Commentary

In a recent paper for E3 Network, Elizabeth A. Stanton and Frank Ackerman present the seven key questions that the public should ask about any proposed climate legislation. The answers to these questions will determine whether the proposed legislation will be successful in reducing emissions and how it will impact households.

Today we address question two from this paper: will price ceilings on carbon prices interfere with emission reductions?

A cap on carbon emissions will drive up carbon prices. A ceiling on carbon prices means that there is an upward bound to how high carbon prices can climb.  A ceiling removes some of the uncertainty regarding carbon prices; businesses and households can expect that carbon prices will not exceed pre-determined levels. But does a price ceiling, or what is often referred to as a safety-valve, make it less likely that carbon policy will deliver the emissions reductions we need? According to Stanton and Ackerman: (more…)

In a recent paper for E3 Network, Elizabeth A. Stanton and Frank Ackerman present the seven key questions that the public should ask about any proposed climate legislation. The answers to these questions will determine whether the proposed legislation will be successful in reducing emissions and how it will impact households.

Today we tackle question one: are the emissions targets low enough to do the job? (more…)

Though Congress has failed, once again, to deliver national climate legislation, the issue simply will not go away. As Russia burns, Pakistan drowns, and law makers inside the Beltway melt from one of the hottest summers on record, the urgency of the climate crisis mounts in the public’s eye. If the recent suite of Congressional proposals to cap carbon emissions are essentially sunk, and if Congress is headed back to the drawing board, we need to avoid some of the predictable pitfalls and deliver a bill that the majority of Americans can support.

In a recent paper for E3 Network, Elizabeth A. Stanton and Frank Ackerman present the seven key questions that the public should ask about any proposed climate legislation. The answers to these questions will determine whether the proposed legislation will be successful in reducing emissions and how it will impact households. (more…)

A global market that trades in the rights to produce carbon emissions and to use the atmosphere’s limited absorptive capacity is rapidly emerging. The global carbon market was valued at $126 billion in 2008, only several years since trading began in earnest. Some credit the carbon market with leveraging capital for emissions reductions, clean energy and energy efficiency. Others fear profiteering from the sale of illegitimate emissions reductions credits that could undermine global emissions reduction goals.

Carbon is the most ubiquitous input into economic activity; we produce emissions by powering our industries, homes, and cars, by producing and transporting our food, by deforesting our landscapes, and by other activities. The carbon market, therefore, has the potential to become the world’s largest commodity market. In this day and age when markets have met with intense scrutiny for engendering ruinous boom-bust cycles, it  seems almost an anathema to defend the carbon market as a tool for addressing climate change. Yet, this defense of carbon markets is rooted in the notion that markets often fail. (more…)

The following in an excerpt from the recent E3 Network report, Emission Reduction, Interstate Equity, and the Price of Carbon, by Elizabeth A. Stanton and Frank Ackerman.

If carbon emissions from energy production are the problem, is nuclear power the solution? After all, nuclear reactors split uranium atoms to generate heat; no fossil fuels are used on site, and no CO₂ is released into the air from the power plant itself. Plenty of voices can be now heard advocating construction of nuclear plants in order to save the environment. The Obama administration supports new loans and incentives for nuclear power, as does the Kerry-Lieberman climate and energy bill. (more…)

It’s time for Congress’ summer vacation, and once again, they’ll be leaving the Capitol without adopting a climate policy. Is it impossible to pass a bill that’s good for both the earth’s climate and the American taxpayer? Or did Congress just drop the ball again?

The good news is, a well-designed climate policy could slash greenhouse gas emissions, while putting money in the pockets of most Americans. The bad news is, that’s not the policy that Congress has been debating.

What would it look like, to do climate policy the right way? In a recent study, released by Economics for Equity and Environment (E3 Network), Frank Ackerman and I explored the impacts on emissions, and the costs to households throughout the country, under a wide range of scenarios. We found two basic principles for designing a fair, effective climate policy: We need to put a price on carbon dioxide emissions, and we need to use the resulting revenues wisely. (more…)

This week, E3 economist Juliet Schor (Boston College) contributes a guest post based on her latest book Plenitude: the new economics of true wealth (Penguin Press 2010).

The Plenitude Path to Sustainability by Juliet Schor

Despite the lack of policy progress on climate change and ecosystem degradation there is no shortage of solutions currently on offer. While the specifics may differ, those getting most attention share one characteristic—they focus on technological change. Whether it’s Pacala et al’s wedges, Jeffrey Sachs’ plan to reduce carbon emissions through plug in hybrids and carbon capture and storage, McKinsey’s cost abatement curve approach, or Jacobson and DeLucchi’s 100% renewables by 2030 plan, the emphasis is on technology. Most conspicuously lack a number of obvious changes that would reduce emissions and footprint. They barely address households’ lifestyles and “behavioral” changes (the first McKinsey report calls these too “difficult”), ignore changes in distribution of assets and structure of enterprises, and are light on the conditions of knowledge generation and dissemination. Furthermore, with the exception of the green jobs literature, they generally fail to integrate their analyses with current labor market conditions. As readers of this blog are well aware, the dominant discourse also pays scant attention to the equity implications and opportunities of environmental policy. (more…)

While Congress was busy dropping the ball on capping carbon emissions, another debate was brewing inside of the beltway. This debate, which involves economists and various federal agencies, is over the social cost of carbon (SCC). 

The SCC may be the most important number you have never heard of. It asks, how much will each ton of carbon dioxide that we release into the atmosphere cost us in damages, both today and in the future? If the answer is a big number, then we ought to make great efforts to reduce greenhouse gas emissions. If the answer is a small number, then the case for reduction is weaker, and only easy or inexpensive changes seem warranted. Estimates of the social cost of carbon could be used by federal agencies such as the Department of Energy and the Environmental Protection Agency to justify regulations as wide-ranging as tail pipe emissions standards, energy efficiency standards, and greenhouse gas emissions from power plants and industry. (more…)

In my last post, I described the Fundamental Theorem of Climate Economics as “You break it, you buy it.” Most everyone has seen this policy in place somewhere or another, and most people accept it as more or less fair to both sides of the equation. In law, it’s called the doctrine of strict liability and it applies in many situations.

One of the aspects of the rule that is important to the climate conversation is that, from an economic standpoint, it doesn’t matter if, once you break something, you actually pay the owner for the damage. The You Break It You Buy It doctrine is important because, when it works, it gives people the incentive to behave appropriately. In the context of a gift shop with lots of fragile objects for sale, the objective is to get us to take enough care to avoid breaking the merchandise. (more…)

Environmental justice is at the heart of the debate over how to solve the problem of climate change. At the global level, international negotiations are stalled on the issue of how to distribute the burdens of global emissions reduction between countries. Within the U.S., the political stalemate over climate policy can be explained, at least in part, by concerns over the potential for unequal class and geographic impacts of a carbon cap or tax.

There is an expansive literature documenting environmental disparities along race and class lines, yet a recent paper by Michael Ash, James Boyce, Grace Change, and Helen Scharber at the Political Economy Research Institute reaches a surprising conclusion: environmental justice is good for white folks too.  (more…)