Every year, Gustavus Adolphus College in tiny St. Peter, MN holds a Nobel Conference, authorized by the Nobel Foundation of Stolkhom, Sweden. The conference brings together renowned experts to discuss timely issues, like aging or globalization. This year, it was “Heating Up: The Energy Debate.”

I attended the two-day event, which delivered in its round-up of impressive energy and global warming experts: Nobel Laureate in Physics Dr. Stephen Chu, biofuels expert Dr. Lee Rybeck Lynd, peak oil expert Ken Deffeyes, economist Paul L. Joskow, polar explorer Will Steger, hydrogen expert Joan M. Ogden, and James Hansen, Director of NASA’s Goddard Institute for Space Studies.

While at times the science got a bit thick, the message from all of the lecturers was clear: Global warming is urgent, we need to do something NOW, and many different solutions will get us there.

I was most interested to hear from Paul L. Joskow, an MIT economist who discussed the best methods for regulating carbon dioxide (CO2), a major contributor to global warming. Many politicians favor a cap-and-trade policy, in which a limit on CO2 is determined and then tradable/sellable permits to pollute are issued to utilities and industry. Economists, on the other hand, generally prefer a carbon tax that simply taxes CO2 at a certain rate.

Although an economist himself, Joskow argued that a cap-and-trade policy is the best way to create a market for CO2 and drive down emissions. First of all, a cap-and-trade policy is politically feasible, and making sure it actually has a chance of passing Congress in our lifetime is the most important thing to slowing global warming. Secondly, a cap-and-trade plan links the U.S. with other nations (and other states) that have already started down this path, thus creating a global solution to a global problem.

While economists favor a carbon tax that the feds could ideally use to cut taxes in another area, like income, Joskow said “perfect the enemy of good.” Sure, in a perfect world we would tax bad stuff and never tax good stuff (like working). But the urgency of global warming calls for a good system that is feasible now and gets us in sync with the rest of the planet. And the best system for that is a cap-and-trade policy.

Joan M. Ogden lectured on a hydrogen economy, although her fellow panel discussion presenters were skeptical of using hydrogen as a fuel source, at least in terms of it being ready fast enough to fight global warming. Although no option should be taken off the table, hydrogen could play a more important role in bettering existing technologies (like ethanol production) rather than creating an entirely new infrastructure.

Dr. James Hansen – you may remember him from his accusations that NASA officials edited his global warming reports – said that if someone is seriously concerned about climate change, any elected official they vote for should agree on three principals:

1) A moratorium on traditional coal-fired power plants (until we can sequester the CO2, building more plants moves us backwards)

2) Policies that encourage more renewable energy

3) Incentives for energy efficiency.

With the clean technology here but the leadership lacking, the issue of urgency was paramount throughout the lectures. In fact, I thought the statistics and scenarios put forth more dire than those I normally read in the media. More than one expert prefaced a recommendation with something like, ‘A year ago I would’ve been laughed out of the room for saying this, but now I can say that what we need to do is…’ The extensive media attention on global warming, along with some serious dialogue and action by the business sector and politicians, have made it “safer” to talk about the true consequences and costs of global warming without immediately being labeled a nutcase.

For example, MIT economist Paul L. Joskow said that any sort of carbon regulation is going to raise our utility bills “and anyone who tells you otherwise is lying.” With a cap-and-trade policy that sets CO2 at $50 per ton (a price he thinks is likely), it could drive up utility bills 40-50%. But this would not happen over night: Any measure passed by Congress would give utilities several years to implement efficiency programs to soften the landing. But the message was still clear: This isn’t going to be easy, but we can do it.

Polar explorer Will Steger, who has been traveling and studying the arctic and Antarctic regions for 40 years, gave an eyewitness account of global warming’s effects at the poles (in May I interviewed him about his most recent trip). I’d heard his talk several times, but there was a big difference this time: He showed a slide of polar bear and then said in his quiet-but no-BS –sort-of-way, “This is our friend the polar bear. I’m afraid there’s nothing we can do for them – they will go extinct. I couldn’t say that 18 months ago to people, but now I am.”

Despite the wake up calls – no use in sugarcoating at this point – it was still uplifting to know that some of the planet’s smartest people are working on this and elected leaders are slowly getting the message.

Now, it’s time for the rest of us to get to work. For starters, check out Will Steger’s “Template for Action,” Lighter Footstep’s “10 First Steps,” or the Union of Concerned Scientist’s “How You Can be Involved.”

While voters, businesses, and politicians are calling for carbon regulation, exactly what that regulation would look like is far from decided.

Carbon taxes and cap-and-trade systems are the two most-cited proposals for cutting carbon dioxide (CO2), a major contributor to global warming. Supporters argue over which plan would be the most efficient method of cutting emissions while allowing for flexibility in the economy.

A carbon tax is a tax levied on CO2 emissions. Those who favor a carbon tax say it will drive innovations and technologies that allow for the same amount of work to be done with less pollution, and decrease the demand for products that are dirtier and thus more expensive. Critics point out that a tax would have a harsher impact on the poor, while others argue that carbon tax revenues could be used to lower other taxes, like income taxes or payroll taxes.

A carbon tax also makes many elected officials nervous: New taxes, fees, or whatever you want to call them, are rarely popular with voters. One notable supporter of carbon taxes — although he’s not running for office anymore — is Al Gore. He has promoted a carbon tax in addition to implementing a cap-and-trade program.

A cap-and-trade system requires an overall cut in emissions. Companies that cut emissions further than required are issued permits that they can then sell to companies that can’t or won’t cut emissions far enough.

Promoters of cap-and-trade say that the system provides an incentive — rather than a heavy-handed tax approach — to cut emissions because companies can sell the excess permits. It also requires a definitive limit on emissions, while some are afraid that a carbon tax would simply drive companies to pay the fines, pass the increase along to consumers, and keep on polluting. Companies like GE, DuPont, Duke Energy, and Toyota back a cap-and-trade policy, as do many environmental groups and labor unions. Presidential candidates like Hillary Clinton, John McCain, and Barack Obama also prefer it.

This fall, Congress could see a slew of measures to cut CO2. Senators Joe Lieberman (I-CT) and John Warner (R-VA) are planning to propose a cap-and-trade bill. Representative John Dingell (D-MI) is expected to introduce a carbon tax proposal — not in the hopes of actually passing it, but rather just to show how unpopular such a tax would be.

San Francisco Chronicle
Wall Street Journal, via Environmental Economics

Last week, Bill Chameides, chief scientist at Environmental Defense, talked with Ira Flatow on National Public Radio’s Talk of the Nation: Science Friday about market-based policies to cut carbon dioxide (CO2) emissions, a big contributor to the global warming problem.

Chameides argued that the fastest, most cost-effective way to reduce CO2 emissions is with a policy called cap-and-trade. This system tells big emitters – like powerplants, automobile manufacturers, etc – that they have to cut their CO2 emissions by a certain amount by a certain date. For companies that make deeper cuts than what is required, a credit is issued and can be traded (sold) to other emitters that don’t meet the targets. With this system, explained Chameides, government plays “a fairly light role” by ensuring that technologies are valid and are reducing emissions, while carbon dioxide becomes a commodity and sold on the open market. Companies are rewarded for innovations that take them beyond targets set by lawmakers.

Cap-and-trade isn’t a new concept: A cap-and-trade policy was enacted with the 1990 Clean Air Act amendments to cut emissions that cause acid rain. According to the current Bush Administration, the cap-and-trade system has been a “resounding success,” cutting annual sulfur dioxide emissions ahead of target dates and at one-third of the expected cost.

When a caller pointed out the lack of action from the federal government on CO2, Chameides noted that states have taken the initiative. For example, the Regional Greenhouse Gas Initiative (RGGI) is an effort by Northeastern and Mid-Atlantic states to reduce CO2 emissions. RGGI employs a multi-state cap-and-trade program and requires electric power generators to make the cuts. California is also implementing a cap-and-trade system (one that targets all big emitters, not just the electricity sector, and which covers all six major global warming gases, not just CO2), and Europe’s cap-and-trade came into effect over two years ago. As important as it is for states to forge ahead, Chameides is concerned that without leadership from the federal government, we won’t get the cuts we need and we’ll fall behind in renewable energy innovation:

“Europe is way ahead of us in renewable energy technology and that’s where we’re really going to have to play catch up…If we wait long enough, we’ll have to be an importer of these technologies instead of an exporter.”

There are several bills in Congress that have cap-and-trade policies, and many see a “clear preference” for this approach among utilities, compared to a carbon tax. In fact, 91 percent of California businesses in one survey responded that a cap-and-trade policy was the best way to meet CO2 reduction goals. Chameides argued that a carbon tax – besides being “a political nonstarter” – doesn’t allow for measurable reductions, and the government sets the price on CO2 rather than the marketplace. The best way to slow global warming, spur technological innovation, boost our economy, and clean up our environment is with a measurable, market-based system like cap-and-trade.

UPDATE: See Maria Energia for another point of view: Fareed Zakaria of Newsweek argues that a global carbon tax is the most efficient, market-friendly way to cut emissions that cause global warming.

Business Wire, via Find Articles
Climate Action Network Europe
MarketWatch
National Public Radio
Regional Greenhouse Gas Initiative
Terra Daily
WhiteHouse.gov