Environmental Economics

Regional carbon markets have a tough go of it in a global economy

Banks and investors are pulling out of the carbon market after the failure to make progress at Copenhagen on reaching new emissions targets after 2012.

Carbon financiers have already begun leaving banks in London because of the lack of activity and the drop-off in investment demand.

via www.theecologist.org

Because carbon is a globally mixed discharge--my emissions have the same global impact as would a German's--regional markets have a fundamental difficulty: Restricting domestic carbon emissions simply reduces the relative price of producing carbon intensive goods internationally. In other words, without a global agreement, and/or effective and binding border price adjustments that price the carbon content of imports at the domestic carbon price, the demand for domestic carbon allowances will be roughly zero--as will be the market price of carbon.

Cap-and-trade = Mark Twain?

South Carolina Sen. Lindsey Graham—the R in the D/R/I Senate’s tripartisan climate bill sandwich known as Kerry, Graham and Lieberman—is declaring the death of cap and trade in this New York Times article:

“Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,” said Senator Lindsey Graham, Republican of South Carolina, who is trying to fashion a bipartisan package of climate and energy measures. “They’re not business-friendly enough, and they don’t lead to meaningful energy independence.”

Mr. Graham said the public was demanding that any energy legislation from Washington focus on creating jobs, whether by drilling for offshore oil or building wind turbines.

“What is dead is some massive cap-and-trade system that regulates carbon in a fashion that drives up energy costs,” he said.

Not ready to let that be the last word, Sen. John Kerry told a clean energy forum cap and trade’s obituary is premature:

We have not scaled back our goals, they are the same,” Kerry said. “We have not recalibrated some lesser approach that is only energy or only this or that … We have to price carbon in order to get the marketplace moving properly.

via commontragedies.wordpress.com

What was it that Mark Twain said about rumors of his death being greatly exaggerated?

Quote of the day

“The fattening [of cattle] should be promoted by feeding them morning and evening with stalks of Indian corn.” (Samuel Deane, The New England Farmer, 1822, p. 63.)

via freakonomics.blogs.nytimes.com

Wouldn't they get fatter if you fed them candy corn?

'nuff said?

I missed this announcement 2 weeks ago that the Air Resources Board will take the revenue collected from California's Carbon Cap and Trade and give the $20 billion dollar a year flow back "to the people".

A couple of points:

1. California has a $20 billion dollar deficit.

via greeneconomics.blogspot.com

I always fail to see why revenue recycling is so overwhelmingly favored by economists. Can't we at least talk about covering a government budget deficit?

Environmental and Urban Economics: Ranking Environmental Economists

I was not aware that Larry Summers, Susan Athey and Brad Delong were leading environmental economists but REPEC knows all and Dr. Summers is #1. As #41 on the list, I have to believe that I would jump into the top ten if REPEC would count kahn book #1 or starting in fall 2010 kahn book #3 . I am a victim of this system. Please feel sympathy for this devil.

via greeneconomics.blogspot.com

Matt and Tim need to compare notes!

A mighty wind

Despite a crippling recession and tight credit markets, the American wind power industry grew at a blistering pace in 2009, adding 39 percent more capacity. The country is close to the point where 2 percent of its electricity will come from wind turbines.

While that is still a small share, it is up from virtually nothing a few years ago. Continued growth at such a fast pace could help the nation lower its emissions of the gases that cause global warming.

The American Wind Energy Association, in its annual report to be released on Tuesday, said the amount of capacity added last year, 9,900 megawatts, was the largest on record, and was 18 percent above the capacity added in 2008, also a banner year.

The group said the growth of wind power was helped by the federal stimulus package that passed a year ago, which extended a tax credit and provided other investment incentives for the industry.

But the group warned that the growth could slow. Much of the wind development in 2009 was caused by momentum from 2008, as huge turbines ordered then were delivered to wind farms. In 2009, the recession idled many manufacturers and new orders weakened, which could portend an installation slowdown this year.

via www.nytimes.com

Imagine how much wind power might grow with higher nonrenewable energy prices. Imagine!

Should we Follow the Money in Research?

Interesting piece by John Tierney in the NYTimes on the practice of discrediting science by pointing out potential conflicts of interest.  I pulled the following excerpt because it illustrates the Tierney's main argument, but the majority of the piece is in the context of climate science and the IPCC:

Why are journalists and ethics boards so quick to assume that money, particularly corporate money, is the first factor to look at when evaluating someone’s work?

One reason is laziness. It is simpler to note a corporate connection than to analyze all the other factors that can bias researchers’ work: their background and ideology, their yearnings for publicity and prestige and power, the politics of their profession, the agendas of the public agencies and foundations and grant committees that finance so much scientific work.

Another reason is a snobbery akin to the old British aristocracy’s disdain for people “in trade.” Many scientists, journal editors and journalists see themselves as a sort of priestly class untainted by commerce, even when they work at institutions that regularly collect money from corporations in the form of research grants and advertising.

We trust our judgments to be uncorrupted by lucre — and we would be appalled if, say, a national commission to study the publishing industry were composed only of people who had never made any money in the business. (How dare those amateurs tell us how to run our profession!) But we insist that others avoid even “the appearance of impropriety.”

via www.nytimes.com

Boone considers an exercise ban

Officials on the Town of Boone’s Greenway, Parks, and Gardens Committee will discuss the possibility of prohibiting bicycles and joggers on portions of the Greenway Trail at their regular meeting Tuesday evening.  Officials with the Town of Boone’s Public Works’ Office said this topic would be open for public comment.

via www.goblueridge.net

I've also heard a rumor that weightlifting and aerobics might be banned in the gyms. Yet, I'm pretty sure I'm safe. No one mistakes my jog for an actual jog.

Dirk Nowitzki's 20,000 Points Not Worth Nearly As Much In European League | The Onion

According to current basketball point exchange rates, due to the weakened value of the NBA basket, Dirk Nowitzki's career 20,000-point total is worth just over half that much in Euroleague Basketball. "A traditional two-point American basket is worth 1.126 points in Europe," leading basket economist Dr. Benedikt Acton told reporters after Nowitzki's career milestone, later adding that while the NBA point is struggling, it is still strong against the IBL Punkt and the Chinese Basketball Association's fēn. " If Mr. Nowitzki would have remained in Germany, the value of his points would have remained stable. Then again, nobody could have predicted the soaring inflation that followed Kobe Bryant's 81-point game in 2006." Acton added that if the Celtics' defense remains strong, the NBA point could see a resurgence in the second half of the season.

via www.theonion.com

Can we somehow blame poor Ben Bernanke for NBA point inflation?

A kindred spirit(s)

Robert Hahn and Peter Passell:

In the beginning, economists touted emissions taxes and cap-and-trade systems as efficient, market-friendly methods for reducing pollution. The idea: put a price on pollution equal to the damage it caused or decide what level of emissions was acceptable to society as a whole, and then let businesses decide how to minimize the cost. The two approaches – put a price on emissions or put a limit their total quantity — were thought to be equivalent means to the same end.

Then came Martin Weitzman, a very clever economist from Harvard, who showed decades ago that the choice between the price and quantity approaches mattered a lot when policymakers weren’t certain what the costs and/or benefits of pollution control would be. And now Round Three: In a recent, provocative piece [Download Here], David Weisbach of the University of Chicago questions Weitzman’s conclusions. He concludes that the optimal approach may change if you make the (realistic) assumption that policymakers can alter course in response to new information.

And then there’s another factor to consider: the systems can be designed to look a lot like each other. For example, a cap-and-trade system with a “safety valve,’’ which effectively limits the maximum market price of emissions permits, in many respects mimics the impact of an emissions tax.

So where does that leave us on climate change policy? The key is not to get lost in the trees – any market-based system that rewards people and businesses for emitting less carbon would be a big step forward.

via regulation2point0.org

Emphasis added. Hat tip: Lynne Kiesling.