Do any economists disagree that California’s economy will benefit from a carbon cap and trade system?

In 2006, California passed AB 32 which among other effects will soon lead to the creation of a carbon cap and trade system within the state. Some Texas oil companies have funded a proposition on this year’s ballot to delay implementation of the cap and trade system until the state’s unemployment rate remains below 5.5% for four consecutive quarters – a level rarely met even in strong economic conditions.

118 Ph.D. economists who live or work in California or who have expertise related to California issues or climate and energy issues have signed a letter in support of AB 32, against Proposition 23.

"Delaying action now and waiting for the future before initiating accelerated action to reduce global warming gases will be more costly than initiating action now. Acting now is more likely to limit further environmental degradation, lower the cost of mitigation, and spur innovation in renewable energy and conservation technologies. Furthermore, policies that reduce global warming pollution are likely to provide immediate benefits to the health and welfare of residents by reducing local pollutants.

For these reasons we urge continued support for policies that reduce greenhouse gas emissions. These policies can improve our energy security, create new business opportunities and more jobs,
and provide incentives for innovation."
http://www.ucsusa.org/assets/documents/global_warming/2010-CA-Economists-LTR.pdf

So I’m wondering, do you know of any economists who oppose California’s proposed carbon cap and trade system?
Since so many people seem to be misunderstanding the question, allow me to clarify. I’m not asking for your personal opinions, I’m asking if any economists disagree that a cap and trade system will be good for California’s economy.

Giving me your personal opinion, unless you’re an economist, does not answer the question.
Ottawa, almost every sentence in the quote I provided talks about ‘costs’ or something similar. I suggest you edit your response to actually attempt to answer the question.
jim, yes! Economists and climate scientists are all stupid! That’s got to be the answer – well done!
deano – please name one economist who has said cap and trade will cost thousands of jobs and thousands of dollars in higher energy bills. Hint – Glenn Beck is not an economist.

I am sure Starbuck would disagree and he is an expert on economics (just ask him).

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How much climate damage will the most recent US failure to pass a climate bill do?

As the Senate gave up on trying to pass a climate bill this year, the inevitable question is how much impact will this failure have on the climate?

Obviously it’s a difficult question because we don’t know what will happen in terms of policy in the future. It’s inevitable that at some point we’ll pass a climate bill. But with Republicans to gain Senate seats in November, it likely won’t happen until 2013 at the earliest. There’s also the possibility that Congress will find a way to remove the EPA’s mandate to regulate greenhouse gas emissions, although one such effort already failed, and this also seems unlikely.

Conveniently, the World Resources Institute just completed a study assessing how much the US can reduce emissions just with EPA and state regulations and emissions trading systems which are already in place or will be in the near future. They find that in comparison to a nationwide cap and trade system, EPA and state regulations will fall behind in terms of emissions cuts, but will almost catch up by 2016. But after 2016, they fail to keep up with the cuts in a national cap and trade system. By 2020 the climate bill was to reduce emissions 17%, whereas under EPA and state regulations, national emissions cuts are only 5-12% by 2020.
http://www.wri.org/publication/reducing-ghg-emissions-using-existing-federal-authorities-and-state-action

Then again, if we could begin implementing a national cap and trade system by around 2016, there wouldn’t be much difference compared to implementing the system now.

The other question is how this will impact international emissions cuts. It’s going to be hard for the Obama Administration to negotiate in international climate conferences when we know there won’t be a climate bill in the near future. He can only commit to the cuts that the EPA can make, which are less than a national cap and trade bill will make. So it’s possible that this failure will impact emissions cuts from many other countries as well. China, India, Australia, Canada, etc. may be less likely to cut their emissions without the US leading the way.

So there are a lot of variables involved, but what’s your guess – how much climate damage will the most recent US failure to pass a climate bill do?
Beam, maybe instead of making ignorant and irrelevant comments about ‘history’, you should study a little basic climate science.

The problem does not rest on any specific piece of legislation. The biggest hurdles are institutionalized government and human nature. There is not a single instance in all of human history where a societal-level group has done anything based on what it thought might happen beyond the current or next generation. The first concern of every national leader in the world is their personal political future. And in fairness to them, they are just a reflection of those they rule.

The greatest fear America’s founders had for the long-term future of the nation they had created was that, eventually, an ill-informed and intellectually disinterested public would elect politicians even more selfish and greedy than themselves.

“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.” – John Adams

Unfortunately, we may be the living nightmare they were afraid of.

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Which economic analysis of the proposed carbon cap and trade bills do you find most plausible?

Climate and energy bills involving carbon cap and trade systems have been proposed by the US House (Waxman-Markey [WM]) and Senate (Kerry-Lieberman [KM]). Numerous economic analyses of these bills have been performed, as summarized below.

Congressional Budget Office (CBO): WM will cost about $175 per household in 2020, and those “in the lowest income quintile would see an average net benefit of about $40 in 2020. The estimate “does not include the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change." CBO’s estimate also does not include the economic benefits of other provisions in WM.
http://www.cbo.gov/ftpdocs/103xx/doc10327/06-19-CapAndTradeCosts.pdf

American Council for an Energy Efficient Economy (ACEEE): estimates that the WM efficiency provisions alone could save businesses and consumers $22 billion ($170 per household) annually by 2020, and that the net savings of the bill’s provisions not included in the CBO estimate would more than make up for the estimated cost.
http://www.aceee.org/energy/national/National_Summary_ACES.pdf

Energy Information Administration (EIA) on WM: the average cost to households from 2012 to 2030 (discounted) is $83.
http://www.eia.doe.gov/oiaf/servicerpt/hr2454/pdf/sroiaf%282009%2905.pdf

EPA on WM: $80-111 per year per average family.
http://www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf

EPA on KL: $79-146 per year per average family.
http://www.epa.gov/climatechange/economics/pdfs/EPA_APA_Analysis_6-14-10.pdf

Peterson Institute on KL: "In our analysis, households see somewhere between a $136 increase and a $35 dollar decrease in annual energy expenditures, depending on future improvements in vehicle efficiency"
http://www.piie.com/publications/pb/pb10-12.pdf

Heritage Foundation: WM "Will Cost American Families Over $3,000 a Year" (per family of 4)
http://www.heritage.org/Research/Factsheets/Waxman-Markey-Global-Warming-Tax-Kills-More-Jobs-and-Kills-the-Economy

Institute for Energy Research on KL: "Households would face a gross annual burden of $125.9 billion per year or $1,042 per household,"
http://www.instituteforenergyresearch.org/2010/06/30/new-study-kerry-lieberman-to-destroy-up-to-5-1-million-jobs-cost-families-1042-per-year-wealthiest-americans-to-benefit/

So basically 3 government analyses put the cost at somewhere between a modest net gain for consumers, and a $175 per family (about $60 per person) per year net cost. You also have 2 oil-industry-funded organizations (Heritage Foundation has received over $630,000 and Institute for Energy Research has received $307,000 from ExxonMobil since 1998), which put the net cost at $1000-3000 per family.

If you don’t trust government or oil-funded analyses, the only alternative I found was the Peterson Institute for International Economics which "is a private, nonprofit, nonpartisan research institution devoted to the study of international economic policy." If you look at their climate change page, they don’t seem to have any particular dog in this race.
http://www.iie.com/research/topics/hottopic.cfm?HotTopicID=16

Their analysis is consistent with the CBO, EIA, and EPA at between a modest net gain for households ($35 per year) and a net cost of $136 per year. Which economic analysis of the proposed carbon cap and trade bills do you find most plausible?
Deniers, I ask that you either answer the question or don’t bother ‘answering’ at all. The question is about the cost of the proposed legislation in the USA.

Thanks Dana, for the summary. Generally I like to take the middle course when experts disagree, and discount the opinions of industry "experts" with an economic interest. If I read correctly, that puts me in the modest cost per family camp.

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Given carbon regulation realities in the USA, shouldn’t everyone support cap and trade?

In an interesting article written by a couple of economists – one from the Bush Sr. administration and one from the Clinton Administration – they compare and contrast the two likely options regarding carbon. As they note, the EPA is set to begin regulating greenhouse gas emissions from large emitters in 2011. That’s just the reality of the situation. The first effort to overturn the EPA’s ability to regulate GHGs was immediately squelched, and even if it had miraculously passed Congress, President Obama would have vetoed it. The only way to change this reality is if Republicans control both houses of congress, the presidency, and still want to eliminate EPA regulation in 2013.
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