Guest essay by Eric Worrall
According to the Sydney Morning Herald, the EU and Biden administration working together could together impose a global carbon price to which even China would have to submit. But there is a catch which proponents of global carbon cartels are ignoring.
Biden and the EU can forge a new path on global warming
By Andreas Kluth
January 7, 2021 — 11.38am
There’s a great way the US and the European Union could together address two huge challenges in one policy sweep. It’s to create a transatlantic “carbon club,” which I’ll describe in a moment.
It’s that the rest of the world isn’t in the system. This both slants the economic playing field against European companies and leads to “carbon leakage.” Take a European steel company, for example. It must buy allowances to emit carbon, which is a cost. To avoid that cost, it can invest in technology that makes production cleaner, but that’s also expensive.
By contrast, a Chinese steelmaker doesn’t incur this cost yet. A European firm that uses steel could therefore simply switch to buying it more cheaply from China than from the home market. The European steelmaker and its workers lose. And the world loses because the same amount of carbon – or even more – has been emitted, just elsewhere. Only the Chinese supplier wins.
This is the classic problem of free riding, as analysed by the economist William Nordhaus among others. In a nutshell, countries have an incentive to share in the benefits of a global public good – saving the climate – while shirking the costs of abatement. This logic, also known as the “tragedy of the commons,” explains why purely voluntary international climate deals such as the defunct Kyoto Protocol or the Paris Agreement tend to disappoint.
The solution to the free-riding dilemma is the club model proposed by Nordhaus and now endorsed by sharp minds such as Guntram Wolff, the director of Bruegel, a think tank in Brussels. Here a group of countries would agree on a minimum international carbon price.
All club members would then set about reaching that price with either a carbon tax or a cap-and-trade system, the equivalent of their club dues. As long as their domestic carbon prices are high enough and comparable, there’s no need for club members to punish each other’s imports, so they trade freely (if you ignore other tariffs and quotas for the moment).
…Read more: https://www.smh.com.au/business/the-economy/biden-and-the-eu-can-forge-a-new-path-on-global-warming-20210107-p56scp.html
The underlying premise behind carbon cartels like the SMH proposal is that the world will absorb the additional costs, that life would continue as normal, except that with the imposition of a global carbon price farmers and manufacturers would have a strong pricing signal, an overwhelming incentive to reduce CO2 emissions.
But what if there is no practical means to respond to that pricing signal?
The provision of essentials we take for granted, and the systems which provide those essentials, can easily be broken by politicians blindly imposing impossible burdens. Think food availability in Venezuela.
Let’s vote on it.
But not use those flippable Dominion voting machines?
No, Nullify it state by state like Jefferson and Madison did with the Alien and Sedition Acts and with teeth.
I assume such a plan would require a treaty which would still require 2/3s majority confirmation in the Senate. Hopefully there are still enough rational conservatives to block such a move. Perhaps after 2 years of single party rule the people will see the wisdom in voting out the bozos. 2022 can’t come soon enough.
…and use Dominion voting machines developed by Hugo Chavez that guaranteed him 4 wins in a row?
No, thanks; I’d rather navel gaze.
More likely just agree to it and start doing it without even bothering to consult the Senate. “It’s not a treaty, it’s an agreement” or something like that.
Include India in the voting pool. A common vote of the populations of US, EU and India.
Anyone who thinks China will sign up for a global carbon tax that doesn’t work totally in their favour..
….. has to be totally delusional.
But that’s Biden for you.
Some members of his family had been colluding with China.
Yep.. Dementia Joe trying to set Hunter up for even more money laundering !!
And the delusional EU.
Zhou Bei Den
Even if they agree to it, they won’t follow it. And who’s going to enforce it?
“imposing impossible burdens. Think food availability in Venezuela.”
China had one-child to relieve their carbon-based “burdens”. The West has a kinder, gentler form of shared… shifted… delegated responsibility. So, give the Chinese communists their due credit in Great Leaps, new deals, green deals, social progress in plain sight.
It’s two child policy now. Too many baby girls were aborted or infantcided. Seems they didn’t anticipate that in their policy making.
And now there’s a bunch of Chinese Men roaming around without any prospect of a wife
Not entirely correct. There are PLENTY of single/available women in China, problem is they are mostly over 35/40 IIRC.
Leftover ladies. 剩女
There is one use for an excess of males: manning armed forces.
The one child policy will create serious problems looking after the elderly.
Four grandparents per couple.
How many grandparents did you have as an individual?
It complicated- I had more than 4?????
My point is tradition chinese families would have had multiple children.
Daughter moves out to live with husband
Oldest son stays with parents and his wife moves in.
Other sons may venture out on their own.
Still four grandparents but many income earning children.
My traditional Chinese neighbours have their two sons and daughter-in-laws living with them
4 working adult per two grandparents.
2 working adults for four grandparents.
With people living longer, you can throw a couple of great grandparents into that mix as well.
Great grandparents is another problem. CoVid helps and with harsh living conditions brought about by carbon taxes and other green policies the great grandparent problem will become a thing of the past. /sarc
China had one-child to slow their population increase. Nothing more. You may call them “carbon-based burdens” but the people called them children. It had nothing to do with CO2 emissions, they didn’t give a rip about them then, they don’t give a rip about them now, except when they’re other countries’ emissions which are a handy tool for them to reduce said other countries’ competitiveness.
All an “equitable” carbon tax would do is provide more revenue to the governments. Even if AGW were true it would change nothing for the climate. Watch the media spin this as a win for the people.
Governments are missing the best taxation bet. Oxygen is the most abundant element on earth. Why bother taxing carbon, an element that doesnt even make the top ten in abundance? Plus, oxygen is the worst pollutant. It oxidizes every other element it touches. Plus, There is twice as much oxygen than carbon in CO2. Facts. Government needs to tax oxygen as people will gladly pay immediately to get some.
strikes me as twisted the greentards hate capitalism
theyre the ones pricing everything like air water trees etc
progressives believe people should be paid based on “social worth”. Government gets to decide what each person is worth.
Under capitalism, every body is paid based on how society values what they produce. This value is determined by how much people are willing to pay for it.
The problem for progressives is that other people do not value what the progressives are producing. Since other people don’t value the work of the progressives as much as progressives do, this proves to them that capitalism is broken.
Huge companies expect dividends for the gazillions they invested in stealing people’s votes. From there on, sky’s the limit. Higher bidders call the shots.
When I saw “SMH” I immediately thought it was the text shorthand for “shaking my head.” I wasn’t wrong.
It’s as good as anything really. The SMH here is Australia is on par with The Guardian any excuse to promote any alarm du jour. Now that Trump is out (I am sure you can hear the roars of joy from Australia), COVID-19 is just about testing and cases now (Except for the brand spanking new strain just imported from the UK), but climate alarm is rising higher every day.
Tax carbon. Raise business, capital gains, and property taxes. Institute a wealth tax. Impose new fees. Jack up interest rates. Raise government worker salaries and pensions. Subsidize corrupt companies. Increase deficits.
Tax and spend doesn’t work. It leads to shortages and inflation. Is a new wave of mass poverty coming? You folks are smarter than average. What is your prognosis?
My observation from Australia was that Obama was slow and steady in implementing his policies.
The best hope for USA is to suffer short term pain from Biden creating really stupid policies quickly, with the hope this leads to him being voted out earlier.
Biden will not be voted out. In our system the President serves for four years. Then he can run again for a second term, but Traitor Joe won’t. He’ll either be brain dead or completely dead.
And he will not be making any policies — he is a puppet, like Howdy Doody. Somebody else has his hand up Joe’s backside and is making his mouth move. The Radical Left runs the show now. I predict the players in the Inner Circle will attempt to out do each other with excessive extremism. There are no adults in the room.
But that wasn’t my question. I wish to know your best estimate of where the economy and stock market are going (US, AU, UK, China, world), given the probabilities of world carbon pricing and other loony stuff the Great Resetters have planned.
The post is about economics. Not my field of expertise, so I’m interested in other’s opinions. What’s your outlook?
The following is only the thoughts of an Aussie sitting on the couch.
A. I get your point about people pulling strings. But radical lefties are radical:)
They are known to eat their own if someone tries to replace their dumb policy with a different dumb policy.
B. Socialists are good at spending other people’s money. But this spending takes a long time, so it’s better they publicly waste money quickly on really dumb stuff that fails. Here in Australia there was a program to subsidise roof insulation ( save energy). It was rolled out so poorly with untrained installers dying from electrocution. Although a reasonable do goodda program, it was a PR disaster.
I suspect many do goodda socialists programs will fail.
C. Economy. Here in Melbourne, the cbd and inner surburban shopping strips have been hammered.
It it obvious that once covid is over and everyone has had vaccine, companies will re assess their needs.
I am confident that in 2021 3rd quarter these companies will reduce leases and reduce staff. What happens after that, nobody knows.
Zerohedge financial items are thinking crash and usd$dropping to half
markets are so delusional and when the present rise due to vax hopes falls over as 2nd dose adverse events soar..markets will drop as stonelike Im thinking
usd$drop would be great for buyers lousy for people selling INto ie EU
but for aus parity on $ would be.hhmm a leveller for farm goods at least
Oil prices in the US are already on their way up in anticipation of the Democrats killing oil production. That means the price of *everything* is going to go up including fuel of all kinds as well as anything made from plastic. Every bit of wage gain for the poor and lower middle class under Trump will be eaten up by inflation. The economy will be back to where it was under Obama and likely even worse off because of all the small business that the Democrat governors have killed off.
That means government tax revenues will be going down in the coming years prompting ever higher taxes, more poverty, and a lower labor force rate which feeds into a never ending cycle of higher taxes and more poverty. It’s what always happens with Marxism. The examples are legion.
In short, confiscation of wealth by the elite who don’t understand how wealth is created.
We are already seeing oil prices go up and a flight from gold to cryptocurrency. As oil goes up so does inflation. The Democrats are already beginning to talk of taxing the wealth in IRA’s and 401K’s. They’ll even start to tax Roth IRA’s.
If you have a nest egg you might want to start on plans for how to spend it because if you don’t the Democrats will take it. Hand-to-mouth, the Marxist Democrat meme.
This is not correct. Inflating commodity prices do not cause inflation.
The more people spend on oil, the less they have to spend on everything else.
This decreased demand for other things causes the price of everything else to drop.
The drop in price for everything else equals the increase in cost for oil.
The only thing that creates inflation is expanding the money supply faster than the supply of goods is expanding.
Why then do airline prices go up when oil prices go up? That *is* inflation. Why do bread and chicken prices go up when oil goes up? That *is* inflation.
When you have less to spend because the price of everything has gone up that *is* inflation. It’s what the Consumer Price Index is all about.
What is Consumer Price Index (CPI)?The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
Dear Mr. MarkW,
The carbon-tax will increase the energy prices in general. This will lead to the increase of the prices of all goods and services indirectly.
Biden knows the playbook – just don’t say it’s a “treaty” & then USA Congress won’t have a say. The ploy worked for Obama’s Iran accord.
Then Biden can push Congressional legislation complying all citizen pay green “fees”, declaring those aren’t a tax. When the levy challenged at the Supreme Court the judges can stipulate that green “tax” constitutional; the ploy worked for ObamaCare.
Trump doesn’t pay green fees. He owns the courses he plays…
Any carbon tax will just lower the American middle-class standard of living in favor of the elites.
It always amazes me that so many pundits think that the United States (with or without the help of Europe) can just snap their fingers and impose global policy on everyone else.
youre either with us or agin us….
worked fairly well for sham wars
The very first question: How large will be the “carbon-club”, and how large will be the “non-carbon club”. In other words: How large will be the market “carbon-club” and how large will be the market “non-carbon club”. And nowadays it will not be enough to send some war ships and bombers to motivate the entry into the “carbon club”: Some “non-carbon” countries can defend themselves. Sooner or later also the population in the “carbon-club” will awaken and defend themselves against the carbon-tax lunatics. Don’t forget the famous recommendation from Napoleon: “Never interfere with your enemy when he is making a mistake.” It can happen even in the not far future, that there will exist at least two worlds on the Earth….
Countries such as Indonesia, Nigeria, Pakistan and the Middle East are unlikely to raise taxes to make their people suffer.
Additionally, it’s important to understand that the “elites” in each country are not the same and they do not get their income from the same sources.
Arab or Russian elites personal wealth may be aligned with the their working class countrymen.
Wouldn’t the war ships and bombers run out of electricity on the way?
Only one thing is true of Biden, he won’t be doing anything. It has all been decided well in advance. He was installed by the vast wealth who will rely on his extreme incompetence and susceptibility to coercion and corruption. Things are going to change for you Americans much sooner than you realize. You are going to become China’s “piggy bank” for world dominance. A global economy isn’t interested in American leadership and the rule of law.
You Americans blew your best chance on November 3.
No, we had it stolen from us – in a normal election, with normal rules, Trump would have won easily. But this time there were so many changes to accommodate Covid issues that the fraudsters were able to easily steal the election. And the idiot RINOs running Georgia didn’t learn anything from that election and kept the same rules&procedures for the Jan. 5 runoff that guaranteed Democrats winning via more fraud, so now we’re totally screwed.
It’s gonna get really ugly here, once the idiots who actually voted for this understand what’s been done to them, but it’ll be too late then, the avalanche will have already begun.
It could lead to the breakup of the Union, there are already states talking openly of secession.
I watched the numbers for Trump climbing by hundreds of thousands of votes, well after the polls closed, from normal counting of real votes … then the great miracle happened. Suddenly, after everyone had gone home, some great force reversed everything.
There are one hell of a lot of very angry people who have had someting important taken from them … a leader of their own, someone who hadn’t caved to the establishment. I don’t know what will happen, but like you, I don’t believe this is going away any tie soon.
There’s gorra be ‘a word’ but am struggling here.
[Peta, its The Climate wot did it]
Peta: “Maybe. Seems like I’m not the only one suffering from Executive Function Fail. Check out Australia”
One case. Just one. And they lockdown.
Australia – What is going on in The Land Down Under? Maybe coz you is all upside down? Would Ibuprofen or Prozac help?
because that one case had been roaming around a large area before feeling ill n testing. as they say a few days or a week to do huge testing beats the hell outta what Victorians copped and I live in rural Vic , with zero cases and we still had the same idiot restrictions imposed here too
we had ONE mask free day at supermarket last friday
by monday its masks while in all shops again;-((
China does not and will not do what any other nation or group of nations demand unless it is in their interest. The same goes for Russia
Ah, the new world order. Having failed to win the masses through the cold logic of science, goes medieval world order to impose a global tax on CO2 emissions.
Social equity through shared economic misery.
Fascism seems to be the order of the day. I expect to see social credits being offered along with the CO2 credits. Maybe a ‘red book’ collection of Green orthodoxy in verse for Party members. Utopia. You could almost reach out and touch it, if it wasn’t for that damnable CO2.
You write “fascism”. I would say a “combination of fascism and neomarxism / neobolshevism” aka “progressive liberalism”(shortly “liberonazism”). Faschism and bolsevishm have both the same roots. It can happen very easily that even WUWT will be forbidden: Look to the latest actions of the digital tech giants (open cenzorship) of course everything in frame of “free speech” (oh yes, “free speech” if this “free speech” is the allowed speech). And don’t forget, that in Obama’s last year there was an open discussion on a limited nuclear war which could be won. The mankind will enter now a very dangerous era: There is no “limited nuclear war”, and a general nuclear war can not be won, there will be only losers. However, the lunatic globalists can not understand this simple issue. The dem (hard liner communists) take over has increased the risk of a nuclear III. World War by a factor at least 10.
I use the word fascism here in its original form.
“a authoritarian political system in which the government controls business and labor, and opposition to that political and economic control is not permitted.”
There really is no need to create the mashups of similar ideological aims that you offer. NeoMarxism, neobolshevism, or progressive liberalism. All work towards the control over private property and the economy derived from it (the exchange of private capital investment in labor and production).
Nuclear war is a zero sum game. Though such an event would actually create a measurable socioeconomic and geographical negative. Chernobyl is a good example. Since 1986, 2500 square kilometers around Chernobyl have been cordoned off to create an exclusion zone. 34 years later dangerous radiation levels are still an issue. If Chernobyl had been a principle agricultural and livestock region, the Ukrainian people would be in dire straits as to their food security.
I shouldn’t worry about nuclear war. Even radical leftist have to eat. And no one wants to have to pass a radiation counter over each meal plate.
I would make one small change to your definition of fascism:
“a authoritarian political system in which the government controls business, capital, and labor, and opposition to that political and economic control is not permitted.”
This *is* the path the Democrats have been taking us down since the 60’s.
Socialist understand how easily and cheaply the electorate can be bought. And how short their collective memory is. Conservative’s have no government made products that would entice the electorate to return to limited government. We have to wait until the fish tire of the bait before we can turn them from the hook of big government. We’ll have to see what 2024 brings. The question is. Who is the GOP grooming for 2024?
Tim Scott. Nikki Haley. Christie Nome. Mike Pence.
There are others. They will come to the front as we get closer to 2024.
2022 is more important. If the GOP takes back the House they can stop all of the Marxist plans of the Democrats.
Don’t these world planners ever bother to look around and see what’s going on? Electric cars are the (very) near future of transportation, largely due to two factors : public that wishes to avoid carbon emissions and (more importantly) much lower costs for EVs and much greater EV capabilities – driving ranges that can exceed those of most gas powered cars (400 – 500 miles) and public charging stations that can recharge an EV to 80% in ;less than 15 minutes, For homeowners, public charging stations will only be used on long trips – charging at home will be the norm and will be done mostly during the evening and nighttime hours and not interrupt the owner’s life. Most automakers are not planning on building any gas powered cars after around 2024, and often sooner. No automakers in China are allowed to produce gas powered cars,
Abd small modular molten salt nuclear reactors are the very obvious future for power generation : cheap (4 cents per kilowatt hour) and totally safe and rapidly constructed, we could build enough molten salt reactors which, combined with the existing conventional nuclear power and hydro power, provide all the power this country needs, for less than $ 1 trillion. And they
could be built and operating long before any renewable power farms and they don’t require fossil fueled peak power or backup power units.
If this were true it would be happening today – and it isn’t! Pipe dream after pipe dream!
When EV cars die and block evacuation routes that will be the end of them!
Dear ColMosby, sorry to say “negative”. I drive also an electric car, so I have some practical experiences:
So the mathe at the end of the day: The e-car provides for about 1,5 times higher price7costs about 35% value compared to a diesel car. Of course everything looks very nice on MS PPT slides. However, the reality is a completely other issue.
Conclusion: In a real market enviroment the e-car business would collaps faster, than the explosion time of a nuclear bomb (about 2 ns). The whole e-car business is based on political brute force. The communists/bolsheviks tried to limit the market economy by politivcal means (brute force) in Eastern-Europe. The end result is rather well known: Total banktrupcy.
Col, is there anything your believe that is actually true.
The only reason why electrics get close to the cost of ICE is because of the huge subsidies. Remove those and the advantage completely disappears.
Outside the lunatic left, nobody cares about carbon emissions.
There is no electric car that can charge in 15 minutes. 30 is the best, and the cost of that speed is a huge decrease in the life expectancy for the batter.
15 minutes is still 3 times longer than it takes to refill an ICE.
As to your often repeated nonsense regarding molten salts. They have not yet figured out how to actually build a full sized one of these. Until that has been accomplished it is completely impossible to figure out how much it will cost to operate one of these.
Proclaiming any price is a complete lie.
MarkW saying to ColMosby: “As to your often repeated nonsense regarding molten salts. They have not yet figured out how to actually build a full sized one of these. Until that has been accomplished it is completely impossible to figure out how much it will cost to operate one of these. Proclaiming any price is a complete lie.”
Figuring out the basic technology of a new approach to nuclear power is roughly 20% of the total work needed to reach initial operation of that very first commercial-scale plant.
The remainder of the work, roughly 80% of it, is doing the detailed design work for the reactors and their support facilities, passing through ongoing regulatory and environmental review of the upfront design work, finding nuclear certified component suppliers for the reactors and the support equipment, mobilizing the supervisory and craft labor skills needed to fabricate the equipment and install it, mobilizing the construction site workforce, keeping all the parts and pieces of the project plan in sync so that the workforce is used efficiently, and last but not least, going through the final testing and startup.
Here is the corker with a technology like molten salt. It’s not enough just to build that first commercially-deployed molten salt reactor.
All the external support infrastructure needed to establish an end-to-end molten salt nuclear fuel cycle must be designed, approved by regulatory authorities, fabricated, and then installed wherever it needs to be established in order to be certain that no radioactive material associated with molten salt technology ever falls outside the control of a disciplined approach to nuclear fuel management.
Would regulatory authorities allow that very first molten salt reactor to go live if the end-to-end fuel cycle for molten salt technology had not already been established and had been placed into commercial operation? Not a chance.
run a bloody mile!
I could go one better. Lets form a very limited cost United Liberal Democratic Nations club and we completely free trade among ourselves and leave the gaggle of gangsters to please themselves. Then we can have a decent scientific argument about changing the climate among other very limited club member responsibilities.
Those who aspire to join the club can be probationary members and have a say but no vote or trade until they meet the necessary standard of membership. What say you leftys and librul progressives? Out with the regressives and gangsters and the copious overstuffed bureaucrats sucking up to them?
I guess it comes down to the shifting definition of what moderate is.
The further to the left the left goes, the further to the left “moderate” is defined as being.
You can use the EU ban on battery hen egg production as an example of regulation breaking the market. The ban was brought in nearly ten years ago (2012), but was legislated for thirteen years earlier (1999) giving producers plenty of time to prepare. Massive investment in new cages was required – about 50% increased area per bird, with perch, scratch, and nesting areas. Naturally, this investment in equipment along with lower density production increased the costs. Or at least that was the experience in Britain. France simply ignored the ban, and increased their battery egg production to become the largest producer in Europe. They are now saying they will comply with the legislation in 2022 – a full ten years late, after capturing a large market share. With the EU, you are better off rejecting their proposals, as they ignore their own agreements. Hence we found the need to leave.
Why would any country outside of The Club recognize intellectual property from The Club? Economy of The Club is critically dependant on regognizing it’s intellectual property – which it has a lot, but the price for such recognition imposed by poorer countries – with less IP, more reliant on physical goods economy – is the ability to be able to trade their physical goods (otherwise they don’t have a way to pay for this IP). If the ability to trade physical goods is broken because of extra CO2 tarrifs, then there’s no motivation to recognize IP of The Club that imposes extra CO2 tarrifs.
Question to the admin: How could I edit my contributions? I’d like to correct the typing errors. Many THX in advance.
The UK is currently proposing to require landlords to invest in emissions saving measures on their rental properties. The official government assessment shows the value of energy savings to tenants is less than half the estimated cost of the measures, assuming a 42 year life for the investment. The balance of the justification comes from assuming a value of emissions savings: it turns out that these are somewhat tautologous, in that they are now not defined by some estimate of the “climate damage”, but simply by the cost of avoiding emissions (finding this out entails tracking back a long train of government publications).
Now of course, the real benefit such as it is of reducing the emissions is shared globally. It should be noted that the UK already imposes carbon taxes in excess of those in the EU, and that these are insufficient to cause voluntary investment, or even to provide an economic justification based on energy prices. It is hard to see how such measures can be made to work through carbon taxation alone. Yet they are only a small step along the way towards net zero.
The government estimate (doubtless over-egged) is that the proposed measures would save about a sixth of the average gas and electric bills (before allowing for EVs). Yet the torrent of publications of future net zero scenarios from government and quangos suggest that domestic energy consumption will need to halve or more. These measures are therefore quite inadequate, and will have to be replaced, rendering much of the investment redundant. Of course, it is likely that the bill will simply be unaffordable.
But we know that, don’t we?