This afternoon featured Jonathan Alder, Greg Arnold, and Dr. Paul MacCready. Alder spoke about the Fables of Federal Environmental Regulation (check out Richard’s post for more on that), Arnold spoke about market mechanisms for reducing pollution, and MacCready spoke about Doing More with Much Less – human powered transportation, electric cars, and other such wonders.
We’re just going through the final question and answers of the day, and after dinner we’ll be hearing from Stossell and Crichton (the moment we’ve all been waiting for, I’m sure!). We just heard a question from an audience member, wondering why there haven’t been any women speakers today? It’s true, and it seems remarkable that with 12 speakers, Shermer couldn’t find a woman to speak today.
I only caught notes from Arnold’s presentation, as I was catching up on posts and podcasts during the other two. But read on if you’re interested in his take on market mechanisms to address climate change.
Greg ArnoldOutlines three economic approaches to solve environmental problems.
1) Let the Market Work – but the reality is that markets don’t price in negative externalities (like air or water pollution, or anything where we all pay the cost).
2) Command and Control – tell everyone what to do and make them do it regardless of the costs to them. Standards, regulations, subsidies, taxes and tax credits, loans, etc.
3) Cap and Trade – allows market to set price on negative externality. Government sets a goal and allows the market to set a price.
How Emissions Trading Works – the administrator will allocate credits to all the source polluters. Each credit allows one unit of pollution to be emitted. Then if you pollute more than that, you have to buy credits, and if you pollute less, you can sell them.
This allows all participants in the market to design their own compliancy strategy. Penalties exist for non-compliance and vary greatly by program. Compliance becomes increasingly expensive as polluters are allocated fewer credits each year. This leads to the least expensive mitigation options being consumed first.
LA RECLAIM – success story. Believe it or not, the air quality in LA used to be a lot worse than it is now.
There are probably over 100 programs in the US today.
US Carbon Market Prospects – it’s going to be hard to get something like this through Congress with the current administration.
Estimates are that we will be burning 70% more coal by 2030, which is distressing.
How are we going to hope to get our carbon emissions down to 1990 levels by 2025?
Where to from here?
Air markets can work and solve climate crisis, but can’t work without the US. Developing world must have caps too, and cuts must be meaningful (Kyoto as is is not). If Al Gore is right, we have a very small period of time to reverse things. Programs must be well-designed – allowances allocated appropriately, pricing mechanism must be allowed to function properly, verification and monitoring must be ensured.
Watch Richard for more from this afternoon…