Legislating Science

The Utah House has declared that CO2 is harmless. The essence of the argument in HJR 12: temperature’s going down, climategate shows that scientists are nefarious twits, whose only interest is in riding the federal funding gravy train, and emissions controls hurt the poor. While it’s reassuring that global poverty is a big concern of Utah Republicans, the scientific observations are egregiously bad:

29 WHEREAS, global temperatures have been level and declining in some areas over the
30 past 12 years;
31 WHEREAS, the “hockey stick” global warming assertion has been discredited and
32 climate alarmists’ carbon dioxide-related global warming hypothesis is unable to account for
33 the current downturn in global temperatures;
34 WHEREAS, there is a statistically more direct correlation between twentieth century
35 temperature rise and Chlorofluorocarbons (CFCs) in the atmosphere than CO2;
36 WHEREAS, outlawed and largely phased out by 1978, in the year 2000 CFC’s began to
37 decline at approximately the same time as global temperatures began to decline;

49 WHEREAS, Earth’s climate is constantly changing with recent warming potentially an
50 indication of a return to more normal temperatures following a prolonged cooling period from
51 1250 to 1860 called the “Little Ice Age”;

The list cherry-picks skeptic arguments that rely on a few papers (if that), nearly all thoroughly discredited. There are so many things wrong here that it’s not worth the electrons to refute them one by one. The quality of their argument calls to mind to the 1897 attempt in Indiana to legislate that pi = 3.2. It’s sad that this resolution’s supporters are too scientifically illiterate to notice, or too dishonest to care. There are real uncertainties about climate; it would be nice to see a legislative body really grapple with the hard questions, rather than chasing red herrings.

Climate bills LITE

Over Christmas, with little fanfare, two new approaches to climate legislation were introduced, perhaps in response to the possibility that Boxer-Kerry’s prospects are dimming. VentureBeat has a summary. The Kerry-Lieberman-Graham approach is just a “framework” and too vague for me to sink my teeth into. The Cantwell-Collins CLEAR act on the other hand is a real bill. Unlike the 1000-page ACES (Waxman-Markey), it’s just about cap & trade,  so it’s refreshingly brief – 39 pages. CLEAR sets targets,

CLEAR targets

Source: EPA & EIA STEO

As in Waxman-Markey and other bills, the target trajectory is  mostly linear. That actually doesn’t make much sense, because it implies a much greater proportional effort late in the game. Emissions reductions finish at >6%/year. If GDP growth is 3%/year, that implies a final intensity reduction rate of >9%/year, which is fairly delusional. Unlike Waxman-Markey, which is strictly linear, the first three years are flat, then there’s a race to the 2020 target. It’s good to harvest the low-hanging fruit quickly, but the 2015-2020 trajectory seems a little sporty.

The real emissions trajectory is unknown, because there’s a safety valve price ceiling and floor, initially set at 7 to 21 $/tonCO2eq, and rising at the real interest rate, plus and minus 0.5%, respectively. The resulting prices neatly bracket EPA’s expectations for Waxman-Markey without international offsets (Scn07 on graph):

CLEAR price corridor

Source: EPA W-M analysis.

CLEAR is upstream, covering fuels at the minemouth, wellhead, import terminal, etc. This strikes me as a big advantage administratively and improves coverage as well. Offsets, funded by a set-aside from auction revenues, play a much smaller role, which is OK, because with better coverage there won’t be as big a market. International offsets are also assumed to play a much smaller role (a few % of reductions, vs. roughly half of W-M reductions). That makes the true target trajectory much more aggressive, and raises expected permit prices a lot. Whether this is good or bad is ambiguous; one drawback is that there’s potentially less “carrot” for developing countries, and less funding for forestry.

Unlike Waxman-Markey, CLEAR allocates most (75%) permits to citizens as “shares”. That’s bad news for coal-fired electric utilities, but possibly good news for low income residents of coal-intensive areas. My guess is that the totally flat distribution of revenue would more than compensate for regional inequities for the bottom quintile, who would come out ahead. The remaining permits go to a “CERT” fund for worker, business, and community transitions, stranded assets, targeted relief for energy-intensive industries exporting to countries without emissions controls, R&D, offsets and other usual suspects. There’s room for a lot of good here, but also a lot of pork. I think it would make sense to partially phase out the fund in the future, as its revenues would likely rise beyond the need.

Like W-M, CLEAR includes a border adjustment (effectively a tariff on the embodied carbon content of imports). This, plus the potential trade measures in CERT, should make labor happy and infuriate WTO partners like China.

Strategically, CLEAR seems to leave more of the detailed design of the market and related mechanisms to the executive branch. I think that’s a good thing. It’s impossible to have a sensible debate about a piece of legislation the size of the Oxford dictionary. Add in the fact that this proposal is much closer to economic ideals for a cap & trade (upstream coverage, flat rebates, safety valves) and I’m liking this a lot better than ACES.

Draft Climate Bill Out

AP has the story. The House Committee on Energy and Commerce has the draft. From the summary:

The legislation has four titles: (1) a ‘clean energy’ title that promotes renewable sources of energy and carbon capture and sequestration technologies, low-carbon transportation fuels, clean electric vehicles, and the smart grid and electricity transmission; (2) an ‘energy efficiency’ title that increases energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry; (3) a ‘global warming’ title that places limits on the emissions of heat-trapping pollutants; and (4) a ‘transitioning’ title that protects U.S. consumers and industry and promotes green jobs during the transition to a clean energy economy.

One key issue that the discussion draft does not address is how to allocate the tradable emission allowances that restrict the amount of global warming pollution emitted by electric utilities, oil companies, and other sources. This issue will be addressed through discussions among Committee members.

A few quick observations, drawing on the committee summary (the full text is 648 pages and I don’t have the appetite): Continue reading “Draft Climate Bill Out”