Rob recently discussed the passage of the Waxman-Markey emissions trading bill through the US House of Representatives, and there’s been much written about its impact both on global climate change negotiations and on the chances of the CPRS legislation in the Australian Senate. What hasn’t received too much coverage in our press is the fact that Steve Fielding’s antics and the Australian Senate’s vote are being used by the climate change denialist clique in the States to mount a campaign against the Waxman-Markey bill. It’s completely cynical, of course, and the Wall Street Journal – which has been leading the charge – has been falsely reporting that the Senate here voted to reject the bill, and to reject the bill because of a lack of acceptance of climate change science. Obviously, that wasn’t the case for The Greens, and probably some of the other Senators who voted against immediate consideration.
To put it mildly, though, it’s hardly helpful, and it’s illustrative of the despicable tactics which the globally interconnected forces of reaction are prepared to employ.
This issue isn’t directly canvassed by Nate Silver, but he has written a very interesting post at FiveThirtyEight.com on the chances of the Climate Change Bill receiving 60 votes in the US Senate (which it will need to survive a filibuster) – recommended reading.
and it’s also illustrative of the despicable tactics which the globally interconnected forces of socialism, such as FiveThirtyEight.com, are prepared to employ.
Interesting, I hope it passes.
Quite sad how the chances of passing the bill are calculated, in large part, by assessing the campaign contributors to each Senator.
I can’t see it like CraigMc has – global socialism? Rather the strong linkages between how a pollie voted and what it got in contributions from Coal or Nuclear was very scary – democracy for auction it seems – so I think CraigMc has an differing view on socialism than I.
Nate’s analysis on voting intentions WRT health care linking PAC contributions to an individuals probable voting outcome scares me. Is the USA system particularly corrupt, or is it in fact more open in that the greater transparency of political donations than ours make it easier to predict a politician’s voting outcome.
What Robert said immediately above me much more succinctly – embarrassingly it took me 20minutes to post
Ummm. In my opinion there are maybe 5 Democratic senators who are ‘Leftwing’ in the way we understand the term (though I’m sure the purists here will quickly respond that no Dems in the US upper house are Leftwing, silly. Except, of course, for the self-described independent socialist Bernie Sanders of Vermont.)
Anyway, one of those five is Brown of Ohio, and Silver says this about that fella:
He might be the weathervane for the vote to allow a vote on this issue (Silver reckons there’s a minimum 52 senators favourable to the Bill. That’s not enough to get it to the floor.)
I think the prospect of a double dissolution in this country for weaker legislation is more likely than America getting their act together.
I’m guessing that this is the WSJ article that Mark is referring to.
In other news, more people have joined the Facebook group Steve Fielding is not Real than gave him a primary vote in the last election.
Nate is simply using campaign contributions as one of the variables that helps to predict the way Senators might vote, and it has limited information at that.
Here is Nate’s quote:
“These percentages are based on the relatively limited amount of knowledge embodied in the seven variables in the model; that should not be read to imply that there aren’t other factors, both tangible and intangible, that wouldn’t have a significant impact.”
That is, the explanatory power of the model is still relatively weak.
More generally we shouldn’t be surprised if there is an impact – afterall, why would lobbyists contribute to political campaigns if there wasn’t at least some expectation of it influencing votes? Although the Australian system is different in that more money feeds into campaign headquarters than to individual campaigns, similar forces are at work.
Finally, just because the variable has some explanatory power doesn’t mean all of the effect is causal. Presumably Senators with particular ideologies are more likely to accept and even seek out campaign funds from organisations that fit with their own ideological beliefs.
@7 – Thanks, Peter – I’ll add the link. Choice photo of Fielding.
@9 – LO, Nate’s model has worked as a predictor pretty well in the past, if I recall correctly!
It may not be so straightforward as campaign contributions = votes. What’s also going on is who attracts the contributions in the first place to get through a primary and a general election – that may bias the process towards particular types of candidates given the enormous expense in many states of competing in Senatorial elections… plus the very strong political norms on looking after industries prominent in one’s state. That’s another way of putting your point but less in terms of ideology – Brown, for instance, is regarded as one of the most liberal of the Democratic Senate caucus.
It’s not as simple as saying the US political system is completely corrupt, but to be honest, it’s not flash at all.
The article that Peter W linked to also praises Ian Plimer to the heavens.
It could be argued that the US system with weaker party discipline is better at responding directly to what the particular voters represented want. But developing public policy in these circumstances seem to be difficult.
WSJ may be pushing it’s old barrow here, but Scoop has the real, erm, scoop:
Ahh bless those Larouchites. I’m sure GetUp will be pleased to know that their campaigns are being bankrolled by Soros. Everyone to the tinfoil hattery!
Waxman Markey has much in common with CPRS. To put it bluntly, it is another complex system that will will take years to have any real difference to emissions. Like CPRS it will increase the risk of economic instability while causing unecessary price increases.
The chances of the US and the world taking serious, price effective action to reduce emissions will improve enormously if the US Senate sends it back to Obama with a request for serious consideration to be given to alternatives to cap and trade including altenatives that don’t depend on putting a price on carbon.
Lindy Edwards in the Age wondered
Why Rudd is supporting something as neo-liberal as ETS? Good question that all progressives should be asking.
John D, when you pollute when there is no carbon price, you impose damages and costs on people throughout the world, and future generations. When you can pollute for free, you are receiving a subsidy, one that distorts our economy into a highly polluting one.
Yes there are policies other than putting a price on pollution that we need to do, such as fund research and public transport, and have much better standards for new building infrastructure. But without a price on carbon, we will never achieve the emissions reductions that are needed.
Peter W we are talking principle here, but putting a price on carbon is saying the carbon pollution is acceptable at a price. In principle we should just ban it.
So then it comes back to the best strategies of getting rid of it and here I’m still sceptical that the ETS way will get us there quickly enough.
I disagree with Brian. There are many things that are bad in large quantities but fine in small quantities. There’s no reason to ban them, but we should price them so that the quantities never get out of control. If we had had a price on carbon from the 1960s or 70s we would not be in this situation, but would be releasing an entirely manageable amount of carbon that would do no harm to anyone.
Arguably we have already emitted so much that we can’t afford any more, but in principle putting a price on it is quite acceptable, as well as the most practical way to control things. Whether a ETS is the best way to price carbon is a different question.
Fair point, fs, I can agree with that. As to what might have been it depends on how and how much.
So it’s a matter of the best path forward from here. Mistakes could be costly.
Brian, you may have come to the crux of the argument in that there are problems with putting a finite price on carbon, just like there are ethical issues associated with putting a value on statistical human life. But I’m with feral sparrowhawk on this one — I don’t believe that an outright ban on greenhouse pollution is viable, or ethical.
There is an argument why any finite valuation of the social cost of carbon could be too low. Even expected utility cost-benefit analysis shows this (via Weitzman’s work). For any cost on greenhouse pollution, there is always the possibility that someone will value greenhouse pollution higher, because they value human life more, ecosystems more, have more risk aversion, care more about future generations, or whatever reason.
But banning greenhouse pollution outright (effectively putting an infinite cost on greenhouse pollution) makes even less sense. To do so implies that we would shut down all electricity generation that is not generated without emissions, which will make it impossible to power hospitals, transportation infrastructure, as well as households and workplaces. You would have to stop all sheep and cattle farming (which might make sense in Australia, but not in the rest of the world), and not make any more cement. To be effective you would need to stop greenhouse pollution in the rest of the world, including in China, Bangladesh, India and Africa. Not only would this be totally unethical, it would also be impossible.
Political economy leads to limits on the amount of greenhouse gas emissions that can be achieved, and this limit is based on cost. This brings us to the question of what can be done to reduce emissions as quickly as possible, as cheaply as possible? I would argue that one of the things necessary is a strong and steadily increasing price on carbon. We also need strong regulations of vehicles and buildings; we need public investment in infrastructure such as a better energy grid and public transport; we need policies that enable us to sequester carbon in ecosystems and protect them from the effects of climate change.
But without a carbon price, we end up with a bunch of ad-hoc measures that reduces any target to an aspirational goal. The best mechanism is up for debate (I’m in favour of an ETS with a price floor), what matters more is whether the policymaker is serious about addressing the problem.
Peter W I have limited time at the computer and hence I have to prioritise. I haven’t tried to become fully conversant with the ETS literature. At 1.20am I was thinking of finding a quote from Ken Caldeira who said something like I said @ 15, but I took the shortcut and said it myself. I’m not surprised it looks overdone in the light of day.
If I was PM and wanted a group to look at the issue of ETS you’d be on it.
Your third paragraph is important. Certainly there are activities that are necessary in any realistic future scenario that will involve carbon emissions.
Right now I’m with John D in that there is low hanging fruit that can be harvested without the impost and complication of a carbon price across the whole economy. In my strategy (not necessarily the same as John’s) one of the first things I’d do is legislate (if necessary) to prevent building new or expanding old coal-fired power stations. I’d also start a process to establish a future energy strategy that included a plan for retiring coal-fired power stations. I’m not sure whether forward defence equipment planning is a proper analogy, it may be. But the idea would be to establish a framework that the industry, and markets where appropriate, could operate within. And one that properly compensates those who invested in good faith in what at the time was a brilliant solution to cheap energy needs.
I think at some stage we might be well-served with a global carbon market, but it would have to be a market we could trust. We are a long way away from that.
It’s probably too big an issue to go into here, but I’d have a mix of command and control along with markets right through the process but the emphasis would change along the way. Command and control, within an accountable and transparent democratic framework.
I’d suggest we need to peak emissions in the advanced economies by 2015 and in the developing countries by 2020. I know that you want to limit the offshore trading with developing countries, but as things stand I’m worried that there are evil people out there developing plans to do things for the sole purpose of getting someone to pay them not to do it, and then corruptly accepting money from someone else who will do it anyway.
And elites that will pay for the right to do things that most of us would find frivolous in a carbon constrained world.
I’d better stop before I demonstrate my ignorance any further.
The bottom line is that both the Australian and the US approaches lack sufficient ambition in terms of 2020 and there is insufficient certainty that either will achieve even those distressingly modest targets.
Really. It’s all a vast international conspiracy by “the globally interconnected forces of reaction”, then?
Oh, spare me!
IT
Peter @14: The aim of the game is to find the best way of driving down pollution, not “punishing polluters”. This doesn’t mean that life will be pain free for polluters.
For example, if you leave the price of fuel unchanged and use regulations to drive down the average fuel consumption of new cars the producers of inefficient cars will have to develop new, efficient models or go out of business.
Similarly, if we leave the price of dirty electricity unchanged, insist that the use of clean electicity takes precedence and negotiate contracts for the supply of clean electricity, the suppliers of dirty electricity will suffer the disadvantage of going out of business. In the meantime, we will get the necessary investment in clean electricity without the need to jump the average price of electricty above the price of clean electricity.
Peter @ 18: You say that
My argument is that “putting a price on carbon” is not the cheapest approach. There is simply too much collateral damage to people and industries that are not in a position to do much to much to reduce their emissions.
Electricty and transport account for over 60% of Australia’s emissions. It doesn’t make sense to use second rate methods to drive down these emissions just to gratify a desire to punish polluters or to indulge politician’s desire for a silver bullet. I have nothing against the idea of merging a carbon tax into the GST. However, it is important to understand that the real gains will come from more direct action.
Arguments about the extent to which we can reduce our dependence on fossil carbon are academeic at this stage. We have along way to go before we have to deal with emissions that fit into the very hard basket. The important thing is to get on with rapid reduction of the emissions it is easy to do something about.
That’s well said, John D, well said indeed.
John D, the role of a carbon price is not to “punish polluters”, but to drive emissions reductions at low cost. It is quite possible to implement carbon pricing schemes so that things are as revenue neutral for polluters as possible — for example the EU ETS allocates almost all permits to industry for free. The CPRS allocates some permits to industry, and distributes some permit auction revenue to households, who are polluters when they buy coal-fired electricity. The CPRS approach is better than the EU approach at not punishing polluters because under the EU approach, one group of polluters (electricity generators) pass on the carbon price to another group of polluters (electricity consumers).
Where we disagree is on the question of whether carbon pricing will drive emission reductions at low cost.
Consider efficiency standards for cars as an example (which I think are a good idea, but this example is to provides an illustration). Lightweight cars are generally more efficient than heavier ones, and one way of making cars lighter is to make them from aluminum. Aluminium production requires huge amounts of electricity. To work out the best way to regulate car manufacture to reduce emissions would require what is known as a life cycle analysis, something that takes a large amount of time and work.
Under carbon pricing, things are much easier. A less efficient car would use more fuel, which attracts a carbon price. The car that is made of aluminium will be more expensive because the carbon price will increase the price of aluminium. The carbon price informs decisions about what should be manufactured. If the carbon price is sufficiently high, the cheapest option becomes the best climate option.
But markets fail, and this is why we need complementary policies, such as efficiency standards. With the aluminium car, the fuel is not paid for by the manufacturer, it is paid for by the buyer, who may not be well informed. An efficiency standard is a way to address this. Investment in public transport is also a way to address market failures. But to transform the whole economy to a low emissions economy, without having to regulate everything, we also need a carbon price.
This is why I believe that carbon pricing, and complementary policies, are the cheapest approach.
Actually, what John D said is not well said at all because it completely fails to take into account the cost of the command and control approach that he favours! For example, if you mandate that all electricity be generated from clean sources, John D seems to think that you haven’t priced carbon! But you have, and at considerably higher level than under emissions trading! Some command and control mechanisms have implicit costs in terms of $ per tonne of carbon abated that are orders of magnitude higher than what would be optimal. As Peter says, there are other market failures that mean that there are circumstances where CAC mechanisms are complementary to carbon pricing, but they should only address very specific and well understsood market failures. The beauty of emissions trading is that you can set the quantity of emissions now and into the future based on the science, let the market determine the price of carbon, and then allow emissions to be reduced where they can occur at least cost. Only an omniscient central planner could deliver the appropriate emissoins reductions efficiently using CAC mechanisms! Of course, when the government sets the wrong targets, or designs the ETS in a way that introduces distortions, some of the advantages of the ETS disappear. But then, why would you expect a government that acted in that way to turn around and implement optimal CAC policies? Unlikely I think!!
Peter W @ 23, in the car example wouldn’t we end up importing cars embodying a lot of aluminium from developing countries that didn’t have a price on carbon and our aluminium industry would likely go out of business?
Brian,
The situation you describe relates to what happens if some countries have strong mitigation policies and a price on carbon and countries are not mitigating (which may not necessarily be developing countries). The situation where cars are instead imported from a non-mitigating country is sometimes known as “carbon leakage”, which is sometimes exaggerated (especially for capital intensive industries like aluminium), but is a real issue.
A much more important issue is what happens when a country does not comply or participate in an international agreement, undermining the whole framework (this is what is known as the Prisoner’s Dilemma in climate change policy). My preferred approach is to impose taxes at the border when importing emissions intensive goods or exporting fossil fuels to countries such as these — but not penalise countries which are signatories.
The government’s approach is to give free permits to emissions intensive industries (90-95% in the case of aluminium), and reduce the amount of permits if there is a loss in production. One problem with the government’s approach is that even if all other countries are complying with an international agreement and reducing emissions, the industry will still receive free permits. Another problem is that it distorts the price signal — the aluminium may be produced slightly more efficiently, but the price of carbon is no longer factored into the price of aluminium.
Labor Outsider @24: You are missing the point LO and claiming that I am saying things that weren’t said or implied. For example you said:
In the particular case of encouraging investment in clean electricty putting a price on carbon is a very clumsy and costly way of putting a price on clean electricity that is high enough to drive the necessary investment. For putting a price of carbon to be effective it must jump the average price of all electricty above the price of clean electricity. It is this sudden jump in prices that increases the risk of economic instability and has industries such as the aluminium industry spooked.
If you take the converse approach, the investment in clean electricity is driven by directly putting a price on clean electricity. This means that there is no need to do anything at all about the price of dirty electricty thus the average price of electricity only rises slowly as the percentage of clean electricity rises. Important for investment programmes that will take decades. You also say that:
I would be keen to see the figures supporting this claim. The cost of running the CPRS scheme with all its complications is not going to be negligible, particularly if you take account of the profits that will be skimmed off by hedge funds and their ilk.
Peter W@23: You are right, CPRS and the EU system use free permits and compensation to avoid some of the collateral damage associated with comprehensive systems that insist on putting a price on carbon. However, these special treatments are all going to large industries supported by effective lobby groups. Any small business will struggle to get much help.
The converse approach avoids the problem of collateral damage by starting with the clean up of electricity and then adding other activities that are more cost effective at reducing emissions.
On the issue of cars, replacing steel with aluminium would make little difference so it is hardly a good example to use to defend putting a price on carbon. The point i would make is that we need to do our homework properly, consider various alternatives and then make decisions. As a matter of interest an UK study into the effect of fuel price increases on total fuel consumption suggested that increasing fuel price had little effect on fuel consumption.
Brian @25: Our aluminium industry woudl be the first victim of border taxes – Keep in mind that most of the 23 tonnes CO2/tonne Al comes from the electricity required to make it. Australian electricity is some of the dirtiest in the world so border taxes would give chinese producers a very big advantage.