Transcript - Catalyst

ENVIR 200
ENVIR 280
Environmental Studies:
Communication and Information
Natural History:
Knowing Our Non-Human Neighbors
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5 credits, I&S
Writing Credit (W)!
Open to all students who have taken
ENVIR 100 and ENGL Composition.
•5 credits, NW
•No prerequisites
•Required fieldtrips to Pack Forest (near Mt.
Rainier) and Leavenworth!
A practical seminar to develop the skills
necessary to write and speak about complex
environmental issues.
Learn the natural history of the Pacific
Northwest through direct experience, field
trips, and readings.
Pack Forest image source: http://adirondackkayaker.com/
What do you think of the new tolls
($3-$5 each way) on the 520 bridge?
38%
13%
4
36%
3
12%
2
Love them!
Hate them!
Indifferent
What tolls? What
520 bridge?
1
1.
2.
3.
4.
Story #1: Traffic congestion
• The 520 bridge (connecting Seattle and
Bellevue/Kirkland/etc.) used to be very
congested during rush hour.
• Now there’s a toll of about $3-5 each way
(collected electronically… very nifty!)
• As a result…
Story #1: Traffic congestion
Story #1: Traffic congestion
• The 520 bridge (connecting Seattle and
Bellevue/Kirkland/etc.) used to be very
congested during rush hour.
• Now there’s a toll of about $3-5 each way
(collected electronically… very nifty!)
• As a result…
• No more traffic congestion!
• Plus government revenue (that, e.g., can
be used to build a new bridge)!!
How can capitalism save us?
Put a price on pollution!
The line from James Morrison
that summarizes today’s class is
1. To you everything
was just a game.
2. You don’t get to
taste the honey
without the sting of
the bee.
3. You hit me like a
steel freight train.
4. Oh, yeah yeah yeah.
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In the context of carbon pricing,
“taste the honey” refers to…
1. Technological
green innovation.
2. Lower taxes.
3. Sugarcane
ethanol.
4. Stevia powder.
61%
38%
2%
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2
3
0%
4
In the context of carbon pricing,
“the sting of the bee” refers to
1. Lawsuits against
polluters.
2. Higher energy
costs.
3. Bureaucracy.
4. Climate impacts.
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It begins with energy… We will soon lay down thousands of miles of
power lines that can carry new energy to cities and towns across this
country. And we will put Americans to work making our homes and
buildings more efficient so that we can save billions of dollars on our
energy bills.
But to truly transform our economy, to protect our security and save our
planet from the ravages of climate change, we need to ultimately make
clean, renewable energy the profitable kind of energy.
So I ask this Congress to send me legislation that places a marketbased cap on carbon pollution and drives the production of more
renewable energy in America. That's what we need.
And to support -- to support that innovation, we will invest $15 billion a
year to develop technologies like wind power and solar power,
advanced biofuels, clean coal, and more efficient cars and trucks built
right here in America.
Three pollution solutions
• Voluntary approaches: “Give a hoot, don’t
pollute.”
• Mandatory “command-and-control”
approaches: Fuel economy standards,
government-funded R&D (research and
development), etc.
• Mandatory “market-based” approaches:
Make polluting expensive.
Three possible solutions
• Voluntary approaches: “Give a hoot, don’t
pollute.”
• Problem: Voluntary approaches often
don’t work very well because of the
Tragedy of the Commons.
Three pollution solutions
• Voluntary approaches: “Give a hoot, don’t
pollute.”
• Problem: Voluntary approaches often
don’t work very well because of the
Tragedy of the Commons
• Note: Sara Curran may disagree; she has
more faith in bottom-up community-based
solutions than I do.
• I hope she’s right!
Three pollution solutions
• Mandatory “command-and-control”
approaches: Fuel economy standards,
government-funded R&D (research and
development), etc.
• Problem: These can work, but often they
are unnecessarily costly (i.e., inefficient).
• And do you really want the government
picking winners? (Consider corn ethanol.)
Three pollution solutions
• Mandatory “command-and-control”
approaches: Fuel economy standards,
government-funded R&D (research and
development), etc.
• Note: Some experts (e.g., Breakthrough
Institute) disagree; they think governmentfunded R&D will be a big help.
• I hope they’re right!
Three pollution solutions
• Voluntary: “Give a hoot, don’t pollute.”
• Mandatory “command-and-control.”
• Mandatory “market-based” approaches:
Make polluting expensive.
Three pollution solutions
• Mandatory “market-based” approaches:
Make polluting expensive.
Which idea was not discussed in
the Sightline carbon primer reading?
1. Carbon taxes
2. Carbon offsets
3. Cap-and-trade
permits
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How popular was the “tax shift” idea
among local Town Hall stakeholders?
10%
3
68%
2
23%
1
1. Very popular
2. Average
3. Very unpopular
How popular is the “tax shift” idea to
you (as an individual)?
7%
3
42%
2
51%
1
1. Very popular
2. Average
3. Very unpopular
Three pollution solutions
• Mandatory “market-based” approaches:
Make polluting expensive.
• Almost all economists think that this is the
best idea since sliced bread.
• Market approaches use the power of the
free market to protect the environment.
• Two varieties of sliced bread:
– Taxes
– Cap-and-trade permits
Both act as a surrogate for missing
market prices/incentives
• Pollution creates negative externalities.
• The resulting “external costs” are not
included in market prices.
• The invisible hand breaks down, leading
to the tragedy of the commons.
• We can use taxes or cap-and-trade to
“internalize” those external costs.
• These policies “heal” the invisible hand!
How popular (to you) is the UW policy
of charging $0.12 a page for printing?
30%
3
54%
2
16%
1
1. Very popular
2. Average
3. Very unpopular
Story #1: Paper
• Before 1998, it was free for students to
print at the computer labs on campus.
• More correctly, it was “free”: the money
came from student tech fees rather than
individual students.
• The result: 35,000 pages printed per day,
1000s of those pages unclaimed, $25,000
per month for paper and toner…
Price of
printing
Demand curve: At different prices, how
many pages do students want to print?
Which point (A, B, or C) shows
how many pages were printed
when printing was “free”?
When printing was $0.10 per
page?
$0.20
$0.10
A
B
C
Quantity
of printing
Which point shows how many pages
were printed when printing was “free”?
1. Point A
2. Point B
3. Point C
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Which point shows how many pages
were printed when printing was $0.10?
1. Point A
2. Point B
3. Point C
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Po
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Po
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Price of
printing
Demand curve: At different prices, how
many pages do students want to print?
$0.20
Supply and demand:
X marks the spot!
$0.10
A
B
C
Quantity
of printing
Charging for printing is most similar to
which idea from the reading?
1. Carbon tax
2. Auctioned capand-trade
3. Grandfathered
cap-and-trade
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What is your recommendation?
18%
4
2%
3
1%
2
79%
1
1. Charge $0.12 a
page for printing
2. Free printing, pay
higher tech fees
3. Free printing, use
old computers
4. I have a better
idea!
Story #2: Sulfur dioxide (SO2)
• Under Title IV of the 1990 Clean Air Act
Amendments, a “cap and trade” program
was created for SO2 from power plants.
• Any firm wanting to emit SO2 needed to
turn in 1 permit for each ton of emissions.
• In 1980, emissions were 20m tons, but by
2000 the government only gave out 10m
tons’ worth of permits. (Cut pollution in
½!)
• Allocations based on historic emissions.
This example is most similar to
which idea from the reading?
1. Carbon tax
2. Auctioned capand-trade
3. Grandfathered
cap-and-trade
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Source: Pew Center on Global Climate Change
Price of
sulfur
Demand curve: At different prices, how
much sulfur do utilities want to emit?
Which point (A, B, or C) shows
the “price” of emissions before
the cap-and-trade? What about
with a cap of 10m ton?
A
B
C
10m
20m
Quantity
of sulfur
Which point (A, B, or C) shows the “price”
of emissions before the cap-and-trade?
1. Point A
2. Point B
3. Point C
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Which point (A, B, or C) shows the “price”
of emissions with a cap of 10m tons?
1. Point A
2. Point B
3. Point C
98%
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Po
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Po
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Price of
sulfur
Demand curve: At different prices, how
much sulfur do utilities want to emit?
A
Supply and demand:
X marks the spot!
B
C
5m
10m
20m
Quantity
of sulfur
Lesson #1: Taxes and cap-andtrade systems are very similar
• A tax is a “price” instrument and cap-andtrade is a “quantity” instrument, but the
demand curve tells us that price and
quantity are related to each other!
Price of
sulfur
$200
$100
5m
10m
15m
Quantity
of sulfur
Lesson #1: Taxes and cap-andtrade systems are very similar
• A tax is a “price” instrument and cap-andtrade is a “quantity” instrument, but the
demand curve tells us that price and
quantity are related to each other!
• If we know what the demand curve looks
like, I can tell you the quantity of emissions
from a given tax, or I can tell you the
“price” of emissions from a given cap.
Price of
sulfur
$200
$100
5m
10m
15m
Quantity
of sulfur
Price of
sulfur
$200
$100
5m
10m
15m
Quantity
of sulfur
Complication #1: We don’t know what
the demand curve looks like exactly.
• So we can’t say exactly how much carbon
reductions will come from a $100/ton tax
on CO2.
• And we can’t say exactly what the “price”
of carbon will be with a cap-and-trade that
reduces emissions to (say) 1990 levels by
2020 and 50% below 1990 by 2050.
• Still, don’t forget Lesson #1.
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What is Lesson #1?
1. Taxes and capand-trade are very
similar.
2. Taxes and capand-trade are
totally different.
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Lesson #2: It’s all about the money.
• The best way to think about cap-and-trade
is to think about its price equivalent, even
if we don’t know exactly what that price
equivalent will be.
• Example: the Waxman-Markey climate bill.
Lesson #2: It’s all about the money.
Source: EPA preliminary analysis of Waxman-Markey, 4/20/09
Lesson #2: It’s all about the money.
• The best way to think about cap-and-trade
is to think about its price equivalent, even
if we don’t know exactly what that price
equivalent will be.
• Example: the Waxman-Markey climate bill.
• A price of ≈$30/tonne CO2 is about $0.30
per gallon of gasoline, $0.03 per kWh coal.
Lesson #2: It’s all about the money.
• The best way to think about cap-and-trade
is to think about its price equivalent, even
if we don’t know exactly what that price
equivalent will be.
• Example: Any auctioned cap-and-trade
system is equivalent to some tax.
• What about grandfathered cap-and-trade?
Lesson #2: It’s all about the money.
• Grandfathering permits to existing firms is
equivalent to giving them money.
• Exactly equivalent.
• Give them permits, and they can sell them
for money.
• Give them money, and they can buy
permits.
Is it a good idea to give companies
a bunch of money?
1. Yes
2. No
3. I’m not sure
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What could we do with all that money?
•
•
•
•
Fund R&D into clean energy.
Rebates for energy efficient appliances.
Reduce existing taxes.
BC has implemented a revenue-neutral
tax shift that will generate about $1 billion
per year from a carbon tax and “spend”
the revenue on tax cuts and rebate checks.
What this means
$ 3,051 million
$2,792 million
Personal income tax
cuts $860
Every dollar raised by
carbon tax is returned to
taxpayers by law
Low income tax
credit $486
Business tax cuts
$1,705
(Includes School
Property Tax Cuts)
Carbon tax revenues over three fiscal
years (10/11-12/13)
Tax reductions over three fiscal years (10/11-12/13)
http://www.bcbudget.gov.bc.ca/2010/bfp/2010_Budget_Fiscal_Plan.pdf
Price impact of $30/ton CO2 in WA
Price of...
Tax impact
Fossil CO2, 2004
Motor gasoline
≈$0.30/gallon
≈26m tons
Diesel (mostly
transportation)
≈$0.30/gallon
≈11m tons
Jet fuel
≈$0.30/gallon
≈8m tons
Coal
≈$0.03/kWh, ≈$3/mmBtu
≈11m tons
Natural gas (split
electric/res/com/ind)
≈$0.018/kWh, ≈$1.80/mcf, ≈15m tons
≈$1.80/mmBtu
Hydro, wind, etc.
None
None
Gasoline prices, 2000-2010
Natural gas prices, 2000-2010
Who wants a tax shift?
• Charles Krauthammer [Fox News]: “For
25 years… I have been advocating… a
U.S. energy tax as a way to curtail
consumption and keep the money at home
[by recycling it back into tax reductions].”
• George Will [Washington Post]: “A carbon
tax would be a clear and candid incentive
to adopt energy-saving and carbonminimizing technologies… [and produce] a
commensurate reduction of other taxes.”
Who wants a tax shift?
• Al Gore: “It's important to change the light
bulbs, but it's much more important to
change the laws… Tax what we burn, not
what we earn.”
• William Nordhaus [Yale economist]: “To a
first approximation, raising the price of
carbon is a necessary and sufficient step
for tackling global warming.”
What’s so great about a tax shift?
• Right now we tax “goods” (things we want
more of: employment, saving, investment)
and don’t tax “bads” (things we want less
of: carbon, pollution, traffic congestion).
• This is like turning down a meal at a nice
restaurant in favor of dumpster diving.
• Taxing “bads” instead of “goods” is smart
economically and smart environmentally.
• That’s how capitalism can save us!