Supreme Courtputs Clean Air plan on hold.

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A divided Supreme Court agreed Tuesday to halt enforcement of President Barack Obama's sweeping plan to address climate change until after legal challenges are resolved.

The surprising move is a blow to the administration and a victory for the coalition of 27 mostly Republican-led states and industry opponents that call the regulations "an unprecedented power grab."

By temporarily freezing the rule the high court's order signals that opponents have made a strong argument against the plan. A federal appeals court last month refused to put it on hold.

The court's four liberal justices said they would have denied the request.

The plan aims to stave off the worst predicted impacts of climate change by reducing carbon dioxide emissions at existing power plants by about one-third by 2030.

Appellate arguments are set to begin June 2.

The compliance period starts in 2022, but states must submit their plans to the Environmental Protection Administration by September or seek an extension.

Many states opposing the plan depend on economic activity tied to such fossil fuels as coal, oil and gas. They argued that power plants will have to spend billions of dollars to begin complying with a rule that may end up being overturned.

Implementation of the rules is considered essential to the United States meeting emissions-reduction targets in a global climate agreement signed in Paris last month. The Obama administration and environmental groups also say the plan will spur new clean-energy jobs.

To convince the high court to temporarily halt the plan, opponents had to convince the justices that there was a "fair prospect" the court would strike down the rule. The court also had to consider whether denying a stay would cause irreparable harm to the states and utility companies affected.

Paris Agreement

                                                          Comments due by Feb 11, 2016

Do you agree with this assessment of Paris?

 The Paris Agreement, a truly landmark climate accord, which was gaveled through today, December 12, 2015, at 7:26 pm (Paris time) at the Twenty-First Conference of the Parties (COP-21), checks all the boxes in my five-point scorecard for a potentially effective Paris Agreement, described in my November 17th blog essay, Paris Can Be a Key Step.  The Agreement provides a broad foundation for meaningful progress on climate change, and represents a dramatic departure from the Kyoto Protocol and the past 20 years of climate negotiations.

Essential Background

Anyone who has read this blog over the past several years, or – even more so — my academic writing over the past twenty years on international climate change policy architecture, knows that I have viewed the dichotomous distinction between Annex I and non-Annex I countries as the major stumbling block to progress. That distinction was first introduced in the climate negotiations at COP-1 in Berlin in 1995. That was, in my view, an unfortunate and narrow interpretation of the sound equity principle in the United Nations Framework Convention on Climate Change (UNFCCC, 1992) – “common but differentiated responsibilities and respective capabilities.” It was codified two years later in the Kyoto Protocol.

The Kyoto Protocol, which has been the primary international agreement to reduce the greenhouse-gas emissions that cause global climate change, included mandatory emissions-reduction obligations only for developed countries. Developing countries had no emissions-reduction commitments. The dichotomous distinction between the developed and developing countries in the Kyoto Protocol has made progress on climate change impossible, because growth in emissions since the Protocol came into force in 2005 is entirely in the large developing countries—China, India, Brazil, Korea, South Africa, Mexico, and Indonesia. The big break came at the annual UNFCCC negotiating session in Durban, South Africa in 2011, where a decision was adopted by member countries to “develop [by December 2015, in Paris] a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties.” This “Durban Platform for Enhanced Action” broke with the Kyoto Protocol and signaled a new opening for innovative thinking (which we, at the Harvard Project on Climate Agreements, took to heart).

The Paris Agreement is a Departure from the Past

Today, in Paris, representatives of 195 countries adopted a new hybrid international climate policy architecture that includes: bottom-up elements in the form of “Intended Nationally Determined Contributions” (INDCs), which are national targets and actions that arise from national policies; and top-down elements for oversight, guidance, and coordination. Now, all countries will be involved in taking actions to reduce emissions.

Remarkably, 186 of the 195 members of the UNFCCC submitted INDCs by the end of the Paris talks, representing some 96% of global emissions. Contrast that with the Kyoto Protocol, which now covers countries (Europe and New Zealand) accounting for no more than 14% of global emissions (and 0% of global emissions growth).

This broad scope of participation under the new Paris Agreement is a necessary condition for meaningful action, but, of course, it is not a sufficient condition. Also required is adequate ambition of the individual contributions. But this is only the first step with this new approach. The INDCs will be assessed and revised every five years, with their collective ambition ratcheted up over time. That said, even this initial set of contributions could cut anticipated temperature increases this century to about 3.5 degrees Centigrade, more than the frequently-discussed aspirational goal of limiting temperature increases to 2 degrees C (or the new aspirational target from Paris of 1.5 degrees C), but much less than the 5-6 degrees C increase that would be expected without this action. (An amendment to the Montreal Protocol to address hydrofluorocarbons (HFCs) is likely to shave an addition 0.5 C of warming.)

The problem has not been solved, and it will not be for years to come, but the new approach brought about by the Paris Agreement can be a key step toward reducing the threat of global climate change.

The new climate agreement, despite being path-breaking and the result of what Coral Davenport writing in The New York Times rightly called “an extraordinary effort at international diplomacy,”is only a foundation for moving forward, but it is a sufficiently broad and sensible foundation to make increased ambition over time feasible for the first time.  Whether the Agreement is truly successful, whether this foundation for progress is effectively exploited over the years ahead by the Parties to the Agreement, is something we will know only ten, twenty, or more years from now.

What is key in the Agreement is the following: the centrality of the INDC structure (through which 186 countries representing 96% of global emissions have made submissions); the most balanced transparency requirements ever promulgated; provision for heterogeneous linkage, including international carbon markets (through “internationally transferred mitigation outcomes” – ITMOs); explicit clarification in a decision that agreement on “loss and damage” does not provide a basis for liability of compensation; and 5-year periods for stocktaking and improvement of the INDCs.

The Key Elements of the Paris Agreement

Here are some of the highlights of what stands out to me in the Paris Agreement.

Article 2 of the Agreement reaffirms the goal of limiting the global average temperature increase above the pre-industrial level to 2 degrees C, and adds 1.5 degrees C as something even more aspirational.  In my opinion, these aspirational goals – which come not from science (although endorsed by most scientists) nor economics, and may not even be feasible – are much less important than the critical components of the agreement:  the scope of participation through the INDC structure, and the mechanisms for implementation (see below).

Article 3 makes it clear that the INDC structure is central and universal for all parties, although Article 4 blurs this a bit with references to the circumstances of developing country Parties. But throughout the Agreement, it is abundantly clear that the firewall from the 1995 Berlin Mandate has finally been breached. In addition,five-year periods for the submission of revised INDCs (and global stocktaking of the impact of the Paris Agreement) are included in Article 14.  The first stocktaking review will be in 2018, with the start date for new INDCs set for 2020.

Article 4 importantly describes transparency requirements (domestic monitoring, reporting, and verification).  This is crucial, and represents a striking compromise between the U.S. and Europe, on the one hand, and China and India, on the other hand. All countries must eventually face the same monitoring and reporting requirements, regardless of their status as developed or developing.

Article 6 provides for international policy linkage, and is therebyexceptionally important for the successful exploitation of the foundation provided by the Paris Agreement.  The necessary language for heterogeneous international policy linkage (not only international carbon markets, but international linkage of other national policy instruments) is included. I have written about this key issue many times over the past ten years. It can bring down compliance costs greatly, and thereby facilitate greater ambition over time. (See our paper on this from the Harvard Project on Climate Agreements:  “Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement” By Daniel Bodansky, Seth Hoedl,Gilbert E. Metcalf and Robert N. Stavins, November 2014.)  The Paris Agreement accomplishes this through provision for “internationally transferred mitigation outcomes.” With this provision, we have a new climate policy acronym – ITMOs – about which I suspect I will be writing in the future.

There is considerable discussion of “finance” in Article 9, but the numbers do not appear in the Agreement, only in the accompanying Decision, where item 54 states that by 2025, the Parties will revisit the total quantity of funding, using the current $100 billion target as a “floor.”

Finally, the Agreement’s Article 8 on Loss and Damage was necessary from the point of view of the most vulnerable countries, but the most contentious issue is settled in Decision 52, where the Parties agree that this “does not involve or provide a basis for any liability of compensation.”  That decision was absolutely essential from the perspective of the largest emitters.

Anticipated Impacts of the Paris Agreement

Before I turn to my assessment of the Agreement, I should comment briefly on a topic that seems to be of considerable interest to many people (based on the questions I received from the press during my 10 days in Paris), namely what effect will the Agreement have on business, what signals will it send to the private sector?

My answer is that impacts on businesses will come largely not directly from the Paris Agreement, but from the policy actions that the various Parties undertake domestically in their respective jurisdictions to comply with the Paris Agreement.  I am again referring to the 186 countries which submitted Intended Nationally Determined Contributions – INDCs – under the Agreement.

So, in the case of the United States, for example, those policies that will enable the country to achieve its submitted INDC are: the Clean Power Plan (which will accelerate the shift in many states from coal to natural gas for electricity generation, as well as provide incentives in some states for renewable electricity generation); CAFE (motor vehicle fuel efficiency) standards increasing over time (as already enacted by Congress); appliance efficiency standards moving up over time (as also already enacted by Congress); California’s very aggressive climate policy (AB-32); and the northeast states’ Regional Greenhouse Gas Initiative.

These various policies are credible, and they will send price signals that affect business decisions (but not across the board nor with ideal efficiency, as would a national carbon tax or a national carbon cap-and-trade system). In terms of impacts on specific companies, impacts will continue to vary greatly. But a useful generalization is that a major effect of most climate policies is to raise energy costs, which tends to be good news for producers of energy-consuming durable goods (for example, the Boeing Company) and bad news for consumers of those same energy-consuming durable goods (for example, United Airlines).

An Assessment with my Paris Scorecard

Lastly, here is my November 17th scorecard and my assessment of the five key elements I said would constitute a successful 21stConference of the Parties:

1. Include approximately 90% of global emissions in the set of INDCs that are submitted and part of the Paris Agreement (compared with 14% in the current commitment period of the Kyoto Protocol). This was obviously achieved, with total coverage reaching 96% of global emissions.

2. Establish credible reporting and transparency requirements. This was achieved, through long negotiations between China and India, on the one hand, and Europe and the United States, on the other.

3. Move forward with finance for climate adaptation (and mitigation)B the famous $100 billion commitment. This was achieved.

4. Agree to return to negotiations periodically, such as every 5 years, to revisit the ambition and structure of the INDCs. This wasachieved.

5. Put aside unproductive disagreements, such as on so-called “loss and damage,” which appears to rich countries like unlimited liability for bad weather events in developing countries, and the insistence by some parties that the INDCs themselves be binding under international law. This would have required Senate ratification of the Agreement in the United States, which would have meant that the United States would not be a party to the Agreement. There wassuccess on both of these.

Final Words

So, my fundamental assessment of the Paris climate talks is that they were a great success. Unfortunately, as I have said before, some advocates and some members of the press will likely characterize the outcome as a “failure,” because the 2 degree C target has not been achieved immediately.

Let me conclude where I started. The Paris Agreement provides an important new foundation for meaningful progress on climate change, and represents a dramatic departure from the past 20 years of international climate negotiations.  Of course, the problem has not been solved, and it will not be for many years to come. But the new approach brought about by the Paris Agreement can be a key step toward reducing the threat of global climate change. In truth, only time will tell.

2015 Hottest Year on Record

                                                   Comments due by Feb 3, 2016
Scientists reported Wednesday that 2015 was the hottest year in the historical record by far, breaking a mark set only the year before — a burst of heat that has continued into the new year and is roiling weather patterns all over the world. In the contiguous United States, the year was the second­warmest on record, punctuated by a December that was both the hottest and the wettest since record­keeping began. One result has been a wave of unusual winter floods coursing down the Mississippi River watershed. Scientists started predicting a global temperature record months ago, in part because an El Niño weather pattern, one of the largest in a century, is releasing an immense amount of heat from the Pacific Ocean into the atmosphere. But the bulk of the record­setting heat, they say, is a consequence of the long­term planetary warming caused by human emissions of greenhouse gases. “The whole system is warming up, relentlessly,” said Gerald A. Meehl, a scientist at the National Center for Atmospheric Research in Boulder, Colo. It will take a few more years to know for certain, but the back­to­back records of 2014 and 2015 may have put the world back onto a trajectory of rapid global warming, after a period of relatively slow warming dating to the last powerful El Niño, in 1998. Politicians attempting to claim that greenhouse gases are not a problem seized on that slow period to argue that “global warming stopped in 1998,” with these claims and similar statements reappearing recently on the Republican presidential campaign trail. Statistical analysis suggested all along that the claims were false, and that the slowdown was, at most, a minor blip in an inexorable trend, perhaps caused by a temporary increase in the absorption of heat by the Pacific Ocean. “Is there any evidence for a pause in the long­term global warming rate?” said Gavin A. Schmidt, head of NASA’s climate­science unit, the Goddard Institute for Space Studies, in Manhattan. “The answer is no. That was true before last year, but it’s much more obvious now.” Michael E. Mann, a climate scientist at Pennsylvania State University, calculated that if the global climate were not warming, the odds of setting two back­to­back record years would be remote, about one chance in every 1,500 pairs of years. Given the reality that the planet is warming, the odds become far higher, about one chance in 10, according to Dr. Mann’s calculations. Two American government agencies — NASA, the National Aeronautics and Space Administration, and NOAA, the National Oceanic and Atmospheric Administration — compile separate analyses of the global temperature, based upon thousands of measurements from weather stations, ships and ocean buoys scattered around the world. Meteorological agencies in Britain and Japan do so, as well. The agencies follow slightly different methods to cope with problems in the data, but obtain similar results.                                               The American agencies released figures on Wednesday showing that 2015 was the warmest year in a global record that began, in their data, in 1880. British scientists released figures showing 2015 as the warmest in a record dating to 1850. The Japan Meteorological Agency had already released preliminary results showing 2015 as the warmest year in a record beginning in 1891. On Jan. 7, NOAA reported that 2015 was the second­warmest year on record, after 2012, for the lower 48 United States. That land mass covers less than 2 percent of the surface of the Earth, so it is not unusual to have a slight divergence between United States temperatures and those of the planet as a whole. The end of the year was especially remarkable in the United States, with virtually every state east of the Mississippi River having a record warm December, often accompanied by heavy rains. A warmer atmosphere can hold more water vapor, and an intensification of rainstorms was one of the fundamental predictions made by climate scientists decades ago as a consequence of human emissions. That prediction has come to pass, with the rains growing more intense across every region of the United States, but especially so in the East. The term global warming is generally taken to refer to the temperature trend at the surface of the planet, and those are the figures reported by the agencies on Wednesday. Some additional measurements, of shorter duration, are available for the ocean depths and the atmosphere above the surface, both generally showing an inexorable long­term warming trend. Most satellite measurements of the lower and middle layers of the atmosphere show 2015 to have been the third­ or fourth­warmest year in a 37­ year record, and scientists said it was slightly surprising that the huge El Niño had not produced a greater warming there. They added that this could yet happen in 2016. When temperatures are averaged at a global scale, the differences between years are usually measured in fractions of a degree. In the NOAA data set, 2015 was 0.29 degrees Fahrenheit warmer than 2014, the largest jump ever over a previous record. NASA calculated a slightly smaller figure, but still described it as an unusual one­year increase. The intense warmth of 2015 contributed to a heat wave in India last spring that turns out to have been the second­worst in that country’s history, killing an estimated 2,500 people. The long­term global warming trend has exacted a severe toll from extreme heat, with eight of the world’s 10 deadliest heat waves occurring since 1997. Only rough estimates of heat deaths are available, but according to figures from the Center for Research on the Epidemiology of Disasters, in Brussels, the toll over the past two decades is approaching 140,000 people, with most of those deaths occurring during a European heat wave in 2003 and a Russian heat wave in 2010. The strong El Niño has continued into 2016, raising the possibility that this year will, yet again, set a global temperature record. The El Niño pattern is also disturbing the circulation of the atmosphere, contributing to worldwide weather extremes that include a drought in southern Africa, threatening the food supply of millions. (NYT Jan 22, 2016)

Scrap Cap & Trade

                                                       Comments due by April 25, 2015
 An argument in favour of carbon taxes over cap & trade is that cap & trade requires an efficient secondary market. As we know from recent experience, financial market efficiency cannot be taken for granted. While the instrument that is traded in the secondary market under cap & trade is relatively simple, compared to Residential Mortgage-Backed Securities based on US subprime mortgages, cap & trade does have this additional link in the chain, and is therefore vulnerable to all the familiar financial market pathologies, from market manipulation to illiquidity.

The economic equivalence of carbon taxes and cap & trade is exact only in a world without uncertainty, or in a world with uncertainty but with complete contingent claims markets for risk trading. In the real world, where there is uncertainty and markets are incomplete ….

Why then do politicians and outfits like BP prefer cap & trade to a carbon tax? The politicians prefer it because the cap & trade scheme, while economically equivalent to a tax, will not count as a tax in the traditional record-keeping manuals. It does not add to the official 'tax burden' the opposition likes to bash you around the head with. You can present cap & trade in a way that hides/obscures the fact that for it to work, that is, for it to reduce emissions, it must be equivalent to a tax by increasing the marginal cost of emitting CO2E; however, it does not look like a tax and will not show up in conventional tax burden calculations. Lack of transparency means absence of accountability. That is why non-transparent arrangements are universally valued by politicians.

A second reason is that with cap & trade, you can distribute the shadow tax revenue associated with the cap & trade scheme (that is the amount of revenue you would be able to obtain for the permits in a transparent, competitive auction) in a non-transparent manner. Give-aways through explicit grants or subsidies are not as easy. There are parliamentary committees scrutinizing revenues and outlays; there may be institutions like the UK National Audit Office that can ask bothersome questions.

Life is easier with the initial allocation of permits. You can, for instance, hand out the permits free of charge to your friends (including the heavy historical polluters). This is also the reason, I believe, that the heavy emitters, including BP, favour cap & trade over taxes. They believe that the initial allocation of free permits will favour them. There is this crazy notion that past heavy polluters should not be hit too hard by schemes to reduce CO2E emissions, and that they should therefore be given gratis allowances of permits that are related to their recent past emissions record. I can see no efficiency reason in favour of this, and many a fairness argument against it, but the argument carries weight in the unreal real world.

When the problems associated with running an efficient secondary market for CO2E emissions permits and the political economy of the non-transparent initial allocation of the CO2E emissions permits are taken into account, I believe that, on balance, explicit carbon taxes are better than cap & trade.

The Eighth Wonder of the World.

                                                        Comments due by April 18, 2015

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

- Albert Einstein

Yesterday, in my Principles of Food and Resource Economics class (135 students--mostly freshmanpeople and sophomores), I was talking about cost-benefit analysis.  In particular, I was talking about comparing benefits and costs across time, which of course leads to a discussion of discounting.  Rather than drone on about discount rates and present and future values, I decided to show the class the power of compound interest--if nothing else to provide them with something useful they might use outside of class (it's not like they will remember any actual material from class).   

So here is the example I used:  Suppose, starting at age 25, you invest $1,000 per year at 10% return per year (the rough long-term average of the S&P 500) until age 65.  Alternatively, suppose you waited until age 45, but invested $2,000 per year for 20 years.  In both cases you are investing $40,000.  Which savings plan would you choose?

Most of the class chose the delay option (probably because we had already spent a good amount of time talking about the time value of money).  I then showed them how to calculate the future value of an annuity (FV=$X(((1+r)^n)-1)/r).

In the first case, the future value of $1,000 ($X=$1000) invested at 10% annual interest (r=0.10) for 40 years (n=40) is $442,593.  This seemed to shock most of the students.  Investing $40,000 could multiply by over a factor of 10.  I explained that is the power of compound interest.

To emphasize the point I then showed them that the future value of the second savings stream ($2,000 per year at 10% for 20 years) is 'only' $114,550.  Again, this seemed to surprise many of the students. 

So I asked the class, "What is the most sure way for you to become a millionaire by age 65?"

Someone shouted, "Marry rich!"

(John Whitehead)

Income from Commons to All.

Comments due by April 12, 2015

(The following is a book review of a rather novel suggestion to collect income from the Commons in the US and proceed to distribute this financial flow to all citizens)

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In the mid-17th century, Gerrard Winstanley led a series of protests in England against “enclosure,” the practice of landlords privatizing public lands. Nonviolent, with a utopian communist agenda, Winstanley’s followers, the Diggers, published pamphlets and, more quixotically, sang their hopes and fears.

A stanza from one of their songs:

“Your houses they pull down, stand up now, stand up now

Your houses they pull down, stand up now.

Your houses they pull down to fright poor men in town,

But the gentry must come down and the poor shall wear the crown.

Stand up now, Diggers all.”

Peter Barnes’s new book, With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough, isn’t as poetic as a Digger tract; yet at its core, it is a book about power relationships as relevant to the 21st century as Digger pamphlets and songs were to the 17th.

What do we do, Barnes asks, when increasing numbers of Americans no longer have jobs that pay enough to generate a modicum of economic security, or when the federal political system seems too paralyzed to do much more than tinker on the margins? What do we do when median wages are unlikely to rebound to pre-2008 levels, while exploitation of common goods by private companies continues to enrich those already perched atop the economic ladder?

The answer: Use the riches of the commons to provide decent living standards for all. Barnes’s inspirations include Thomas Paine’s social insurance schemes of the 18th century, British economist Arthur Pigou’s pioneering work on taxing pollution in the early 20th century, and Francis Townsend’s idea in the 1920s for a universal pension. His modern inspiration is Alaska’s Permanent Fund, which pays residents an annual dividend out of the proceeds from taxes on oil companies that operate in the state. Out of these ideas, he carefully develops a framework for change with the core idea that profits extracted from the commons should be broadly shared. Barnes doesn’t explicitly mention Henry George, but the concept of taxing the unearned increase in the value of land, and then plowing that money back into the common good, is also tacitly present in Barnes’s thinking.

Barnes, the co-founder of Working Assets, a socially responsible financial services group, and the author of five previous books, asks readers to visualize a series of “pipes,” which would generate new revenue streams. These pipes, he calculates, would allow for up to $1.5 trillion per year, generated by developing “rent” mechanisms for private companies’ usage of common assets, to be recycled into the economy via dividends paid to all citizens and legal residents of the United States.

Barnes estimates that upwards of $300 billion could be generated through carbon taxes. More than $350 billion could be brought to the table by taxing financial transactions. Another $300 billion-plus could be made available by charging companies for the use of intellectual property and technological infrastructure seeded with public investments, which they currently use for free. Additional moneys could be raised by charging for use of the electromagnetic spectrum.

Barnes also suggests that the Federal Reserve could create more money—a function it has long utilized during economic contractions. The last few years of quantitative easing have been a partial success, but a lot of that money has sat unused in banks. Barnes thinks the Fed could inject it directly into the economy.

Create the mechanisms to raise funds on this scale, Barnes writes, and the funds will be generated along with the political support.

The proposed $1.5 trillion is roughly the amount that Social Security, Medicare, unemployment, and disability insurance already pay out annually. It’s a huge sum, but Barnes aims to show that the idea is not just fiscally possible but politically feasible. Last year, The Wall Street Journal reported that the 60 largest companies alone had parked more than $166 billion offshore to avoid paying taxes on that income. Large gas and coal companies weren’t paying the costs of their contribution to carbon pollution, but were passing them along to the public as invisible social expenses. Create the mechanisms to raise funds on this scale, Barnes writes, and the funds will be generated along with the political support.Even if $1.5 trillion proves an impossible goal to attain anytime soon, plans that raised several hundred billion dollars to cycle back into the broader economy would have transformative implications.

On one level, it’s a fairly conservative idea. Barnes is not proposing to raise taxes to fund more government. On the contrary, he is proposing new revenue streams to give everyone a social dividend that will offset dwindling wage and salary income. In conservative Alaska, where the Permanent Fund gives an equal share of oil revenue to every man, woman, and child, this highly redistributive idea is phenomenally popular. In some native Alaskan communities, the Permanent Fund provides a significant portion of all cash income. Like the fund, Barnes’s proposed revenue stream, once experienced, would be politically untouchable. Even former Governor Sarah Palin is a strong supporter, and Alaska voters beat back a recent industry-backed campaign to dilute the annual dividend.

Consider every American to own one “share” in America, Barnes asks his readers. And then work out a way to give each shareholder an annual dividend in the profits generated for the country from the usage of the environment and the broader public sphere: Develop cap-and-trade systems so that carbon polluters pay their way; charge for groundwater withdrawals; create financial transaction taxes paid by large financial companies who currently utilize America’s trading and legal infrastructures for free; create profit taxes on oil and mineral extraction; charge large Internet companies rent (or royalties or licensing fees—the terminology is less important than the outcome) for use of the Internet infrastructure and charge phone, television, and radio companies for use of the electromagnetic spectrum.

It’s in these details that this plan morphs from conservative to radical. If Barnes has his way, companies long used to freeloading off of the public—and having that freeloading purchased by well-paid lobbyists and protected by a captive political class—will be faced with far higher bills than they are used to. The more those companies pollute and otherwise wreck the natural environment, the more those bills will increase. Corporations that have effectively engaged in a modern-day Enclosure Movement, privatizing the benefits of large parts of the environment and the economy, will be made to financially compensate the public for the lost access.

Berrett-Koehler Publishers

On the flip side, individuals long used to working for wages that can’t cover all of their needs will find that their families qualify for many thousands of dollars a year in “dividend” income to supplement paychecks of dwindling reliability. Barnes projects that each resident would receive roughly $5,000 per year in dividends—or $20,000 for a family of four—thus locking into place a viable subsidy that would catapult low-income families into something approximating economic security. Don’t think of it as a government giveaway, he argues, in a Digger-like turn; think of it as an empowered citizenry reclaiming essentially looted public property.

A similar system is being developed in Vermont, via a proposed Common Assets Trust, which would raise money from taxes on pollution and other socially harmful practices and pay dividends to each resident while bulking up social investments such as education and public libraries. Several tribal communities across the country have also embraced a form of collective ownership and wealth-sharing. The principle has been institutionalized in California, via utility bill credits, as a part of the state’s effort to encourage utility companies to reduce greenhouse gas pollution. Barnes reports on local government initiatives, such as in Sherman County, Oregon, where a booming wind energy project has generated large tax windfalls that have allowed the county to pay $590 annually to local households.

Overseas, a mixed analogy is sovereign wealth funds. While some of these are run by corrupt regimes and benefit only a privileged few, elsewhere they have been used to shore up vital public services. Norway has taxed oil production and other usages of public resources in order to sock away huge amounts of money for public investments, cash distributions, and the protection of expansive social safety net systems. According to Barnes, Norway’s fund has assets of roughly $1 million per Norwegian. It’s such a large amount that the state has shied away from cash handouts, instead investing heavily in education, job training, health-care services, and the like.

The social dividend becomes, in Barnes’s telling, both a stunningly effective redistributive tool and a way of reining in some of the most anti-environmental business practices. “Linking nature’s well-being to that of our middle class is the key to harmonizing capitalism with nature,” he writes. “If that connection isn’t made, nature’s rent can’t rise very much, and markets will continue to overuse her.”

With Liberty and Dividends for All does a lot in relatively little space. Over the next few years, the Social Dividend concept will enter into the broader conversation about how to craft a new economy—based on environmental and equity ideas too often absent from current growth-model conversations. If the Occupy Movement put the spotlight on economic inequality, Barnes has now defined a particularly creative solution. By itself, Barnes’s proposed Social Dividend won’t change the underlying power dynamics that generate such wealth extremes in the first place. But it does have the potential to transform our comprehension and politics. Such an idea for reform deserves to be taken very seriously. 

Fossil Fuel Companies are the biggest Threat to Life.

                                                          Comments due by April 5, 2015

“Will we go ahead?” asked Shell CEO, Ben van Beurden, rhetorically, about the oil company’s plans to drill in the Arctic. “Yes if we can. I’d be so disappointed if we wouldn’t.” Van Beurden had the grace to concede that his plans “divide society,” but he seemed unable to comprehend that they might condemn it.

From new research showing that recent sea level rise is “far worse than previously thought”, to updated confirmation of how far we are transgressing our planetary environmental boundaries, an almost daily accumulation of evidence seems unable still to connect van Beurden’s words to their full implication.

What if, instead, he had said to the press conference gathered to hear Shell’s quarterly financial results a few days ago: “We wish to inform you that our business plan is to destabilise permanently the climate on which you, your families and society depend.”

Harsh? Perhaps, but their strategy will end the party for the rest of us, so that their corporate party might continue. In fact, it seems that extreme weather in the form of drought is already breaking hearts in Brazil by forcing cities to cancel carnival, the greatest party of all.

It’s ironic. Those who argue it’s a good idea to respect nature’s various thresholds (like not making farming so toxic that you poison the bees who kindly pollinate our food crops) traditionally get labelled as fun-free spoilsports. But it seems it’s those who recognise no limits at all who represent the greatest threat to life’s party.

While the global industrial exploitation of nature drives a mass extinction event on land and sea, it becomes ever clearer that our own well-being is dependent on the general condition of the environment. Our health, both physiological and psychological, is deeply connected to and relies on the diversity of life.

Now, a new global calculator developed by the Department of Energy and Climate Change, suggests a course of action to prevent irreversible warming that could be as good for the web of life as it is for our quality of life. Radical changes to farming, transport, food and fuel will be needed, but it envisages a world of spreading forest canopies, clean, quiet electric transport and healthy, increasingly vegetarian diets. With such a potential win-win, why would anyone choose bad times with business as usual? The status quo is tenacious.

If you look at the UK’s biggest lobbying groups at the centre of European power in Brussels, their scale seems to be in direct proportion to the damage they do and how likely they are to resist progressive change. Oil, finance and aviation are all in the top five. And, even as the economics of fracking and remote oil exploration, such as in the Arctic, have fallen apart, their lobbies remain persistent and audacious. How else could a Conservative party, which extols the notion of an English person’s home being their castle, be persuaded to promote changes in the trespass law to allow fracking firms to drill beneath homes without the owners’ permission?

Logic, consistency and science become inconvenient to indefensible positions. When the US Senate last month voted on whether climate change was real and caused by human activities it was creating future folklore. Accepting the first, but not the second proposition, the Senate put its debate on a par with the famous, and now seen as absurd, 1925 Scopes ‘Monkey’ case in theUS, which effectively put the theory of evolution on trial.

History is littered with the sorrow of foreknowledge of terrible things about to happen. “We wish to inform you that tomorrow we will be killed with our families,” a line written in a letter by Tutsi pastors in 1994 must be among the saddest words ever written, as they proved correct and became the title of a book on the Rwandan massacres. Like the Holocaust of half a century earlier, there were signposts pointing toward impending atrocity. Yet, a strange disbelief about the possibility of truly extreme action left even informed observers paralysed.

Don’t we now have enough foreknowledge on global warming to call a halt in the face of those who would not only burn all currently known fossil fuel reserves, but search for more?

Knowledge and learning from history are themes in The Edge of Extinction: Travels with Enduring People in Vanishing Lands, by the author Jules Pretty who draws a map of hope from the mountains of China to the Russian steppe and the snows of Canada. He describes an astonishing diversity of human experience in which our species has learned to live well with, rather than against, nature and often each other.

Done intelligently and not dogmatically, we might still make a pleasant and lasting home for everyone on our blue and green planet. But, to make the most of it and keep the party going, we’ll have to stop clinging to dead economic models which wreck our environmental foundations. Because, sadly, for those excited by the possibility of planetary relocation, the nearest known other Earth-like planet is around 13 light years away and would probably take a few hundred thousand years to get to. That’s a long time to wait to get another party started, when you can keep the one you’re already at going strong. (The Guardian)

A California town decides whether to drill or not?

                                                    Comments due March 29, 2015

— This quaint and quirky seaside community south of Los Angeles has had a conflicted relationship with the oil industry for close to a century. It has variously approved oil drilling, banned it, approved it and prohibited it again. During one yes­on­oil stretch, it contracted with an energy company to put 34 wells on a 1.3­acre city maintenance yard a few blocks from a stretch of beach that normally bustles with surfers and swimmers. On Tuesday, the residents of Hermosa Beach are going to vote yet again on an oil and gas drilling initiative — whether to allow a contract with the energy company E&B Natural Resources Management to proceed despite a current drilling ban. The contract, which could mean hundreds of millions of dollars for the local government, received final approval from the City Council in 1992, but it has been in limbo ever since. A vote to block the drilling would come at an unusual cost: $17.5 million in damages to the energy company, the equivalent of about half the annual general fund budget in this city of almost 20,000 people. There have been voter initiatives to restrict oil drilling, particularly fracking, up and down the California coast, but none seem to have quite the complications and emotions associated with the one here. Across this community on a hillside rising up from the beach, homes are blistering with signs urging a no vote on Measure O, as the drilling initiative is known: “Keep oil out of Hermosa.” All five members of the City Council, including the mayor, have urged voters to defeat it, despite the huge penalty — part of an agreement the city signed with the company to end a lawsuit — and the loss of future oil revenue. “It’s a little more than we probably should have paid,” Mayor Peter Tucker said, referring to the deal for potential damages. “But if it gets us out of this constant, constant oil issue we’ve had hanging over us for 30 years, I think it’s money well spent.” “We are not an oil town,” Mr. Tucker said. “We don’t need the money.” E&B has begun an all­out campaign to persuade voters to approve the initiative, including the kind of television commercials that seem more suited to a governor’s race. (No local cable for this campaign: E&B says it has bought time on Fox News and CNN.) The advertisements, with a backdrop of sun­dappled beaches and comforting music, dispute claims that the project would harm the environment and note that the method of drilling would mean no unsightly oil platforms on the horizon. The wells would drop straight into the ground before turning toward the oil under the ocean. Officials said the project was being jeopardized by unfounded fears in a state that has long been protective of the environment and wary of oil companies. “It’s the California coastline, and that’s always a challenge,” Michael Finch, a vice president with E&B, said. “We suffer from the ‘I don’t want it in my backyard’ syndrome. But you are talking about a 1.3­acre site that would be behind a 35­foot wall.” He said it would be more environmentally sound to drill for the oil here and put it right into the California distribution system than to ship it from across the globe. The campaign has set off fraught neighbor­versus­neighbor debates about the future of this peaceful community, while fueling pointed questions about how the city ended up in such a financially vulnerable position. (City officials noted that the energy company had originally pushed for a much higher penalty for breaking the contract.) An environmental­impact statement commissioned by Hermosa Beach listed nine potential areas of concern that it said the company would be unable to mitigate, including air quality, aesthetics and noise. “Hermosa Beach is a real small beach town,” said Hany Fangary, an environmental lawyer who is a member of the City Council. “We like the feeling of a beach town. If you have someone coming in and putting 34 oil wells right near the beach, it changes the character of the city.” Supporters of the project say the fears voiced by opponents — declining property values, offensive odors and the potential for a spill that could spray fuel into the water, on the beach or over neighboring houses — are exaggerated. “I’m very much in favor of it,” said Jim Sullivan, a commercial real estate broker. “It’s the best thing to come down the road for Hermosa Beach in its entire history.” Concern is driven in no small part by the conspicuous location for the proposed wells: a maintenance yard, now used to store city vehicles, that is in the middle of the city and surrounded by homes and businesses. For months at a time, drill rigs would soar as much as 110 feet, and construction is supposed to take at least three years. This is hardly a community of beachfront mansions. The streets are lined with small (but not inexpensive) homes where people, though able to feel the sweep of Pacific Ocean breezes, do not exactly have privacy: The entire community fills just 1.4 square miles. “We are all kind of crammed in here,” said George Schmeltzer, 76, a former mayor who has lived here for 53 years and is a leader of the opposition. “You can hear your neighbor brush his teeth. We are off­kilter in a pleasant kind of way.” “It’s not an atomic bomb,” he said of the project. “But doggone it, it doesn’t seem right for a residential neighborhood.” The company anticipates that the drilling would produce 35 million barrels over the 34­year life of the project, producing a potential $500 million windfall for Hermosa. (The revenue projection was made when the price of oil was close to $100 a barrel; it is about half that now.) But the more pressing question may be whether to pay $17.5 million to terminate the drilling contract. The initial ban on drilling was passed in 1932, about 13 years after California awarded Hermosa Beach the tidelands with the oil fields. In 1984, with the promise of much­needed revenue for the city, voters approved initiatives granting two exemptions to permit oil drilling. In 1986, the City Council approved the first version of a contract that would be repeatedly amended over the next six years, awarding drilling rights to a company that was a predecessor to E&B. In 1995, voters reinstated the ban on oil drilling, leading the company to sue for damages. After years of litigation, the city in 2012 said it would let drilling begin only if approved by a ballot measure, and agreed to pay E&B the penalty if the initiative was defeated. The city has a surplus of close to $7 million that it has put aside to help pay the penalty. The rest would be paid in roughly $800,000 annual installments. “An $800,000­a­year payment to preserve the quality of life and the special beach community that we have certainly seems worth it,” said Stacey Armato, one of the leaders of the anti­drilling effort. (NYT March3, 2015)

EXXON settles with NJ over Environmental Damage.

                                      Comments due by March 15, 2015

A long-fought legal battle to recover $8.9 billion in damages from Exxon Mobil Corporation for the contamination and loss of use of more than 1,500 acres of wetlands, marshes, meadows and waters in New Jersey has been quietly settled by the state for around $250 million.

The lawsuits, filed in 2004, had been litigated by the administrations of four New Jersey governors, finally advancing last year to trial. By then, Exxon's liability was no longer in dispute; the only issue was how much it would pay in damages.

The stakes were high, given the enormous cost the state's experts had placed on restoring and replacing the resources damaged by decades of oil refining and other petrochemical operations, as well as of the public's loss of use of the land.

"The scope of the environmental damage resulting from the discharges is as obvious as it is staggering and unprecedented in New Jersey," the administration of Gov. Chris Christie said in a court brief filed in November.

But a month ago, with a State Superior Court judge believed to be close to a decision on damages, the Christie administration twice petitioned the court to hold off on a ruling because settlement talks were underway. Then, last Friday, the state informed the judge that the case had been resolved.

The parties have not announced the deal publicly, and it still must be approved by the judge. But some legal and environmental experts ​who were told about the agreement asked why New Jersey would suddenly settle a case that it had fought strenuously for more than a decade.

Richard B. Stewart, a New York University law professor and a former head of the Justice Department's environmental division, noted the "striking disparity between the damages claimed, which have been exhaustively litigated, and the settlement amount," particularly with a judicial ruling expected soon.

Mr. Stewart said it was hard to assess the agreement without knowing the evidence. But he added, "It raises questions."

The documents that made reference to the settlement, which had not been filed publicly, were obtained after a request by The New York Times. They do not reveal the settlement amount; the figure was provided by two people who were told about it, and who spoke on the condition of anonymity because the deal was not yet public.

A spokesman for Mr. Christie referred questions about the settlement to the attorney general's office. A spokesman for the acting attorney general, John J. Hoffman, said the office had no comment, as was its practice with pending litigation. Exxon also declined to comment.

Peter H. Lehner, executive director of the Natural Resources Defense Council, said that New Jersey, "in the first instance, should be applauded for bringing this and for pursuing it aggressively over the course of four administrations."

Photographer | CNBC

Governor Chris Christie

"But," Mr. Lehner continued, "some will wonder about the benefits of settling now, rather than after the judge's ruling."

The settlement comes at a time when Mr. Christie, a potential contender for the Republican presidential nomination in 2016, is experiencing the lowest approval ratings of his tenure, and has been forced to defend his decision to reduce state pension payments.

The state chapter of the Sierra Club this week criticized his budget proposal, saying it would hurt environmental protections. Kevin Roberts, a spokesman for Mr. Christie, said on Thursday that the governor stood by his environmental record, and that the Sierra Club had been "reflexively partisan in its criticism of the governor."

A review of state campaign finance databases shows no record of Exxon's making any campaign contribution to Mr. Christie, either through its political action committee or directly, in those years available online. In fact, the records show, Exxon made no contributions of any kind in New Jersey from 2009 to 2013 at the state level.

The damage to the Bayonne and Linden (known as Bayway) sites dated back many years. "Contamination of the land and water at the Bayway and Bayonne refineries began as early as the 1870s in Bayonne and the early 1900s in Bayway and continues to this day," the state's expert report says.

"Today, many of these dredge fill areas still look and smell like petroleum waste dumps," the report continues. "Spilled materials from pipeline ruptures, tank failures or overflows, and explosions have resulted in widespread groundwater, soil and sediment contamination."

The attorney general's office said in its brief in November that the sites had been "adversely affected by or buried under the discharge of hazardous substances," including over 600 identified chemicals.

On the Bayway site, a 2007 court opinion noted, marshland adjacent to a creek was "now mostly covered with a tar of petroleum products or filled with other hazardous constituents and debris." Another 45 acres comprised "sludge lagoons," one-time tidal marshes that had been used as hazardous waste disposal facilities.

The state had set the cost of primary restoration of the sites at $2.6 billion; the state also sought $6.3 billion for what it described as compensatory or "loss of use" damages, intended "to make the public whole."

The damages trial, held before Judge Michael J. Hogan in Mount Holly, N.J., lasted from January through September 2014. The judge was to rule once the closing briefs were filed in November.

Exxon had vigorously contested the lawsuit, and in its brief after the trial said that it had long ago taken responsibility for cleaning up the contamination; that there were "fully functioning" marshes, forests and wildlife on the sites; and that, because they had been closed to the public for years, the state was seeking a windfall "for something the public never lost."

Exxon argued that the state's arguments "ignore the evidence, science and the law" and that no damages should be awarded.

It was unclear when the talks began. A deputy state attorney general, Richard F. Engel, emailed Judge Hogan on Jan. 29, saying the parties were engaged in "serious settlement negotiations" and asking him to "defer the issuance of a decision in this matter."

Two weeks later, Mr. Engel again wrote to the judge, saying "a few critical points" still needed to be resolved and asking that he delay his decision until Feb. 20.

By then, Mr. Engel added, "we are confident that we will have an agreement or our efforts to settle will have ended."

​Then last Friday, Mr. Engel ​wrote to Judge Hogan​, saying the parties had reached a settlement "which is memorialized in a final, agreed upon, consent judgment​."

​Mr. Engel said the agreement would be submitted for public comment in April and would then be submitted for court approval in May, "unless comments received during the public notice and comment period necessitate a change."

If the settlement is approved, Judge Hogan will presumably not release his opinion, and ​whatever damages he would have set will not be made public.

(NYT and CNBC)