1. Grist commentators take different positions. There is no one Grist position.

2. What most of us have in common is that we want mandatory reductions. Some favor 80% reductions over the course of 40 years. I think we can and should phase out all emissions within 30 years.  Efficiency is just one of many means to reach this end. But I don't think anyone thinks efficiency alone will be enough. But I think most of us agree that efficiency has to part of the solution.

3. Sean's proposal, though I think wrong in many respects, is aimed at mandating efficiency. If you are not efficient you pay for it under his scheme, and if emissions are not reduced fast enough how much you pay rises until they do drop fast enough.

4. What I favor is much simpler: Divert 200 billion or so a year from military spending to public investment in deployment of efficiency and renewable technology; divert another 200 billion or so into funding clean energy in the global south. In foreign policy get the U.S. foot off the world's neck. Put in place strong efficiency regulations in buildings, transportation, electricity production, appliances, office equipment, and to some extent in industry. Require agriculture to end its dependence on fossil fuels and to build rather than consume soil. Regulate forestry; require it to be truly sustainable, which will mean harvesting a tiny percentage of the lumber we cut today. Lastly put a price on emissions to mop up those emissions all of these other means miss. This is the  Gar Lipow plan. I doubt I speak for many other bloggers on Grist with this.

Sean's proposal that David enhances, which encompasses easing clean air standards harmful to human health, mtr, bla bla bla, seems very similar to the Bush White House goal for efficiency it calls carbon intensity, where both can be achieved at the same time as increasing annual emission levels (with more of the more efficient plants).  If we all do agree to the 80% reduction, all the noise about Casten's RED coalgeneration is a stupidly small part of it all.  I've seen Sean raise red herrings about absurd results with additionality, I've seen him seemingly try to bore an enviro to death, and now it's self-serving hype.  Is that it?

Gar,

If you're allowed to sneak ponies into your plan, you're kind of stacking the deck. If I can just tap into the military budget at will, then hell, problem solved -- maybe I'll take $400 billion a year and end poverty too. One benefit of Sean's plan is that the incentives are tied tightly to revenue sources that are within the realm of the possible. Can you explain what makes you think the U.S. will consent to a huge cut in military spending in anything like the time frame we're talking about?

grist.org

er...just trying to imitate the brilliant writing style of the esteemed editor of Grist, however poorly.

Dave, the point of advocating something as politically impractical as cutting the military budget is so that maybe, just maybe, at some point in the future, it could actually happen.  You know, like reversing climate change.  So I think (mr. utopian here, yes) that something as obvious as cutting the military should be on the table -- then you can trash it as impossible.

That is politically saleable.  How could Barack sell it?

Two words.  Tax neutral.  No new taxes, it fits the talking point standard of the anti-government movement.

The old energy economy gets subsidies it no longer needs.  With record profits it is justifiable to eliminate it.

Choosing technology is done by lobbying now.  Science could do better.  It's possible to scientifically verify the GHG savings from different technologies.

And energy generation and consumption is already carefully measured and metered.  we can do better than vague giveaway programs designed by lobbyists, with corrupt loopholes they can back an armored car up to and haul off tax dollars.

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It is just too easy to destroy any politician who calls for cutting the military now.  fear mongering about a dangerous world works.  Why?

Because the bush crew has made it a dangerous world, reviving the crusades.  Uniting right wing christians and jews against right wing muslims.

Take the money from the old energy economy subsidies.  that is doable.  And it's enough cash.  If used in the right way it will attract 10 time the private equity to the fight.

We have to beat the corporate lobbying cap and trade crowd, they are set to take over energy policy and hand it to the hedge funds.  These think tankers all dream of having hedge fund investments themselves, as most of congress already does.  So they tout so-called market solutions.

Real market solutions are impelled with subsidies in real markets.  Where consumers pay monthly power bills and mortgages. That is where subsisdies need to be applied.

Don't fall for a lot of over complexity.  The more complicated the plan and the language, the less likely the person explaining it understands it or believes in it.

I'm not saying that the people here on the blog who tout cap and trade are not sincere, I just don' think they are thinking this through.  They are playing follow the leader.  Joe Romm, for instance, has been in government, so when he claims cap and trade is the only wasy, they follow.

You'll notice that Sean is quite a bit more skeptical, experiencing bungling on a massive scale in his way everyday.  From excessive complexity.  He seems to like simple direct subsidy.

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Tax neutral.  That's how Barack could do it.  A fireside chat about the economy.  He is really different, he has become the change he wants to see in the world.  Why no one else thought of using Ghandi's genius?  Who knows?

Stimulus without new taxes or new debt (owed to china).  Tax neutral stimulus.

Lower energy prices, lower trade deficits, investment here at home, restore the job and tax base.  

Think politically, remember the no new taxes swiftboat.  It's a powerful weapon.

http://amazngdrx.blogharbor.com/blog

I can agree about the precariousness of pushing politicians to think about cutting the military; but I have to disagree about worrying about the military lobbying against climate change warming, although it's after midnite Chicago time but I'll still do my best, since I think you raise a very interesting point.  Actually, any point you raise about what you think (or know) would be a response to cutting the military budget would be very helpful, because I think it's a very important issue.

It never ocurred to me that the military might actually work against climate change legislation -- but in order for your scenario to play out, it seems to me, a movement to cut the military would have to be so huge, that the chances would be pretty good anyway that a cut could be made.  

In 1991 a bunch of us tried to suggest to many different progressive groups that it would be to everybody's benefit if we all got together and pushed for a "peace dividend".  I don't know that many people were worried about Pentagon pushback, they just thought it was like tilting at windmills (now we're tilting for windmills?).

It may be, like many "radical" ideas, that the people who should push for military cuts might not be the same ones that push for things like cap-and-trade, because power brokers like the military can pressure bigger, more established groups.  The "crazies" can create an agenda, and make the "progessives" look reasonable.  

But there may come a time, unfortunately, when the powers-that-be start to feel very threatened -- and that will freak out all the good people that are working on more moderate proposals, if history is any guide.  

But right now, the military is riding very high, they survived the 1990s, when there was no threat, and they're doing very well right now, even though they really aren't needed for a war on terrorism.  They have their own, complicated take on global warming and peak oil (and Michael T. Klare is the best observer of this dynamic).

I know it would be toxic for a politician to raise the issue of cutting the military -- a very sorry state of affairs.  The only way that will change, I think is 1) the corporate elites decide that we can't afford a huge military (we can't), or 2) there is a big grassroots push to cut the military (and tax the rich, etc) in order to transform the economy.  So, I will opt for the second.  But if you have any more reasons to fear that the military might actually fight global warming legislation, I think that would be significant, I'd be interested to hear it.

But certainly, I am not advocating that the central thrust of a green movement should be to cut the military budget, simply because I believe in letting "100 flowers bloom", we don't know what will work politically, and if we can get it done without cutting the military, so much the better -- cutting the military might be the single most difficult thing to do politically.

That's why the "Berkeley" plan is so interesting, it just provides loans,not even spending, per se.  So there are lots of possiblities, including subsidies.

If the local power company pays you 11 cents per kwh for your renewable energy, the retail rate,and government chips in another 10 cents;  that would be just right to get this all done in time.

A local power company here pays their customers 23 cents per kwh for solar electricity.  I would like to see that become the norm for wind, solar, farm biogas, and water power.  germany was paying a whopping 56 cents per kwh to solar investors.  I wonder how it is working out?

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The crux of good GHG policy (and a big part of the problem with Lieberman-Warner, as my next post on that topic will outline) is to make sure that the action (both sticks and carrots) is imposed on the actors who have the most direct ability to positively or negatively affect GHG emissions.

The way I see it, these actors are pretty easy to identify: people who produce useful energy.  If you are producing electricity, steam, hot air, mechanical power, etc., a GHG policy ought to force you to make a choice between producing that energy in a fossil-heavy or fossil-lite way, and drive you towards the latter.  That's not because that's the only way to lower GHG emissions - of course end-use efficiency is also critical, as you note.  But the optimal decision point in the system is that point where one can choose to burn (or not burn) fossil energy.

Note that this is not "winner picking", but simply a matter of placing policy at the point where it can maximally drive behavior.  I wouldn't tell my younger daughter that I'm going to give her big sister an ice cream cone every time the little one finishes her dinner. By the same token - and for the same reasons - it doesn't connect cause and effect to reward downstream behavior for upstream GHG activities.

As an example, let's consider a factory that is considering a full demand side management program to cut their electricity use - lighting upgrades, variable speed drives, etc.  Clearly, this activity is societally good.  And clearly - per your observation - this action would have GHG impacts that are not directly incentivized by my output based approach.  

But equally clearly, those impacts are a lot different if the factory is located in Idaho than if it's located in West Virginia.  Both states have cheap energy and are likely to attract electric-intensive manufacturing.  But in Idaho, this is driven by the large volume of hydro while in West Virginia it is driven by the large volume of coal.  To a first approximation, there's about 1500 lb/MWh difference in the CO2-intensity of power in those two states. (~2000 lb/MWh in coal-intensive WV vs. ~500 in ID.  For comparison, the entire US grid averages about 1400 lb/MWh.)    

As a result, the factory in WV is having a vastly greater impact on reducing GHG emissions than the one in Idaho.  This is not to say that both EE investments aren't worthwhile (nor that GHG emissions are the only reasons to invest in efficiency.)  It's simply to point out that the moment you move the carrot/stick away from the point of energy conversion is the moment that the impacts of that policy with respect to GHG emissions get diluted.

But now look at the same scenario in an output-based approach.  The upstream power plants in West Virginia pay a premium to emit their dirty electricity, while the upstream power plants in Idaho get paid for their clean stuff.  The two of us disagree on the degree to which this cost will ripple through into prices but - if I take your perspective in that conversation - you would have to conclude that the efficiency investment in WV is now disproportionately incentivized relative to Idaho, to a degree that is a function of it's greenhouse gas benefits.  In other words, the GHG policy is providing incentives to reduce GHG emissions.  Which is the goal, no?

(Note that I picked electric here because it's easy to talk about, but we could just as easily apply this to your tomato plant if we assumed that the gas supplier replaced their fossil nat. gas with biogas.  This is a bit less likely, which is why I focused on electric, but would lead to the same disconnect between cause & effect.)

The government only "picks" GHG-free energy.  Science ought to determine which devices and systems are GHG-free.  And how much GHG a given system saves.  These are factual determinations, not value or policy issues.  Science determined that corn ethanol doubles GHG over gasoline, that's a fact.  So ethanol ought to lose all it's subsidies.

Industry produces the devices and systems, consumers then buy them based on the money saved and amount of subsidy.  The bank loans the money, and everyone knows how much the government check will be to help pay off the loan.

Or in the case of a consumer paying upfront, they will know how many years it will be until their solar, wind, or biogas energy if free, once the system is payed off.

KISS, keep it simple stupid.  a good sound engineering and policy principle.

With cap and trade, who knows what might happen?  Manipulated markets could bankrupt anyone and everyone at anytime.  like happened in the enron/California electricity trading fiasco.  traders shut down powrplants to boost short term profits and electricty prices 1000s of percent.  They have the recordings of the rats cackling about it.

Hedge fund rats will do the same with cap and trade.

http://amazngdrx.blogharbor.com/blog

Here's some math:

For electric generation and thermal generation, the annual operating cost is a significant fraction of the capital cost.  Take a power plant that costs $1500/kW (a typical gas turbine.)  Assume it runs for 7000 hours/year (80% of the time) at 33% efficiency (the US average) with $7/MMBtu gas (rather cheap at current prices, but let's be conservative).

That plant generates 7 MWh per year, per installed kW (e.g. 7000 hours per kW = 7000 kWh/yr).  There are 3.413 MMBtus in a MWh, so that means that our fuel cost can be expressed as 7 x 3.413 = $23.891/MWh (of fuel - not electricity).  

Thus, the annual operating cost, per installed kW is:

$23.891 / 0.33 x 7 = $507/kW, or about 1/3 of the capital costs.  Which means that doubling fuel costs (or, conversely finding a way to cut my fuel purchases in half) is pretty significant.  Doubling the cost of fuel costs me 1/3rd of my capital every year  Doubling efficiency saves me 1/6th of my capital every year (about a 15% return on investment).  Those kind of numbers can drive behavior.

Now look at transportation.  Suppose you've got a $25,000 car and you drive 13,000 miles/year, getting a paltry 20 mpg.  Even at today's high gas prices (let's use $4/gallon), your total annual operating costs are just:

13,000 / 20 x $4 = $2600, or about 10% of your capital cost.  Which means that you really have much greater proportional increases in gasoline costs - whether through shoddy foreign policy or carbon pricing - to affect behavior enough to cause people to think about doing something other than buying a $25,000, 20 mpg car.  (Note that this math is way worse for a Lexus!)

The challenge here is simply one of capacity factor.  Unless you drive for a living (taxi drivers, city buses, etc.), most of the time you own a car you're not using it.  But if you own a boiler/furnace/power plant, most of the time you own it you're using it.

This has always suggested to me that in the transportation sector, regulation is more appropriately placed at the vehicle (whether through CAFE, sales taxes, or some other mechanism), since any likely carbon price on the fuel is unlikely to affect behavior.  Intellectually, I'm not wild about that, as this approach very quickly gets back to winner picking, but it's a hard circle to square.  Perhaps other Gristers have thoughts.

The catch is that everybody would have to live in a NYC, but I said this is a minimum.  But obviously, it is an extremely efficient minimum.

So, I suppose it would be necessary to compare the cost per person in their 20 mpg car, yearly, vs. the cost of transporting that person via public transit -- the huge complicating factor being the location of said person, i.e., in sprawl or in a walkable community.

There here have been a wave of light-rail projects -- although I don't have the figures on how many vehicle-miles those saved.  But if public transit does save vehicle-miles, via renewable electricity, then it should, by your logic, receive a huge amount of money to expand (pending future research, of course).

Levying the tax on the fuel at the extraction level does an even better job. Yeah the hydro plant gets zero credits, but since the tax is on 100% of the carbon instead of a difference between carbon content and arbitrarily picked standard, the coal burning plant pays more. So the incentives to save electricity are more for the electricity user in the coal burning state than in the hydro state - just as in your scenario.  The differnce is that the straight carbon tax/permit fee works in more direct scenarios where it is fuel savings vs. fuel savings, and yours does not. You want a scenario where your method provides zero incentives compared to carbon tax?

Most manufacturing pulp, paper, fabrics, chemicals, chip manufacturing include substantial hot water rinsing processes. And it turns out that these are often done very inefficienctly. For example, in 80's chip manufauctures reduced ultra-clean hot water demand by 85% by replacing a process where ultra-pure hot water was delivered in a high pressure stream, with  a process where the chips were soaked in hot water for 15 minutes and then rinsed with a gentle stream. That cuts BTUS uses by 85%, but does not improved the emissions per delivered BTU by even 1%. In fact, since the water is allowed to cool over that 15 minutes and may need minor reheating, it may decrease efficiency the way you meansure it. But it still reduces fuel used to heat hot water, and thus emissions by at least 85%. (Since it is  ultra-pure water being saved, it also reduces the electricity used to purify the water.) The thing about a carbon tax or permit fee is that as long as it is charged upstream, the incentives percolate through the system and hit every case. Now there are all sorts of market irrationalities that keep people from responding to such incentives, which is why we have to do addition stuff - subsidies or public investment or regulation or all of the above.

My point is simply that if we're going to put a price on carbon specifically, you have to price it at the point where it's released.  That price will then ripple through (or it won't), but the differential incentive is there to reduce carbon.  Whether one chooses to conserve energy or carbon in either circumstance is therefore simply a function of the relative pricing of GHG and energy & the capital returns of any given project.  But your hot water guy, or tomato filtering guy still has the same economic incentive to conserve energy.

I'm simply trying to make sure that the price paid for carbon accurately reflects the carbon being reduced - because in all of your cases, the carbon impacts of those investments are (while admittedly non-zero) hard to quantify, variable and dependent  upon upstream decisions beyond the industrial's control.  Which means that if you pay that industrial to make that investment, the incentive per ton of CO2 is uncertain.  Ergo, the degree to which that model incentivizes CO2 reduction is uncertain.  The logic of the output-based model is to provide clarity and certainty on the price of a ton and let markets respond as they may.  Because after all, markets respond really well to clarity and certainty.  Not so well to muddiness and uncertainty.

If one separately wants to incentivize downstream energy efficiency investments (and there are certainly many good reasons for doing so), that's fine, and you certainly won't hear any opposition to that idea from me.  My objection is simply that this is an inefficient way to incentivize GHG reduction, for the simple reason that it doesn't provide consistency or clarity on the value of reducing GHG emissions.

Take it from the other side.  If your energy is worth $7/MMBtu, you know the value of investing in energy efficiency.  Every MMBTu you save puts $7 in your pocket.  But if I stipulate that anyone who saves energy gets $7/MMBTu, regardless of whether they are presently using $0 solar, $2 coal, $7 gas or $15 fuel oil, I've injected an awful lot of goofiness in the model that is going to preferentially direct capital based on arbitrary factors.  This economic inefficiency is precisely my opposition your framework - and precisely the problem that an output-based standard solves.  Since we are both trying to maximize the rate of GHG reduction, why is it that we disagree?