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April 20, 2004

Comments

I can see where you're going here, but I think Brooks is actually making good points here.

The nut of the problem is where you set the caps, and how long it takes to get there. My thinking, and the thinking of most environmental groups, is that you don't trust the foxes to guard the henhouse. Therefore, you fight hard for the old way of doing things, which is better than having some laws gutted in exchange for toothless replacements that seem better, which is the Bush approach.

Now Eddie where does most of the mercury in the atmosphere come from (an it ain't from US power plants)?

But it's now turning out that it may be the taxpayers, rather than the trucking companies, who foot the bill for much of the cleanup.

So what is new about that?

but I think Brooks is actually making good points here.

Which ones?

But it's now turning out that it may be the taxpayers, rather than the trucking companies, who foot the bill for much of the cleanup.

So what is new about that?

Timmy, now it's my turn...if you read the article...here, I'll help out...

Soon after the report was released, Jeffrey Holmstead, assistant EPA administrator for air and radiation, accompanied EPA Administrator Mike Leavitt to Fort Lauderdale, Fla., to discuss the report's findings at a trucking industry meeting titled "Diesel Engine Emissions Summit II."

"I am prepared to say, 'Let's work together,'" Leavitt announced to a round of applause from the audience of more than 900 industry representatives. He assured the crowd that he was amenable to the idea of tax breaks to help trucking companies comply with the rules, saying it's the government's job to incentivize businesses "to do the right thing."

The EPA, though, does not typically ask taxpayers to shoulder the corporate costs of meeting new pollution standards. The health benefits of these regulations are supposed to justify their costs. If the financial burden is heavy for industry, the costs are passed along to consumers.

Philosophically, Bush steps in and stands up for Business. It's as if he doesn't believe in what he's doing environmentally...

...that's who he is...that's fine...just don't try to sell him as "green" though.

Guess you've never heard of the win, win scenario.

Guess you've never heard of the win, win scenario.

quite the contrary...see the Dateline story...it's a perfect example of win-win and what Bush is pushing will undo it.

If the financial burden is heavy for industry, the costs are passed along to consumers.

I think you could lop the entire first half of that statement off and have it be just as true.

Edward-

To answer your question, this is good stuff, for instance:


The Bush administration's biggest air pollution failure has been its inability to restart the global warming debate. There is ample evidence that we have a long-term global warming problem, and the sooner we address it the better. The old approach, the Kyoto treaty, was never going to be ratified by the Senate. But the administration could have moved aggressively to find another way forward. Instead it proposed a pitiable voluntary program, which has had no effect.

The thrust of Brooks' argument, as I understand it, is that in theory a cap'n trade system is better than a command-and-control scheme like NSR, because of the equimarginal principle.

That's true. And, as Brooks admits, the key is where you set the caps. And he's right when he says that there are solutions to the mercury hotspot problem. It's worth noting that there are hotspots right now.

Like I said before, the key thing that Brooks does not admit is that the Bush administration is entirely untrustworthy when it comes to environmental issues. So the groups are hoping to just freeze them out until a Democratic administration that the groups feel comfortable working with.

Another point is that NSR was hammered out with the industry in the 70s, as a way to allow them to spread their costs over time. They reneged on the deal, and they should suffer the consequences for breaking the law. Settlement money can be used for Supplemental Environmental Projects, the grandfathering would be lifted, and the companies could then decide whether it is more cost-effective for them to buy emissions credits or just shut the plants down.

The thrust of Brooks' argument, as I understand it, is that in theory a cap'n trade system is better than a command-and-control scheme like NSR, because of the equimarginal principle.

Doesn't cap n trade also rely on the ability to punish those who don't comply? In other words, isn't it just another, looser, form of command and control? Can't we expect similar noncompliance by the industry?

Besides, as the CEI notes, "Both NOx and SOx emissions from power plants and other sources have already been successfully regulated under the Clean Air Act." The cap n trade scenario is a handout to those companies that didn't comply with NSR. Bush is rewarding them for bad behavior. Why on earth would they expect to be punished going forward?

Excellent post, Edward. I admittedly don't know squat-all about this sort of thing, so I can't say whether you've got a decent point or not, but it all holds together well.

It'd be nice to know which companies are involved in this:

The cap n trade scenario is a handout to those companies that didn't comply with NSR. Bush is rewarding them for bad behavior.

And for what reasons. Any ideas? On the surface of it, the can 'n' trade concept seems like it ought to be restricted to gases like NOx and not to things that can form localized problems that require Superfund to get them cleaned up.

It'd be nice to know which companies are involved in this:,

A notorious one is the Detroit Edison power plant in Monroe, Michigan. Bush chose it as the location to announce the end of NSR...how's that for a clear indication of how he feels about the environment?

For a list of NSR violaters see this pdf file

On the surface of it, the can 'n' trade concept seems like it ought to be restricted to gases like NOx and not to things that can form localized problems that require Superfund to get them cleaned up.

I read, but now can't find, that this is the exact thinking behind opposition to Clear Skies.

Overall, the way I look at it is the power plants have been skirting, if not breaking, a very considerate law (and there's a good argument to be made that lots of "maintenance" done since NSR was enacted has really been criminally miscategorized, so I'll go with "breaking the law"), and at just the time in the chronology of things when they'd have to start complying, their knight in shining armor comes to the rescue and says "Don't you worry about it, I'll take care of that pesky old NSR you've been cheating your way around."

In his speech announcing he'd trashed NSR, Bush had the gall to say "The old regluations undermined our goals for protecting the environment."

WRONG! The industry systematically and criminally undermined our goals for protecting the enviornment. And now Bush is rewarding them for it.


Edward, "command and control" refers to an old-school approach whereby the EPA dictates specific approved technologies, and power plants have to install them.

The problem with this approach is that it provides little incentive for utilities to innovate, because as soon as a superior control technology comes out, they know that the EPA will ratchet down the standards and force everyone to buy the new stuff.

Another issue is that if, say, the EPA requires utilities to all reduce their emissions by 50%, it will be costly to do so for some than for others.

The advantage of cap and trade is that it gives utilities the ultimate flexibility.

It says, here is the goal--an overall annual tonnage for a region, which is less than the current amount of emissions. Then you allocate the initial distribution, via fiat or auction, of emissions credits.

Then utilities can trade with each other so that each can reduce by an amount commensurate with its marginal cost of control.

Another nice feature here is that utilities can donate credits to non-profits, and thus permanently retire them in exchange for a tax break.

The total overall cost to industry of the reduction will be lower as a result, which is why for the same total dollar amount, you can take more bad stuff out of the air.

Hence, it's better.

For example.

Say that there are two plants in the US, A and B. The EPA wants to reduce overall emissions by 50%. A currently emits 100 tons of NOx each year, and B currently emits 150 tons. So the EPA would like to see the overall level reduced from 250 tons to 125 tons. Under command and control, each plant would have to cut emissions in half. So A now emits 50 tons and B emits 75 tons.

But what if it costs A $10,000 per ton to control, but B has to spend $20,000 per ton?

Under c-n-c, the total cost of reducing pollution by 50% would be $500,000 + $1.5 million = $2 million.

But you can see that B could just buy some of A's credits at a negotiated price (which I could figure out if I weren't so lazy), and the total cost of control would be lower.

It's not a perfect or completely realistic example (the marginal cost of control isn't constant), but I hope this makes sense.

It makes sense asdf...thanks for taking the time to do that. The example is particularly illuminating and helpful (it's hard to wade through all this stuff without examples). I'm still unclear why this is better than NSR, which I assume would improve many more plants in the next decade if adhered to than cap-n-trade.

I get the flexibility thing. In fact Clinton and Gore's plan called for an end to dictated technology, but, if B buys A's credits, assumedly for less than they'd spend to make renovations (any renovations), where's the motivation for them to ever upgrade? And who's looking out for B's community? This plan means essentially, the air near Cheney's ranch in Wyoming gets better while the air near the school in New Jersey never does, no?

Edward, good points.

Remember that the problematic plants where NSR is concerned are coal-fired plants in the Midwest that were "grandfathered" in the 70s. The deal was that compliance with the Clean Air Act would be prohibitively expensive, so the compromise was "OK, just next time you upgrade to a certain extent, throw on the scrubbers."

Obviously, industry broke the bargain, and the Clinton administration decided to sue. Clearly, the Clinton approach would have worked, because the utilities would have been forced to install the controls.

So the dilemma is, do you go ahead and punish these guys, or do you forget about the past and just throw them in the pool with everyone else and see what happens?

The Bush administration decided to do the latter, only they did a couple things. One was that they gutted NSR to the point where it was meaningless, and made that retroactive so as to let the utilities off the hook. That's clearly bad.

The second is that they came up with Clear Skies, which weakens the 1990 revisions to the Clean Air Act as well as the Clinton EPA proposed rule change from 2001. The 1990 revisions are cap and trade for ozone, but they retain the old compromise - the grandfather clause and new source review.

As I understand it, Clear Skies doesn't put the old plants into the system. Plus, the EPA is lying through its teeth about it, because it compares Clear Skies to current emissions, rather than to projected emissions, which would continue to decrease under the Clean Air Act. An imaginary scenario with no basis in reality. And then it basically delays implementation until 2018, when it's likely that new technology would have come along anyway.

[I]f B buys A's credits, assumedly for less than they'd spend to make renovations (any renovations), where's the motivation for them to ever upgrade? And who's looking out for B's community? This plan means essentially, the air near Cheney's ranch in Wyoming gets better while the air near the school in New Jersey never does, no?

B upgrades when technology comes along that makes it cheaper for them to control than to buy credits.

The EPA and outside groups would continually monitor B's community to make sure there are no hotspots. As far as I know, the 1990 CAA didn't cause any hotspots to develop. Additionally, you can set some regional caps based on health.

But here's the kicker. Clear Skies set one national cap, rather than state caps, as the 1990 regs did. So under Clear Skies, it's actually much more likely that hotspots will develop.

This is complicated stuff, and I may have made some mistakes here, but I think that about covers it.

where do you know all this from asdf...professional or personal interest?

again, many thanks for taking the time.

To summarize, though, cap-n-trade credits cost X dollars. New scrubbers cost XX dollars...but will eventually, hopefully cost less than X dollars, meaning eventually power plant B will choose new scrubbers over more credits, no?

And built in to help the people living near power plant B are safeguards that do what to prevent hot spots?

All in all, this strikes me as more faith-based regluation, requiring faith in the technology getting cheaper (with no dates set), faith in the diligence of the EPA (and with all its best people quitting that seems unlikely), and faith in the hot spots not killing people before something is done about them.

Bush expects a good grade for this?

Bush expects a good grade for this?

Nah, Bush expects a pass from people like Easterbrook, support from industry, and a compliant press that throws its hands up and refuses to arbitrate between the NRDC and the EPA.

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