19 May 2009: Opinion

The Flawed Logic of
the Cap-and-Trade Debate

Two prominent — and iconoclastic — environmentalists argue that current efforts to tax or cap carbon emissions are doomed to failure and that the answer lies not in making dirty energy expensive but in making clean energy cheap.

by ted nordhaus and michael shellenberger

In early May, anxiety among climate activists about the fate of cap-and-trade legislation erupted into a full-throated roar with the release of a scathing open letter by Dr. James Hansen. In it, the NASA scientist called a bill by Representatives Henry Waxman and Ed Markey a “temple of doom,” savaging it for being complex, corrupt, and “a minor tweak to business-as-usual.” Hansen called for a carbon tax in its place, one that would establish a “substantial and rising price on carbon emissions.”

Hansen was right about Waxman-Markey. It will do little to reduce U.S. emissions, will transfer billions to incumbent energy interests in the form of free pollution permits, and will send billions more to timber, agriculture, and other interests, here and abroad, in the form of dubious “offsets.” But Hansen’s analysis of why climate legislation has gone so terribly off the rails is wrong.

Hansen argues that the problem has to do with the mechanism by which Waxman-Markey would establish a carbon price — a cap-and-trade system. In this, Hansen is joined by many other greens and economists, who argue that cap-and-trade is a cumbersome and economically inefficient means of establishing a carbon price, one that is particularly vulnerable to manipulation by polluters and politicians.

On the other side of this debate stand many business interests, some prominent climate scientists, and green groups like the Environmental Defense Fund and the Natural Resources Defense Council. They argue that
No government in the world has been willing to place a high price on carbon.
cap-and-trade is a superior approach, because it guarantees certainty of actual emissions reductions, and a more pragmatic one, because it does not require politicians to vote for a new tax on pollution. They say taxes are just as prone to manipulation by politicians and polluters and that simple carbon taxes exist only in the ivory tower equations of academic economists, not in the real, rough-and-tumble world of politics and legislating.

The truth is, however, that neither of these approaches will lead to significant reductions in carbon emissions, and for a basic reason: Both Hansen and those he criticizes focus on pollution regulation and pricing to make fossil fuels more expensive, rather than on innovation to make clean energy cheap. This approach ignores the history of technological breakthroughs, which has primarily been driven by public investment. And public investment in clean energy is what is needed today, because no effort to achieve deep reductions in carbon emissions, domestic or international, will succeed as long as low-carbon energy technologies cost vastly more than current fossil fuel-based energy.

The Power of Positive Thinking

For more than a decade, the cap vs. tax debate has taken on a ritual quality, with carbon tax advocates conveniently ignoring the reality that the reason that capping and trading carbon has been so ineffectual has been the unwillingness of politicians to establish a high price on carbon. Similarly, cap-and-trade advocates have ignored the fairly obvious fact that carbon caps are not binding and provide no certainty of reductions if policies substantially limit the maximum amount that emitters will be required to pay to reduce greenhouse gases.

Ironically, both sides share the same pollution paradigm, which views the massive transformation of the global energy economy as fundamentally the same as past pollution battles over acid rain and air pollution. In fact, the debate pits one central objective of that paradigm, the establishment of strict pollution caps, against another, making industries pay to pollute.

But the debate between carbon tax and cap-and-trade proponents is a false one. The problem is that no government in the world so far has been willing to establish and sustain a high price on carbon, whether through taxes or caps. This is due to at least four substantial and interlinked issues: the political power of incumbent energy interests, low consumer tolerance for high energy prices, the economic impacts that substantially raising energy prices will have on key energy-intensive sectors of the economy, and — most importantly — the substantial price gap that continues to exist between fossil fuels and clean-energy alternatives.

Yet so powerful has been the mental model imposed by the pollution paradigm that neither party to the tax vs. cap debate has much acknowledged either the ways in which the climate crisis differs from past environmental problems or the larger socio-political context in which any climate policy must function. Clean energy technologies cost much more than fossil fuels. Binding caps requiring deep and rapid reductions in carbon emissions must allow carbon prices to rise to whatever level they must (read: very high) in order to comply with the cap. As a result, no society has been willing to establish high carbon prices, regardless of the mechanism.

The serial failures of the European Emissions Trading System, the recent rollback of emissions reduction commitments in Australia, and the looming passage of the Waxman-Markey legislation in the United States are evidence not that carbon trading is the “temple of doom,” but rather
Environmentalists must look to low carbon prices to fund public sector research into clean energy.
that most political economies are highly resistant to high carbon prices. Yet when confronted with this reality, proponents of traditional cap-and-trade or tax schemes have had three responses. The first has been to produce a blizzard of economic models that downplay the economic impacts of high carbon prices. But even when these models show that long-term benefits outweigh the costs, someone will still have to pay in the short-term, and those interests — whether consumers or industries — are well-represented in the U.S. Congress.

Others, such as Peter Barnes of CapandDividend.Org, have proposed refunding to consumers all revenues generated by auctioning pollution allowances, under the assumption that doing so would blunt consumer opposition to high carbon prices and the energy price increases they bring. But there is no evidence that rebates would have this effect. Moreover, the strategy would do nothing to soften the impacts on regional economies and energy intensive industries.

Another strategy, prominently championed by author Bill McKibben, argues that it will be necessary to build a much more powerful movement to mandate the deeper emissions reductions and higher carbon prices needed to stabilize the climate. But there is strong evidence that as long as such a movement is predicated on deeply cutting carbon emissions, no matter the cost, such a political tipping point is unlikely to arrive — at least not before climate catastrophe is so close at hand that substantial mitigation actions will be largely beside the point.

All three strategies have been offered with the best of intentions, but have allowed greens and others to ignore the ways in which economic and political realities constrain carbon pricing. Greens have sunk enormous political and intellectual capital into an emissions reduction framework that simply can’t succeed — at least as long as the price gap between fossil fuels and clean alternatives remains large and so requires the maintenance of high carbon prices to close. This is what we identified in 2007 as “global warming’s Gordian Knot”: price carbon too high and provoke political backlash that results in the evisceration of emissions caps and other policies to reduce emissions; price it too low, and you don’t have a sufficiently high price to drive the innovation and technology investment necessary to make the transition to clean energy alternatives.

For this reason, we argue that environmentalists must shift from looking to high carbon prices to drive private sector energy innovation to using low carbon prices to fund public sector research, development, and deployment of clean energy technologies.

Rather than focusing on emissions reduction targets and timetables, a new framework will establish price declines in the real, unsubsidized costs of clean energy technologies as the explicit objective of climate and energy policy. Rather than attempting to establish high carbon prices globally in order to create sufficient incentives for private interests to invest in energy technology innovation, this new framework focuses on
Far better to set a low carbon price and implement a simple and transparent program.
establishing very modest and politically sustainable carbon prices in developed economies to fund very large public investments in technology innovation and to help bring competitive technologies to market. Rather than viewing private interests and markets as the primary driver of technology innovation, this framework recognizes public investment as the most effective method of driving technology innovation. Rather than insisting that developed economies “go first” by achieving symbolic but largely irrelevant emissions reductions, the new framework sees developed economies as critical laboratories that will finance and invent the low-cost technologies that will make deep global emissions reductions possible.

The serial contortions of cap-and-trade programs around the world result from the political necessity of containing the costs and price impacts while maintaining the fiction that strict pollution caps are being enforced. Offsets promise cheaper reductions somewhere else. The liberal distribution of free pollution allowances to energy interests and industry promises to ameliorate the impacts of high carbon prices. The various schemes to borrow allowances from future compliance periods promise to keep carbon prices from rising too high. When all is said and done, what we get is a program where costs are intentionally opaque, implementation is corrupt, and benefits are few. Little wonder that Rep. Rick Boucher (D-VA), who represents a coal-dependent state, recently told reporters that he expected cap-and-trade legislation to “create the opportunity for increasing coal production.”

Far better to accept that the price for carbon won’t be high and implement a simple and transparent program to establish a stable and low price. Such an approach is compatible with either a carbon tax or cap-and-auction with hard price caps and floors. Because the impacts of the price on end users, consumers, and businesses are small, this approach does not require figuring out how to refund the proceeds to consumers, buy off impacted industries, or flood the market with cheap offsets, which is what Rep. Waxman and Rep. Markey have spent the last month doing. And this approach allows all the revenues generated by the program — $30 billion or more annually, even with a low carbon price — to be dedicated to the development and deployment of clean energy technologies and infrastructure.

This approach will not offer certainty of emissions reductions. But neither will carbon taxes or cap-and-trade, as Europe has proven. What it will do is explicitly direct climate and energy policy toward the single variable that holds the key, both politically and economically, to achieving deep reductions in global carbon emissions: the broad availability of low-cost, low-carbon energy technologies.

The End of the Pollution Paradigm

The Waxman-Markey cap-and-trade legislation represents the final absurd expression of the failed pollution paradigm that has defined climate policy for over a decade. The long obsession with pollution caps, targets, and timetables has produced legislation that, in the name of reducing greenhouse gas emissions by 20 percent by 2020, will allow regulated industries to emit as much as a third more carbon in 2012 than they did in 2005 and close to 10 percent more in 2020.

This program will have little, if any, impact on U.S. emissions. But it will allow President Obama to arrive in Copenhagen next fall touting a mandatory U.S. program to cap and reduce its carbon emissions, thereby returning the U.S. to the community of good global citizens that have made such commitments without discernibly altering the actual trajectory of their growing emissions. What all share with the United States is an unwillingness to establish carbon prices high enough to drive significant emissions reductions.

Meanwhile, soaring rhetoric from greens and Democrats about the importance of bold public investments to build a clean energy economy has proven empty. The Waxman-Markey bill would, under the rosiest of scenarios, invest just $9 billion annually in technology innovation, defined broadly, compared to a whopping $41 billion to buy off utilities and heavy industries and $19 billion for offsets. If the price of carbon dioxide is $5 to $10 per ton — a level Waxman-Markey supporters like the Center for American Progress's Joe Romm acknowledge it could be in the early years of the program — there would initially be just $3 billion to $6 billion for energy technology and just $250 million to $500 million for R&D. Those levels are only a five to ten percent increase over current energy R&D spending, and one-thirtieth or one-sixtieth of the $15 billion annually in new clean energy R&D investment President Obama has consistently promised. In the end, greens supporting this bill have chosen weak caps, riddled with loopholes and giveaways, over serious investment in clean energy technologies.

For the rest of us, including the many greens who now see the writing on the wall in Congress, the time has come to question whether the long effort to establish high carbon prices and strict carbon caps has finally run its course. It is time that we get serious about how to achieve deep reductions in emissions with the low carbon price we will get rather than the high carbon price we may wish for.

This may not be the choice that many greens would like, but the alternative is another decade of attempting to implement policy predicated on high carbon prices without the necessary price signal for those policies to have any chance of succeeding. If this choice were not clear already, the impending cap-and-trade legislation likely to pass the U.S. House this summer should leave no further doubt.

Correction, May 21, 2009: An earlier version of this article incorrectly stated the position of Joe Romm, of the Center for American Progress, on the expected auction price of carbon dioxide under a proposed cap-and-trade system. Romm has written that the price of one ton of carbon dioxide will initially be low — roughly $5 to $10 — before rising to no more than $15 a ton in 2020.

POSTED ON 19 May 2009 IN Biodiversity Business & Innovation Energy Forests Policy & Politics Sustainability Water Africa North America 

COMMENTS


You two make a good point — we need clean energy, not more bureaucracy.
Posted by Matthew Watkins on 19 May 2009


I'm afraid that Nordhaus and Shellenberger do not speak to me.

Some good points, but there's a little too much ego in them — as if they have the oh-so-obvious answers which everyone else is blind to. The battle to avert climate change is going to be messy and confusing, and there are no pain-free perfect answers. By catering to our desire for easy solutions, they subvert the real struggle that is happening right now.

Bart / Energy Bulletin
Posted by Bart on 19 May 2009


In March of this year Terry Dinan of the Congressional budget office spoke to a subcommittee of the House Committee on Ways & Means, on the distributional consequences of a cap & trade program; he noted that “[t]he profits resulting from a free allocation of allowances would accrue to shareholders, who are primarily from higher-income households…. Low income households, by contrast, would benefit little if allowances were given to energy producers for free, and they would still bear a disproportionate burden from the price increases that would nonetheless occur.” It’s disconcerting, to say the least, to follow the compromises contained in the developing (900 plus page) Waxman-Markey bill.

Public investment in clean energy technology is crucial, yes; but can this alone address the global warming crisis soon enough? Isn't there a troublesome, real time lag between developing and implementing the new technologies on a sufficiently large scale? If so, in the interim, we're going to have to reduce our energy usage. The simplest, least 'open-to-abuse', direct way to encourage the necessary adjustment in behavior is through increased cost --and a carbon tax. The jargon of the debate needs to shift. And just because no government’s “been willing to establish and sustain a high price on carbon” so far doesn’t mean it can’t happen. These are unprecedented times after all.

Posted by elizabeth kessenides on 19 May 2009


Nothing thrashes about more fiercely than a dying paradigm! As usual, Michael and Ted are the supreme realists in the climate debate and I like the logic here.

The whole point of cap and trade is to create the market conditions necessary for viable clean energy at massive scale. Well why don't we cut to the chase and simply provide those market conditions directly? Because of conservative fears that 'Big Government' will be running our lives.

It's time to get over this tired argument and realize that Govt can do more than prop up banks and auto industries to avoid economic collapse — it can invest directly in REAL climate solutions to avoid global environmental collapse and the political chaos that will follow. And just as military investments gave us freeways and the internet — government investment and R&D can bring cheap clean energy to all, and relegate carbon pollution AND carbon taxes to the scrap heap of the past.
Posted by Andy Mannle on 19 May 2009


Well obviously the solution to the problem is renewable energy production that is cheaper than using fossil fuels.

What a terrible shame that solution isn't here yet. And what do you know, the clock has already run out and we need to stop the pollution starting *right now*. If the government can't provide elegant solutions like carbon taxes or a cap-and-trade market, then it certainly can start shutting down power plants.

Suddenly a tax doesn't look so bad.
Posted by Ernie on 19 May 2009


I am glad that Nordhaus and Shellenberger and Speth are letting us know when they think compromise equals defeat. Sometime the most effective action is to not show up at a battle that that can't win the war. To some of us it has gone beyond being an issue, to something that is closer to life and death. How did the stakes get this high, many many compromises has gotten us to this point.
Posted by Chris Pratt on 19 May 2009


Unfortunately, I have to agree with Bart. I find this piece full of finger pointing and arm chair quarterbacking. Of course we need more money towards renewables, but how are we going to go about doing that funding?

Its like Norhaus and Shellenberger think if you throw enough money at R&D, the world will suddenly develop the perfect fuel to save all of us from impending climate disaster. Well, what if nobody finds cold fusion or the 50 percent efficient solar panel, then all that money has been wasted on research and no true development? We need to place a price on carbon — period. It's only when our leaders stop compromising and start usinf scientific data to beat it into the heads of the great unwashed.
Posted by John E Johnson on 19 May 2009


Coal, petroleum fluids (and uranium) are material resources. Make them illegal as "energy" resources in two decades and tell American enterprise to get going. Economics as practiced today is (ecologic) fraud.
Posted by James Newberry on 19 May 2009


The problem is capitalism. Let's face it, you can't have a system of wage work and be able to sustain business.

Businesses survive on profit, without profit the dry up, any act of conservation hurts jobs and businesses which in turn means less consumption which in turn means less jobs, which in turn means higher unemployment.

Capitalism is the problem you can't have a world where people are competing for more and more wealth and expect a peaceful world.

Everyone here is a hypocrite, you all want to hang onto your gold while the ship goes down and not lose your socio economic position.

While it's easy for us to write such articles about severe impending problems, us not doing anything, nor getting militant about it and punishing our friends and neighbors who don't anything isn't good for anyone.

Truth be told at this point most people don't give a fuck, they are too wrapped up in their lifestyles and seeking wealth for retirement and leisure. They want free time + wealth to enjoy it.

This means more war and devestation into the future unless some miracle of technology or artificial intelligence comes along that makes resources less scarce and much easier to recycle as well as enhancing human intelligence and especially their LOGIC.

Humans are some of the most illogical creatures imaginable.

Millions of years of war and poverty means we are a race failures, a race of ignorant rubes.
Posted by Joe Klooney on 19 May 2009


These two think too highly of themselves and their ideas. It's as if they are the only ones who have the answer. Their past critique of the environmental movement came during the peak of the right-wind pendulum and they were too eager to freak out and say that everything has changed and must change. I don't disagree that there is great room for improving the movement, but I don't feel the need to trash all the sincere folks out there trying to do just that. Know they were off base there, my skepticism is raised here.
Posted by Doug on 19 May 2009


Out here in Australia, the number one on the bestseller list is" Heaven and Earth" by the geologist, Ian Plimer. A well reasoned, evidence-based challenge to the prevailing theory of anthropogenic global warming, backed by over 2000 references. All you guys talk about is carbon pollution, [meaning co2 pollution], when co2 is NOT a pollutant, and in the short history of this planet has never yet been shown to lead temperature. Concrete may be a pollutant;cities may be a pollutant, [from a green perspective] but co2 is vitally necessary for life on earth. If you really want clean power, go nuclear like the French. The problem is that you dont really want cheap clean power. Which leading luminary of the left stated "giving unlimited cheap power to humanity would be like giving a loaded machine gun to a baby"? Look it up. Cheers.
Posted by ian hilliar on 20 May 2009


I agree with the others who point out the lag between the R and the D in R&D. (Not to mention actual implementation.) We need to address this problem now — preferably with a revenue-neutral carbon tax COUPLED with unprecedented investment in R&D.
Posted by CTF on 20 May 2009


This piece was great, but I had to read through to paragraph 14 until I got to your actual point — in journalism, that's called burying the lede.

I was disappointed that you didn't consider feed-in tariffs or some other solution. Seems perfectly
compatible with your stance — which is that it's better to make the good stuff cheap.
Posted by Christopher Mims on 20 May 2009


"By catering to our desire for easy solutions, they subvert the real struggle that is happening right now..."

Yes of course, the real struggle, as Maurice Strong (Founder of the UN Environment programme) has pointed out is this ...“Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsibility to bring that about?”

http://mickysmuses.blogspot.com/2009/03/international-man-of-mystery.html
Posted by Ayrdale on 20 May 2009


Ted & Michael-

Where's the beef? You continue to hammer home this core message without answering the basic questions about the effectiveness of your proposal. Good messages are fine, but they need to back real policy solutions.

So can you answer these basic questions?

How much $$ is needed to reduce emissions to the levels necessary and when will we see those reductions?

What price point do we need? How can we ensure that coal, oil and natural gas won't drive their prices even lower to save their business?

How would this revenue be raised, which services should we cut or would we just borrow the money (that might be ok)?

Who gets to decide who gets this money? How do we ensure that it gets to the right people & not just the most powerful lobbyists — ie nuclear, clean coal & corn?

I guess that would be a start.
Posted by Sam on 21 May 2009


James Lovelock says the CO2 already in the atmosphere is enough to make it too late to avert catastrophe yet he says we need to move to nuclear power. I assume he means nuclear power is an up-and-running industry that could make a difference right now and the other clean techs cannot. He says in his latest book that just the amount of CO2 expelled by 7 billion humans is 20 percent of the present emissions so population has always been the main problem.
Posted by spearman on 22 May 2009


There's a lot wrong here.

How are you going to build new energy systems to compete with old energy systems. New wind and other low carbon fueled energy is always going to cost more than old coal and other carbon fueled energy just like a new 2009 house is going to cost more than the 10 000 dollar house built in 1950.

Look at other ways that pollution was stopped and reduced. Cars were mandated by law to pollute less and this required car manufacturers to put antipollution equipment on cars making them cost more. If we had spent money for research and development and deployment on non-polluting car engines that cost less than polluting car engines, you would still be looking for the fantasy engine and we would still have the smog pollution.

Fantasy solutions will solve complex problems, but they are just that, fantasy. We need reality arguments and solutions to solve actual and reality problems.
Posted by Ronald Lindeman on 22 May 2009


See ClimateProgress.org May 22 for post on Nordhaus and Shellenberger controversy.
Posted by James Newberry on 22 May 2009


FYI if you read Romm's May 22 attack on Shellenberger/Nordhaus, Breakthrough's response is posted here: http://thebreakthrough.org/blog/2009/05/romm_attacks_breakthrough_for.shtml
Posted by Devon on 27 May 2009


If the scientists like Hansen et al are correct, we have less than ten years to bring CO2 levels down to where they might avert catastrophic climate change. But all the money in the world thrown at renewable energy isn't going to meet this deadline. Why? Because most schemes are based on the assumption that we need to find sufficient renewable energy technologies that will NOT change our present pattern of consumption. Even those promoting "green jobs" work on this assumption, which is that the current consumer economy — consumption of goods and energy — can continue unabated, and that no hardship or sacrifice need be involved as we move into a renewable energy economy.

Australian Ted Trainer has done a detailed and very convincing analysis of why this is not true, but even intuition and empirical evidence tell us the truth. The result is that few people, Nordhaus & Shellenberger included, are willing to even acknowledge the need for requisite and rapid deep cuts in energy consumption. Whether you agree that government investment, not the private sector, must lead the way into renewables, or whether you disagree, it is an
inescapable fact that without deep mandatory cuts in energy consumption, involving regulation, price, rationing and mandatory standards, there will not be sufficient time (even if there is sufficient money) to head off climate chaos. In the end it is quite stupefying to realize that few people aside from Hansen and a handful of other scientists are actually cognizant of physical reality sufficiently to overcome their timidity and their whistling-in-the-dark attitudes about renewable energy. Simplistic answers may be comforting for some but they belong in myths, not science journals and certainly not in public discourse, which deserves more honesty than it is getting. In brief, renewable energy cannot come on line quickly enough to head off disaster.
Posted by Lorna Salzman on 29 May 2009


We know a lot more specifically what we don't want: CO2 emissions, than what we do want: conservation, efficiency, alternatives, renewables...

If there was one clear technology that would solve the climate problem it might make sense to just subsidize development of that technology enough to make it beat cheap fossil fuels. But given that we need to use multiple strategies and develop many new technologies, pricing carbon so those alternatives can get going is absolutely necessary.

As Yale economist William Nordhaus noted recently:

"Economic participants-thousands of governments, millions of firms, billions of people, all making trillions of decisions each year - need to face realistic prices for the use of carbon if their decisions about consumption, investment, and innovation are to be appropriate... without a strong price signal, there is simply no hope for making the vast number of decisions in a remotely efficient manner... Raising the price of carbon is [thus] a necessary condition for implementing carbon policies in a way that will reach the multitude of decisions and decision makers over space, time, nations, and sectors."

In short: Price carbon emissions or die.


Posted by James Handley on 31 May 2009


It's so concerning that one of the greatest threats to our world seems destined to failure.
I know I'm not as clever or as knowledgeable as the people leading the debate on cap and trade but what I do know is that the cost of things must start to equate to the true cost from an environmental perspective.

So many government initiatives are actually anti-initiatives - they just keep the status quo for large industries with money to spend on lobbyists and what the world needs is change, if we don't the next crunch won't be to credit it'll be the climate crunch beginning to bite - water, and food, will be the new 'liquidity' problem facing us.
Posted by green office on 31 May 2009


The only problem with the theories relating to cap-and-trade or emissions program is the problem that it will not stop climate change and the anthropogenic part of the climate change theory (Human CO2) is so minuscule that even if we stopped tomorrow it would make little difference. Why spend Billions and billions on a trading scheme that will achieve nothing? Stop the battle and divert to R and D, provide clean water, better sewage, better crops, adapt, adapt, adapt. The planet always changes. I know I will probably cop some flack but I used to be a believer in the theory that CO2 was causing dangerous climate change but the more I researched the less I am convinced. I am now very skeptical and don't trust government with new TAXES, and this one ETS/Cap-and-Trade will achieve nothing except hurt the people who can least afford it.
Posted by CO2 is not a pollutant on 06 Jun 2009


I would really like to see the EPA-OBD II Annual Vehicle Emissions Inspection Law closely examined, and changed.As it stands right now, it is entirely possible for any Gasoline powered Vehicle, from 1996 to the present, to fail it's Emissions Inspection, for not emitting enough Polluting Exhaust Emissions ! All such Vehicles have on board Oxygen [O2] Exhaust Sensors.These O2 Sensors are set up to detect a level of Polluting Exhaust Emissions that would indicate that Gasoline is being consumed by an Engine at 14.7 parts of Air to 1 part of Fuel.If there is a low level of Oxygen, and a high level of Pollution, a Vehicle will fail it's Emissions Inspection, as well it should.But, Gasoline can be safely vaporized into a mixture that is 100 parts of Air to 1 part of Fuel.With this, even the largest SUV could easily get 50 + MPG, and emit a fraction of the Emissions of a conventional 14.7/1 Fuel System, with an increase in Power, and much longer Engine life.I'm not the first to figure this out.Far from it ! For proof, do a search on [the late] Tom Ogle, and Charles Nelson Pogue.Then, go to http://energy21.freeservers.com/bookrep.html .But, even if it is not to be believed that Fuel Vaporization is entirely possible, it's illegal to even attempt to do, with any Vehicle, 13 years old, or newer.O2 Sensors are set up to detect that Fuel is being consumed at 14.7/1. A mixture of 100 / 1 will not emit enough Polluting Exhaust Emissions to register on O2 Sensors.When such a Vehicle is connected to an OBD II Emissions Inspection Analyzer, an O2 Sensor Failure Code will be generated, which will result in a failed Emissions Inspection.O2 Sensor Exemptions are permitted for Vehicles that have been legally converted to operate on Natural Gas, Propane, or Hydrogen, and are Registered as such.But not for Vaporized Gasoline.Thus, it is entirely possible, under this EPA-OBD II Vehicle Emissions Inspection Law, for any Gasoline Powered Vehicle, 13 years old, or newer, to fail it's Emissions Test, for not emitting enough Polluting Exhaust Emissions ! As long as this insane 14.7/1 Law, that only benefits Big Oil, remains in effect, the only way to make Vehicles more "Efficient" will be to make them lighter, and smaller.This has got to change ! I have asked the Question many times ; "Why is it illegal for any Gasoline powered Vehicle, 13 Years old, or newer, to emit too little Polluting Exhaust Emissions"? So far, not one Big Oil Executive, Politician, or Concerned Environmentalist will answer the Question.Those that have replied can't seem to come up with an Answer.Can you ?
Posted by Gary Kirkland on 08 Jun 2009


I agree entirely with Sam's post on May 21. Thank you, Sam, for asking these very basic questions. In my view, this whole debate quickly becomes so "wonky" and out of touch with the central concerns that drive all real life solutions.

Nordhaus and Shellenberger are described in the heading as "iconoclastic," yet I couldn't help but wonder how their fundamental argument isn't simply for a lower level of tax on carbon than that called for by proponents of high-carbon costs, one in which the revenue generated from this "low level tax" is entirely directed toward R andD. If so, how does this represent an iconoclastic approach? This sounds more like a proposal that might come from a moderate Republican here in the U.S. Perhaps even McCain...What am I missing? Am I just too simple-minded? (It wouldn't surprise me.)

As Sam says, "Where's the beef?" What does this mean in terms of real dollars on the price of carbon? How is this administered in real life? I found myself reading this article and wondering whether the authors have any real substance (or an actual plan) beyond this superficial analysis. If so, then let's hear it.

Thanks for the opportunity to post.
Posted by Mike on 19 Jun 2009


My goodness! How on earth can they mess up a carbon trading system? It's like the purest expression of market dynamics! Get a scarce resource, split it up into identical chunks, auction them and then let them be traded. Do a bad auction and people can game it, do a good auction and those who pollute more pay more. Full stop.

No special free credits needed, just a central pot of money that you use to fund research. Every government department would have to buy through exactly the same system, and would have procurement for this as for any other resource.

This money can then be used to fund low rate loans to fund energy efficiency, the returns of which would pay back the loan, or to fund new research directly.

Fortunately once the system is in place you can just scale down the allowances rapidly so as to produce the more accurate carbon price, and as you do put that subsidy money into research. Equally the cap can be adjusted to fit the science. Just agreeing to the cap is a good start.
Posted by Josh W on 20 Jun 2009


The problem I see with Waxman-Markey is its reliance on carbon capture and sequestration. CCS uses 40 percent of generated power to “capture” CO2. The technology has been around for decades in the fertilizer, methanol, and petrochemical industry and no engineer or scientist has been able to develop a solvent which substantially improves performance.

So, on the “capture” side of the equation we will need to mine and transport (by rail and ship) twice as much coal as we do today just to break even. That will release tons more methane, mercury, and radioisotopes.

On the “sequestration” side of the equation, we will need tens of thousands of miles of pipelines to transport captured CO2 to caverns where it can be dumped to service the 9200 thermal power plants we have in the United States. The pipelines from Florida alone would be over 3000 miles (a conservative estimate).

Finally, what will the CO2 pumped into the ground displace? Methane and other GHG's which are currently entrapped?

Finally, the largest CCS system built is 1/7th the size of what would be needed to handle a medium sized coal fired power plant.

So lets add it up---twice as much coal, twice as many power plants, a capturing plant for each power plant, tens of thousand of miles of pipelines, and displaced underground gases, all so we can bury CO2.

It seems that under Waxman-Markey the “green jobs” being created are in coal mining, rail transportation, maritime transportation, power plant operation, steel fabrication, and pipeline construction. These are not what I picture when I think of “green jobs.”
Posted by Rod Sullivan on 06 Jul 2009


I like our technological civilization. Are you willing to live in huts without food and medicine? Would you like to be killed by infectious diseases or drink polluted water? How does a 50 percent infant mortality sound? We should stop trying to learn how the universe came to being.

The energy problem is amenable to solution once people realize that there are laws of physics. Even if CO2 is not a problem (the models that neglect clouds effects is questionable), there are other pollutants that coal gives off. Nuclear Power is clean and with fast neutron technology will provide power indefinitely. The wastes are gone in a few hundred years. Wind and Solar are intermittent and often not near population centers. They might produce 25% of the energy. It takes 4500 Wind Turbines weighing 235 tons to equal 1 nuclear plant, a 10 fold increase in raw materials.
Posted by Allan M Salzberg MD, PhD on 12 Jul 2009


While carbon cap-and-trade may succeed in reducing carbon emissions within the countries that practice it, the carbon market will always be riddled with inefficiencies. As a financial product, carbon will never be free of the political influences that reduce scarcity and, therefore, cause market players to trade carbon differently than they would the commodities that release it – making price forecasting an art best left to the gods.



Posted by Emily Gallagher on 06 Aug 2009


Even though cap-and-trade has many flaws, I think it will strongly work as a weapon of raising awareness in the consumers of carbon-prone products. The taxed money value is only as a bi-product. The real achievement will be creating a concept of wrongness and penalize the culprit, even if nominally. The real solution, no doubt, is clean and cheap energy.
Posted by Padam Pande on 21 Sep 2009


In the end, I think we all are looking for lower carbon emissions and a clean environment. Even though we are discussing environmental issues, most agree it comes down to the financial effect on business, especially during the current global economic crisis.

To that effect, I would have to throw my vote to the carbon tax approach. It can be implemented relatively easy, will have an immediate impact, and also begin to alter the supply/demand curve for clean fuel options. Business will do what's best for their bottom line and in the end, it's the environment that will benefit.

Posted by Jim Bisnett on 09 Jan 2010


I hope the debates stop, and people start taking action. Nice post - Now who is taking action.

Posted by Nevil Darukhanawala on 10 Jun 2010


How are you going to build new energy systems to compete with old energy systems. New wind and other low carbon fueled energy is always going to cost more than old coal and other carbon fueled energy just like a new 2009 house is going to cost more than the 10 000 dollar house built in 1950.

Posted by Webhoting vergleich on 29 Mar 2011


"I hope the debates stop, and people start taking action. Nice post - Now who is taking action. "

If people don't start a global conversation about this, action will never be taken! I commend people who take time out of their busy days to provide input on any important issue, including the impact, efficacy or lack thereof with the cap-and-trade model.

Posted by Jared on 06 Jun 2011


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ted nordhaus and michael shellenbergerABOUT THE AUTHORS
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