Ecology and Economics

Christian Science Monitor Endorses Carbon Tax

Yet-another vote for carbon taxes over cap-and-trade:

A tax on carbon to cool the planet, Christian Science Monitor, Oct 26: Forcing higher prices for fossil fuels would be simple, fair, and effective. Why do politicians fear to do it?

Conservative and liberal economists like it. James Connaughton, President Bush's top environmental adviser, backs it. Al Gore says he's always preached it. So why isn't a carbon tax on the table in Congress as it weighs measures to curb climate change? A three-letter reason: T-A-X.

From the start of Capitol Hill's debate on global warming, the notion of taxing all uses of oil, coal, and natural gas has made lawmakers look for less direct ways to wean the nation off fossil fuels and onto alternative energies. They'd rather set caps on greenhouse-gas emissions (with allowances to trade emission permits) and tighten up regulations, such as fuel- efficiency standards.

Indeed, caps may put the US on a knowable track to, say, an 80 percent reduction in carbon emissions by 2050. But as the previous Monitor's View pointed out, the flaws in cap-and-trade plans as experienced in other nations – their complexity and vulnerability to fraud and special-interest lobbyists – would reduce the intended effect. They also take a long time to set up and get working right. …

[P]olls indicate strong opposition to higher taxes on gasoline or electricity. But wait: What if the carbon-tax revenues were returned to most taxpayers, canceling out the effect on pocketbooks but retaining the market incentives?

Under one plan, every worker would receive a tax rebate of about $560, cutting the tax bill by 18 percent for those earning $20,000, or by 4 percent for those earning $90,000. The burden on consumers would shrink, but the US would achieve greater conservation and a shift to energy alternatives. And the tax could be fine-tuned to meet rising targets for reducing carbon dioxide.

With Europe's cap-and-trade system faltering, the US should be a leader in using a carbon tax, even if big polluters such as China don't follow. As a last resort, the US could tax goods from countries that fail to cut their carbon emissions.

A carbon tax is not the whole solution. Regulations will still be needed, such as stiffer fuel-economy standards for cars and trucks. And the US should fund research into alternative fuels, too. All it takes is the political will to act.

Carbon Trading Schemes Backed by Big Banks

If the big banks are pushing for cap-and-trade carbon trading schemes ought we not to be a bit skeptical? Aren't they the ones who have led us down a primrose path with "subpime" and other messes? Big banks are pushing cap-and-trade, reports the NY Times. And yet, many big environmental groups support cap-and-trade legislation over carbon taxes. Why?

I'm still on the carbon tax bandwagon. But what do I know, relative to these economists who, as members of the Union of Concerned Scientists are on record in favor of cap-and-trade systems. Questions linger: Do economists like Joseph Stiglitz favor cap-and–trade over carbon taxes, or do they endorse cap-and-trade as a second-best resolution to the carbon problem relative to extant institutional arrangements? Of course we all know—or should—that it is difficult to know, at least in the Theory of the Second Best what really constitute a "second best". Then again, said "theory" doesn't apply here. What does? To the NY Times:

Banks Urging U.S. to Adopt the Trading of Emissions, JAMES KANTER, Sept. 26: PARIS, Sept. 25 — A group representing some of the world’s leading banks will urge the United States and other industrial nations this week to move quickly to introduce a lightly regulated system for trading carbon emissions permits.…

See also: World Betting the Farm on Carbon Trading?, Youth Climate Movement,Sept 4

Peak Oil Update

I usually let The Oil Drum deal with oilpatch news, but I found this to be both informative and compact:

Peak Oil is Now . RGE Economonitor, Mikka Pineda, Oct 22: German-based Energy Watch Group released its October Oil Market Report [PDF] which claims "peak oil is now"

-Looking at the countries outside of the Former Soviet Union and OPEC, it can be noticed that their total production increased until about the year 2000, but since then total production has been declining.

-Only a very limited numberof countries will still be able to expand production, particularly Brazil and Angola.

-King Abdullah of Saudi Arabia: "The oil boom is over and will not return. All of us must get used to a different lifestyle."

-World's biggest fields in decline.

-Based on the analysis of the world's giant oilfields peak oil will happen somewhere between 2008 and 2018 [Robelius 2007 [RGE $] ].

-Growth of production has come to a standstill and production now is more or less on a plateau despite historically high oil prices.

-The historical maximum of oil discoveries after some time has to be followed by a maximum of oil production (the "peak"), which was in May 2005

-33 of the 48 largest oil producing countries have already passed peak [Chevron 2007].

-IEA projections are not a very reliable basis for planning the future.

Another update from The Oil Drum shows a peak oil plateau starting in 2006 and ending in the middle of 2009, falling-off thereafter.