mastheade3 link
About   Articles   Reports   Blog   Briefs   Experts

Blog

Don’t Pay Polluters

by James Boyce • September 14, 2012 @ 4:31 pm

Originally posted to Triple Crisis.

A little known greenhouse gas called HFC-23 made the news recently. Also called fluoroform, it’s a waste gas generated in the manufacture of refrigerants. Compared to carbon dioxide (CO2), HFC-23 is a minor greenhouse gas. Pound-for-pound, however, it traps more than 10,000 times as much heat.

The UN’s Clean Development Mechanism (CDM), set up under the Kyoto accord as a way for industrialized countries to “offset” their own CO2 emissions by paying for comparable actions in developing countries, counts destruction of one pound of HFC-23 as equivalent to prevention of 11,700 pounds of CO2 emissions.

The CDM pays large sums to coolant manufacturers in India, China and elsewhere to destroy the HFC-23 they produce. Indeed, these payments have become the largest single item in the CDM budget: this year, HFC-23 disposal is getting 50% more CDM money than wind power and 100 times more than solar energy.

The rub is that paying firms not to pollute gives rise to a perverse incentive. A firm that threatens to pollute more gets paid more. So manufacturers have upped their production of the refrigerants (themselves greenhouse gases, albeit less potent ones), in order to produce more HFC-23, so they can then get paid to destroy it.

It’s a great example of what economists E. K. Hunt and Ralph d’Arge once called capitalism’s “invisible foot”: when polluters are paid to clean up pollution, they create more of it, as if guided by an evil twin of Adam Smith’s invisible hand. Today some firms make half their total profits from HFC-23 disposal payments.

People living near the coolant factories don’t do as well. In the state of Gujarat in western India, residents of an adjacent village complain of skin rashes, birth defects, and damages to crops caused by a noxious fog that burns the eyes and lungs.

The European Union has halted further HFC-23 payments, prompting firms to threaten to release the gas into the atmosphere. A scientist at the Environmental Investigation Agency, which opposes the pollution subsidies, put the matter baldly: Attempting to force countries into squandering billions on fake offsets that actually increase production of greenhouse gases,” he said, “is extortion.”

The HFC-23 fiasco offers three crucial lessons for climate policy. (more…)

Tags: ,


Breakthrough Institute Fails to Flatten Climate Economics

by Frank Ackerman • May 17, 2012 @ 4:31 pm

Why does the Breakthrough Institute insist that everyone else besides them who cares about the environment is wrong, wrong, wrong? Their latest, called “The Creative Destruction of Climate Economics,” is a swipe at those misguided souls who think putting a price on carbon emissions would help combat climate change.

Breakthrough, according to its website, aims “to modernize liberal-progressive-green politics” and to accelerate the transition to an “ecologically vibrant” future. They “broke through” into well-funded fame in 2003 with their attack on environmentalists for failing to emphasize the economic concerns of ordinary Americans, such as jobs – thereby alienating  the major environmental groups, who had been talking about jobs and the environment for years.

What’s wrong with pricing carbon emissions? This particular breakthrough rests on a mistaken reading of an academic paper in the American Economic Review, the most prestigious outlet for mainstream economics. That paper develops a simplified, abstract model of an economy that generates carbon emissions. Unlike some climate economics models, it assumes that public policy can affect the pace of innovation. Its conclusion, in the authors’ own words, seems quite balanced: (more…)

Tags: ,


Carbon Cost Recalculation Reveals True Value of Emissions Reduction

by Kristen Sheeran • July 13, 2011 @ 10:18 am

New research exposes flaws in government estimate of social cost of carbon.

The U.S. government’s estimate of the social cost of carbon – an estimate of the damage caused by each additional ton of carbon dioxide emitted into the atmosphere – is fundamentally flawed and  understates the potential impacts of climate change, according to a new report released today by E3 Network.

The peer-reviewed report, Climate Risks and Carbon Prices: Revising the Social Cost of Carbon, authored by Frank Ackerman and Elizabeth A Stanton for E3 Network, finds that the true social cost of carbon is in fact more uncertain than the government’s $21 per ton estimate, a key policy-making factor in everything from power-plant regulations to car fuel-efficiency standards.

The entire range of new calculations arrived at in the report, reaching as high as $893 per ton in 2010 and $1550 in 2050, are all well above the government’s $21 estimate, bringing into question prior analyses of the benefits of reducing emissions and potentially current thinking on what policymakers will consider cost effective. (more…)

Tags: , ,


Older Posts »
Powered by WordPress

-->