If you listened to right wing media, you might assume that “Cap and Trade” was a game that ISIL fighters played with severed heads of their enemies.
Actually, it’s a Republican idea for fighting pollution, and it’s been shown to work pretty well in tamping down Acid Rain – which is why it was proposed early on as a means of dealing with climate change.
President Obama reminded Republicans Tuesday that cap-and-trade has GOP roots in a rare public reference to the embattled environmental policy.
“Cap-and-trade was originally proposed by conservatives and Republicans as a market-based solution to solving environmental problems,” Obama said during a fiery speech at a luncheon hosted by The Associated Press.
“The first president to talk about cap-and-trade was George H.W. Bush. Now you’ve got the other party essentially saying we shouldn’t even be thinking about environmental protection. ‘Let’s gut the EPA.’ ”
Obama’s remarks were part of a broader argument that the Republican Party has moved to the right in recent years.
“I think it’s important to remember that the positions I’m taking now on the budget and a host of other issues, if we had been having this discussion 20 years ago, or even 15 years ago, would have been considered squarely centrist positions,” Obama said. “What’s changed is the center of the Republican Party.”
In the 1980s, President Ronald Reagan used a cap and trade system to phase out leaded gasoline, noted MIT economics professor Richard Schmalensee and Harvard Kennedy School government professor Robert Stavins.
In 1989, President George H. W. Bush proposed the use of a cap and trade system to cut by half sulfur dioxide emissions from coal-fired power plants and consequent acid rain, they wrote in a Boston Globe op-ed in 2010.
“An initially resistant Democratic Congress overwhelmingly endorsed the proposal,” the professors wrote. “The landmark Clean Air Act amendments of 1990 passed the Senate 89 to 10 and the House 401 to 25.”
Bush not only accepted the cap, but he sided with environmentalists who wanted a larger cut than his own advisers, according to Smithsonian Magazine, in a report that detailed how the Environmental Defense Fund worked with Bush’s White House to make cap and trade a reality.
“George H. W. Bush does indeed deserve enormous credit for being the champion of the cap and trade program for sulfur dioxide, a major cause of acid rain,” Pooley said. “That has led many over the years to refer to it as a Republican idea.”
Cap and Trade has actually been applied regionally in the US, by several states in the Northeast – and a new evaluation tells us (again) that it’s working pretty well, thank you.
A rational Republican Party would be taking credit for the success of their idea – but that is not the world we live in.
U.S. Sen. Marco Rubio, a GOP presidential contender, made waves about climate change in a May 11 interview with ABC’s Jonathan Karl on This Week.
“I do not believe that human activity is causing these dramatic changes to our climate the way these scientists are portraying it,” Rubio said. “And I do not believe that the laws that they propose we pass will do anything about it. Except it will destroy our economy.”
A nine-state agreement to reduce emissions that cause global warming has netted $243 million for the Massachusetts economy and more than $1 billion for other northeastern states, according to a new report.
Massachusetts collected $166 million from the carbon permitting program from 2012 through last year, according to the report, and it has plowed $152 million back into energy-efficiency programs. After adding and subtracting other impacts, including higher electricity prices, the report said Massachusetts netted $243 million in economic value and 2,718 jobs.
Susan Tierney, one of the report’s authors, says Maine’s economy received a gain worth $122 million over the past three years.
“Eighty-six percent of the dollars, or about $27 million, was spent on energy efficiency,” Tierney says, “so that meant that the state was hiring people to put in insulation, to purchase more efficient lighting. So it was pretty good for Maine.”
In addition, Tierney says, another 3 percent of the proceeds were spent on giving customers a credit on their electricity bills.
RGGI began in 2009 when 10 Northeastern and Mid-Atlantic states undertook the approach. This is the second report on its progress, and Tierney says it did come with some reassurance.
“It wasn’t a surprise because we saw it in the first report we did,” she says, “but we were still really thrilled and impressed that these investments in energy efficiency really give you a double bang for the buck. They give you lower electricity bills and they give you the economic gains in the economy.”
Tierney says one of the greatest findings is that RGGI can be used as a model for other states that are considering ways to comply with the EPA’s proposed Clean Power Plan.
Gov. Jack Markell praised RGGI’s impact on the Delaware economy.
“RGGI is good for consumers and the environment,” he said in a statement. “It serves as an incentive for cleaner, less carbon-intensive power supplies; while the reinvestment of RGGI proceeds into energy efficiency and other greenhouse gas reduction programs spurs the economy, creating capital investment and job creation.”
John Byrne, a professor at the University of Delaware Center for Energy & Environmental Policy, said the state’s reinvestment in energy-efficient technology is key to generating economic benefits through RGGI. Byrne added renewable energy companies are hiring workers to create and install new technologies. Those jobs are having an indirect benefit on other businesses in the state, Byrne added.
“When you create the technology jobs, the workers put the investment back into the local economy by spending it on restaurants and movies,” he said.
Byrne also noted the jobs created at these companies are high-paying, highly desired engineering and information technology positions.
“Creating better jobs makes Delaware more competitive,” he said.
A new economic study released today by the Analysis Group on the Northeast and Mid-Atlantic Regional Greenhouse Gas Initiative (RGGI) reports how the regional cap and trade program that includes nine states has generated $1.3 billion in economic value for the region and $460 million in savings for consumers between 2012 and 2014. Combining these newly calculated benefits to the value added by the RGGI program during 2009-2011, the total economic value added since 2009 is nearly $3 billion and the savings for consumers surpassed $1.5 billion. Additionally, carbon emissions in the nine states have been reduced by about a third since the carbon trading market opened in 2009.
Under the RGGI plan, nine states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont — have reduced the amount of carbon allowed from electricity producers by requiring them to buy a credit for every metric ton of carbon they emit. There are only a limited number of permits, which are put up at auction every quarter. The states use the proceeds from the auctions to invest in further carbon reduction programs, such as efficiency retrofits and renewable energy development. (New Jersey initially participated, but withdrew in 2011 under Republican Governor Chris Christie).
“From an economists’ perspective, directly putting a price on carbon the way RGGI does is the most efficient way to regulate carbon,” (report author Andrea) Okie said. In fact, the program has been so successful that after a 2011 review, the states agreed to lower the overall emissions cap.
But as a macro-economic driver, the key to RGGI’s success has been the reinvestment of money from the carbon permit auction, Okie said. So far, the states have spent 59 percent of the funds on energy efficiency; 15 percent on renewable energy projects; 13 percent on bill-payment assistance to energy consumers; 12 percent on other greenhouse gas programs and program administration; and 1 percent on clean technology research and development, the report found.
For example, investing in efficiency programs — such as weatherizing houses — reduces the amount of electricity used. But that’s not actually why bills are going down. The decrease in electricity demand actually reduces the overall price of electricity. That means the costs go down for everyone, not just someone who installed new, efficient windows.
So while opponents of the Clean Power Plan say that it will raise electricity prices for consumers and depress the economy, putting a price on carbon can actually have the opposite effect.
Natural Resources Defense Council reports that California expects similar results with its own regional cap and trade program.
Along with RGGI, California’s carbon market serves as a testament to not only the potential benefits of carbon reduction programs, but also the important role of complementary clean energy policies.
Government reports have clearly shown that the state’s clean energy policies have played a significant role in helping California achieve its emission reduction targets in a manner that delivers a range of public benefits and mitigates equity concerns.
Expected carbon pollution reductions from the state’s RPS, energy efficiency programs, and appliance and building code standards will account for the lion’s share of necessary reductions to achieve California’s 2020 statewide limit. This has allowed the carbon allowance prices to remain lower while still achieving results. Without an RPS and only half the expected energy efficiency savings, the state predicted the carbon allowance price would have to increase five-fold to achieve the same emission reductions.
A cap-and-trade system with complementary polices also produces larger economic benefits. Employment, economic growth, and personal income all were higher under a cap with complementary policies than either without any cap or with a cap without complementary policies. Personal income was projected to increase by an estimated $2 billion in 2020 alone – about $50 per person. In addition, annual energy costs for the entire state are projected to decrease by 5 percent.
Implications for Midwest States and Clean Power Plan Compliance
A few voices have argued that complementary, clean energy policies are unnecessary under a market-based system. RGGI and California show that state energy policies can make carbon markets achieve better outcomes. Clean energy policies have played a vital role in the present economic and environmental success both RGGI and California’s Cap-and-Trade. And it doesn’t end there. A number of groups have all found concrete evidence that a mix of policies, rather than a carbon price alone, is the most efficient and lowest cost method to achieving significant pollution reduction. They are clear: a combination of policies is not only the cheapest and easiest way to achieve significant pollution reductions, but it also helps mitigate potential impacts on low-income and other consumers.
So the success of carbon programs is to be measured by how much money they move around, but NOT on how much renewable energy infrastructure they actually generate?
I’m shocked, I tell you…. SHOCKED!!
per NRDC:
“Renewable energy as a percent of total electricity generated has doubled since RGGI began, spurred by renewable portfolio standards (RPS) and expanded clean energy financing programs for municipalities, public institutions, and interested residences and businesses.”
carbon emissions down by a third.
that sounds like positive movement to me. Am I wrong?
Less carbon emissions is always a good thing.
But how much of these gains are truly directly attributable to carbon taxation, and, more cogently, why set up programs (which took hundreds of thousands if not millions of man-hours and a lot of money to conceive, design, negotiate, implement, and administer) which rely on market forces (which retrogressively hurt less wealthy consumers) when it is the policy requirements which are directly responsible for the real gains here? Imagine if all the collective time, money and effort that it took to get carbon taxes implemented were instead used to get the Executive branch to direct the construction of the new energy system we all agree is what we need? One fell swoop, one simple goal and we solve the problem.
The goal here is to build new renewable energy infrastructure, yes? Improving, say, housing energy efficiency is nice, but it still means that carbon-burning power plants are pouring CO2 into the atmosphere, albeit at a somewhat smaller rate. Why not build the renewable plants we need directly, and skip all the shenanigans?
We don’t need (and we really don’t have the time to waste anymore) to finance our new energy system through market forces (ie, raising energy rates on consumers), we can do it more egalitarianly with broader taxes.
And, at the Federal level, finding funding is not an issue. The Federal government (and I can’t stress enough that the Federal government is the appropriate entity to tackle this) can pay for whatever it wants. The money just gets added to the National Debt, and gets paid off over years. The Federal government, btw, is the only entity which also can print its own money.
Carbon taxes are well meant, of course. But they are an inappropriately small response that don’t directly address the extremely acute dilemma we are in, and they further the fallacy that we are going to save ourselves with market forces instead of direct government policy and spending.
I fully agree that carbon taxes not enough, but if they’re not redistributed (in either the forms of corporate tax breaks or fee-and-dividend), they can be used to directly finance governmental programs and facilities. Case in point, from the above article:
“Massachusetts collected $166 million from the carbon permitting program from 2012 through last year, according to the report, and it has plowed $152 million back into energy-efficiency programs.”
If carbon taxes are used in this way, they have a doubling effect by making carbon both less profitable in the market and by directly subsidizing efficiencies and renewables. They ‘could’ also be used for public utilities (if we weren’t Aynrandia).
The results in New England are a combination of governmental policies, targets, programs, and taxation that go back about 10 years. They’re all working in concert together, and it’s not accurate to portray the total emissions reductions as purely just cap-and-trade, or just governmental initiatives (mass transit, efficiencies, car and power plant emission limits, others). However, the vehicle and power plant emissions caps are often attributed as the largest factor in the recent declines.
Another important factor in measurements to 2007-2010 is the effects of the recession. The really telling sign will be results from 2011 onwards – are emissions continuing to drop, or are they leveling off or rising?
But, in the end, we’re talking about reductions that won’t be nearly enough to offset the growth in emissions from developing countries, and in that way, we’re kidding ourselves if we think the current policies are aggressive enough to solve the problem.
No, you’re not wrong, but the closing paragraph of this excellent post needs to be looked at more closely.
“A few voices have argued that complementary, clean energy policies are unnecessary under a market-based system”. And those “few voices” are way too powerful and able to impede the rate of “positive movement” far too much.
“RGGI and California show that state energy policies can make carbon markets achieve better outcomes. Clean energy policies have played a vital role in the present economic and environmental success both RGGI and California’s Cap-and-Trade. And it doesn’t end there. A number of groups have all found concrete evidence that a mix of policies, rather than a carbon price alone, is the most efficient and lowest cost method to achieving significant pollution reduction. They are clear: a combination of policies is not only the cheapest and easiest way to achieve significant pollution reductions, but it also helps mitigate potential impacts on low-income and other consumers”.
Many folks have talked about the need for a “mix” before and said that the quickest way to reduce emissions is through efficiency measures. That’s exactly where RGGI is spending most of its “earnings”, with most of the rest going into renewables. Good news, but it is just “moving money around” while COAL, oil, and natural gas consumption drops far too slowly. I think that’s the point that our SHOCKED friend GB is trying to make—that this iteration of cap and trade is to some extent picking the low hanging fruit and doesn’t really have the impact on GHG that we need to see soon.
(And can we hope that some day our SHOCKED friend in VT will be able to go hang from the wires outside his house and earn some bucks for putting some of that electricity into the grid?)
Hansen’s Tax-and-Dividend directly financially motivates non-carbon generation over carbon generation. Cap-and-Trade is a (limited) license to pollute. And yes, how much of the 1/3 reduction was due to cap-and-trade vs, say, the large cost drops in solar due to technology (and some subsidies)? I’m vastly unconvinced Cap/trade can take any credit, especially vs tax/dividend.
I wonder if Chris Christie has any regrets about pulling NJ out of the RGGI.