Articles by Ken Johnson

CARB does not recognize the meaning of ‘maximum emission reductions’

The California Air Resources Board is finalizing its Scoping Plan for implementation of the state’s global warming law, AB 32, which could establish a precedent for federal legislation by the 111th Congress. Barbara Boxer recently announced plans for a cap-and-trade initiative to be introduced in January, and she earlier indicated that the next go-round on […]

On the art of setting (and hitting) emission targets

Gore's call for 100 percent renewable electricity generation within 10 years may seem, at first blush, to be so far out in left field as to lack any seriousness -- but it has some commonality with established regulatory policy. For example, California's global warming law (AB 32) is rooted in Governor Schwarzenegger's Executive Order S-03-05, issued on June 1, 2005, ordering that "the following greenhouse gas emission reduction targets are hereby established for California: by 2010, reduce GHG emissions to 2000 levels; by 2020, reduce GHG emissions to 1990 levels; by 2050, reduce GHG emissions to 80 percent below 1990 levels."

What is notable about both Gore's and the governor's targets is that all the numbers happen to end in zero. Gore did not call for a reduction of, say, 95 percent in 13 years; his targets are evidently ballpark numbers more-or-less picked out of a hat. "One hundred percent" can basically be interpreted to mean "a whole lot" and "10 years" translates to "ASAP."

How to reduce California auto emissions faster than Pavley

Last update: 7/22/2008

In my last post I touted the benefits of a fully refunded emissions tax. Let's take a look at how it could work in California.

When it comes to a refunded tax, more money for industry doesn't mean less money for consumers. Case in point: Today's gasoline prices in California are averaging $4.58/gal, which equates¹ to $536/MT-CO2e. That's how much California drivers are currently paying to emit CO2 -- and how much they could save from fuel economy improvements.

The same approach used by the Swedish program could be applied to motivate efficiency improvements in vehicles, consumer appliances, etc., by employing feebates, which can be implemented as a kind of refunded emission tax. The tax would be applied to projected lifecycle emissions (direct or upstream) and would be refunded in proportion to some measure of economic utility (e.g. refrigeration capacity, illumination output, etc.). The tax and refund together would incentivize lower emissions per unit of economic utility. Feebates could be used as an alternative to traditional performance standards, or could be used to effectively impose a price floor on a tradable standard.

A possible consensus perspective on the tax vs. cap debate

Last revised: 07/10/2008

In his recent Congressional testimony, James Hansen talked about a "perfect storm" of climatological tipping points that may soon converge to yield global cataclysm. But another kind of perfect storm is brewing: a technology storm that could rapidly displace fossil fuels and restore global climate sustainability.

Effective regulatory policy could provide the kind of incentives and stable investment climate that are needed to facilitate the clean-energy revolution. Unfortunately, the "caps and standards" approach that is currently in vogue cannot provide the economic backbone for a rapid and orderly transition to a sustainable global economy. Emission caps and performance standards are rarely if ever set at levels that represent true sustainability, and are generally biased toward extreme cost conservatism. Regulators try to second-guess markets in setting targets and schedules, while markets try to second-guess regulators; the instability and unpredictability of carbon prices deters long-term investment in clean energy.

A carbon tax like the one advocated by Dr. Hansen and many economists would provide price stability, and could theoretically be five times more cost-efficient than cap-and-trade, but taxes are politically verboten. Industry interests oppose taxes because of their alleged high regulatory costs and cap-and-traders won't let go of their hallowed "environmental certainty."

So the tax-versus-cap debate goes round and round, never resolving and never converging on a credible climate stabilization strategy. But the debate could be resolved if policy makers -- and the economics profession -- could put aside their dogmatisms and recognize several basic principles of climate policy: