Environmental Economics

JEEM in USA Today

From USAToday (China now No. 1 CO2 offender):

China has overtaken the USA to become the world's No. 1 industrial source of carbon dioxide, the most important global-warming pollutant, according to a scientific study to be published today. ...

Unless China sharply cuts its emissions, "the situation is pretty bleak," says Richard Carson of the University of California, co-author of a study in today's Journal of Environmental Economics and Management. "There's a lot less time to do something than people previously thought."

Hat tip: GatE.

John Locke gets it wrong: it's not about jobs

From the press release "Claims about climate change policy benefits are unreliable:"

“ASU economics professor John Whitehead has distanced himself and his department from the report,” Cordato added. “Whitehead wrote on his Web site that he’s ‘very skeptical’ any positive benefits from climate change policies would cancel out the clear negative impacts.”

U.S. Scientists and Economists' Call for Swift and Deep Cuts in Greenhouse Gas Emissions

From the RESECON listserv (see below) comes an opportunity to sign a U.S. Scientists and Economists' Call for Swift and Deep Cuts in Greenhouse Gas Emissions petition:

There is growing momentum in the United States to establish policies that cap and reduce our nation's heat-trapping emissions. A central feature of the policy debate—in Congress, in the international negotiations, and in statehouses and legislatures across the country—is over how swiftly and how deeply U.S emissions should be reduced.

A distinguished group of U.S. scientists and economists have come together to develop and endorse this Call for Swift and Deep Cuts in Greenhouse Gas Emissions. The core purpose is to ensure that this debate is informed by a powerful, succinct statement from top U.S. experts on the urgency of U.S. action, and the scale and feasibility of needed reductions.

The Union of Concerned Scientists is providing logistical support for this initiative on behalf of the signatories.

The failure of U.S. ethanol policy

Sometimes ecological economists sound like real economists*.  That is, every once in a while they make sense.  From Lester Brown and Jonathan Lewis in today's Washington Post:

Taking these together -- the environmental damage, the human pain of food price inflation, the failure to reduce our dependence on oil -- it is impossible to avoid the conclusion that food-to-fuel mandates have failed. Congress took a big chance on biofuels that, unfortunately, has not worked out. Now, in the spirit of progress, let us learn the appropriate lessons from this setback, and let us act quickly to mitigate the damage and set upon a new course that holds greater promise for meeting the challenges ahead.

Happy Earth Day.

*Relax, I'm joking.

Is the U.S. becoming more GHG efficient?

Tuesday, (tax day--coincidence?) the U.S. EPA released its Inventory of U.S. Greenhouse Gas Emission: 1990-2006.  I haven't worked my way through the whole thing and I'm not sure I will (can you blame me?) but the graph to the right is my favorite so far.  The U.S. is becoming more greenhouse gas efficient.  That is, there is a distinct and unambiguous downward trend in greenhouse gas emissions per dollar GDP generated since 1990. 

A few notes:

• Total greenhouse gas emisions seem to have leveled off since 2000 (and even took a slight dip in 2006--1%)
• Emissions per capita are fairly constant--if not falling slightly. 
• We know, we know, GDP ignores most environmental damages. 

A good start?

Businesses in Bay Area May Pay Fee for Emissions:

Air quality regulators in the San Francisco Bay Area appear set to begin charging hundreds of businesses in the region for their emissions of heat-trapping gases.

It is believed to be the first time in the country that any government body would charge industries directly for emissions that contribute to climate change. ... The businesses affected by the fee — 4.4 cents per ton of carbon dioxide emitted — range from large petroleum refineries and cement plants to small gasoline stations and industrial bakeries.

... regulators indicated that the fee could raise $1.1 million annually. Refineries, power plants and cement plants would pay nearly 90 percent of total fees. The largest gas stations might be charged $1 a year; the Safeway bakery that supplies bread to all stores in the Bay Area would pay $85 a year.

The biggest emitter of the gases, the Shell oil refinery in Martinez, would have to pay $195,355, based on 2005 emissions of 4.4 million metric tons.

This policy is consistent with the history of pricing pollution, emissions taxes and effluent fees are set too low ... too low relative to the marginal damages and too low to get a decent behavioral response.

However, it is always wonderful to see implementation of economic incentives-based environmental policy.

Ethanol Dominoes: Are corn ethanol subsidies really taxes on the poor?

A student came in my office last week and asked: Aren't ethanol subsidies just implicit taxes on the poor?  I thought about it for a minute, then said, "Yep."  The United Nations World Food Programme agrees--sort of:

The demand for food as an input into energy production, whether it's biodiesel or bioethanol or any of these, is a global phenomenon. And it affects everything from palm oil to cassava to everything else … There isn't much marginal room in the global food supply system. ...Now, there's a point at which it doesn't economically make sense to buy food as an energy input. It's pretty low; it's apparently when oil hits about $70 a barrel. So anything above that makes food a very viable energy production input.

In other words, higher subsidies for ethanol lead to less food at higher prices.  Subsidies for ethanol are an implicit tax on food.

The 5th District tackles carbon offsets

From the Region Focus Weekly Update (my link to my local Fed bank) [Offsetting "carbon footprints" is more complicated than you might think]:

For those who worry about their "carbon footprint" every time they turn on the television or leave a hall light on, there are a variety of ways to mitigate the carbon dioxide produced by coal-fired power plants. For example, one can purchase carbon offsets online, the proceeds of which go to planting trees or subsidizing renewable, lower-pollution energy sources like wind and solar power.

In mid-February, North Carolina's two largest utilities — Duke Energy Carolinas and Progress Energy Carolinas — announced their plan to offer "carbon-free electricity." The utilities' goal is to increase people's awareness about the choices they make in using electricity, says Paige Sheehan, a Duke Energy spokesperson. "If customers understand the trade-offs of the power they use, then hopefully it will drive better decisions with how they use power."

Customers would buy carbon offsets through the utilities to compensate for the carbon dioxide emitted from their electricity use. The price of these credits would be determined by an offset provider chosen by the utilities. One possible provider, NC GreenPower, currently charges $4 for one block of 100 kilowatt hours of green energy. (A typical household consumes about 1,000 kilowatt hours a month.)

But, as the article's title implies, this is "more complicated ...." Beware, some cool economics with quotes from environmental economists might follow.

I'm trying to become a blog aggregator

From Knowledge Problem (The Kansas coal carbon tax caper):

On Monday night, Republicans in the Kansas House voted to apply a tax of $37 per ton of CO2 emitted from coal fired power plants for emissions in excess of 110 percent of the statewide average. Proceeds from the tax would be distributed to the large coal plants in the state with the lowest average carbon emissions.

...

Pigovian taxes are great in theory, but even in theory sometimes quantity regulation is preferred. And, of course, in practice both price- and quantity-based regulation will be shaped by lobbyists and politicians, perhaps motivated by factors beyond pure economic efficiency. Economist-advocates should mind the gap between theory and practice; the Kansas coal carbon tax caper provides an illustrative example.

0 to 80 in 298 words

Mr. Know-It-All Dan Hall at Common Tragedies surveys the range of the social cost of carbon.