Critique of ‘cap and trade’ by Jim Hansen

6/5/2009 Extract from e-mailed letter to the Australian government.My frustration arises from the huge gap between words of governments, worldwide, and their actions or planned actions.  It is easy to speak of a planet in peril.  It is quite another to level with the public about what is needed, even if the actions are in everybody’s long-term interest.

             Instead governments are retreating to feckless “cap-and-trade”, a minor tweak to business-as-usual.  Oil companies are so relieved to realize that they do not need to learn to be energy companies that they are decreasing their already trivial investments in renewable energy.  They are using the money to buy greenwash advertisements.  Perhaps if politicians and businesses paint each other green, it will not seem so bad when our forests burn.

             Cap-and-trade is the temple of doom.  It would lock in disasters for our children and grandchildren.  Why do people continue to worship a disastrous approach?  Its fecklessness was proven by the Kyoto Protocol.  It took a decade to implement the treaty, as countries extracted concessions that weakened even mild goals.  Most countries that claim to have met their obligations actually increased their emissions.  Others found that even modest reductions of emissions were inconvenient, and thus they simply ignored their goals.

             Why is this cap-and-trade temple of doom worshipped?  The 648 page cap-and-trade monstrosity that is being foisted on the U.S. Congress provides the answer.  Not a single Congressperson has read it.  They don’t
need to - they just need to add more paragraphs to support their own special interests.  By the way, the Congress people do not write most of those paragraphs - they are “suggested” by people in alligator shoes.

             The only defense of this monstrous absurdity that I have heard is “well, you are right, it’s no good, but the train has left the station”.  If the train has left, it had better be derailed soon or the planet, and all of us, will be in deep do-do.  People with the gumption to parse the 648-pages come out with estimates of a price impact on petrol
between 12 and 20 cents per gallon.  It has to be kept small and ineffectual, because they want to claim that it does not affect energy prices!

             It seems they would not dream of being honest and admitting that an increased price for fossil fuels is essential to drive us to the world beyond fossil fuels.  Of course, there are a huge number of industries and people who do not want us to move to the world beyond fossil fuels - these are the biggest fans of cap-and-trade.  Next are those who
want the process mystified, so they can make millions trading, speculating, and gaming the system at public expense.

             The science has become clear: burning all fossil fuels would put Earth on a disastrous course, leaving our children and grandchildren with a deteriorating situation out of their control.  The geophysical implication is that most of the remaining coal and unconventional fossil fuels (tar shale, etc.) must be left in the ground or the emissions
captured and put back in the ground.  A corollary is that it makes no sense to go after every last drop of oil in the most remote and pristine places - we would have to fight to get the CO2 back out of the air or somehow “geoengineer” our way out of its effects.

A more sensible approach is to begin a rapid transition to a clean energy future, beyond fossil fuels - for the sake of our children and grandchildren, already likely to be saddled with our economic debts, and to preserve the other species on the planet.  Such a path would also eliminate mercury emissions, most air pollution, acid rain and ozone alerts, likely reversing trends toward increasing asthma and birth defects.  Such an energy future would also halt the drain on our treasure and lives resulting from dependence on foreign energy sources.

             What is it that does not compute here?  Why does the public choose to subsidize fossil fuels, rather than taxing fossil fuels to make them cover their costs to society?  I don’t think that the public actually voted on that one.  It probably has something to do with all the alligator shoes in Washington.  Those 2400 energy lobbyists in Washington are not well paid for nothing.  You have three guesses as to who eventually pays the salary of these lobbyists, and the first two guesses don’t count.

             I get a lot of e-mails telling me to stick to climate, that I don’t know anything about economics.  I know this: the fundamental requirement for transition to the post fossil fuel era is a substantial and ising price on carbon emissions.  And businesses and consumers must understand that it will continue to rise in the future.

             Of course, a rising carbon price alone is not sufficient for a successful rapid transition to the post fossil fuel era.  There also must be efficiency standards on buildings, vehicles, appliances, electronics and lighting.  Barriers to efficiency, such as utilities making more money when we use more energy, must be removed.             But the essential underlying requirement is a substantial rising carbon price.  Building standards, especially operations, for example, are practically unenforceable without a strong cost driver. 

The carbon price must be sufficient to affect lifestyle choices.   648 pages are not needed to define a carbon fee.  It is a
single number that would be ratcheted upward over time.  It would cover all three fossil fuels at their source: the mine or port of entry.  Consumers do not directly pay any tax, but the fee’s effect permeates everything from
the price of fuel to the price of food (especially if it is imported from halfway around the world).       As a point of reference a fee equivalent to $1/gallon of gasoline ($115/ton CO2) would yield $670B in the United States (based on
energy use data for 2007).  That would provide a dividend of $3000/year to legal adult residents in the United States ($9000/year to a family with two or more children).

             A person reducing his carbon footprint more than average would gain economically, if the fee is returned 100 percent to the public on a per capita basis.  With the present distributions of income and energy use, it is estimated that about 60 percent of the people would get a dividend exceeding their tax.  So why would they not just spend their dividend on expensive fuel?  Nobody wants to pay more taxes.  They prefer to have the money for other things.  As the price of fossil fuels continues to increase, people would conserve energy, choose more energy efficient
vehicles, and choose non-fossil (untaxed) energies and products.

             Hey, does anybody know a great communicator, who might level with the public, explain what is needed to break our addiction to fossil fuels, to gain energy independence, to assure a future for young people?  Who would explain what is really needed, rather than hide behind future “goals” and a gimmick “cap”?  Naw.  Roosevelt and Churchill are dead.  So is Kennedy.