Tuesday, July 31, 2007

latest article on climate change..by intan zarina..

August 1, 2007
U.N. climate change meeting aims at rich countriesBy Deborah Zabarenko, Environment Correspondent
UNITED NATIONS (Reuters) - The first U.N. special session on climate change focused on the world's rich countries on Tuesday, as policy-makers urged long-standing polluters to shoulder much of the burden for cutting greenhouse gases.
British economist Nicholas Stern said poor and developing countries also need to participate in a "global deal" to curb the human-made emissions that swaddle the planet like a blanket.
Stern, author of a path-breaking report last year on the economic consequences of climate change, said the global target for reducing greenhouse gases -- notably the carbon dioxide released by coal-fired electric plants and petroleum-powered vehicles -- should be a cut 50 percent by 2050.
"Because of reasons of past responsibility and better access to resources, the rich countries should take much bigger objectives than that 50 percent," he said. "They should be looking for around 75 percent cuts."
That responsibility could extend to financing cuts in emissions in other countries, said Stern, formerly head of the British government's economic service and now at the London School of Economics.
British Prime Minister Gordon Brown sounded a similar note in earlier remarks at the United Nations.
"We know that the gains from global prosperity have been disproportionately enjoyed by the people in industrialized countries and that the consequences of climate change will be disproportionately felt by the poorest who are least responsible for it -- making the issue of climate change one of justice as much as economic development," Brown said.
'HIGH ON RHETORIC ... LOW ON REAL ACTION'
"The rich world has to reduce emissions far more drastically than it has done so to date," said Sunita Narain, director of India's Center for Science and Environment. "The political leadership is very high on rhetoric but very low on real action when it comes to delivering the goods on climate change."
Global climate change has been blamed for droughts, floods, rising seas and more intense storms, and these cannot be explained by natural climate variability, John Holdren, an environmental scientist at Harvard University, told the gathering.
The United States, one of the world's biggest emitters of greenhouse gases, made no statement at Tuesday's sessions, and has repeatedly rejected firm targets for cutting greenhouse gas emissions, maintaining this would hurt the U.S. economy.
Instead, Washington has called for voluntary rather than mandatory emissions cuts.
President George W. Bush agreed with other leaders of the Group of Eight major industrialized nations in June to make "substantial" but unspecified reductions in climate-warming emissions and to negotiate a new global climate pact that would extend and broaden the Kyoto Protocol beyond 2012.
The two-day climate meeting at the United Nations, which concludes on Wednesday, is the first of its kind in substance and in style. The gathering is carbon-neutral, with all emissions from air travel and the operation of the U.N. Headquarters building in New York being offset by investment in a biomass fuel project in Kenya.

Friday, July 27, 2007

::Malaysian company says bio-fuel from nipah can help halt global warming::

KUALA LUMPUR: A Malaysian government-backed company claimed Tuesday it has found a new source of energy to replace fossil fuels - ethanol from nipah palm trees that it believes can help stop global warming.
Pioneer Bio Industries Corp. said it is building the world's first refinery to commercially produce ethanol from the short palm trees, found in equatorial countries, that could fuel everything from automobiles to power plants.
Pioneer says the nipah palm sap will be used in a patented process to make ethanol, which produces virtually none of the carbon emissions blamed for the climate-changing greenhouse effect and ozone depletion.
"This is a new energy source to the world, to tackle global warming,'' Pioneer Chairman Badrul Shah Mohamad Noor told reporters.
The company envisions a fuel of the future that would be 85 percent nipah ethanol and 15 percent gasoline, he said, thereby greatly reducing dependence on fossil fuels.
With a production capacity of 100 million imperial gallons (450 million liters), the refinery in the northern state of Perak will go on stream by the end of 2008, Badrul Shah said. Pioneer plans to build 15 such refineries across Malaysia.
Badrul Shah said nipah ethanol is an better alternative to ethanol produced from palm trees, sugarcane, corn, cassava and other plants because ethanol from those sources eats into food production and raises their prices.
Nipah palm trees are not a food source and its sap can be drained every day without the need to harvest the plants.
"The plant will live for 50 years. We just have to collect its sap,'' he said.
He said Pioneer has received an order worth more than US$66 billion (euro50 billion) from one of the biggest trading companies in the world to buy its ethanol from 2009 to 2013.
Badrul Shah refused to identify the company, saying details would be announced at a later date.
The size of the order could not be independently confirmed.
The Malaysian government has given Pioneer the right to harvest nipah palm trees on 10,000 hectares (24,710 acres) of land in Perak.
That is enough to run 15 refineries for five years, and there are millions of hectares of nipah palm trees growing in the wild in the wetlands along the coast and on Borneo island that can produce enough fuel to "replace the entire fossil fuel needs of the world,'' Badrul Shah said.
Pioneer has taken an international patent on the process of producing ethanol from nipah palm tree, which was perfected over five years by 16 Malaysian scientists commissioned by Badrul Shah, a businessman with interests in construction and services.
Currently, ethanol accounts for only 2 percent of the total global fuel consumption.
Also, the demand for food-based ethanol has been blamed for deforestation as trees are being cut down for plantations. - AP

::Climate Change::


"In my view, climate change is the most severe problem that we are facing today -- more serious even than the threat of terrorism."



With this warning to an international science meeting in February 2004, David A. King, Chief Scientific Advisor to the British Government, brought the issue of global warming into sharp focus.


The World View of Global Warming project is documenting this change through science photography from the Arctic to Antarctica, from glaciers to the oceans, across all climate zones. Rapid climate change and its effects is fast becoming one of the prime events of the 21st century. It is real and it is accelerating across the globe. As the effects of this change combine with overpopulation and weather crises, climate disruptions will affect more people than does war.


The 2005 average global temperature equaled (within several hundredths of a degree) the record warm year of 1998, according to meteorologists. 2002-4 were nearly as warm, and the 11 warmest years on record have all occurred since 1990. In response, our planet has been changing with warming winds and rising seas. At the poles and in mountains, ice is under fire and glaciers are receding. Down into the temperate zone, change is rearranging the boundaries of life. The plants and animals with whom we share the planet are adapting and moving -- some even going extinct -- because they have no choice.


We six billion humans are being affected, too. Coastal towns are suffering from rising sea level, storms are getting stronger and 35,000 people died in European heat waves in 2003. However, we have choices to make to help correct and ameliorate global warming. This is a story of frightening scale and and great urgency that is just beginning to be told. Please go to Actions to see what you can do now.


I began photographing climate change in 1999, about when scientists started to realize how great a change in temperatures is taking place in our time. Past earth temperatures left their mark in tree rings, glaciers and ancient lake and ocean sediments, and the record shows slowly decreasing temperatures over the last 2000 years. In that time there have been warm and cool periods, but nothing like the rise in temperatures in the past 150 years -- and no increase even close to the past 30. This research has created what has become the single most powerful icon of climate change, the so-called "hockey-stick" graph of temperatures. In 2005-6 it was subjected to intense re-analysis. Evidence of previous cool and warm periods has increased, but the rapid and sustained heat gain especially since the 1970s remains unparalleled in recent earth history.


In general global temperatures have risen since the 19th century industrial revolution. There is little scientific question the reason is a steep increase in atmospheric carbon dioxide -- CO2 -- from human use of fossil fuels. Methane, ozone, other gases and dusts have also increased greatly. The mechanism of our atmosphere is that gases like CO2 and methane trap some of the sun's radiation and hold it in the lower atmosphere, heating it. The natural greenhouse effect made the earth warm enough for life, but the effect is much higher now. Ice core records show that whenever CO2 has increased in the earth's past, so has temperature. The recent increase in atmospheric CO2 is 200 times as great as any previous change seen in the ice cores. The current level is 380 parts per million, the highest in more than 650,000 years. It shows no signs of decreasing.

This increase caused earth's average atmospheric temperature to go up about 1. degree F in the 20th century. Now, according to NOAA, the global warming rate in the last 25 years has risen to 3.6 degrees F per century. This tends to confirm the predictions of temperature increases made by international panels of climate scientists (IPCC). The ocean has actually absorbed most of the added CO2 and heat -- becoming warmer and very slightly more acidic. These increases, seemingly small, have a giant effect on weather, climate zones, plants and animals, sea life, glaciers and river flow -- and thus human life. My project and this Web site seek to document these changes. For more on past climate and today's weather, see especially the Paleoclimate and Weather sections.

This project would be impossible without scientists and observers around the world who have provided hundreds of scientific contacts and papers. See Background, Advisors, and Reference for documentation, funders and major advisors, without whom I could not complete the work. This project is privately supported and I seek donations through Blue Earth Alliance.
"Polar Thaw," a 30-print exhibit of photographs from locations of Arctic and Antarctic climate warming, is available for museums, science centers and funded public venues.
World View of Global Warming is a project of the Blue Earth Alliance, Seattle Washington, a 501(c)3 tax-exempt organization. The project is supported entirely by donations, grants, and license fees for the photographs. Information about how to contribute is on the Blue Earth web site, or contact Gary Braasch. Thank you.


This project is featured in The Nieman Reports, Harvard University, Winter 2002,in a special section on Environmental Reporting. Link to PDF version

Tuesday, July 24, 2007

::Melting glaciers on the Tibetan Plateau::

10 Jul 2007By Claudia Delpero*

“If I compare this land to what it used to be in the 1960s, it is difficult for me to recognize it,” recalls Qi Mei Duo Jie, a 71-year-old nomadic herder from Yanshiping in China’s central-western Qinghai Province.“Glaciers are melting, temperatures are rising and rainy seasons have become unpredictable.”Yanshiping is the last town on the Qinghai-Tibet Highway before entering Tibet. At an altitude of 4700 metres, its landscape in summer is marked by shaggy yaks grazing in the green alpine pastures and the transparent blue waters of Buqu River – a tributary of the Yangtze. Winters are white and freezing, with temperatures reaching as low as -20°C. It is no surprise that people welcome a warmer, more comfortable climate in this remote region. But there is another side to the changing climate story.Pressure on the PlateauNomadic groups of Tibetans have been moving around this area for time immemorial, following the natural rhythm of the seasons and availability of grassland to raise their livestock. Qi Mei Duo Jie’s family has been raising yaks for at least three generations. “This year has been very dry, and with less grassland it will take longer to properly feed and raise livestock,” he says. “This will mean a lower income for us.” To compound the situation, warmer climate conditions are attracting more cattle and sheep farmers to this harsh but beautiful high-altitude area, putting additional pressure on the already fragile alpine landscape. This pressure is also starting to squeeze out local wildlife, such as Tibetan antelopes, that depend on the grasslands too. There have even been reports of brown bears wandering close to villages in search of food. And if bears roaming around town aren’t enough to lose sleep over, the remote rural region is experiencing pollution from greenhouse gases that have been emitted from big cities as far away as Beijing and Shanghai.These are some of the consequences of climate change on the Qinghai-Tibetan Plateau.Monitoring the river“It is only by reducing greenhouse gases across the country, as well as worldwide, that vulnerable ecosystems can be preserved and continue to function as a source of livelihood for people living here and downstream,” stresses Dr Li Lin, Head of Conservation Strategies at WWF China.“With global warming hitting hard, our efforts must be extended to find ways for this region to adapt to climate change.”WWF, the global conservation organization, is embarking on a series of studies on how high-altitude wetlands in the Yangtze source area — including the Qinghai-Tibetan Plateau and parts of the Kunlun Mountains — can cope with changing climate conditions. Results of the studies will help WWF and its Chinese partners come up with practical solutions to protect vulnerable ecosystems from the adverse affects of climate change.At the village of Tuotuohe — also along the Qinghai-Tibet Highway and one of the first places to cross the Yangtze by bridge — a hydro-geological station monitors the river’s water levels. This year, despite an increase in precipitation, water depth has slightly decreased. One spring that used to supply drinking water has already dried up.“The water level decrease is a direct result of rising temperatures,” explains Professor Li Shijie from Nanjing’s Institute of Geography and Limnology.“With warmer weather, evaporation is happening at a rate faster than the melting of the glaciers that supplies water to the river. Overall, this means a less supply of water for local inhabitants.”Melting glaciersSome 150 kilometres to the east, in the permafrost area of Fenguoshan, average precipitation has been increasing only in certain months of the year, while the general trend points toward drier periods.The evidence is found in the permafrost itself, the overlying ground surface layer which freezes in the winter and thaws in the summer.“In the last 20 years, larger portions of frozen ground have melted during summer,” says Professor Li. “With less water and more sand on the ground, desertification is just one step away.” “Warming temperatures will certainly continue, but weather events such as rain, snow and wind are becoming less predictable,” Professor Li adds. Experts today agree on one trend: Glaciers, rivers, wetlands and lakes — all elements of the fragile high-altitude ecosystem — are being altered at a speed never seen before. Professor Li has personally witnessed the retreat of Yuzhu glacier, the highest peak in the Eastern Kunlun Mountains. “I was in Xidatan, near Yuzhu Peak, for the first time in the 1980s, and when I went back, ten years later, the tongue of the glacier had retreated by 50 metres,” he says. “Nowadays it is about 100m higher than it used to be.”According to scientists, projected climate change over the next century will further increase the rate at which glaciers melt. In particular, glaciers in China, as well as Nepal and India, are receding at an average rate of 10–15 metres per year. “Once destroyed, it will be extremely difficult to restore the high-altitude ecosystems,” adds WWF’s Dr Li Lin. “If industrialized and developing countries will not focus their efforts on cutting emissions, some of this land will be lost forever and local populations will be displaced. What we need is commitment to continue and increase the efforts of reducing warming pollution so that the next generations will inherit a healthier environment.”In early June, China released its first Climate Change National Action Plan. The plan is the first formal acknowledgement of China’s goal to reduce CO2 emissions through a cut of energy consumption by 20 per cent per unit of GDP by 2010. For WWF, this clarification of the country’s basic stand on the issue is expected to play a positive role and stimulate an international agreement on greenhouse gases emission cuts in the future.* Claudia Delpero is Communications Manager with WWF’s European Policy Office.

END NOTES:• The Tibetan Plateau Steppe — one of the largest land-based wilderness areas left in the world — has the most pristine mountain grassland in Eurasia. Known as the “Roof of the World”, this ecoregion has an average elevation of 4500 metres (15,000 feet). From here, several major rivers (including the Yangtze, Mekong and Indus) begin their long journeys to the sea. Due to its size and its position near the tropics, the Tibetan Plateau is one of the most ecologically diverse alpine communities on Earth.• The Yangtze River rises in the mountains of Qinghai Province on the Tibetan plateau and flows 6,300km to the East China Sea, opening at Shanghai. The Yangtze river basin accounts for 40% of China’s freshwater resources, more than 70% of the country’s rice production, 50% of its grain production, more than 70% of fishery production, and 40% of the China’s GDP.

Saturday, July 21, 2007

::How Should the United States Regulate Greenhouse Gas Emissions?::



The February 2007 report from the Intergovernmental Panel on Climate Change declared with 90 percent certainty that human activity was responsible for global warming. Some thirty-five developed nations have agreed to mandatory emissions targets set by the Kyoto Protocol. Yet Washington, which experts say is the linchpin for more significant international action, has yet to impose caps on greenhouse gas emissions. Most agree that U.S. regulation is now only a matter of time, but there is disagreement over how to curb carbon emissions.
William A. Pizer, senior fellow at Resources for the Future, and Kenneth P. Green, resident scholar at the American Enterprise Institute, debate how the United States should regulate greenhouse gas emissions.Mr. Pizer raises an important, if subjective question: which carbon control system is more likely to be well-designed. I suspect this is where we will have to agree to disagree. Mr. Pizer thinks an emission-trading regime would be more likely to embody the set of features we both agree upon, while I believe that a revenue-neutral carbon tax is more likely to do so. To me, the answer to this question lies in the nature of the incentives created along the way, and the institutional transparency that tends to limit overt corruption.
In an emission-trading regime revenue would flow largely from consumers to for-profit, private-sector entities that claim reduced emissions, and to the many traders and auditors that would be involved in the process. One has to presume the profit incentive offered would lead participants to push the limits of legality at all stages in the process, from the assessment of historic emissions; to efforts to claim routine equipment upgrades as credit-worthy actions; to lobbying against an auction; and, in some cases, to outright false-credit generation. There is also potential for profiteering at the consumer’s expense. If one pays a business for not doing something, they’ll gladly take the money and save the labor. If we pay mildly-profitable companies more in carbon credits than they can make via product sales, a goodly percentage will take the credits and reduce productive output, curtailing consumer choice. Most importantly, under an emission-trading regime, every entity that profits has an incentive to not only perpetuate the scheme, but to push for more restrictive carbon caps, while groups paying out will lobby for the right to buy cheap (unverifiable) credits abroad. Finally, most companies would have incentive to avoid revealing how much of their price fluctuations are caused by the carbon-permit market, both to please regulators, and to preserve secrecy about their profit margins.
While a carbon-tax regime has some latitude for cheating (understating emissions) and economic distortion (tax shifting), the incentives for most other forms of cheating, such as lobbying for tighter caps; seeking credit for business-as-usual investments, creating false sequestration credits; reducing useful output; and so on are negative. Very few companies will see a potential profit in an increase in the carbon tax, or be willing to spend money lobbying for it. The normal tax aversion of the public would serve as a useful check on the stringency of a carbon tax. And the fixed value of a carbon tax could easily be displayed on the gas pump, on an electricity bill, or on a natural gas bill. The rebate could be easily seen on a tax return.
For these reasons, I believe a carbon tax regime would be superior to an emission-trading regime for greenhouse gas emission control.Mr. Green asks two questions. First, does SO2 and lead trading demonstrate emission trading is a viable option for greenhouse gas emissions? Many of the concerns he raises have nothing to do with whether a trading system will work. Proxy indicators, in particular, are recommended by the IPCC (PDF) and would presumably also be used in a tax approach. Among the other issues, the idea of too many diverse sources is interesting. Usually, more trading and greater diversity of traders would be good. But even by the numbers, there is not much difference between the SO2 program (3,456 electric generating units in 2005) and an upstream CO2 system (around 2,000 units). Regarding technological solutions, he ignores fuel switching and conservation—exactly the same results that would arise under a tax.
The second question is whether a safety valve can fix the volatility issue. Mr. Green discusses the recent run-up in SO2 prices and the failure of an apparent safety valve mechanism. But the recent run-up is not volatility—it reflects the tightening of the program under the new Clean Air Interstate Rule, with firms reducing emissions now to bank for the future. Recent SO2 prices (PDF) of around $1500 are extremely close to future compliance costs predicted by economic analyses (PDF). While Mr. Green suggests there is currently a safety valve, that is not true. The mechanism he refers to is a special reserve, offering up to fifty thousand allowances at $1500 (adjusted for inflation). The relevant proposals for a CO2 safety valve would not be limited to 0.5 percent of total allowances and would cap volatility. Discussions of the European Union program are irrelevant: They do not have a safety valve. Interestingly, there was no discussion of the effectiveness of true safety valve mechanisms in the trade and renewable energy applications where they have been used with considerable success.
In the end, much of our debate is really about whether a trading program or tax is more likely to be well-designed. We agree on the basic features that are important—coverage, price stability, raising revenue to cut other taxes, minimizing rent seeking. There are plenty of practical examples of how those features can be addressed in either approach. The question is whether they will be. Mr. Green claims that emission-trading schemes have been plagued by corruption and subversion. While I am not sure his claim is true, it is certainly true that taxes have been subject to such manipulations on a grand scale. And, while such forces in a tradable permit system lead to redistribution, in a tax system they lead to distortions—a much worse outcome.Mr. Pizer makes many claims for the superiority of emission-trading regimes over a revenue-neutral carbon tax. I’ll examine two here: First, the claim that the successes of lead and sulfur trading demonstrate the utility of carbon emission trading regimes. Second, that price volatility can be averted with the proper use of “safety valves.”
Do SO2 and lead trading demonstrate emission trading is a viable option for greenhouse gases? A bit of drilling down suggests not. Sulfur and lead trading were local issues, and were pollutants of relatively short duration in the environment (before being rained out). There were far less entities that had to trade (as compared with greenhouse gas trading), and the chemicals in question were easily measured at the point of emission. Initially, SO2 trading was only applied to a single sector: Only 110 coal-fired power plants were included in the system, subsequently expanded to 445 plants. In addition, there were readily available technological options to reduce emissions. Carbon trading features none of these: There are no off-the-shelf technologies that can reduce the carbon content of fuel; there would be many thousands of diverse trading entities across multiple sectors of the economy (not simply coal power generation); emissions can only be monitored by proxy indicators; and the pollutants themselves are of long to extremely-long duration in the environment.
Can safety valves fix the volatility issue? Mr. Pizer points to the success of the SO2 trading program to suggest carbon trading would work well to control carbon and avoid price volatility. But as my colleagues and I point out in a recent AEI Environmental Policy Outlook, “There has been significant volatility in emission permit prices, ranging from a low of $66 per ton in 1997 to $860 per ton in 2006, as the overall emissions cap has been tightened, with the price moving up and down as much as 43 percent in a year. Over the last three years, SO2 permit prices have risen 80 percent a year, despite the EPA's authority to auction additional permits as a "safety valve" to smooth out this severe price volatility.” Carbon trading has fared no better in initial runs, as economist William Nordhaus points out: “We have preliminary indications that European trading prices for CO2 are highly volatile, fluctuating in a band and [changing] +/- 50 percent over the last year.”
It is true, in theory, that a perfectly designed carbon trading system can match the efficiency of a carbon tax. However, in practice, emission trading systems have been plagued by corruption and subversion that make such a perfect scheme highly unlikelyIt is useful to first highlight where Mr. Green and I agree—bans and regulations are highly inefficient. We also agree on the desirable goals for a domestic policy: an economy-wide incentive, transparency, strong institutional frameworks, minimizing rent-seeking and transfers, government revenue to cut other taxes, avoiding unnecessary price volatility, and (possibly) harmonizing policy internationally.
However, in contrast to Mr. Green, I see tax and cap-and-trade equivalent on many of these goals, and cap-and-trade exceeding taxes on several. Both policies can be imposed upstream in the fossil-fuel supply chain, covering virtually all U.S. emissions. Both involve a transparent price signal. While Mr. Green suggests trading systems are unenforceable and the institutions untested, I would argue they are as enforceable and tested as taxes. Both systems require identical measuring and reporting of associated emissions at some point in the fossil-fuel supply chain. And emissions trading institutions have proven themselves in everything from the 1980s lead phasedown in gasoline to the 1990s acid rain program, with a minimum of administration (fifty EPA [Environmental Protection Agency] staff manage the current acid rain program covering thousands of sources).
It is ironic that he would suggest, after the American Job Creation Act of 2004, that taxes are less likely to incite rent seeking than tradable permits. Indeed, rent seeking in a carbon tax program creates distortions in behavior, as well as redistributing rents—making the problem worse. While we both favor raising government revenue to cut other taxes, it is ridiculous to imagine that raising $50 billion of revenue through a carbon tax or permit auction to finance such a cut is not a redistribution from people paying for carbon emissions to those currently paying the other tax that will be cut. Indeed, perhaps such a swap is—at least initially—a less fair redistribution than giving some free permits to those industries and regions bearing more of the burden under a carbon tax or tradable permit program.
Avoiding price volatility is important and easily done in a trading program with a safety valve—exactly the same mechanism applied to policies as diverse as trade (tariff rate quotas) to performance standards (alternative compliance payments). Given its wide application, it is hard to argue it is a particularly complicated or nontransparent approach.
All of this goes to highlight exactly why I prefer a tradable permit system. It can do everything a tax does—and more. Most importantly, it addresses rent seeking head on rather than pretending it does not exist under a tax and ending up with a debate over exemptions and special interest deals.Policymakers wishing to restrain greenhouse gas emissions have a broad range of potential instruments available. They can criminalize emitting activities, they can regulate emissions via technology requirements or emission standards, or they can put a price on the activity via a tax or trading scheme.
There is widespread agreement among economists and public policy analysts that activity bans and regulations are highly inefficient approaches to managing environmental externalities, particularly those such as climate change, where polluting activities span nearly all aspects of human life; cross all jurisdictional borders; have high levels of uncertainty with regard to costs and benefit delivery; and impose asymmetric costs and benefits. Thus, emission pricing—through taxation or the establishment of a pseudo-market that trades in emission permits—has been widely favored (by analysts) over regulatory approaches for several decades. Both taxes and emission-trading (also called cap-and-trade) impose a price on emissions, but the two systems are very different.
Taxing greenhouse gas emissions accomplishes several desirable goals in one stroke: It creates an economy-wide incentive to reduce greenhouse gas emissions; it is largely transparent; it operates within preexisting institutional frameworks adept at fraud prevention; it minimizes the potential for rent seeking; it does not lead to wealth transfer between regions with different forms of economic activity; it produces revenue that can be used to reduce other taxes in order to offset the economic harm of higher energy prices; it is predictable, adjustable, and can thereby avoid price volatility; it shifts some revenue generation from production to consumption; and it can be harmonized internationally if desired.
Emission trading systems by contrast (particularly international systems) are virtually unenforceable; create massive incentives for fraudulent claims of prior emission estimates and emission reductions; lead to massive wealth redistribution; require new untested institutions that have performed poorly in pilot testing (the European Trading System is a prime example); create incentives for rent seeking; generate no revenue to offset the economic harm of higher energy prices; require complicated “safety valves” to prevent massive energy price volatility; and are largely nontransparent.
We recently estimated that a tax of fifteen dollars per ton of CO2-emitted levied on the carbon content of fossil fuels would produce an 11 percent reduction in greenhouse gas emissions while raising the costs of crude oil and natural gas modestly. The majority of the price increase would affect coal prices and hence coal-based electricity. This is entirely appropriate as that, to paraphrase bank robber Willy Sutton, is where the emissions are.
For these reasons, I believe that a revenue-neutral carbon tax is a superior policy alternative to emission trading, regulation, or activity bans if our goal is the cost-efficient reduction of greenhouse gas emissions.For most of the past thirty years, economists have strongly advocated market mechanisms (PDF)—either taxes or tradable permits—to encourage emissions reductions because they effectively reduce emissions at the lowest cost to society. The alternative—regulation that tells businesses how much to emit or what technology to use—risks requiring expensive options in some sectors while cheaper options in other sectors remain untouched. Because climate change is easily the most expensive environmental problem we have ever tried to tackle, doing so at the lowest cost is critical.
Therefore, the most important feature of a U.S. program is that it should be a single market-based policy—either a tax or a tradable permit system—and it should cover as much of total U.S. emissions as possible, across regions, sectors, and various greenhouse gases.
Between taxes and tradable permits, I believe a tradable permit system is a better way to go for two overarching reasons. First, a tradable permit system can be designed to mimic all of the key features of a tax and can do more; and second, this flexibility to do more—specifically to easily provide compensation to various businesses and individuals through a free allocation—takes away pressure to exclude some sectors.
Taxes are typically advocated because they fix the price rather than leaving it to fluctuate in response to volatility in permit demand, and they raise government revenue that can be used to cut other taxes. Yet, a tradable permit system—through use of a safety valve and permit auctions—can match these two features. A safety valve (PDF) would limit the permit price by having the government supply unlimited “extra” permits at a specified price. If the emission cap is low enough, the safety valve can fix the price with certainty. Similarly, the government can sell off permits and raise money to cut other taxes.
But a permit system can do more. While a safety valve can fix the price like a tax, the safety valve can also be removed as more emission certainty is desired. And, all the permits need not be auctioned—some can be given away or used to finance related technology investments. This latter flexibility is the key to why I favor permit trading.
In the end, regulation is not entirely about efficiency—it is also about the distribution of costs (PDF). Market-based climate policies, in particular, have very transparent costs in the form of higher energy prices. This creates obvious and disproportionate burden in some sectors and regions of the country, and consequent political efforts to seek redress. In a permit system, this is easily addressed by a free permit allocation. No such flexibility exists in a tax system—and the logical result is to begin excluding those sectors that face the greatest burdens. Unfortunately, this undermines the primary argument for market-based policies in general—that everyone faces a transparent price and therefore seeks out the cheapest options wherever they exist.

::Hot Air is Not Enough::

President George W. Bush averted a nasty rift when he agreed in the final hours of the recent G8 summit to “consider seriously” the need to halve the world’s emissions of global-warming gases by 2050. Canada, the European Union and Japan had already embraced that goal, leaving America the dirty stand-out. The deeper truth is that these eight industrial countries control only part of the world’s emissions, and the industrial activities that cause emissions are slow to change. Coal will be the hardest to tame because it is so cheap and abundant. Many coal-power plants coming online today will still be in service by 2050, and advanced plants that store effluent safely underground won’t be used widely for many more decades. The geopolitical hurdles are also high. The plan introduced with much fanfare earlier this month by China, which next year will become the world’s top emitter of greenhouse gases, contains nothing beyond what Beijing already had in place. The world, therefore, is in for some warming.
Pessimism about stopping global warming is leading some scientists to wonder out loud if it is possible through “geoengineering” to force the Earth to cool. The idea is not entirely new and is fraught with dangers, but it is likely to get more attention in coming years. At least since the 1950s, weather makers have dreamed of steering clouds and rain to crops (though they failed in practice). From there it was a small step to dreaming on the global scaleIndeed, when the thesis of global warming was first proposed a few decades ago, some analysts envisioned putting mirrors in space or on deserts to deflect a small fraction of sunlight—just enough to offset, crudely, the buildup of warming gases in the atmosphere. These premature plans were wildly costly and faltered also because climate is sensitive to a lot more than just the gross amount of sunlight that warms the planet.
Today's plans are looking more practical, though still fraught with danger. One would spread iron, a nutrient for algae, in the ocean to stimulate photosynthesis, a natural process in which plants absorb carbon dioxide. Injecting iron in parts of the ocean where it is scarce could trigger algal blooms and help remove even more CO2. Experimental "iron fertilization," as well as careful measurement around natural iron sources, offers tantalizing support for the theory, though nobody knows what biological horrors might follow from messing with the ocean ecosystem on a large scale. Nobel laureate Paul Crutzen helped touch off the current pondering about geoengineering with an editorial in the August 2006 issue of the scientific journal Climatic Change. He revived a Russian idea from the 1970s to inject sulfur particles into the stratosphere with balloons, artillery guns or jumbo jets. (Full disclosure: I am on the journal's board of editors.) Sulfur, in turn, can produce aerosols (particulates) and clouds that reflect some sunlight back to space.
The plan has some drawbacks. Nasty chemistry, including that which caused the hole in the ozone layer, might follow—nobody is sure. Sulfur can also cause acid rain and respiratory diseases. But such ideas are worth a close look, says Crutzen, because unchecked changes in climate might be even worse. And nature already does this—through volcanoes such as Mount Pinatubo, which cooled the planet for a while after it erupted in 1991. None of this is ready for prime time, and the mere mention causes environmentalists to shudder because it distracts from the urgent need to reduce emissions. But it will get more attention as the difficulties in making deep cuts in emissions and adapting to climate change become more apparent.
Geoengineering will raise at least two awkward questions. First, it turns the geopolitics of global warming on its head. Cutting emissions requires many nations to cooperate. Geoengineering can be done by just a few, or even one. Who will determine if geoengineering is safe, and what if the rest of us don't like the consequences? The second is humanity's relationship to nature. Climate warming is already causing stress on natural ecosystems, and it is a small step to imagine engineering rare and special ecosystems to help protect them. But if mankind extends management to the whole planet, do we, in effect, turn Earth into a zoo?
Victor is professor of law at Stanford University's Program on Energy and Sustainable Development and adjunct senior fellow at the Council on Foreign Relations.

Wednesday, July 18, 2007

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