James K. Boyce

This is the final installment of a five-part series on climate policy adapted from regular Triple Crisis contributor James K. Boyce’s March 31 lecture for the Climate Change Series at the University of Pittsburgh Honors College. This installment lays out his case for a cap-and-dividend policy, which Boyce argues would put into practice the “widely held philosophical principle … that we all own the gifts of creation in equal and common measure.”  The first four installments of the series are available herehere, here, and here.

The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.

The Case for Cap and Dividend

A carbon price is a regressive tax, one that hits the poor harder than the rich, as a proportion of their incomes. Because fuels are a necessity, not a luxury, they occupy a bigger share of the family budget of low-income families than they do of middle-income families, and a bigger share for middle-income families than for high-income families. As you go up the income scale, however, you actually have a bigger carbon footprint—you tend to consume more fuels and more things that are produced and distributed using fuels. You consume more of everything; that’s what being affluent is about. If you’re low-income, you consume less. So in absolute amounts, if you price carbon, high-income folks are going to pay more than low-income folks.

Well, under a policy with a carbon price, households’ purchasing power is being eroded by that big price increase, that big tax increase. But money is coming back to them in the form of the dividend. Because income and expenditure are so skewed towards the wealthy, the mean—the average amount money coming in from the carbon price and being paid back out in equal dividends—is above the median—the amount that the “middle” person pays. So more than 50% of the people would get back more than they pay in under such a policy. As those prices are going up, then, people will say, “I don’t mind because I’m getting my share back in a very visible and concrete fashion.” I would submit to you that it’s politically kind of fantastical to imagine that widespread and durable public support for a climate policy that rises energy prices will succeed in any other way.

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James K. Boyce

This is the fourth installment of a five-part series on climate policy adapted from regular Triple Crisis contributor James K. Boyce’s March 31 lecture for the Climate Change Series at the University of Pittsburgh Honors College. This installment focuses on how the revenues from a carbon price will be distributed: Who gets the money? The first three installments of the series are available herehere, and here.

The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.

Who Gets the Money?

How much money are we talking about, when we put a cap on carbon emissions? What I want to share here are some “back of the envelope” calculations. Don’t take these to the bank, but they’ll give you some idea of the ballpark we’re talking about, what kinds of prices are likely to be associated with what levels of emission reduction. These are figures that trace the trajectory if we’re going to achieve an 80% cut in emissions by the year 2050.

In the first five years of the policy, if we were to have such a policy in 2015, we’d be emitting on average about 6 billion tons of carbon dioxide per year, a little bit less than in the absence of a policy. The price associated with that would probably be in the neighborhood of $15 a ton, so we’d be talking about $90 billion a year, or about $540 billion over those first six years. In the next decade, we’d be ratcheting those emissions down further to about 4.5 billion tons. To do so, the price would have to be about $30 a ton, generating a total cost to consumers and therefore a pot of money of about $135 billion a year, or $1.35 trillion over the decade. In the next decade, getting down to about 3 billion tons of carbon, we’d be raising the price to about $60 a ton, generating about $1.8 trillion over the decade. And the last decade, ratcheting down further to 1.5 billion, perhaps somewhat optimistically assuming here that the price needed would be only $120 a ton—that would assume that a lot of R&D has happened, a lot of new technologies come online, investments in public mass transit are online, etc., so you don’t have to push the price through the roof—that would generate another $1.8 trillion.

You add it up and over that 35-year period, we’re talking about something to the order of $5.5 trillion. Economists have a technical term for it—“a hell of a lot of money.” So the question is: Who owns that atmospheric parking lot and, therefore, who will get the money?

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James K. Boyce

This is the third installment of a five-part series on climate policy adapted from regular Triple Crisis contributor James K. Boyce’s March 31 lecture for the Climate Change Series at the University of Pittsburgh Honors College. This installment focuses on the costs associated with the institution of a carbon price, both the private costs of measures to reduce emissions and the larger private costs that would be paid for emissions that are not eliminated. The first two installments of the series is available here and here.

The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.

Just How Much Would It Cost?

Back in 2009, the Speaker of the House of Representatives, John Boehner (R-Ohio), commented in the debate running up to the vote on the American Clean Energy and Security Act—known as the Waxman-Markey bill, after its main sponsors, Henry Waxman (D-Calif.) and Ed Markey (D-Mass.)—that if this bill were passed, it would be the biggest tax increase on working families in American history.

Now, that was probably political hyperbole, but Boehner wasn’t entirely wrong. It would be like a tax increase, and it would be substantial. It has to be substantial if it’s going to engender the kinds of changes in consumption of fossil fuels that are needed to push forward the clean energy transition. We’re talking about big changes: an 80% reduction in our emissions by the year 2050 below some baseline level. We’re talking about really a revolution in energy, and the kinds of price increases that would be ultimately needed to drive that forward are not inconsequential, and so Boehner had a really serious argument there.

What was the Democratic response? “No, no, it’s not a tax, really it’s not like a tax, and really it’s not a big price increase, it’s not going to hurt people all that much, it’s equivalent to a postage stamp a day.” Now, that postage-stamp-a-day estimate came from an estimate of something quite different from the price increases that households would face.

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James K. Boyce

This is the second installment of a five-part series on climate policy adapted from regular Triple Crisis contributor James K. Boyce’s March 31 lecture, part of the Climate Change Series at the Honors College of the University of Pittsburgh. The lecture explores how to turn the atmosphere (heretofore treated as an “open access” resource, into which greenhouse gases can be dumped at no cost to the emitter) into a common-property resource. The first installment of the series is available here.

The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.

The Tragedy of Open Access

The kind of problem that carbon emissions epitomize is what’s called in economics the “tragedy of open access.” It’s also sometimes called the “tragedy of the commons,” although since that phrase was coined back in 1968 by Garret Hardin, it’s become clearer to folks that there’s a difference between commons and open access. Very often, commons are, in effect, regulated through systems of common-property resource management. Open access is really the heart of the problem. The problem is that, currently, we’re able to put carbon dioxide in the atmosphere as if there’s no scarcity of the biosphere’s capacity to absorb emissions. There’s no price associated with doing so—it’s free. There are no property rights associated with this—no one owns the carbon absorptive capacity of the atmosphere. And the problem is that when you have resources that are treated as open access resources but in fact are in limited supply, you can get overuse of the resource—you can get abuse of the resource to the point where you’re damaging the resource and the economy.

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James K. Boyce

This is the first installment of a five-part series on climate policy by regular Triple Crisis contributor James K. Boyce, professor of economics at the University of Massachusetts-Amherst and director of the Program on Development, Peacebuilding, and the Environment at the Political Economy Research Institute (PERI).

The series is adapted from Prof. Boyce’s March 31 lecture, part of the Climate Change Series at the Honors College of the University of Pittsburgh. The lecture explores how to turn the atmosphere (heretofore treated as an “open access” resource, into which greenhouse gases can be dumped at no cost to the emitter) into a common-property resource. This requires the establishment of a set of public property rights over the atmosphere’s capacity to absorb and recycle carbon, the imposition of costs (as through a carbon tax or sale of carbon permits) on those who use this finite resource, and a determination of how the rents will be distributed.

The remaining parts of the series will appear once a week for the next four weeks. The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.


Demand and Supply

Broadly speaking, there are two types of policies to reduce carbon emissions from fossil-fuel combustion. One set of policies operates on the demand side of the picture, on the need for fossil fuels. These are policies that include investments in energy efficiency, investments in alternative sources of energy, public investment in mass transit, etc.—investments that reduce our demand for fossil fuels at any given price. Even if the prices of fossil fuels were to remain unchanged, people would consume less of them, thanks to these investments in efficiency, alternative energy, alternative modes of transportation, etc. That’s an important set of policies, but it’s not the only one that is relevant.

I’m going to focus on the complementary set of policies that operate not on the demand side of the equation, but the supply side—policies that raise the price of fossil fuels at any given level of demand. Those policies operate by raising the price in either of two ways which are more or less equivalent, either by instituting a tax on carbon emissions or, alternatively, by putting a cap on emissions and thereby restricting supply. In the same way, OPEC restricts supply when it wishes to increase the price of oil and increase profits—it raises the price. Well, that’s how a cap works to raise the price, too.

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Sunita Narain

Climate change has a surprising new follower: the U.S. president. The U.S. government has been the biggest bugbear in climate change negotiations. Since discussions began on this issue in the early 1990s, the United States has stymied all efforts for an effective and fair deal. It has blocked action by arguing that countries like China and India must first do more. Worse, successive governments have even denied that the threat from a changing climate is real, let alone urgent. President Barack Obama, who came to power in the first term with the promise of change in dealing with climate change, was noticeably coy about the issue in the recent years.

But in May this year, the U.S. government released its National Climate Assessment, which puts together carefully peer reviewed scientific information on the impacts in the United States. It makes clear that even the United States is not immune to the dangers of climate change. In fact, many trends are visible and the country is already hurting.

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Sunita Narain

Australia is a coal country. It is big business—miners are important in politics and black gold exports dominate the country’s finances. But dirty and polluting coal evokes emotions in environmentally concerned people. Coal-based power provides 40 per cent of the world’s electricity and emits one-third of global carbon dioxide, which is pushing the world to climate change.

Given this, on my recent visit to Australia, it was obvious I would be asked about my opinion on Australian coal exports to India. My answer, at the end of a discussion on the environmental challenges the world faces, was that as long as Australia was addicted to coal for energy it would be hypocritical for it to ask countries like India to give up coal. It is also important to note that Australia’s per capita carbon dioxide emissions are the highest—18 tonnes per person per year, compared to India’s 1.5 tonnes per person per year.

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James K. Boyce

What’s rent got to do with climate change? More than you might think.

Rent isn’t just the monthly check that tenants write to landlords. Economists use the term “rent seeking” to mean “using political and economic power to get a larger share of the national pie, rather than to grow the national pie,” in the words of Nobel laureate Joseph Stiglitz, who maintains that such dysfunctional activity has metastasized in the United States alongside deepening inequality.

When rent inspires investment in useful things like housing, it’s productive. The economic pie grows, and the people who pay rent get something in return. When rent leads to investment in unproductive activities, like lobbying to capture wealth without creating it, it’s parasitic. Those who pay get nothing in return.

Two other types of rent originate in nature rather than in human investment. Extractive rent comes from nature as a source of raw materials. The difference between the selling price of crude oil and the cost of pumping it from the ground is an example.

Protective rent comes from nature as a sink for our wastes. In the northeastern states of the U.S., for example, the Regional Greenhouse Gas Initiative requires power plants to buy carbon permits at quarterly auctions. In this way, power companies pay rent to park CO2 emissions in the atmosphere. Similarly, green taxes on pollution now account for more than 5% of government revenue in a number of European countries. When polluters pay to use nature’s sinks, they use them less than when they’re free. Read the rest of this entry »

Sunita Narain

Cross-posted from Centre for Science and Environment.

Chulhas—cookstoves of poor women who collect sticks, twigs and leaves to cook meals—are today at the centre of failing international action. Women are breathing toxic emissions from stoves and these emissions are also adding to the climate change burden. The 2010 Global Burden of Disease established that indoor air pollution from stoves is a primary cause of disease and death in South Asia. As many as 1.04 million pre-mature deaths and 31.4 million disability adjusted life years (DALYs)—measure of years lost due to ill-health, disability or early death—are related to exposure to biomass burning in poorly ventilated homes.

But what has spurred action is the science that there is a connection between local air and global air pollution. The particles formed during incomplete combustion—in diesel cars and cookstoves—are seen as powerful “climate forcers” because they absorb light and convert it into heat. It is also found that these particles or aerosols interact with clouds and affect rain pattern. They also fall on snow or ice surfaces and make them melt faster.

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Martin Khor

While political events will no doubt dominate the news in 2014, social issues such as health and environment and coping with the rising cost of living will be just as important in the new year.

Good health is the basis of everything else that is positive in life. Thus, a preview of key social issues in 2014 should begin with health.

In Malaysia, a major concern is the dramatic rise in dengue, with 39,222 cases in 2013, a 90% jump from a year before.

There is a re-emergence of the deadly human variety of avian flu, with 47 deaths from 147 cases in China coming from the new H7N9 strain in April-December last year.

A few years ago there was the expectation that a flu epidemic could sweep through the world, affecting millions of people. The flu pandemic in 2009 killed thousands of people, including in Mexico and Indonesia, but it was fortunately contained.
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