Forum: Enthusiasm and Frustration
Posted: November 4, 2015
A November 2 carbon pricing forum in Berkeley, California met with audience enthusiasm for putting a price on carbon, and frustration that more wasn’t happening. Frustration was aggravated by an announcement the day of the forum by Christiana Figueres, UN climate chief, that carbon pricing would not happen at the Paris talks.
The educational forum “Solving the Climate Crisis: Carbon Pricing 101” hosted five speakers describing the basics and complexities of carbon pricing and some of the proposed systems, followed by audience questions and discussion. It was moderated by Gail Schickele of the League of Women Voters. Video of Forum and individual presentations here.
Dr. Diz Swift (League of Women Voters and PriceonCarbon.org) kicked it off with a general overview of carbon pricing elements; Mr. Peter Barnes (author and co-founder of Working Assets) described the “cap and dividend” system proposed in the Van Hollen bill currently before Congress; Dr. James Fine (Environmental Defense Fund), talked about the cap and trade system in California; Ms. Laurie Williams (Environmental Attorney) described the pitfalls of offsets; Ms. Elyce Klein (Citizens Climate Lobby) spoke on CCL’s “carbon fee and dividend” approach; then Dr. Swift wrapped up with a look at current and potential carbon pricing systems and legislation.
Carbon Pricing – Three main elements of carbon pricing were described by Dr. Diz Swift: 1) the pricing mechanism (carbon tax/fee or cap and trade), 2) emissions covered (electricity generation, transportation or industrial) and 3) revenue use options (revenue positive such as government programs, or revenue neutral which can take many forms).
Cap and Dividend – described by Peter Barnes, is a cap on fossil fuels entering the supply chain, thus limiting aggregate fossil fuels entering the system. Trading would be restricted to those companies affected (e.g. upstream oil and gas, mines) with the revenue returned as a dividend.
California Cap and Trade – Dr. James Fine showed some of the results of the California system thus far, stressing that companies are complying, the carbon market is healthy, the economy continues strong with emissions down and efficiency up, and that 25% of revenues are used in disadvantaged communities for mitigation or adaptation. Further, cap and trade is not the sole mechanism for emissions reductions, but one of a suite of about 70 policies.
Offsets – Ms. Laurie Williams described offsets – projects which sequester carbon used to offset permits required for emissions. Offsets that are additional are those that 1) are not legally required, and 2) would not occur but for the incentive of an offset payment. If true, emissions can be reduced, but the second requirement is hard or impossible to verify. Further, “Forest A” might be uncut as an offset, but rather than reducing emissions, “Forest B” is cut in its stead. Finally an unintended consequence called “perverse incentives” can actually lead to increased emissions.
Carbon Fee and Dividend – advocated by the Citizens Climate Lobby was described by Ms. Elyce Klein. It is a carbon fee at the point where fossil fuels enter the supply chain, e.g. at the mine or wellhead, with the revenue returned equally to all households as a dividend. The plan includes border tariffs with rebates to U.S. exporters to ensure that U.S. manufacturers aren’t disadvantaged, and to encourage other countries to enact their own carbon taxes. A study by REMI on the proposal has shown the economy would not suffer, indeed would lead to 2 million additional jobs and $1.3 trillion more GDP.
Carbon Pricing Systems and Legislation – Dr. Swift showed 39 pricing schemes currently active or planned at national, regional, state/province, and megacity levels. With China’s recent pledge to put in a cap and trade system by 2017, some form of carbon pricing will cover 33% of global emissions. The U.S. has had several bills proposing a federal price on carbon, but only the Waxman-Markey bill got any traction, passing in the House (and that took significant compromising) but failing in the Senate. Opportunities to advance carbon pricing are much more promising at regional, state or provincial level.
The forum was sponsored by the League of Women Voters, Citizens Climate Lobby, the Berkeley Ecology Center, the Sierra Club, Berkeley Climate Action Coalition, and the David Brower Center. Videos of the forum will be posted when available.