Monthly Archives: May 2007

The worst possible objection to personal carbon credits

Tony Benn speaks at an anti-war rally, 2006Britain’s aged socialist icon Tony Benn demonstrates why socialists can’t be trusted with environmental policy as he denounces the idea of tradeable personal carbon allowances.

I’m not hot on the idea myself, which is being kicked around by Britain’s current environment minister, because I can’t imagine any government introducing something just about as complex as a second currency to any modern economy without screwing it up — actually, probably more complex than a second currency, because its value would have to be re-pegged periodically according to how much carbon … — look, anyway, nobody could get it right.

But get a load of Benn:

In the war it was a criminal offence for me to sell my ration book to somebody else, because the purpose of the rationing was to see that everybody had a fair share … If we need to ration [carbon expenditure] that’s one thing, but fair distribution is the key to it. If the world is short of resources we have to ration them, which is different from selling them… The earth is a common treasure; it is a crime to buy and sell it for personal gain.

So in Benn’s vision, virtue cannot be rewarded. Also, during the war, nobody traded rations of stuff they didn’t want to get stuff they did, and if they did, it was wrong. Why would anybody listen to this?

(Photo credit: “Tony Benn,” Flickr/BinaryApe)

Bush’s climate-change proposal is meaningless.

I do not understand all the fuss over President George W. Bush’s call for a round of talks about capping greenhouse-gas emissions among the 15 top emitters. How could anybody take seriously any document that contains a sentence like this one:

  • In creating a new framework, the major emitters will work together to develop a long-term global goal to reduce greenhouse gasses.

The only, and I mean only, thing of consequence in the thing is a deadline set after the 2008 presidential election. That’s all that matters.

Otherwise, he’s just joined Canada’s Conservatives in declaring the severity and urgency of the problem loudly in the hope that nobody will notice he’s not interested in solving it. This is a tactic, not a strategy.

Hasta la vista, CO2

Vancouver skylineBritish Columbia’s greenhouse-gas emissions dropped so much in a newly released batch of stats that even the provincial government is surprised, according to the Vancouver Sun.

The new figures from Environment Canada, covering 2004-05, say that in that year emissions fell 1.6 megatonnes, to 65.7 megatonnes from 67.3 megatonnes — and it happened during a period of significant economic growth: emissions fell nearly 2.4 per cent as the economy grew 3.7 per cent.

Some of the reasons for the reduction included a decreased use of personal vehicles, which saw emissions drop 5.2 per cent, or half a million tonnes.

Boating also saw a major decrease of 7.4 per cent, or 200,000 tonnes and manufacturing decreased by 11.7 per cent, or 750,000 tonnes.

“We’ve actually seen people driving less,” said [Environment Minister Barry] Penner. “Higher gasoline prices likely encouraged people to reduce unnecessary trips in their personal automobiles and/or move to more efficient vehicles,” he said.

“And we’re hearing anecdotal evidence that boaters are just not burning as much fuel on the water.”

Penner attributed the decrease in greenhouse gases from manufacturing primarily because of changes in efficiency, such as reductions in power consumption by Alcan at its giant aluminum smelter in Kitimat. He also said there was a decrease of 100,000 tonnes of greenhouse gases coming from landfills thanks to new technologies to burn off methane gas.

The announcement happens to come on the same day that California Governor Arnold Schwarzenegger, probably the highest-profile green pol in the United States, hit B.C. during his whirlwind tour of Canada. Stroke of luck, eh?

B.C. Premier Gordon Campbell seems to have rebranded himself and his government along Schwarzenegger’s lines, making a dramatic cut in B.C.’s greenhouse-gas emissions, to 10 per cent below 1990 levels by 2020 a top priority. (The Sun kind of botches this point, but never mind.) The province still has about 22 megatonnes to go, but at least it’s headed in the right direction.

Campbell and the Governator signed a nice but meaningless (“This Memorandum of Understanding is not intended to be legally binding or to impose legal obligations on either British Columbia or California and will have no legal effect”) agreement to emphasize each other’s green credentials today.

The emissions drop just reported, however, actually happened before Campbell went green. It just happened on its own, as a result of individuals and industrial companies making decisions to burn less fuel to do what they needed to do.

Incidentally, this is a convenient illustration of the arithmetical sleight-of-hand that intensity-based greenhouse-gas emissions caps can do. By my math B.C.’s “real” emissions drop is 2.4 per cent, but when you factor in the economic growth, it’s a drop in emissions intensity of nearly 6 per cent. Amazing how a bit of growth can exaggerate even a small change in reality.

A test for a good carbon-trading system

David Jeffery of Oikos points to a column in Australia’s Sydney Morning Herald in which think-tankist Clive Hamilton lays out a seven-point test for an effective carbon-trading system. (An advisory panel to Australia’s right-of-centre prime minister John Howard is expected to recommend a cap-and-trade system today.) This is Jeffery’s point-form summary:

1. Comprehensive coverage of the main emissions sources.
2. A clear target.
3. No loopholes. (Hamilton reckons there shouldn’t be offsets or credits from actions like planting trees. I disagree, but the challenge is ensuring that offsets are genuine and robust.)
4. Permits should be auctioned, not handed out to existing big polluters for free.
5. It should be able to link in with foreign schemes.

I think this one’s problematic given all the trouble Europe has had with its carbon market. Easy linkages with poorly run markets (Hamilton cites Europe as an example of the sort of market any new one should link to). Back to the list:

6. Allow the market to work unconstrained.
7. Ensure medium-term economic certainty (ie, fixed emissions caps) but longer-term flexibility to adjust caps if necessary.

Let’s run Canada’s plan for heavy greenhouse emitters, which includes a limited cap-and-trade system for emissions, through this test:

  1. Mostly, although new facilities get a start-up holiday from compliance.
  2. Yes.
  3. No. Technology credits are purchasable for $15, rising to $20, though in diminishing quantity as time goes on.
  4. No.
  5. Limited. The government says it’ll explore linkages with the United States.
  6. Yes, except for the safety-valve of technology credits.
  7. No. Intensity-based caps are unpredictable because they depend on two variables (emissions and economic activity) rather than one.

A good hard whack at the latest U.S. Farm Bill

Ken Cook of the Environmental Working Group goes up one side of the United States’s subsidies to its farmers and down the other on the Mulch blog:

[W]ealth and income status officially have almost nothing to do with qualifying for farm subsidies. A person of very considerable means, with an adjusted gross income of up to $2.5 million per year under federal rules, can legally collect farm subsidies that range from trivial amounts to seven figures. Taxpayers are well within their rights to take offense, or at least raise an eyebrow, all along that wasteful continuum. And big farmers (earning 75 percent of that $2.5 million AGI from agriculture) are exempt from even this laughable eligibility “limit”.

It’s also no doubt the case that some of the very largest recipients of federal farm subsidies, far from being enriched by the taxpayers’ money, would not have been able to survive at all, much less expand their operations, without a constant infusion of big government checks.

But what is to be said about a government policy that obligates taxpayers to provide hundreds of thousands of dollars in unencumbered aid every year, for years on end and with no end in sight, just to keep one business and its owners on the brink of insolvency? Isn’t that policy just as bad, in its way, as a subsidy that makes the wealthy wealthier? And why do we do so much for farm businesses and by comparison so little for factory workers laid off by foreign competition, or small businesses that struggle year after year?

Agriculture subsidies are pure vote-buys that support non-viable domestic businesses, screw Third World farmers out of access to markets that might inch them out of poverty, lead to bizarre gluts of some farm products and shortages of others, encourage monoculture and overfertilized farming, and take money from productive taxpayers to do all these things.

Feebate program works well, automakers complain

Also in today’s Globe, a lobbyist for the Big Three makers of big cars complains about the federal feebate system (extra taxes on gas guzzling cars, a tax rebate on highly efficient ones) working exactly as it’s supposed to:

The Canadian Vehicle Manufacturers Association also cautioned that Ottawa’s scheme to subsidize more fuel-efficient cars is distorting the market, sending more than two-thirds of the cash to Toyota Canada Inc. buyers, half of which will reach purchasers of a single model, the Yaris.

Ottawa expects to extract $110-million annually by a levy slapped on purchases of so-called gas guzzlers — about $55-million of which will come from autos sold by the Big Three U.S.-based auto makers.

That number is a bit of a red herring — what matters is the cars the Big Three don’t sell, not the money raised from the buyers of the cars they do. Nevertheless, the solution is clear and to his credit, Finance Minister Jim Flaherty offers it: Make cars that qualify.

Yuppie chow defended

Loblaws organic tea boxThe Globe‘s Michael Valpy gets 900 words in today’s Globe to summarize a forthcoming research paper from Irena Knezevic, an academic who doesn’t like that big corporations are selling organic food.Valpy:

She says [big companies like Coca-Cola and Kraft] products – along with those sold by retail giants such as Loblaws and Wal-Mart – are turning organic agriculture into product brands that are becoming “a marketing tool more so than an assurance of quality, let alone an assurance of a fair and sustainable production process.”

Officials from Loblaws and Wal-Mart were unavailable for comment last night.

This trend, says Ms. Knezevic, is driven by consumer demand, with the food industry’s eager willingness to jump on the bandwagon and make organic consumption efficient and slightly less expensive by mass-producing – creating only a slightly “greener” version of the dominant industrial food system but separating organic agriculture from its central concepts.

It takes a normative judgment to decide what organic agriculture’s “central concepts” are. And indeed, Knezevic makes one: “Organic agriculture is by definition intertwined with environmentalism, resistance to corporate globalization and the ‘back to the land’ movement.”

Knezevic, if her paper is being summarized fairly, seems to want to include not only factual declarations about the use of pesticides and fertilizers and other planet-friendly techniques, but also small-scale farming and an anti-corporate attitude on the part of the farmer.

Significantly, Knezevic is a PhD candidate in a communications and culture program, not anything to do with food science or economics. She’s presented a previous paper on “How corporations and the PR industry make big pharma look good.”

It seems to me that again we’re asking an “Organic” label to do something it can’t possibly — indicate not just the chemical conditions under which a particular food item was produced, but the political and economic conditions, too.

All this having been said, while I don’t share Knezevic’s apparent judgment that “organic” should be interchangeable with “good” in every way meaningful to the environmental left, she’s right that there’s a danger in labels that are effectively meaningless. There’s a danger that as organic foods become increasingly attractive positional goods — things people like to show off to demonstrate how cool they are — some shady labelling standards will spring up to approve any old thing. If indeed a particular mango was grown organically, but as a result comes from so much farther away from the market than an industrial mango that the environmental benefit is obviated, buying organic doesn’t do anybody any favours.

But neither does saying big companies can do nothing right just because they’re big companies, or saying that efficient production aimed at making organics more affordable for more people is necessarily bad.

The paper comes out for real on Friday, and I’m looking forward to Knezevic’s wrestling with these problems.

Liquid-coal subsidies aren’t needed, but are probably coming anyway

The New York Times reports on a passel of subsidy programs winding their way through the U.S. Congress, aimed at boosting the production of coal-based liquid fuel.

The ostensible purpose: independence from foreign oil for security reasons. A major factor: an amazing number of powerful congressmen and -women come from coal-producing states, including Rep. Nick Rahall of West Virginia, who’s chairman of the House Natural Resources Committee (what could possibly be wrong with that?).

The downside: coal is, well, coal, and liquefying it apparently produces twice as much greenhouse gas as producing the same amount of diesel, and about half again as much as the same amount of gasoline. Those in the industry insist they can capture and sequester the CO2, to be fair, although they’re not noticeably doing so yet.

The subsidies and subsidy-like proposals:

Among the proposed inducements winding through House and Senate committees: loan guarantees for six to 10 major coal-to-liquid plants, each likely to cost at least $3 billion; a tax credit of 51 cents for every gallon of coal-based fuel sold through 2020; automatic subsidies if oil prices drop below $40 a barrel; and permission for the Air Force to sign 25-year contracts for almost a billion gallons a year of coal-based jet fuel.

The truly mystifying bit:

Industry executives contend that the fuels can compete against gasoline if oil prices are about $50 a barrel or higher.

Oil closed at $63.15 US a barrel today.

Wouldn’t energy independence be better achieved by kicking the habit, rather than finding a more reliable dealer?

Cap-and-trade versus a carbon tax, Part II

(Here’s Part I of my ruminations on this.)

The Los Angeles Times, in a long and well-researched editorial, comes out in favour of a carbon tax (free registration required). The argument comes down to three points:

  1. Carbon markets are very hard to run well;
  2. A cap-and-trade system tends to sharpen already difficult economic conditions, such as when a desperate shortage of power in a hot summer forces power companies to resort to coal. People’s electricity bills will shoot up to cover both the spot price of electricity and the shortage of carbon credits needed to use coal to generate it.
  3. Volatility discourages green innovation, because investors like steady returns.

I’m a little skeptical of that third point — lots of investors are willing to take flyers on long shots that could pay off big, because that’s how big fortunes are made — but the difficulty consumers might face unexpectedly in a system that’s working exactly the way it’s supposed to is undeniable.

The Times is skeptical that something called a “carbon tax” could get past the demands of politics, but makes the case anyway:

[F]or voters, taxes are radioactive, while carbon trading sounds like something that just affects utilities and big corporations. The many green politicians stumping for cap-and-trade seldom point out that such a system would result in higher and less predictable power bills. Ironically, even though a carbon tax could cost voters less, cap-and-trade is being sold as the more consumer-friendly approach.

A well-designed, well-monitored carbon-trading scheme could deeply reduce greenhouse gases with less economic damage than pure regulation. But it’s not the best way, and it is so complex that it would probably take many years to iron out all the wrinkles. Voters might well embrace carbon taxes if political leaders were more honest about the comparative costs.

I doubt that. They might embrace carbon taxes if they were matched with cuts in other consumption taxes, though.

Update, May 30: John Whitehead of Environmental Economics isn’t impressed. It’s mostly a point-by-point fisking, so it doesn’t lend itself to quoting; I think he labels some things “incorrect” that are just differences of opinion, but it’s very much worth a read. He concludes:

Let me be clear, I’m a fan of economic incentives. I would be delighted with implementation of a carbon tax or cap-and-trade to deal with climate change. Yet, I don’t see either as wildly superior to the other. Whenever someone advocates one as wildly superior to the other I grow suspicious (i.e., where’s my wallet). You should too.

The L.A. Times piece very explicitly doesn’t advocate a carbon tax as being wildly superior to a cap-and-trade system. It weighs the two, looks at the very serious practical problems the Europeans have encountered, and finds that a carbon tax comes out as a better choice. The second-last paragraph begins: “A well-designed, well-monitored carbon-trading scheme could deeply reduce greenhouse gases with less economic damage than pure regulation. But it’s not the best way, and it is so complex that it would probably take many years to iron out all the wrinkles.” That’s about as measured as you can get while still taking a side.

An organics challenge in Britain

A major British organics-certifying organization is considering stripping its labels from food that’s been flown in from abroad, according to the Guardian:

The problem stems from the public’s desire to consume more and more organic crops and meat. Demand for organic food now greatly outstrips UK farmers’ ability to supply it. Supermarkets imported 34 per cent of all the organic food they sold in 2005, most of it by air.But increases in the numbers of flights in and out of Britain are also linked to environmental worries because air transport is considered to be a major cause of greenhouse warming. For the Soil Association, which claims it has impeccable green credentials, this link is embarrassing.

Technically, an “Organic” designation is meant to convey information about how food is produced and grown — with an utter minimum of chemicals and so on. How it gets to market is a separate question, notwithstanding some people’s argument that an apple that travels 1,500 miles before being sold gets coated in dirty dust and fuel fumes.

Expecting an “Organic” label to stand in as a general stamp of approval for environmental friendliness is a mistake, though of course a lot of people do. It’s like assuming that a hybrid car engine is necessarily low-emissions, even though some hybrid vehicles use the extra battery power to provide more torque, rather than higher efficiency.

Buying local is good, but many fruits and vegetables can only be coaxed out of the ground in unfriendly climates with the addition of fertilizers and the protection of pesticides. Maybe what’s needed is different labels: green for organic/local, blue or something for organic/flown-in, yellow for non-organic/local, and no label at all for God-knows-where-this-is-from-and-what-they-did-to-grow-it.