Articles by Gar Lipow

Carbon pricing needs to supplement, not undermine, other means of cutting emissions

In solving the climate crisis we need to avoid creating the type of large secondary emissions trading market Kyoto did. Large secondary emission markets constitute a whole new sector with strong incentives that conflict with a really large drop in emissions. Maybe carbon traders are so noble and dedicated to saving the planet that financial self-interest won't influence them. But, if your view of human nature is that incentives matter, then a strong secondary market creates a group of people with the wrong ones. If incentives matter, then a secondary carbon market runs a real risk of becoming the new sub-prime.

For example, it has been noted that the European Emission Trading Scheme and other emission markets tend to be subject to high volatility, something that undercuts long term success. Large price variations for emissions permits discourage long term investment in savings, because it is hard to predict the value of the savings. Volatility can also lead to crashes, where emission prices temporarily drop near zero, which further reduces investment in reductions. The problem is traders tend to profit in the short term from volatility, because prices that vary encourage a larger number of transactions; more transactions produce more profit. While there are regulatory approaches that can discourage such volatility, such as high mandatory minimum emissions prices, financial industries in general tend to resist this type of regulation.

Chevy Volt could cut costs by using batteries more efficiently and paying less for them

In a excellent piece this week, Joe Romm reiterated why battery changing stations don't make sense for electric cars. But he also argued that plug-in electric ranges of more than 20 miles do not make sense because cost gets too high for too little benefit. This seems a reasonable deduction from high (and rising) costs for the Chevy Volt. But this is a case where the efficiency could be cheaper than conservation.

Consuming 0.4 kWh per mile electricity usage, the Volt currently uses a $10,000 16 kWh battery capacity for a 40-mile range. But lots of electric cars get better mileage than that. For example, the Triac only consumes about 0.23 kWh per mile. Admitting this is fairly extreme, there is no reason a car that needs less than half the battery range (and thus does not need to carry as much battery weight) can't keep its power consumption around 0.27 kWh per mile, which would make battery capacity 11 kWh rather than 16 kWh.

Yes, carbon taxes are more transparent than trade system

Proponents of carbon trading over carbon taxes deny that carbon taxes are more transparent -- because you can play any game with a tax you can with a trading system. But the point of transparency is not that games become impossible, but that they become more obvious, and thus easier to stop.

When it comes to handing out permits (grandfathering) rather than auctioning them, carbon tax advocates clearly have the better of this argument.

The equivalent with a carbon tax would be to write big polluters a check -- not more difficult in the abstract, but a lot more visible than creating a property right.

"For every one that doeth evil hateth the light..." John 3:20.

How awful does a bill have to get to lose your support?

Here is a question for cap-and-trade supporters. Nancy Pelosi has already said she wants to wait until 2010 (she later changed this to late 2009) to get a cap-and-trade bill through. Now maybe you can push one sooner. But to get one through soon (even by the revised late 2009 schedule) you are probably going to have to allow for substantial giveaways (grandfathering) rather than 100% (or anything like 100%) auctioning. You will probably have to give up any certainty claimed for a cap-and-trade by agreeing to a price ceiling (off-ramp/escape clause). You will probably have to allow counterfeit emissions reductions (offsets).

Right now it looks like this will be in any bill, but it will almost certainly be a condition of getting anything through in 2009. And even if you agree to all this, odds are you won't get anything through this year.

So let me ask you: what is your limit for this sort of thing? Is there any point at which you will say, "this is not acceptable, I'll oppose the current bill and try again later"?

[Update] Every cap-and-trade supporter I've run into who considers themselves "practical" about the politics says that 100% auctioning is out of the question, that no off-ramp (price ceiling) is out of the question, that no offsets are out of the question. The above assumes my experience represents the views of "players" on this issue in general. So let me modify this. Is there anyone who considers themselves knowledgeable about the practical politics, who supports cap-and-trade who disagrees with these premises?