06 July 2009

The Cost of Cap and Trade

A survey by The Economist illustrates why the debate over the cost of cap and trade is somewhat misplaced.
A poll for The Economist by YouGov (see chart) found that 62% of Americans want carbon curbs, but only 30% would pay even $175 a year for them, and only 7% would pay $770. . . The CBO was asked to estimate the bill’s direct costs to consumers in 2020. It came up with a figure of $175 per year, per family. “Less than the cost of a postage stamp a day!” crowed Democrats. But that is an illusion. In 2020 the bill will not yet have started to bite, and the estimate excludes its effect on economic growth.
The real issue is not simply how much cap and trade legislation will cost U.S. households. The politics of the issue are such that the answer necessarily must be "not very much." The real question is what kind of emissions reductions can you get for the low cost that the political process is willing to bear. Unfortunately, climate policy has not yet internalized this important boundary condition meaning that the political process is characterized by every trick imaginable to avoid, reduce, or otherwise make costs disappear. If climate policy were being developed with a better sense of political realities, then we'd see a dramatically different approach -- maybe even one that could actually work.


  1. Roger,

    The political process relating to climate is very similar to the science. Both are dominated by fools, hacks, liars, and frauds. In both, the agenda trumps all. In both, members of the public who rely only on the mainstream news media for their information are played for mushrooms. They'd be better off merely ignorant.

    Waxmen's putrid porridge is equivalent in quality to our temperature monitoring sites and our climate databases. Statistical shenanigans which turn reality upside down are prevalent in both.

    But I don't think we should be surprised. Clausewitz' observation about war is applicable to climate science -- it's just politics by other means.

  2. Hedging a bet.

    The bet is that some combination of what follows will turn out to be true.

    AGW is small, possibly insignificant, component of Global Warming

    AGW will not kick Global Warming into positive feedback runaway

    Global Warming may be beneficial except for isolated, admittedly awful, dislocations.

    Alarmists are hysterical. Saying that "our current projections show things getting worse faster than our earlier projections" doesn't build confidence among people who can not penetrate the bases of such statements.

    Concepts like "settled science" bespeak propaganda.

    Calling skeptics "traitors" doesn't help, either.

    Co public may have decided that if AGW looks like nonsense, it might be nonsense.

    $175/annum in case above is wrong seems about right.

    On the other hand, AGW could be same as throwing a rabbit into Australia.

    John Ferguson

  3. "Would you support a climate bill if the annual cost per household was...$80?...$175?...$770?"

    I think the implication in this whole question is that the "climate bill" would actually solve the climate problem. Or at least do something significant about the climate problem.

    As Chip Knappenberger has pointed out, the emission reduction targets in the Waxman-Markey bill alone would not make any meaningful change in global temperatures in the next 40 years, simply because the U.S. will not be emitting a significant enough fraction of the world's greenhouse gas emissions over the next 40 years.

    I'll bet if they'd asked the question as, "Would you support a climate bill that lowered the temperature rise from now to 2050 from 3.0 degrees Fahrenheit to 2.9 degrees Fahrenheit, if the annual cost per household as...$80?...$175?...$770?"...

    ...then there would have been far, far less support than indicated by the poll described above. Most people would realize a 2.9 degree Fahrenheit increase versus as 3.0 degree Fahrenheit increase is negligible.