Government often sets goals for us without telling us what is to be done to get there from here. The current goal of the Obama administration to lower our CO2 emissions by 80% by 2050 is a case in point. The target is set but up until now we have no details on the plan short of a plan to cap and trade.
What is neglected, may I suggest on purpose, is that many estimates suggest that such a goal will cost at least $700 billion a year between now and then!!! Another controversial and thus far unresolved issue is the impact of pricing CO2 on energy. Assume that cap and trade can raise $100 billion each year. What would be the impact of that levy on the economy? Who is going to carry the burden and what are the implications on the distribution of income in society?
Congressional hearings on the subject are on their way but ,if history is any indication, I am not very hopeful that much clarity will be shed on the issue as a result of these hearings. There is , however, an idea that intrigues me. One entrepreuneur/environmentalist has been pushing the idea that "energy is not CO2" and that although we need to put a price on CO2 emissions that such a price does not imply a higher cost for energy. His position is simple and elegant. Inefficiencies abound in our current process of using fuel. It is widely accepted that 2/3 of the energy used is not recapyured but wastedie. our present efficiency hovers around 33%. What if the high price of CO2 emissions acts as a stimulus to capture part of this "free energy" that is there for the taking? If that can be done ,technologically, then we stand to at least double the amount of useful energy produced from the same level of inputs that we are currently using. Is this another simple plan that is based on wishful thinking? Only time will tell.
3 comments:
The economic costs might include an increase in prices. But this won’t necessarily be a bad thing. Jonathan Harris discusses this problem in ch.13 of his book “Environmental And Resource Economics”. His conclusions are clear. If we continue down a path of deregulation of the energy sector, conservation will never be possible. Competition in the energy market is solely focused on reducing prices and/or enhancing profits. Lower prices encourage more usage, and also reduce the incentive to develop new technology. The program needs to be carried out in order to create an incentive for change.
Jackson
I think the Cap and Trade program is a good thing because as jackson said these energy companies are only out there to produce electricity at a cheaper price, it doesn't inspire the developement of new technology which would reduce the CO2 emissions, it only inspires createing engergy useing existing natural perhaps non renewable resoursces. Cap and Trade will inspire the developement of new renewable resources that wont produce as much as or no Co2 as previous forms of energy.
-Joel Campbell-
To achieve those goals, involving matters of timing and U.S. cap-and-trade design, I think that domestic climate legislation should limit the use of both international and domestic offsets. Because most importantly there is no time to lose in adoption of binding targets to avoid the risks of dangerous impacts of global warming.
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