Sunday, December 6, 2009

A Response to "The Story of Cap-and-Trade"

While Grist did it better, I thought I should give my own thoughts to this silly little video (response not edited for grammar or spelling whatsoever).

Despite my position as an advocate for the current climate change/clean energy legislation in the Senate, I, like many on this list-serv, have problems with the legislation as written. One would have to be quite blind not to see that there aren't many inherent weaknesses in this bill that will need to be addressed--whether that be during the senate debate over this bill, or in subsequent legislation to strengthen the US's response to global warming. I've heard much about this cartoon "The Story of Cap and Trade," and considering Annie Leonard's great work in Story of Stuff, I was expecting a thoughtful contribution to the discussion over this legislation, and perhaps some concrete ideas on how to improve the senate's efforts.

To my dismay, Miss Leonard's criticisms on the current bill are either so vague as to be discounted entirely, or completely off base.

Claim 1 (at about 1:05 in the video): She starts the cartoon with perhaps the most asinine argument of the whole video: carbon markets are bad, and are a nefarious scheme of financial demons. Paraphrased: Enron and Goldman Sachs designed cap-and-trade, and are making huge claims to lure your "everyone and their grandmother in" and then are going to burst this new economic bubble and ruin us all.

First off--where are her sources that Goldman Sachs and Enron designed this program? Enron certainly pushed (in the early 90's) for deregulating energy markets, and had a big hand in decoupling a lot of energy commodities from the producers in order to make them a tradeable commodity. Part of that deregulation they abused to the great horror of this nation. Part of that decoupling has produced enormous gains in energy efficiency throughout California. NONE of this has anything to do with the current legislation, nor has Enron, an essentially defunct corporation--had a hand in authoring current climate change legislation. Goldman Sachs is certainly researching how to trade on any new carbon market--just as they did in with the Sulfur Dioxide market in the 90's (which worked quite well)--because that's what banks do. Their research into it doesn't somehow mean that they are a creating a nefarious plot on the backs of climate legislation to screw over grandma. Her entire first argument seems to be to throw around scare words--enron, goldman sachs, scam, subprime mortgages, market--wave her hands suggestively, and voila carbon trading is bad. In fact her whole first argument seems to be just an implied idea that markets in general are bad, despite the hundreds of stable, well policed commodity markets we have in the U.S. and around the world. Or is somehow a market for carbon uniquely bad compared to other markets? The best line in this argument is "...creating a $3 trillion dollar bubble. But when this one bursts, it won't just take down our stock portfolios, it could take down everything." How? And where is the proof that this commodity market is inherently inclined to burst? Her argument in this sector, and throughout the cartoon, is to call cap-and-trade a racket or scam, without truly explaining how it is, in fact, a racket or a scam. But hey, repeat the words enough and they must be true.

Claim 2: (Summarily) Cap-and-Trade didn't work in Europe:

Except that it did. The market in Europe had a rocky start--no one can deny that. Any America's will probably have a rocky start too. Almost any new system will. Still, carbon output in Europe is down between 3 and 5% (depending on the source) or about 100 billion tons a year.

Claim 3 (about minute 4:00): Permit giveaways are bad and (implied) are only benefiting the polluters.

Yes, permit giveaways are bad from a pure standpoint of bringing down carbon production. However one of the reasons many of the permits have been given away has been to keep energy prices stable (a thing that Ms. Leonard herself seems to want). In the Waxman-Markey bill, 80% of the permits given away are for consumer and public protection. The other 20%? Pretty much corporate giveaways that really shouldn't be tolerated. You can argue all you want over whether or not permits should be given away, and how much these giveaways really protect consumers. In fact, I'll probably side with the idea that we shouldn't give them away 90% of the time. However, don't mischaracterize these give-aways as nefarious plots and schemes by goldman sachs and corporate polluters. Except for that othe 20%...criticize that all you want.

Through all this, she criticizes that energy prices went up under cap-and-trade in Europe. Keep that in mind when she explore her solutions.

Where her argument should be--and the truth of the matter is--is that the giveaways that are bad are the result of a very powerful, very well connected oil, coal, and energy industry. Scrapping this bill and starting anew will do nothing to reduce these industries power. Any bill we produce is going to be weakened, watered down by industries that have near complete access to our legislators. If a weakened bill means we shouldn't pass anything then we are never going to pass a bill. It seems like a bitter pill to swallow, and one that Miss Leonard refuses. However that refusal will mean we will never have climate change legislation. A better tactic is to pass the strongest possible bill, and as soon as that is passed start working towards strengthening it with new legislation, new amendments.

Claim 4 (min 4:45). We should sell those permits and put the money to work to stop climate change.

I don't have an argument against the idea of selling the permits. What I have a problem with is her implication that giving away permits raised energy prices (bad) and lined the pockets of carbon-traders (bad). Instead we should sell the permits...which will somehow not raise energy prices like the giveaways did, and won't raise a profit for the carbon traders. Selling permits will give a greater jumpstart to carbon reduction, but won't solve any of investment problems she's announced. And her other legislative proposals (such as cap and dividend), while quite good ideas, are still subject to that powerful oil, coal, and energy lobby from above. They would be weakened just like our cap-and-trade legislation. The problem isn't inherent in cap-and-trade, as she seems to imply, but in our political system.

Claim 5 (min 6:45ish): Offsets are bad.

Annie Leonard isn't the only one I know to use this line of argument. She takes anecdotal evidence of abuse (and there will be abuse--just like there is abuse in any system, no matter how perfect), and conflates these anecdotes with offsets in general, and then claims offsets as a whole are bad. I know of a man whose car was hit by a train. He wasn't wearing a seatbelt, was thrown from the car and lived. The rest of the passengers in the car perished. Does this mean seatbelts are bad? Of course not. His story was unique and can't be applied to the whole system. In reality, the idea of offsets, and the system that will be created to utilize them, is extremely complex. There will be abuses, but there will be a lot of gains. A lot of the success or failure of offsets will rely on the stringency of legislation governing offsets (which in Waxman-Markey are suprisingly stringent) and the development and implementation of technology to govern the offsets. Due to satellite imagine, and desktop programs like Google Earth, the ability to monitor offset programs (such as forest preservation in Brazil) has made leaps and bounds in the last few years, and is well suited to effectively monitor most type of offset programs. Abuses will slip through the cracks, and some of those abuses will be quite bad, but that does not make the entire system bad or cap-and-trade meaningless.

Claim 6 (Minute 7:10): Cap-and-trade distracts from 'real solutions.'

What solutions where? To be fair, there are of course many solutions out there. But Ms. Leonard just decries this 'distraction' and then fails to point out any 'real solution' in her final argument. She does mention a cap, but doesn't point out how a cap is more or less effective then CAP-and-trade.

"We are not even close to a global cap on carbon to begin with, and duh, that is the whole point of cap-and trade."
Global cap: no. National cap? Yes (albeit one that needs to be stronger). And the whole point of cap and trade isn't to figure out a global cap, its to implement a system that, once the cap is establish, can work towards reaching that goal.

"We don't need to let these guys design the solution. We, us, our governments can make the laws ourselves."
Again, how is this different than what has happened? Did not the bills she is criticizing come from the legislative process (nefarious Goldman Sachs implications aside)? How will some other bill (cap and dividend, carbon tax, whatever) come through the legislative process fully strong and ready to fight pollution?

[paraphrased]"The EPA can regulate carbon. Go EPA Go!" The EPA is part of the executive branch, is meant to execute laws on the books, and is subject to change in the way it executes laws based on the administration in power. Personally, I'd rather have laws in place that mandate that carbon be reduced, rather then letting a branch of the executive power decided how and when it should regulate carbon. Remember how effective the EPA was under Bush? ACES did remove the power of the EPA to regulate carbon. That was unfortunate, and should be changed. Guess what? The senate bill restores their power.

“Cap-and-trade makes citizens think everything will be OK if we just drive a little less, change our light bulbs, and let These Guys do the rest.” I'm at a loss as to how anyone could possibly claim this. I wish I could make a more coherent argument, but this quote is absolutely asinine and befuddling. Does she have any sources to back up this wild claim?

The real problem with the bill on the table is that our legislative process is incredibly complex, often at the whim of powerful interest groups, and is full of legislators who are, quite simply, idiots (Inhofe anyone?). However, scrapping the current legislation won't change any of that. If Miss Leonard were to make a cartoon taking on this problem, the real problem, I would probably be completely behind her. Instead she sees problems with cap-and-trade, problems that most people see, exaggerates them, then surmises that there are wonderful solutions out there that we just aren't looking at. I have news for her--they have been looked at. Even the authors of these 'distracting' bills want them in place. The problem is, at this moment in time a carbon tax, or heavy carbon fees, just aren't politically possible. Instead, the authors have weakened the carbon cap, and have put a weaker mechanism in place. But while doing that, they have simultaneously:

-Mandated a Renewable energy standard--80% renewable (that's solar, wind, geothermal, hydrological stop, and biofuels) by 2050
-Mandated baseline energy efficiency standards in ALL new residential and commercial buildings
-Created HUGE tax incentives to weatherize homes and businesses.
-Set aside $30 billion to create a modern, efficient, electrical 'super' grid. This number is only set to grow with the subsequent sale of carbon permits (yes, carbon permits are to be sold, just after the initial giveaway).

All these programs--especially the supergrid and the renewable energy standards--would seem to be 'real' solutions to our crisis, yes Miss Leonard misses that these components are in the very bill she dismisses.

Thank you for taking the time to read this very long response.



1 comment:

Wannabe Speechwriter said...

Don't forget Matt Yglesias's take down of the carbon tax purists: