally valid argument that the regions with lower electricity prices (and more emissions) also tend to have a lower cost of living.  Large increases in electricity prices in these areas will constitute a larger burden as a percentage of income.

In the end, it is probably a political compromise which decided the 50/50 split, so there isn’t much we can do about it.  It is just interesting that while a lot of the debate surrounds percent allocations, much less discussion has foused on the mechanism behind the allocation.

Being for Energy Independence v. Being Against Progress

Plenty of criticism and analysis has already been directed at Alaska Governor Sarah Palin’s cap-and-trade editorial in the WaPo today (see here, here, and here). Instead of jumping on the bandwagon, I’d like to juxtapose it against an alternative analysis of the American Clean Energy and Security Act (ACES) by my former Congressman Mark Kirk (R-IL), who voted in favor of the bill. I’m not trying to pretend that Sarah Palin and Mark Kirk fall at the exact same point on the political spectrum (nor am I trying to set up some sort of artificial debate between the two of them). Indeed, Kirk represents a moderate suburban Chicago district (although one that would be hard hit by increased taxes on the wealthy), has always been fairly green, and had further political incentives for the “Yes” vote given his upcoming run for statewide office.

However, it’s worth illustrating that while both share the same overarching policy objective—“an ‘all of the above’ energy strategy”—Kirk’s reasoned, experienced, fact-based, forward-looking and still very much conservative analysis led him to a very different place than Palin. My overall message to the Republican Party: please, please listen to the Mark Kirks in Congress when designing your strategy on climate and energy legislation, and not the Sarah Palins.

The Starting Point

Kirk: “For 2009, our top goal should be energy independence. I support exploring for energy off our coasts, expanding nuclear power and building a natural gas pipeline across Canada to lower heating costs in the Midwest…”

Palin: “We must move in a new direction. We are ripe for economic growth and energy independence if we responsibly tap the resources that God created right underfoot on American soil…Our 3,000-mile natural gas pipeline will transport hundreds of trillions of cubic feet of our clean natural gas to hungry markets across America. We can safely drill for U.S. oil offshore…”

Kirk and Palin seem to be agreed to the standard Republican “all of the above” energy strategy, focused on promoting domestic sources of energy and reducing America’s dependence on foreign oil.

The Experience

Kirk: “…the underlying ACES bill would still lower our dependence on foreign oil by diversifying American energy production. It is time to break the boom and bust cycle of high gas prices and the need to deploy three separate armies to the Middle East (Desert Storm, Iraqi Freedom and Enduring Freedom). As you may know, I am a veteran of the Desert Storm and Enduring Freedom missions.” “In 1998 and 1999, I served as part of the U.S. delegation to both the Kyoto and Buenos Aires UN Climate Change conferences. In those years, there was a significant debate about the amount and effect of atmospheric carbon dioxide. I was a skeptic and spent hundreds of hours on the subject of 1990s climate science. In the Congress, our job is to learn as much as possible from the latest peer-reviewed non-partisan scientists and then plot the best course for our nation.”

Palin: Governor of a large, oil producing state (surely there are no perverse incentives there). Well, until she resigned.

You can’t fault Palin for looking out for her constituents, and supporting increased domestic oil and gas production. However, Kirk has seen firsthand the impacts of U.S. dependence on foreign oil when fighting for his country, and extensively studied climate science. Whose experience is more valuable when judging U.S. climate and energy policy options?

The Analysis

Kirk: “The National Academy of Sciences reports that the earth’s average temperature already increased by 1.4°F, from 56.8°F in 1920 to 58.2°F in 2007. NOAA also reports that due to a 30% drop in winter ice covering the Great Lakes since 1972, evaporation may be the cause of Lake Michigan’s declining water level…I am a strong supporter of the non-partisan Congressional Budget Office. When they reported the Democratic health care bill cost $1.6 Trillion, we should take notice and rewrite that bill. That is why I have become one of the leading Republican authors of an alternative health care bill that will be the Congress’s least expensive bill, costing our Treasury very little. I read their report on ACES carefully too. CBO reports that peer-reviewed scientists expect the world’s average temperature to increase by 9 degrees by 2100, lowering U.S. economic output by 3% annually. In sum, they estimated the costs of the bill per household at $140 annually.”

Palin: “The Americans hit hardest will be those already struggling to make ends meet. As the president eloquently puts it, their electricity bills will ‘necessarily skyrocket.’ So much for not raising taxes on anyone making less than $250,000 a year. Even Warren Buffett, an ardent Obama supporter, admitted that under the cap-and-tax scheme, ‘poor people are going to pay a lot more for electricity.’ ”

It’s perfectly reasonable for two intelligent, reasonable people to look at the same study and draw two different conclusions, based on their judgment of the underlying assumptions or methodologies. However, this was not the case here. Here we have a careful review of available non-partisan scientific and economic data specific to this exact piece of legislation versus unsubstantiated statements and generalized quotes. Once again, whose argument is more compelling?

The Conclusion:

Kirk: “In sum, I would have preferred a bill that focused more on energy independence and less on some of the complications in this bill. Nevertheless, the 1990 Clean Air Act signed by President Bush established a cap and trade system to reduce acid rain that proved to be a great low-cost success…In the coming Senate debate, I hope we can repeat this environmental success and aggressively back a national program to defund Iran and Venezuela by reducing America’s need for foreign oil.”

Palin: “Can America produce more of its own energy through strategic investments that protect the environment, revive our economy and secure our nation? Yes, we can. Just not with Barack Obama’s energy cap-and-tax plan.”

Hmmm…somehow there seems to still be a disagreement between Kirk and Palin about the merits of ACES and the direction of America’s climate and energy policy. Based on their experience, evidence and analysis, I wonder whom to believe?

Desalination and Climate Change

I don’t pretend to know much about water, but being from California and living through droughts certainly has kept it on my mind.  While everyone knows that water will continue to increase in importance, it definitely has not reached a national level of prominence like climate change. Most people acknowledge that climate change will continue to affect water availability going forward, but it seems that water shortages are already contributing to climate change.

A recent article in the Washington Post  discusses the opening of a desalinization plant that is going to open next year in Carlsbad, CA.  Of particular note to climate change was that

Government agencies have opposed desalination because of the process’s energy consumption. The desalination plant would use nearly twice as much energy as a wastewater-treatment plant available in Orange County.

I realize that we are already using energy to treat water, but turning to large scale desalinization is a significant step.  Plants in other parts of California are also expected to be built, and many of these will require the construction of new power plants.   These new emissions will in turn contribute to climate change related water shortages.

One new power plant is a drop in the bucket compared to global emissions, but it illustrates that water needs to be a part of our national climate agenda moving forward.  If we ignore it, it will just find a way to come back and bite us.