Well, duh.
From the DOE/Lawrence Berkeley National Laboratory
New research suggests cap and trade programs do not provide sufficient incentives for innovation
Cap and trade programs to reduce emissions do not inherently provide incentives to induce the private sector to develop innovative technologies to address climate change, according to a new study in the journal Proceedings of the National Academy of Sciences.
In fact, said author Margaret Taylor, a researcher at Lawrence Berkeley National Laboratory (Berkeley Lab) who conducted the study while an assistant professor at the University of California, Berkeley’s Goldman School of Public Policy, the success of some cap and trade programs in achieving predetermined pollution reduction targets at low cost seems to have reduced incentives for research and development that could help develop more appropriate pollution control targets. Taylor is a scientist in the Environmental Energy Technologies Division of Berkeley Lab.
“Policymakers rarely see with perfect foresight what the appropriate emissions targets are to protect the public health and environment—the history is that these targets usually need to get stricter,” said Taylor. “Yet policymakers also seldom set targets they don’t have evidence that industry can meet. This is where R&D that can lead to the development of innovative technologies over the longer term is essential.”
In the study, Taylor explored the relationship between innovation and cap and trade programs (CTPs). She used empirical data from the world’s two most successful CTPs, the U.S. national market for sulfur dioxide (SO2) control and the northeast and mid-Atlantic states’ market for nitrogen oxide (NOx) control. (Respectively, Title IV of the 1990 Clean Air Act and the Ozone Transport Commission/NOx Budget Program.)
Taylor’s research shows that before trading began for these CTPs, analysts overestimated how difficult it would be for emissions sources to achieve targets, in a pattern frequently observed in environmental health, safety, and energy efficiency regulation, including all of the world’s CTPs. This was seen in overestimates of the value of allowances, which are permits to release a certain volume of emissions under a CTP. If an entity can reduce emissions cheaply, they can either sell these allowances for whatever price they can get on the market or they can bank these allowances to meet later emissions restrictions.
The cap-and-trade programs Taylor studied exhibited lower-than-expected allowance prices, in part because program participants adopted an unexpected range of approaches for reducing emissions sources in the lead-up to trading. A large bank of allowances grew in response, particularly in the SO2 program, signaling that allowance prices would remain relaxed for many years.
But this low-price message did not cause the policy targets in the CTPs to change, despite evidence that it would not only be cheaper than expected to meet these targets, but it would also be more important to public health to tighten the targets, based on scientific advances. The lower-than-expected price signal did cause emissions sources to reassess their clean technology investments, however, and led to significant cancellations, Taylor reported.
Meanwhile, the low price also signaled to innovators working to develop clean technologies – which are often distinct from the emissions sources that hold allowances – that potential returns to their research and development programs, which generally have uncertain and longer-term payoffs, would be lower than expected.
This effect also helps explain the study’s finding that patenting activity, the dominant indicator of commercially-oriented research and development, peaked before these CTPs were passed and then dropped once allowance markets began operating, reaching low levels not seen since national SO2 and NOx regulation began in 1970.
“There are usually relatively cheap and easy things to do at the start of any new environmental policy program,” said Taylor, who specializes in policy analysis, environmental and energy policy, and innovation. “But if doing these things has the tradeoff of dampening the incentives for longer-term innovation, there can be a real problem, particularly when dramatic levels of technological change are needed, such as in the case of stabilizing the global climate.”
Lawrence Berkeley National Laboratory addresses the world’s most urgent scientific challenges by advancing sustainable energy, protecting human health, creating new materials, and revealing the origin and fate of the universe. Founded in 1931, Berkeley Lab’s scientific expertise has been recognized with 13 Nobel prizes. The University of California manages Berkeley Lab for the U.S. Department of Energy’s Office of Science. For more, visit www.lbl.gov.
the australian gillard gov,t is a big fan of the carbon tax ,from the 1st of july we are going to be taxed at $23 per ton on any company generating over 50000 tons this tax is going to destroy australia ,please keep a eye on us we need tour help
Hat tip to Small Dead Animals:
http://www.smalldeadanimals.com/archives/019620.html
“Honourable senators, I rise to address Bill S-205, an Act to amend the Income Tax Act. If passed, this amendment would give tax credits to Canadians who invest in so-called carbon offsets. While I have no objection to citizens spending their own money in any way they choose, I do not support the government’s giving tax credits for carbon offsets.”
cui bono says:
March 18, 2012 at 5:29 pm
The 21st Century will see the undoing of centuries of upward civilisation if we carry on like this.
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That is the game plan it would seem.
In the Fabian Window just installed in the London School of Economics, the founder of both, Sidney Webb, along with George Bernard Shaw is depicted smashing the world to bits. Given what George Bernard Shaw has written about a world ” Remould nearer to their heart’s desire! I am not at all interested in living in it!
With the number of world leaders, CEO, Bankers … Who have graduated from that school or give seminars there I think it is idiotic to ignore the school’s influence especially when the free FABIAN SOCIETY PHAMPHLET [url=http://www.aeinstein.org/organizations/org/FDTD.pdf] From Dictator to Democracy[/url] was seen in Egypt
jack morrow says:
March 18, 2012 at 5:32 pm
Don’t forget that the present administration uses the EO (executive order ) to pass anything they desire ,so a cap and trade or something similar could be on the way.
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They will wait until after the elections and pass it during the lame duck session just like they did with the very unpoplular “Food Safety Modernization Act” They hope we will forget about it when they come up for re-election.
Once passed you do not get the *&^$ bills repealed they just get worse.
Craig Moore says: Are you suggesting that Mr. Swift would have approved of climate Lilliputians being roasted on kabob sticks as a means of carbon reduction ?
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Janice says: What a horrible idea, Mr. Moore! The very idea of putting them on kabob sticks! Much better as a nice stew with taters. They are much too tough to make kabobs of them.
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I LOVE vegetarians, YUM! I am eating some cooked medium rare right now.
This article is quite interesting. That cap-and-trade was used in the 90s and 2000s in the way that Professor Taylor describes ignores the fact that the causes of “acid rain” and the acidity of lakes and rivers in New York and most of the Northeast was not utility power plant emissions, nor was the phenomenon as harmful as EPA and the politicians found it to be. The program “60 Minutes” debunked the need for an acid rain cap-and-trade scheme long ago, and there are other scientists who have debunked the myth as well. See the following:
http://www.lewrockwell.com/anderson/anderson297.html
“A fanciful belief that 97% of the scientists polled are right about the earth warming in the last 100 years is due to an assumed after the poll correlation to CO2.”
I really wish people would start saying that 77 “scientists” out of 100s of thousands think CO2 is a poison,and that we are all gonna roast.
And you can bet your bottom penny that the ONLY reason that gubermints go along with these schemes is money in their pockets,farck the rest of us.
morgo….I always keep an eye on OZ ever since I fell in love with it (and of course the shielas!!) way back in ’82.Unfortunately it appears it is no longer the free loving,leftard hating,hard working country I found.
To be honest, I stopped reading when I hit “Berkeley”
The incredible idiocy of “cap and trade” isn’t that it hasn’t worked as planned, but that it accomplsihes nothing that would haven’t have been accomplished anyway. For any industry for which energy is a significant operating expense, the pressure to reduce energy costs by any means possible is relentless. Trucking, mining, shipping, pulp and paper, smelting, pick one, these are all industries working hard to reduce their energy costs, period. Cap and trade provides nothing more than a tax on their proftits that would otherwise have been invested in things like…reducing energy costs.
The secondary effect of “cap and trade” is to push companies away from traditional energy sources toward “green” energy sources like windmills. So now the economy gets hit with a double whammy. Companies spending time and resources to switch energy supply to idiotic things like wind farms instead of spending those resources on energy efficiency, and tax dollars being used to subsidize the wind farms in order to make the competitive so that industry will have something to switch to that isn’t more expensive than just paying the carbon tax in the first place.
Confronted with the fact that industry is highly motivated to reduce energy consumption in the first place, the idiots instead hobble their ability to do so, pour tax dollers into alternative energy which simply winds up subsidizing industry’s options instead of encouraging energy efficiency, and then it takes some geniuses with PhD’s to figure out that the while thing is not working as planned.
Excuse me, but what “planned economy” has EVER worked as planned?
One thing they failed to notice… was that the public in general was already warned about consummate liars in the Joe Isuzu commercials.
David Leisure’s character showed us the extent that some one would go (although he was fictitious) in pushing a meme.
These guys have nothing on Joe Isuzu, they are rank amateurs.
“Policymakers rarely see with perfect foresight what the appropriate emissions targets are to protect the public health ..”
Since when did increased atmospheric CO2 have any demonstrable public health consequences?
I can never figure out if people like Taylor are being deliberately deceptive, or are just merely deluded.
The game wardens will be paying you a visit if you poach them. At least that’s what I see on the Nat Geo channel. Try some other cooking method.
LazyTeenager;
So now we have evidence that all that handwringing you guys were doing is not “worse than we thought”. No surprises there for me.>>>
No what we have is evidence that industry bean counters have been able to outsmart and circumvent government bean counters.
If you think that there is no impact to the cost of food on your plate and the clothes that you wear, and putting a roof over your head, then you are either have an incredibly poor grasp of the economics at play, or you still live off your mommey and your daddy and hence haven’t had to think about these things.
Folks, this is the key….nearly every industrial waste product has a value to someone. The gypsum used in the wallboard in our homes originally came from the wet sulfur scrubbers of coal-fired utilities. Coal ash is so valuable that there is a trade group dedicated to developing new markets, see http://www.acaa-usa.org/
Eventually, new uses will be found for the excess carbon dioxide generated from fossil fuel plants. The carbon dioxide that sparkles your soft drink originally came from an ethanol fermenter & was purified (I’m a former BOC Gases consultant & worked on this stuff, cool as hell if you like chemical engineering!). Carbon dioxide is being widely used to replace solvents, mineral acids and other nasty stuff.
It’s just a matter of time, let the private markets figure it out. If someone can crack the algae puzzle (how to grow the stuff efficiently), there will be a run on fossil carbon dioxide. I’m right in the thick of this through the University of Illinois, it is fun to watch!
Of course, if we are TOO good at recovering all this fossil carbon dioxide, I’m worried about a cooling planet thanks to Svensmark’s theories! (looking over my shoulder for an incoming Lief!)
Life is good, enjoy!
BTW LazyTeenager, do you know what a 2% drop in standard of living in the western world translates into in the third world?
Death.
Any chance you can do some hand wringing for the people who are actually starving to death because we’re burning the food for carbon credits?
davidmhoffer says:
March 18, 2012 at 8:01 pm
BTW LazyTeenager, do you know what a 2% drop in standard of living in the western world translates into in the third world?
Death.
Any chance you can do some hand wringing for the people who are actually starving to death because we’re burning the food for carbon credits?
David – you won’t see any hand-wringing as that is what they want for the whole world not just the third world. The entire thrust of the ‘Green Agenda’ aka Agenda 21 aka Rio Declaration aka Club of Rome is that humanity is the problem and must be reduced. For some reason they always seem to think that they and their families will be immune from their cull.
Craig Moore says:
March 18, 2012 at 7:53 pm>
Gail Combs says:
March 18, 2012 at 7:06 pm
I LOVE vegetarians, YUM! I am eating some cooked medium rare right now. >>
The game wardens will be paying you a visit if you poach them. At least that’s what I see on the Nat Geo channel. Try some other cooking method.>>>
There’s nothing wrong with Gail’s cooking method provided that one keeps in mind that many game wardens are vegetarians. Clearly not all are vegetarian, but variety is good for one’s diet.
I wonder how he is going to like wading through thigh deep snow to the wood pile (If he is lucky enough to have wood) when the climate takes a down turn in temperatures. Try cutting wood without a chainsaw to get a real appreciation for civilization. BTDT
Wood would become a valuable commodity, as it was prior to the industrial revolution. Access to woodland, and the right to collect wood would be restricted. Charcoal would once again become an important fuel and the main use of wood, as it was prior to large scale coal mining.
The reality is that most people in places like Europe and Japan would have little or no wood as fuel, or for cooking. If they were lucky they would get to cook their dinner using a dried cow patty.
BTW I’ve seen charcoal being made the traditional way. All the volatile materials from green wood are ‘cooked off’ as smoke and that is an awful lot of smoke.
Look, Lazy Teenager isn’t worth wasting your time acknowledging. That person is the epitome of exactly what is wrong with these people. Everything is ideology with them without a lick of sense. They would “save the planet” to death if they had their way. It is simply brainless following of a cultural fashion. Engaging with that person is a waste of both of your time. You aren’t dealing with a rational person.
I guess like Indoor cat food, it would control hairballs.
pat says:
March 18, 2012 at 5:20 pm
18 March: EarthTechling: Kristy Hessman: Carbon-Cutting Kids Cop Cool Cash
Helping reduce carbon emissions is not only good for the environment, it can also have financial advantages. That’s what the schools that participated in Make an Impact: Change Our 2morrow (CO2) discovered. The month-long energy conservation challenge, put on by Alcoa Foundation and the Center for Climate and Energy Solutions (C2ES), ended with six of the eight schools winning grants totaling $9,000.
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Yes Pat, you nailed it exactly. The whole effort is directed toward political indoctrination and brainwashing. Real innovation and sound technology are not part of the picture.
Lazy teenager says
“Innovating to reduce carbon emissions will not be as expensive as many people expect and therefore will have minimal impact on the economy.”
As others have already indicated there is virtually no viable subsitute for carbon as an energy source, especially for liquid fuels. If Nuclear is ruled out there is no viable replacement for electricity either. It is foolish to claim that technology can pull a rabbit out of a hat.
Anyone who has ever worked in research and brought technology to commercialization in the real world would never make a claim that such a policy will have minimal impact on the economy.
Also keep in mind the great promise of cellulosic ethanol. Economics aside, in spite of massive subsidies and investments the policy has failed to provide any commercial quantities of ethanol to date. Besides, who can afford to pay $ 14/gal like the Navy has been forced to do.
Some of the low carbon proponents have come to realize this and have invented the term “renewable fuel”, (which actualy emits comparable CO2).
The government has been forced to back off the mandated cellulosic ethanol content drastically, yet still plans to fine the blenders for not incorporating nonexistant ethanol.
For anyone who has a fundamental understanding of energy, it is obvious that there is no viable near term subsitute for carbon that will meet our energy needs. In fact there may never be a subsitute in the forms currently pushed by the government.
The government will continue to try to fool the public with scams like electric cars, which have limited application, because a viable battery does not exist that allows vehicle travel a reasonable distance. The public now knows this with their rejection of electric cars in spite if $7,000 credits per car. It is foolish to subsidize a vehicle for which there is no power source, even on the horizon for multiple decades.
No private industry would spend their own $$$ perfecting any device or technology that has an obvious fatal flaw. You work on the weak link before going into commercialization! The technology was pushed to temporarily fool the public into believing there is an alternative (hiding the fact than an electric car is actually a coal burner).
The current energy plan will destroy the economy!
What would you trade, for one of these ?
Yes it is true. Due to the failure to provide a fed with a gun to hold to my head, I refuse to buy carbon indulgences from these scam artists.
In the UK we have enormous gas and electricity bills, partly because of a government-enforced surcharge (which is then taxed at 20%) to subsidise wind farms and other inefficient alternative energy schemes.