Thursday, February 9, 2017

Finally, a great GOP plan to address climate change. Who's Who

The unbelievable list of Who's-Who from the GOP world have joined together (Climate Leadership Council) to come up with a very workable, market-based, approach to address climate change. Schultz and Baker have been around since the Reagan era. One of their crowning achievements was related to getting the world to reduce all of fluorocarbons (like Freon) which was wiping out the protective ozone layer of our atmosphere. You rarely hear the discuss on the ozone layer, right? Schultz and Baker are a big part of the reason why. The world-wide agreement on fluorocarbons is know as the Montreal Protocol.

Here is a great article by Schultz and Baker, both from Ronald Reagan era Republicans. A Conservative Answer to Climate Change.

First, to address climate change, has some scary implications. It really is unnerving if there is no energy policy in the US. In this report, we may have the only energy policy forming since the attempt by President Carter to have an energy policy. Obama tried to use the EPA to regulate fossil fuels and more, which is no substitute for an actual energy policy that is congress/legislative based.

For decades, economists have linked a market based approach to address the non-sustainable use of energy in the US and globally. One approach is to build a more complicated approach for putting a price on carbon, cap and trade (Emissions trading). A simple tax is so much more straight forward. In this case, they want to take the carbon tax and rebate it back to the population in the form of dividend rebates. The estimate is that the bottom 70% of the population, income-wise, will have a net benefit from this plan. Revenue neutral.

From an international security issue, it reduces the money we send to other countries in order to use more fossil fuels ($1T over every couple years). The large producers of the world are not necessarily friendly to us: Russia, Venezuela, Saudi, Iran. Much of the terrorism of the world is also paid from from oil moneys (ISIS and the renegades in Nigeria).

The beauty of this approach -- above and beyond environmental benefits -- is that people can take that dividend money and pay even more for gas and gas-guzzling vehicles. Or, even better, use if for something they value more.

I've been very disappointed in the GOP; they have let the deniers drown out the engagement of addressing such the critical issue of the non-sustainability of fossil fuels. A smart market approach will work nicely and solve lots of problems simultaneously. This approach will apparently reduce carbon emissions by 2x from  Obama's EPA approach to "clean energy", and 3x what dumping the plan an reverting to business as usual (BAU).  As one of the authors and economist Greg Mankiw says, "this is pretty close to a panacea in the way that it solves lots of problems as once". No need to subsidize renewable; let the best solutions rise and the worst dwindle.

Consider this dividend-tax as insurance. You buy insurance to reduce future risks and costs. This plan starts to steadily reduce carbon emissions.

Everyone wins with this plan. Well, except maybe coal, oil and gas companies and countries.

Now these guys need to go convince Pres Trump and his merry band of fossil burners. Surprisingly, it might just work.

Also see Amy Harder Feb 8 blog on the topic in WSJ. She discusses the meeting of the Climate Leadership Council with Pres Trump where they voiced that they were "cautiously optimistic".

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