Thursday, January 14, 2010

Response - Cap and Trade

This is a repost from a short response to a friend on Facebook. He sent me an article by James Hansen of which the following is my impression. The Hansen article can be found at:

Mixed feelings
I have seen James Hansen talk before, and have always respected his opinion. He's been very involved over the last 30 years. I also know he's up for trying radical solutions. His fee and dividend proposition is not something that happens in government, although it is common in business. I think that government could learn a lot from business in certain areas (like this), but I don't think it would get very far. Essentially, looking at it practically, there isn't enough political capital to make it happen any time soon, not to say it couldn't change in the future. Saying that, I like his plan a lot, and it (1) sounds like something I would say, and (2) clearly is looking at the overall picture (see 2 child limit of benefits).

When it comes to cap and trade, its not a perfect solution, but it IS something more than what we have... so its something, although not a big step. I have heard the complaint that cap and trade just gives legitimacy to polluters and passes to cost to consumers. I think this is true HOWEVER, the point of this is to make alternative sources of energy (solar, wind, etc.) more competitive, as they don't have this increase. That is the point. Then, the idea is that the market will take care of the rest, and carbon emissions will abate as competition from other sources increase. Does this work... according to the article, not yet. Does that mean it can't... don't know. I think Hansen's complaint has more to do with "offsets" and that the legislation had no teeth and therefore, no real way to enforce it. I think that a cap and trade system is inevitable, because it meet the interests of those who are influencing policy, and it also fits with our current economic model better than Hansen's proposal. Again, I like Hansen's better, and if I got a vote, I would vote for his over cap and trade. But, I am a pragmatist, and just don't see the numbers to back it.
"I do not dispute the economic theory that a cap and a fee are, in principle, equivalent. But cap‐and‐trade's complexity allows special interests to take over, killing its effectiveness."

I don't think people (average people) really care much about the environment. Otherwise, they would act differently. Being Green is more a fad than a movement, and when push comes to shove, they would rather be fat cats and wear American Eagle and torn jeans for $60 than sacrifice to preserve the environment. Its a little dark, but I think its true. More people are aware about the environmental problems today because of this "Green Movement" and fads aren't always unhelpful, but the commitment to change (and the willingness to sacrifice for that change) are too small. So, we are going to end up going old school on this one, and letting war, famine, and resource shortages force us to deal with what we can't deal with in peace. That's my take, from someone who's been doing this for a long time. Like I said, dark.

In my opinion, the true issues in all of this are population, resources, and affluence. Climate change is simply a symptom.

Population - if there were only 3 billion people, we would not have as severe of a problem. But no one (except China, and Europe) wants to talk about it, and there are international laws against population control and education about population. Some NGOs have been thrown out of countries for teaching about family planning and contraceptives because they see it as related to population control (these countries governments are usually either strongly muslim or strongly christian). If you want to see a simple way to understand the population affect on the environment, see the IPAT link below:

Resources - There are limits on our resources. We don't live in a world where we think much about that, and assume we can never run out of things like... water... food... birds... but history (including modern) show us that people who blindly use up their resources always pay a price. I think we are really stupid on this, and capitalism is insufficient to the task of conservation, because it is all about consumption. And regulation doesn't stand up to capitalism in force or scale, and so can't do much. But, with awareness, proper regulation, and financial incentives (or disincentive) to encourage resource preservation (ex. tree tax) will be necessary to promote change.

Affluence - Like in IPAT, affluence plays a big part in how much a population effects the surrounding resources and environment. This goes back to my complaint that people aren't willing to drop their affluence on their own. Another level is that people see dropping their affluence as a "step backward" and politicians and speakers on this issue pull a tear jerker by saying that our children and childrens children will live at a lower standard of living than we do.... and so we CAN'T do that. We can't put our families in the position of living at a lower standard. What they don't mention is that this "lower standard of living" is code for "being more efficient". If you drive a hybrid car, you will need to spend less on gas, leading to you spending less on your transportation costs. And if you change the lightbulbs in your home, and change to HE (high efficiency) washers and dryers, you will need less water and energy to wash your clothes, leading to you spending less on home utility costs. All of these efficiencies get transferred into economic terms, and show that although we are spending, hypothetically, $10,000 a year today to live, and in 20 years (thanks to the efficiencies) our kids are spending $6,000.... you can claim that their standard of living has dropped because they aren't spending as much.

If this seems a little far fetched, let me show you how it happens today. In America, we are thought to be wealthy. We might own a million dollar apartment in NYC that is 1/4 acre in size. In the Pacific, a tribal man who owns his own family farm, that is 30 acres large, and has free food, free water, and free sunlight... with only an income of $300 a month from trading, he is thought to be among to poorest of the poor, b/c of his income and b/c there is little competition for his assets (land and produce). However, the farmer probably works 20 hours a week, and will live a decent and casual existence, whereas the NYer will likely need to work 50-60 hours a week (likely accruing large amounts of debt in the meantime), for many years to be able to maintain such a standard of living. Who's wealthier? Well, according to our current metrics, the NYer. However, I think there is something to be said for living simply and within your means.

There can be a balance, and a way to get the benefits of modern technology and knowledge, without the pitfalls of modern commerce and consumption.

That's all I got. Hope this isn't too much.

As an aside:
How can international agreements be upheld and enforced if there is no international force (or government) with the power to enforce them? Its just an inevitable problem of an integrated yet diverse world, and the inevitable solution is some kind of world government (and No the UN is not a government and doesn't count).

No comments: