An ongoing review of politics and culture

The Politics of Climate Change Legislation

Cap and trade may not be dead, but it now looks unlikely that Congress will pursue emissions regulation this year, which no doubt frustrates Michael Livermore, who makes the case for acting quickly over at TNR‘s The Vine. The gist of his case is that passing it now will give businesses and other interested parties more warning, and thus thus allow them to prepare better: “The more time that companies have to adjust and prepare for a cap, the more investment opportunities and jobs we can create now, when we really need them,” he writes.

But as William Galston explains, the politics of cap and trade just don’t look favorable:

One reason is public opinion: a Gallup survey released last week revealed that “for the first time in Gallup’s 25-year history of asking Americans about the trade-off between environmental protection and economic growth, a majority of Americans say economic growth should be given the priority, even if the environment suffers to some extent.” Just four years ago, protecting the environment enjoyed a 17-point edge; today, the advantage goes to the economy, 51-42.

The second reason is regional politics. Support for environmental legislation is strongest on the coasts, weakest in the interior areas that depend more heavily on coal-fired power plants. The Midwest, which has already been hit hard by the collapse of manufacturing, would take a second blow. This matters because the Democratic Party is an uneasy coalition between the coasts and the interior, symbolized by bitter fight between Henry Waxman and John Dingell for the chairmanship of the House Energy and Commerce Committee. It is hard to imagine Midwestern Democrats voting for cap-and-trade in current economic circumstances, and perhaps not in any economic circumstances—that is, unless they receive credible assurances of dollar-for-dollar offsets against the higher costs their constituents would have to bear.

Brad Plumer points out some poll numbers that perhaps slightly counterbalance Galston’s assertion that the public isn’t interested in cap and trade, but even still, those numbers suggest two things: 1) Although the public is generally in favor of regulating emissions, it’s still a fairly low priority and 2) legislation that raises the price of gas at the pump, even if it provides for rebates, is toxic and will be fiercely opposed.

Given this political reality, I can’t see how cap-and-trade could possibly pass without a major change in the political environment. Other big-ticket legislation — financial bailouts, etc — has benefited from complexity. Health-care reform, despite its cost, looks great to a lot of people because it promises to provide something tangible in return for, at worst, a relatively painless adjustment in taxes.

But for most people, cap-and-trade offers nothing besides the feeling of virtue. You can’t take it home with you. You can’t use it, spend it, rely on it, except in the most abstract long-term sense. It’s an upkeep cost on the environment, promising a high cost in exchange for nothing more than maintaining the status quo.

And the debate over it will almost certainly be conducted on terms unfavorable to its backers. As soon as cap-and-trade looks at all like a possibility, Republicans and conservative activists will push back hard with a simple, politically powerful message: Obama and Congressional Democrats want to raise prices at the pump — and, they’ll add, raise your utility bills, food prices, etc., all in the midst of a serious recession. The rest of the details won’t matter, really, except to the wonks and deal-makers; amongst the general public, the debate will be over gas prices first, followed by utility and food prices. Conservation is a nice ideal, but few people see it as a short-term priority. In flush times, perhaps such legislation could prevail, but these days, with the economy spiraling further downward, it seems rather unlikely.

Image used under a Creative Commons license courtesy Flickr user Aussiegall.

Anthropocentric Environmentalism

Freddie deBoer, TAS combox Hall of Famer and proprietor of L’Hôte, has written an insightful and extremely sensical essay on the kind of Green that recognizes our truly human priorities, instead of worshipping the misleading and romantic abstraction of Nature. This topic is very near and dear to my heart, and reading Freddie on it will automatically make you a better person.

The Debate is Moving

Andrew Sullivan has put up an amazing series of posts over the past day or so in reaction to my post yesterday on winning the global warming debate.

It started with Andrew regretfully indicating that he is slowly becoming convinced “that our current approach to climate change is doomed to fail and probably not worth trying.”

This apparently created quite a reaction. He posted an email from “a flaming leftist environmentalist”, who said that:

There’s the old debate, with the Lieberman-Warner mess on one end, still trying to use the techniques that fought acid rain and smog on global warming, and the deniers on the other end covering their ears and screaming. The new debate has Manzi on one end saying, “it can’t be done, so quit trying,” and Shellenberger and Nordhaus on the end saying, “proper government investment means economic growth and greenhouse reductions.” My guess is that by the time 2012 rolls around and we’re doing this Presidential thing all over again, we’ll be thoroughly ensconced in the new debate.

Andrew posted a subsequent email from me saying that I think this is an excellent description of where the debate is headed. I also think, by the way, that this is just another version of the debate over industrial policy, and that we will win this debate as well.

Andrew also posted an email from another reader who said that:

I think the real point is that this is the debate we should have been having years ago. The right wing attack on science, especially of global warming, has meant that in fact the real necessary arguments about cost, level of mitigation, etc are not being played out.

I have made this same point about the problematic relationship between conservatives and science. But most liberals are afraid to confront the fact that liberalism also has, for entirely different reasons, its own problems with science. It is my view that both have created a less-than-productive discussion vis-à-vis global warming, but I hope that we can start to move past them a little bit.

Finally, Andrew posted a piece from Sonny Bunch, who said that:

I defy you to convince Americans that it’s worth radically raising the prices of everyday goods–the real life effect of strict carbon caps–to marginally allay the costs of global warming in the distant future. This is why global warming is a winning issue for conservatives: inertia will lead to resistance towards radical change, a resistance that conservatives share.

Just so. Tocqueville is pretty much always the go-to guy when you want to understand long-term trends in American political society. I quoted him in my original National Review article as describing how the American people react to radical plans put forth by a revolutionary leader:

“They do not combat him energetically, they sometimes even applaud him. To his impetuosity they secretly oppose their inertia; to his revolutionary instincts, their conservative instincts; their homebody tastes to his adventurous passions; their good sense to the leaps of his genius; to his poetry, their prose. He arouses them for a moment with a thousand efforts, but soon after they get away from him, and, as if dragged down by their own weight, they fall back.”

We are, once again, watching him being proven right.

Why Conservatives Are Going to Win on Global Warming

Almost a year ago to the day, National Review published what turned out to be a somewhat controversial cover story on global warming in which I argued three things: (1) anthropogenic global warming (AGW) is real, (2) current projections of its expected impact are wildly uncertain, but are not sufficient to justify the costs of an aggressive emissions reduction program, and (3) conservatives have an unseen political opportunity to win on the issue by pointing this out.

A year ago, many conservatives feared, and many liberals hoped, that this was simply a way-station to a me-too conservative emissions reduction program that accepted the premise of the need for massive government intervention, and did a little tinkering around the edges. But the recent (temporary) defeat of the Lieberman-Warner cap-and-trade proposal showed the success of exactly this strategy. The reason for this is simple: we have the facts on our side. The economic problems with L-W are not fixable with clever drafting. Given current projections, the costs of restricting emissions just can’t be justified based on the benefits that it is projected to provide.

As far as I can see, proponents of emissions reductions will respond with four arguments: (1) inflate the analyzed costs of global warming by claiming the science actually now says things will be even worse than we previously thought, (2) inflate the analyzed costs of global warming by embedding indefensible discount rate assumptions in the black box of econometric calculations used by economists to conduct the cost-benefit analysis, (3) deflate the analyzed costs of emissions mitigation by claiming a free lunch – that there is a cost-free or low-cost way to radically reduce emissions, and/or (4) turn this into a moral crusade asserting that we have a moral duty to the poor of the world because of our past sins of emission. I have laid out responses to each of these objections: 1, 2, 3 and 4. When considered carefully, emissions mitigation proponents have no persuasive arguments.

Where does the debate go from here in practical political terms? It’s going to take a long time to win, and there will be setbacks along the way. A betting man would have to say that Democrats will likely have larger majorities in both houses of Congress, and hold the presidency, in 2009. While a competent Republican presidential campaign on this issue could make cap-and-trade radioactive for years, McCain obviously seems to want to capitulate on the issue. So, it is a good bet that another, maybe more stringent, version of emissions reduction legislation will be introduced and debated in the next 2 – 4 years. It is very possible that conservatives could mobilize sufficient opposition, even in the minority, to prevent its passage, but there is a real possibility that there will be a cap-and-trade law. Even in this scenario, it will fail in practice, either because (as in Europe to date) it becomes a pointless boondoggle, or because it starts to actually restrict energy use, and therefore becomes a visible drag on the economy. One way or the other, it would just create an issue for conservatives to campaign on, win and roll-back.

How do we keep pushing this to the most positive possible outcome, given the overall correlation of political forces? Simple, keep coming back to the same question: “What do we pay, and what do we get?”

Scientific American and Climate Change II: Discounting

This continues a prior post.

John Broome, in his cover article for the most recent Scientific American, tries to help us think though how to compare current economic costs of emitting less carbon dioxide with the economic benefits such mitigation is projected to provide to future generations. In plain English, when somebody tells us that we should give up $X of economic consumption today in order to save ourselves $Y of global warming-driven losses in the future, how do we decide if this is a good deal, even if we accept X and Y?

There is a common-sense element to this. As we all know from everyday life, normally I would rather have a dollar today than the promise of a dollar a year from now. I “discount” the promise. Roughly speaking, the amount of cash I would be willing to take today in lieu of that promised dollar is termed its “present value,” and the percentage lower I am willing to accept today is called the “discount rate.”

In the global warming debate, however, we are discussing how to compare costs over at least the next several decades with benefits that are projected to obtain over the next several hundred years. When decisions are made on the timescale of centuries, discounting can have counterintuitively large effects: Consider that if the legendary sellers of Manhattan Island had put $28 in an account with a 4 percent real interest rate in 1626, they would have enough money in the bank today to buy back all of the land in Manhattan. Albert Einstein supposedly said that “the most powerful force in the universe is compound interest” — and this mathematical reality is central to the correct evaluation of plans to address the risk of climate change.

Broome provides a chart showing that a promise of a $1 trillion benefit 100 years from now has a present value of $247 billion if we use a 1.4% discount rate, and $2.5 billion if we use a discount rate of 6%. That is, the lower discount rate leads us to value this future benefit 100 times more than the higher discount rate.

I hope this makes it obvious why there is a fierce battle in the nerdier end of the global warming debate to control the discount rate assumption. Broome did not select his example discount rates arbitrarily. The “Stern Review,” produced by the British government last year, is cited frequently as demonstrating that the world should begin immediate, aggressive emissions abatement, and it used a 1.4% discount rate. William Nordhaus, a Yale professor widely considered to be the world’s leading expert on this kind of integrated environmental-economic assessment, advocated a 6% discount rate.

Broome poses the question, then, as what discount rate should we use? As I’ll explain, I think this is a poor question, and the far more useful question is the more direct one: would I trade the projected near-term costs of some specific proposed policy for the projected long-term benefits that it promises?

Here’s why.

Read the full article

Scientific American and Climate Change I: Distributional Ethics

Well, if you’re one of the 9 people still reading after that header, prepare for a nerd-ride through the snow.

The cover article in the current Scientific American claims to be a guide to the perplexed in thinking through a difficult question: how do we weigh the costs of ameliorating climate change today versus the potential benefits that this will create for future generations? Unfortunately, it is rhetoric from front to back.

A big issue when considering investments intended to reduce the potential effects of climate change is that the current residents of the US, Europe and a handful of other developed countries who would grossly disproportionately bear the current costs of such investments have a somewhat distant relationship with the people who will receive the benefit – disproportionately people not yet born in countries near the equator.

There are two fairly hairy issues intertwined in this question that can be stated generally as: (1) the ethics of considering harms that person A causes to person B, and (2) comparing the value of a dollar today to the value of the expectation of a dollar tomorrow. This post tries to take on the first of these, and the follow-up post will try to take on the second.

The article poses the overall question as:

If the world is to do something about climate change, some people—chiefly the better-off among the current generation—will have to reduce their emissions of greenhouse gases to save future generations from the possibility of a bleak existence in a hotter world.

Note that the author, Oxford Professor John Broome, makes the huge assumption that the only way for us to assist these future generations is to reduce emissions of greenhouse gases. He assumes away any possible efforts to recycle atmospheric carbon or execute other geo-engineering approaches, or invest in adaptive engineering solutions or simply to grow wealth fast enough to offset the negative impacts of climate change.

Broome goes on to cite “the elementary moral principle that … whenever you cause harm, you should normally compensate the victim.” He then applies this to global warming, saying of developed world carbon emissions that “…the elementary moral principle I mentioned tells us we should try to stop doing it and compensate the people we harm.” (As an aside, it seems to me that his own principle indicates that we should feel free to continue doing it as long as we compensated those who were harmed). He next uses the following homey metaphor to illustrate that we must consider the victim’s interests:

Suppose you calculate that the benefit to you and your friends of partying until dawn exceeds the harm done to your neighbor by keeping her awake all night. It does not follow that you should hold your party.

Metaphors applied to the specific ethical question of carbon emissions often employ some version of the thought-experiment of polluting my neighbor’s yard. But what’s buried in this kind of familiar example is that most people reading this live in a world of legally-defined rights and obligations enforced by courts, police, and ultimately the monopoly on large-scale force held by the government in the form of the army.

But nation-states and societies don’t live in anything like this relationship to one another. It seems to me that a better analogy would be that of a large number of clans living in somewhat overlapping and disputed areas of a primitive forest. Over centuries almost all clans have had massive feuds with almost all other clans. There are constant low-level skirmishes, as well as alliances through marriage or simple treaties. Some of these clans tend to be more peaceful and trade a lot with their neighbors, while others tend to be much more war-like. Some clans have enslaved others, and fortunes have risen and fallen through time. At some point, one clan figures out how to use fire to make things. They become much, much wealthier than any clan has ever been. All of these fires create soot pollution that threatens to reduce crop yields for other clans. On the other hand, inevitably, knowledge of how to use fire also becomes available to the other clans through imitation. The people who live in this forest, as a whole, become much wealthier than they would have been had the original clan never figured out how to use fire in this way. Is it obvious to you that the original clan has an absolute ethical obligation to either stop using fire or develop new technology that burns without soot? It’s not to me.

But let’s leave the world of analogies, and consider the actual world in which we live.

Read the full article

Rent Control

I have been accused of being too cynical about the American legislative process because I forecast in a prior post that lots of side deals would get cut to allow a carbon tax to get enough votes to become a law.

Anyone taken a look at how the current Lieberman-Warner cap-and-trade bill (a.k.a, the “opaque carbon tax”) has been evolving as we approach a vote?

Here are some of the features of the bill: Allocation to farmers and foresters via USDA based on amount of GHG emissions reduced or sequestered; Transition assistance to workers, using auction proceeds directed via the Climate Change Worker’s Assistance Fund; Transition assistance to carbon intensive manufacturers, refiners of petroleum and natural gas providers; Federal assistance to low-income consumers, via auction proceeds directed by the Climate Change Consumer Assistance Fund; Allocation to electricity and natural gas consumers via local distribution companies based on historic sales adjusted upwards for efficiency; Assisting state economies that rely heavily on manufacturing and coal, based on equally-weighted metrics of emissions that resulted from coal production from 1988 through 1992 and number of manufacturing jobs in the same period; Assisting state and local partnerships for mass transit via auction proceeds distributed by the Transportation Sector Emission Reduction Fund; Energy efficiency and conservation block grant program via auction proceeds; Special allocations to states based on historic state investments in GHG reductions and increasing energy efficiency; Special allocations to states and tribes based on several climate change vulnerability indicators; Special auction with proceeds directed to states and tribes via State Wildlife Adaptation Fund; Special allocation to private sector entities through the Early Action program for emissions reductions achieved since 1994; Allocation to owners of high efficiency buildings, retailers and distributors (based on increase in sales), and owners, operators and developers of renewable energy generation facilities (based on several metrics) via the Climate Change Technology Board; Auction proceeds directed to generation facilities and suppliers of technology components via the Low and Zero Carbon Electricity Technology Fund (as administered by the Climate Change Technology Board); Special allocation for entities that purchase medium and heavy duty hybrid vehicles; Special auction with proceeds directed to vehicle manufacturers via the Advanced Technology Vehicles Manufacturing Incentive Program; Allocation to US producers of cellulosic biofuels; Special auction with proceeds directed to federal Firefighting, Wildlife Adaption and similar Funds; Special allocation to foreign countries for the reduction of deforestation; Special auction with proceeds directed to foreign countries and entities via the Clean Development Technology Board (as administered by the International Clean Development Technology Board); Auction proceeds directed to administrative funding via the Climate Security Act Administrative Fund.

Calling some of these carve-outs “transition” assistance is pretty funny, since they extend out to 2030 for the oil, natural gas, power generating and manufacturing companies (six presidential elections and more than three senate terms from now). Do you think that when 2030 rolls around their reaction is going to be “a deal’s a deal”?

Of course, this is the rent-seeking we have now as the regulatory process is about to be kicked off. For this program to work, it has to remain in force for many decades. If this happens, entire lobbying firms will be built up to seek exemptions, allowances and so on. Many nice homes will be built in McLean with the proceeds, and many members of congress will have re-election campaigns financed by the contributions this bill will generate. It will create another income tax code.

Can The Optimum Carbon Tax Possibly Be Zero?

The Energy and Environment blog at TNR has a post up replying to Will Wilkinson’s post arguing that we don’t know how to set the price on a theoretical carbon tax. The gist of the reply is the sensible-sounding observation that “There’s essentially no disagreement at all that there’s some externality associated with carbon emissions, so the optimal carbon tax is certainly not zero.”

I believe that this is not so obvious, however, when you think it through, for at least three reasons.

Read the full article