The Cap and Trade Delusion

HT: Rich Karlgaard

The Waxman-Markey bill that was rammed through the House last Friday—so fast that no one had a chance to read the 300 pages that were added to the bill in the wee hours of the morning, much less to give the thing some healthy debate since it purports to do nothing less than drastically alter the way the U.S. economy uses energy while saving the planet—makes some heroic assumptions that really need exposing before the Senate takes up debate on cap and trade legislation later this summer.

The whole purpose of cap and trade is to raise the cost of hydrocarbon fuels so that a) we use less of them and more of other fuels, and b) thus reduce mankind's carbon footprint in the hopes of saving the world from destructive climate change. We all know that the U.S. economy depends heavily on oil for its transportation needs. We are less aware that electricity is absolutely critical to just about everything else that takes place in our modern economy.

As this chart (which uses Wikipedia data) shows, about 70% of the electricity consumed in the U.S. comes from hydrocarbon-based fuels, and 19% comes from nuclear power plants. 10% comes from renewable energy sources, while the lion's share of that comes from hydroelectric dams. Nuclear power plants are not going to be increasing in number any time in the foreseeable future, even if Washington should suddenly turn nuke-friendly. Similarly, we're not going to be adding appreciably to the number of hydroelectric dams.

So most of the hopes of Waxman-Markey for the salvation of the planet rest on whether we can make really monumental changes in the mix of electricity generation: way less from hydrocarbon fuels and way more from renewable sources. If we want to cut hydrocarbon fuel consumption for electricity generation by, say 50%, we're going to have to increase renewable fuel use by a factor of more than 10 (i.e., from 3% to 35%). That's just not going to happen in one or even two lifetimes. And to even attempt it would be monumentally costly, since carbon-based fuels are much cheaper than renewable fuels.

Waxman-Markey also makes the huge mistake of neglecting the consequences of forcing the U.S. economy to use more expensive energy. As Peter Huber points out in his excellent essay "Bound to Burn," the poor countries of the world are the ones that control most of the world's carbon (e.g. petroleum, coal, and rain forests). Any attempt by us to limit our use of carbon-based fuels could be easily overwhelmed by poor countries' decision to use more. And as even Obama now realizes (thank goodness for small favors), we can't resort to tariff barriers to keep out cheap goods produced by countries that continue to use cheap carbon-based fuel.

Heroic attempts to push the U.S. economy in a direction that is going to be very difficult if not impossible to achieve, in the name of saving the planet based on climate models that have never proven their predictable power, are misguided to say the least, most likely extremely costly, and almost certainly ineffective in the end. Meanwhile, it is a given that they will be massively inefficient, while leading to widespread corruption and waste. Can someone please save the planet from the politicians?

Comments

[A Barrel Full:]

Up to a point I agree. However by far the biggest carbon savings are to be had from efficiency. We can very easily use less energy without much cost to our lifestyles.

However, if the bill were about fossil fuel usage rather than lobbying by interest groups, then they would have chosen a carbon tax, rather tha cap & trade.

By making a new tax revenue neutral (by reducing some other taxes), you get the impact you want without creating an economic disadvantage (overall). However, you have to be honest. Instead they are pretending that there is no cost, only benefit, something that all of us here would recognise a a free lunch, ie up there with the flying porkers.

Jun 30 05:30 AM

[Steven Hansen:]

when you are in unstable economic times and you shift the energy equilibrium - what the hell is the economic outcome??? i do not see one genius who can answer this question.

conservation is an extremely slow acting force. yes, it should always be pushed but it is not part of ingredients of cap and trade. cap and trade is meant to shift sources of energy production.

power plant construction using different energy sources will take decades to be felt. i don't know what caused this bee to get under somebody's bonnet - but i suggest they go back to school to learn the pragmatic realities.

Jun 30 06:10 AM

[I need more...:]

Not to mention it's all base on the BIG LIe. There is absolutly without a doubt no such thing as man-made global warming, climate change, or any other marketing term they want to slap on it.
- the computer model used to generate the hockey stick upwards temp prediction has been thoroughly discredited, riddled with porr assumptions
- the predicted warming trend not only did not occur, but has leveled off for 10 years, then decresed for two
- CO2 is a greenhouse gas, a pollutant? Beyond ridiculous. It's a trace gas that even if it increases 10 fold would still be swamped out. It only absorbs IR radiation in three narrow spectra.
- does anyone still have science in their lives, read data, not political posturing?


On Jun 30 06:10 AM Steven Hansen wrote:

> when you are in unstable economic times and you shift the energy
> equilibrium - what the hell is the economic outcome??? i do not see
> one genius who can answer this question.
>
> conservation is an extremely slow acting force. yes, it should always
> be pushed but it is not part of ingredients of cap and trade. cap
> and trade is meant to shift sources of energy production.
>
> power plant construction using different energy sources will take
> decades to be felt. i don't know what caused this bee to get under
> somebody's bonnet - but i suggest they go back to school to learn
> the pragmatic realities.

Jun 30 06:34 AM

[john s. gordon:]

granted the capntrade bill passed by the house is seriously flawed, and is badly in need of rework.
end-user conservation and cogeneration need to be encouraged.
everywhere in the world (but rarely in the u.s.a) you go you see district- heating systems with a topping-turbine component generating electric power/
> jack

Jun 30 09:10 AM

[fireball:]

so crap and scam will make inneficient appear more efficient by making the efficient less efficient. all at the cost to the u.s. citizen and even more costly to the taxpaying half. looks like a government plan to me.

i need more
good choice of words, the big lie. most of politics are built on big lies.

Jun 30 09:18 AM

[CLH:]

Yes global warming is a scam put out by a party completely anti-science. Why do Democrats pass bills that are not read (cap and trade and budget)? Few Democrats are literate. Its really unfair asking them to read these bills.

Jun 30 10:02 AM

[Chad Brown:]

we're going to have to increase renewable fuel use by a factor of more than 10 (i.e., from 3% to 35%). That's just not going to happen in one or even two lifetimes. And to even attempt it would be monumentally costly, since carbon-based fuels are much cheaper than renewable fuels.
----------------------...
Check your math. It has been about 2.3 lifetimes (using 65 years for a lifetime, which is conservative) since Edwin Drake made his petroleum discovery in PA. So we got from there to where we are now in just over two lifetimes. Two lifetimes is a very long time and a great deal can happen.
Your math is correct about the magnitude of the change needed from 3% to 35%. Actually, you are a little too modest. We really need an increase closer to 100x than 10x.
But let's look at what it would take to go from 3% to 35%, or a little over 10x. If it was going to be one lifetime of 65 years, the growth rate would have to be 3.9%. Wind energy generation is growing about 30 to 40% annually right now. So it has ample room to slow down. Suppose we can wait two lifetimes. To get from 3% to 35% in 130 years 1.9% growth rate is enough. So be careful when you throw around terms like "lifetime".

As for the cost of renewables versus carbon based fuels, I think you are assuming that the carbon based fuels pay a price of zero for emitting carbon. Not $100 per ton, not $15 per ton. Zero. I say let's put a price on the carbon emissions and let the markets figure out which is the cheapest energy source. Rely on markets? What a novel concept! Wonder how we could do that?

Jun 30 10:17 AM

[Alphameister:]

Just one more reason to invest beyond the shores of a very badly governed US.

Jun 30 10:28 AM

[Ferdinand E...:]

Thanks for mentioning Peter Huber's essay 'Bound to Burn'. This is not only something that everyone should read, but it is easy to read. A few thousand copies should be sent to the White House. Moreover, it is better than the work that I once planned to do, because until recently I was dumb enough to think that the TV audience needed something with a little serious mathematics - you know, like 2x + 2x = 4x.

Jun 30 10:40 AM

[yellowhoard:]

Cap and Traitor is not about saving the earth.

It is about crippling the US so no manufacturing can occur here.

Production will accelerate to China and India where there are virtually zero environmental regs.

Jun 30 11:01 AM

[Erich J Knight:]

What the CFC/Ozone success story was for raising the importance atmospheric chemistry, I feel biochar will be for carbon soil chemistry, Mycology and Microbiology. The historical climate work of William Ruddiman showing the agricultural origin of most excess CO2 begs this anthropogenic solution of soil carbon sequestration.

The same relationship I felt held for the NOX & SOX success story in raising the prospects for Cap & Trade and would mean,(with the EU lessons learned) for the cap & trade in carbon. I thought the relatively painless process for both industry and consumer in clearing the air and acid rain would offer the best carbon solution.

Dr. Hansen and the Economist magazine have turned me around with their Tax & Dividend proposal . The simplicity of calling carbon by it's name, at it's source, reduces the overall complexity, for the public most of all. This plan puts the $$ directly into the hands of consumers, they can then decide to save it by hitting the light switch or spend it by leaving the lights on.
A system to deal with CO2 equivalence of other GHGs will be complex enough by it's nature of not having a choke point source.
www.columbia.edu/~jeh1/2009/WaysAndMea...


Politically, C tax & dividend (I prefer the name Tax & Share) may be to late to the stage this year to have a legislative chance, but I am changing my arguments for it, and will spread theirs.

Here is a post concerning modification of where the dividend should go, by Folke Günther, a chemical engineer in Sweden:
Date: Wed, Jun 3, 2009 at 9:50 AM
Subject: Re: [biochar-climatechange] Emailing: 20080604_TaxAndDividen...

I agree with Jim's proposal on a global carbon tax .
However, I don't think the tax should be paid back to everybody, indiscriminately.

Instead, the tax collected to restrain emissions should be paid to those who sequester carbon from the air.
By that the counteracting measure could be very profitable
(In Sweden, the emission tax is 1 SEK per kg CO2, or 3.77 SEK (about $ 0.5) per kg carbon.)

If the same amount would be paid to those who bury char in their own land , a normal farmer, making char of the haulm could get an extra pyment of about $ 1000 per hectare! (assuming a harvest of 8 tonnes per hectare)
Many would join in. Here we are in a potential situation similar to that depicted by the anti-biochaists.
The solution to that is to restrict the payment to those following certain rules of an 'ethical' charring.
I mentioned that in my paper 'Carbon sequestration for everybody<
www.holon.se/folke/car... >' about Mrs Ruth Less.

FG

Jun 30 11:37 AM

[Erich J Knight:]

I hope this link works;
www.columbia.edu/~jeh1/2009/WaysAndMea...

Jun 30 11:48 AM

[Erich J Knight:]

Maybe this one will work, grrrrr;
74.125.95.132/search?q.../~jeh1/mailings/2008/2...

Jun 30 11:52 AM

[Jimbo:]

As Mr. Gibbs, President Obama's White House spokesman says:" We won the election". I fear this administration is going to fly the economy into the ground. The elections of 2010 and 2012 should be very interesting.

Jun 30 12:10 PM

[optionsgirl:]

There's a right way to encourage clean tech and a wrong way. They wrong way is to trade carbon tax credits, building a new industry for the likes of Al Gore.


On Jun 30 09:10 AM john s. gordon wrote:

> granted the capntrade bill passed by the house is seriously flawed,
> and is badly in need of rework.
> end-user conservation and cogeneration need to be encouraged.
> everywhere in the world (but rarely in the u.s.a) you go you see
> district- heating systems with a topping-turbine component generating
> electric power/

Jun 30 01:03 PM

[brutus6:]

" I don't know what caused this bee to get under somebody's bonnet.."

I do.

It is our intellectually lazy fellow Americans who get their news and form their opinions by watching and listening to 10 second sound bites coming from the Democrat Party's Ministry of Information (NBC, CBS, ABC, CNN, etc.). They are the ones who allowed this to happen.

Those mentally lazy Americans listened to and believed the big government Global Warming charlatans like Algore and James Hansen, without bothering themselves to seek out the devil that is always in the details. These are the same intellectually lazy Americans who helped elect Obama because His empty platitudes of Hope! and Change! and Yes We Can! made them feel good.

These Americans will always be too lazy to "go back to school and learn some pragmatic realities." That is why it is so important to debate legislation; to give plenty of time to expose the truth that's buried in these 1,000+ page bills. Obama and the liberal Democrats know this, and that is precisely why they ram these travesties through as quickly as possible.

Sad to know that the fate and prosperity of the United States turns on these mentally lazy Americans who act and vote based solely on their emotions.


On Jun 30 06:10 AM Steven Hansen wrote:

> when you are in unstable economic times and you shift the energy
> equilibrium - what the hell is the economic outcome??? i do not see
> one genius who can answer this question.
>
> conservation is an extremely slow acting force. yes, it should always
> be pushed but it is not part of ingredients of cap and trade. cap
> and trade is meant to shift sources of energy production.
>
> power plant construction using different energy sources will take
> decades to be felt. i don't know what caused this bee to get under
> somebody's bonnet - but i suggest they go back to school to learn
> the pragmatic realities.

Jun 30 01:15 PM

[norom:]

You know what the worst thing you can do today is if you try to commit fraud? Try to hide it. If you simply commit fraud on the American people in broad daylight, for all to see, and act like it doesn't matter to you, (no displays of guilt), you can get away with it.

Jun 30 02:04 PM

[ngwun:]

The problem is bigger than warming, which is in turn more than about CO2.

The two greatest factors are the increase in population, & the determination for each humanoid to "consume" vast amounts of products which are either not necessary or positively injurious.

"Oh but my existence is predicated on fashion clothing, fashion drinks, makeup, cars, x-box-playstations & a neverending continuum of mental masturbation."
So what IS real? he shouted into the wind whistling between city skyscrapers, where people scuttled to jobs they hated so they could support governments who bled them, and buy products which were so cheap they were not fit for purpose despite using resources at the same rate as real useful tools, then go home & pay to be titillated & mesmerised by the obsene leaches who pose as media providers, whose only purposes are to fill the voids in lives lest people think, and to suck the assets of the viewers to enable themselves to wallow in the very lifestyle they advertise to their victims, while relieving the victim of what would need to participate..

What world survives by rewarding societal destruction? What world recompenses the reinactor of an event more than the participator?
In a world where fuel consumption can be legislated but those who hurtle @ high speed are heroes, hypocrisy is ever present.
Old bike advice; focus on where you want to go, not where you want to avoid.

" ... the length of life of the biosphere as an inhabitable region for organisms is to be measured in decades... "
[ The Biosphere, A Scientific American book pub. 1970
Chapter 1 page 11, contributor G. Evelyn Hutchinson]

Jun 30 07:18 PM

[bones33:]

They should have called it the Tax and Run bill.

Jun 30 07:55 PM

[bartpr:]

many of you are not experienced with the characteristics of C02
and its behavior. so you doubt the claims of the global warming crowd. i am in favor of limiting C02 released based on the welding experiences. i have used a shielded gas welder for a car project.
welding gas for carbon steel is composed of argon and C02. why the C02? it acts as a heat concentrator, prieventing heat loss at the molten metal pool. it acts in the same manner in the atmosphere. cap and trae may not be the best answer but it is a start. c02 producers will not voluntarily lower emissions. they have to be forced into it.

Jun 30 08:07 PM