realitybase - Journal

With the recent failure in the Senate of a cap-and-trade bill to reduce greenhouse gas emissions in the US, it's time to reconsider the basic regulatory approach. I have argued at length elsewhere (5th comment, by Roger Chittum) that the cap-and-trade methodology is too vulnerable to political manipulation and evasion and that technology-based emission limits on a plant by plant basis would be more saleable to developing countries. I am delighted to see in this NYT report that Japan has been going in this direction and will urge it on the G-8 next week.

At next week's summit meeting, Japan plans to back an initiative that could make its frugal energy levels the new standards for global industries.

Now, its government is pushing an initiative that could set Japan's levels of energy conservation as targets for global industries. Mr. Fukuda has proposed what is called a sector-based approach to new targets for reductions in greenhouse gas emissions. This means is [sic] setting the same numerical goals for all companies in an industry, regardless of location. The Kyoto Protocol set mandatory limits for industrialized countries.

The sector approach has been embraced by Japanese industry groups, which say their high levels of efficiency should become the global standards. This would also give Japanese companies more opportunities to sell their energy-saving technologies and skills around the world.

The Bush administration has focused on developing sector-by-sector partnerships with Japan and other countries to find ways to curb emissions, but remains opposed to mandatory limits.

A plant-by-plant or sector-based approach would require every new or modified plant to meet the emission limits that could be met by using the best control technology proven to have worked anywhere in the world, a standard that would continuously improve as technology advanced. This is how the Clean Air Act and the California analog work, and this scheme has been spectacularly successful in making California's air, and the nation's air, much cleaner now than it was 40 years ago, despite explosive population and transportation growth. In contrast, cap-and-trade has been failing in Europe.

In a triumph of Chicago School economic orthodoxy over what has been proven to work, Obama and McCain have both announced that they favor cap-and-trade regimes.

Update on Sunday, July 6, 2008 at 01:53PM by

Skeptic

President Bush commented today on the Japanese proposal to reduce greenhouse gases, He said there could be no solution to global climate change unless China and India are also held to "emission reduction standards." This sobering article about the widespread environmental atrocities being committed in China, and the institutional barriers to stopping them, suggests the difficulty of achieving what Bush correctly said we must achieve.

Even when the Chinese central government makes commitments and issues rules, they are routinely and extravagantly flouted by often-corrupt local officials. Though this seems implausible in our world, it is entirely consistent with this report that decentralization has also been responsible for economic growth and human rights abuses in China. In short, China seems to resemble the American 19th Century where robber barons plundered the land, the environment, and local populations, and gained control of state and local governments as necessary.

In a legal and political environment like China's, no imaginable cap and trade system is going to work. There would be a much better chance of enforcing clear, strict, and inflexible best available control technology and/or emission standards on each and every plant. The US should lead by example by adopting at home the system that will work best in China.

Update on Monday, August 25, 2008 at 02:52PM by

Skeptic

In this Foreign Affairs essay, Richard Holbrook predicts that the multilateral approach of the Kyoto Protocol, to be followed in 2009 by the Copenhagen Agreement, have only the slimmest of chances of being adopted by the US and China. Instead, he suggests bilateral agreements between the US and China, perhaps including also Japan. He reports that on a recent trip to China, "senior Chinese officials" showed interest in exploring the idea through non-governmental channels.

Their concern, freely expressd, was that any energy plan the West proposed would be just another device to slow down China's economic growth. Whether true or not, this deeply felt view, shared by India and other major emerging markets in regard to their economic growth, must be understood and taken into account in order to make progress.

China's vice premier in charge of trade and finance suggested something along these lines in this Financial Times opinion piece on June 15, 2008.