Climate Change and Trade

by John Murphy

A few folks have expressed the concern that our November 3rd letter to the Senate regarding climate change represented a change in the Chamber's position on carbon tariffs. While the letter notes that we agree with "a great deal" of what Senators Kerry and Graham presented in a recent op-ed, and we "commend" them for writing it. It does not mean that we agree with them on every point they made, as this Dow Jones story made clear.

The one concept the Chamber objected to in the Kerry-Graham editorial was a proposed tariff on emission-intensive imports, a measure they say could provoke major trade retaliations. It's also a provision the Obama Administration has criticized for the same reason.

More on the Chamber’s position on the trade aspects of climate change legislation, which has not changed, can be found in this July letter(pdf). Special thanks to Scott Linicome for asking the question and helping to set the record straight.

Comments

[Willis Eschenbach]

BP, thank you again for your prompt and thoughtful reply. I fear we have become lost in the details. Let me return to the big picture.

The Kerry/Graham bill, and the other bills, propose an incredibly costly and convoluted taxation/control system for carbon. It will spawn a host of regulations, rulings, and interpretations. It will generate a huge bureaucracy. It will place a host of restrictions and regulations on businesses of all types. It will restrict business in a variety of ways. It will place a burden on every business and every consumer.

Now, can you claim with a straight face that this enormously expensive and complex system is a "no-regrets" option, that spending all this money and creating the bureaucracy and subjecting businesses to a maze of regulations will be of benefit to us *whether CO2 is the secret global thermostat or not?*

That is the real question, not whether that system will contain IP safeguards.

A secondary question, of course, is whether the system will do any good. I invite you to read my short post at http://wattsupwiththat.com/2009/11/06/why-copenhagen-will-achieve-nothing which clearly shows that whatever the US does will make no difference to carbon emissions.

The proposed legislation is simultaneously futile, ruinously expensive, restrictive of business growth, and not a "no-regrets" option. This is a lethal combination. The Chamber is not supporting businesses by having anything to do with this farrago. I implore you to reconsider your position, as you are supposed to be the Chamber of Commerce, not the Chamber of CO2.

[ChamberPost]

Willis - Just to be clear I said that our positions are close to your original "no-regrets" description. That is a label with variations in definition; I am not jumping into a shifting pigeon-hole. Regarding your definition and your breakdown, you score us at 6/12, but I would say that three of your grades are fuzzy (price volatility, IP, negotiations) so 9/12 is easily arguable. I would also add in the renewable one to take it to 10, but that’s your call. Which, arguably, leaves two -- under your assumption that there is no value whatsoever in reducing CO2 emissions.

While we will continue to insist on value for money, it is impossible to ensure that "everything" we spend money on will bring benefit "no matter what the future holds."

Life just isn’t that tidy - BP

[Willis Eschenbach]

BP, thank you for your response. You say that the chamber is advocating a "no-regrets" policy, saying:

     Though we don't describe as such I believe our position hews fairly closely to your "no-regrets" option.

To see if that is true, let's take each of the actions say you agree with in your supporting document listed at the bottom of this page. Remember, a "no-regrets" policy must provide benefits whether or not the climate warms, and if the climate warms, it must provide benefits whether or not CO2 is the cause. You say:

     The Chamber agrees with a great deal of the principles set forth by Senators Kerry and Graham, in particular that legislation should:

     minimize the impact on major emitters;

BZZZZT! Not a "no-regrets" option at all. If CO2 is not the cause, this provides no benefit.

     reduce price volatility for consumers;

BZZZZT! How is this a benefit? At best, it is a reduced cost.

     protect global competitiveness;

Yes, this gives benefits regardless what the future holds.

     invest in renewable energy sources;

BZZZZT! While renewable energy is a good thing, the German and Spanish experiences with investing in renewable energy have been expensive catastrophes which cost both money and jobs. Investing in basic renewable energy research makes sense. Subsidizing technologies which are not ready for the market does not.

     take advantage of nuclear power;

Excellent, it will be of benefit in any case.

     streamline the permit system;

Also excellent.

     make us the "Saudi Arabia of clean coal" by fostering carbon capture and sequestration technology;

BZZZZT! If CO2 is not the cause, spending billions to remove CO2 from coal is just wasted money, all cost and no benefit.

     commit to increased environmentally responsible onshore and offshore oil and gas exploration;

Again, excellent, this one is a no-brainer.

     contain consumer and intellectual property protections;

BZZZZT! Good in theory, but only necessary if the Cap 'n Tax is passed, so no benefit.

     protect against agency regulation under existing laws not written for greenhouse gases;

This is good, as the laws are being twisted badly to do things they were not designed to do.

     strengthen the hand of our international negotiators;

BZZZZT! If CO2 is not the problem, there is no need for international negotiations.

     and increase our own energy security and energy efficiency.

Most excellent, this is critically necessary in any conceivable future.

So out of the twelve actions you say you support, only six of them are "no-regrets" options. The rest are all wasting money if, as many scientists say, CO2 is not the mystery thermostat that controls the world temperature.

I implore you to look seriously at what are and what are not "no-regrets" options. The Chamber should insist on value for money. The only way to do that is to be sure that everything that we spend money on will bring a benefit no matter what the future holds.

Thank you for your willingness to have this discussion, as it is a very important one.

[ChamberPost]

Willis - Though we don't describe as such I believe our position hews fairly closely to your "no-regrets" option. A focus on the basics of education, efficiency, innovation, and the actual deployment of technologies. Economic growth is the key alleviating suffering and promoting human progress. - BP

[Willis Eschenbach]

Thanks for your quick response, ChamberPost. I read those documents before I posted. The effort by Senators Kerry, Graham, and Lieberman are as ill advised as the previous efforts. We do not need carbon sequestration, or many of the other "good ideas" they are promoting.

Acting before we understand a given situation is foolish, as we may easily do more harm than good. Despite this, you say:

"There are many unknowns regarding climate change, anyone who tells you otherwise is trying to sell you something -- caveat emptor. The fact that there are unknowns is not a reason for inaction."

Well, yes, when billions of dollars are at stake, it certainly can be a very valid reason for inaction ... unless you have some plan to get the billions back if they are spent foolishly. Since it's my money you are talking about, I'd rather wait until we understand if carbon sequestration is necessary and cost-effective before I throw bucks at it.

It seems that you are misapplying the "precautionary principle". This is widely misunderstood. A bit of caution about the Precautionary Principle might be in order. It is not just a restatement of "better safe than sorry", nor is it ordinary caution.

Let me start with an early and very clear statement of the “Precautionary Principle” (I’ll call it PP for short), which comes from the UN Rio Declaration on the Environment (1992). Here’s their original formulation:

“In order to protect the environment, the precautionary approach shall be widely applied by States according to their capability. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”

This is an excellent statement of the PP, as it distinguishes it from such things as wearing condoms, denying bank loans, approving the Kyoto Protocol, invading Afghanistan, or using seat belts.

The three key parts of the PP (emphasis mine) are:

1) A threat of serious or irreversible damage.

2) A lack of full scientific certainty (in other words, the existence of partial but not conclusive scientific evidence).

3) The availability of cost-effective measures.

Here are some examples of how these key parts of the PP work out in practice.

We have full scientific certainty that condoms and seat belts save lives. Thus, using them is not an example of the PP, it is simply acting reasonably on principles about which we are scientifically certain.

There are no scientific principles or evidence that we can apply to the question of invading Afghanistan, so we cannot apply the PP there either.

Bank loans are neither serious nor irreversible, nor is there partial scientific understanding of them, so they don’t qualify for the PP.

Finally, the Kyoto Protocol is so far from being cost-effective as to be laughable. The PP can be thought of as a kind of insurance policy. No one would pay $200,000 for an insurance policy if the payoff in case of an accident were only $20, yet this is the kind of ratio of cost to payoff that the Kyoto Protocol involves.

On the other side of the equation, a good example of when we might use the PP involves local extinction. We have fairly good scientific understanding that removing a top predator from a local ecosystem badly screws things up. Kill the mountain lions, and the deer go wild, then the plants are overgrazed, then the ground erodes, insect populations are unbalanced, and so on down the line.

Now, if we are looking at a novel ecosystem that has not been scientifically studied, we do not have full scientific certainty that removing the top predator will actually cause serious or irreversible damage to the ecosystem. However, if there is a cost-effective method to avoid removing the top predator, the PP says that we should do so. It fulfils the three requirements of the PP -- there is a threat of serious damage, we have partial scientific certainty, and a cost-effective solution exists, so we should act.

Regarding the proposal that we pump CO2 into the ocean (or take any action regarding CO2), while there is at least a theoretical threat of serious or irreversible damage, there is no partial scientific certainty, nor are there any cost-effective solutions in hand, including pumping the oceans full of CO2. At the moment, therefore, no action regarding CO2 is justified by the Precautionary Principle.

So no, action on CO2 is not justified at this time. If the Chamber needs to take a position on this question, it should support the "no-regrets" option. This is to take actions that will be productive regardless of whether or not CO2 is the problem. All of the threatened catastrophes which the models say will come from CO2 are with us today — droughts, and floods, and disease, and famine, and rising sea level and the seven Biblical plagues, we have them now.

So the no-regrets option is to research and advance the knowledge and train people around the world in how to avoid the poverty and pain and suffering which comes from the vagaries of the climate today. That will pay huge dividends whether or not CO2 is the boogeyman. Doing that is the best way of preparing for an unknown tomorrow.

And that is what the CofC should be advocating. The "no-regrets" policy is the only policy that makes sense in the face of the "unknowns" you mention above.

Thank you for your consideration in this matter,

w.

[ChamberPost]

Willis - I encourage you to read the letter and supporting documents - BP

http://www.chamberpost.com/2009/11/climate-change---finding-the-balance.html

http://www.chamberpost.com/2009/11/climate-change---a-different-approach.html

[Willis Eschenbach]

Our small business ($50 million sales last year) was thinking about joining the Chamber.

But since your recent craven about face on the climate issue, we'll look for someone else, someone who has the balls to stick to their position despite opposition.