John McCain, Global Warming, and the "D+R/2=Right" Myth

So yesterday John McCain delivered a speech unveiling his plan to fight global warming. Unfortunately, it's not so much a plan to fight it as a plan to, well, acknowledge it. There are a lot of great discussions of the actual plan, but my favorite is from Dave Roberts at Grist:

It comes as no surprise that the focus is on a cap-and-trade program, something McCain has supported for five years. In fact, there is virtually no mention of any emission reduction policies outside of cap-and-trade -- no efficiency or fuel economy mandates, no electrical utility decoupling, no mention of public transit. McCain obviously retains his conservative allergy to regulation and public spending. There is some discussion of funding research and incentivizing market deployment of new technology, but the details are tantalizingly vague. Perhaps they'll be fleshed out in the energy speech.

One area where McCain deserves big kudos: He devotes a good chunk of his speech and his policy plan to adaptation, something that's been too far under the radar in climate discussions. Substantial impacts from climate change are inevitable, and it's high time the federal gov't got serious about coordinating and funding local efforts to prepare.

As for the cap-and-trade program itself, McCain's basic targets and mechanisms are roughly in line with what others have proposed. He would aim for 1990 emission levels by 2020, and 60 percent below 1990 levels by 2050. That long-term target falls short of the "80 percent by 2050" recommended by the IPCC and beloved of climate activists, but the short-term target is roughly in line with what's offered in the Lieberman-Warner bill and Barack Obama's plan [...]

So what's the overall verdict? I'll explore the plan more in coming days, but my initial reaction is that it's better than expected, somewhat short of Lieberman-Warner, and far short of what Obama has proposed. It should comfort us that a McCain presidency will mean real action on climate change, not the shell game Bush is engaged in. But it's hard to see how McCain can claim the allegiance of voters who rank climate change as a top concern. He's still behind the curve.

Saying that McCain's plan is an improvement upon George Bush's efforts at combating climate change is damning with faint praise. Conservative talkers are going nuts about this today because McCain "sounds like a liberal Democrat," but the actual problem is that he only sounds like it. McCain's trying to thread the needle here, saying that one side denies the existence of global warming and the other side wants massive new taxes and regulation. The gambit here is to lie about what Democratic plans would do.

But what “extreme thinks high taxes and crippling regulation is the solution”? Those calling for a carbon tax instead of a cap-and-trade system to set a price on emissions are primarily conservative economists like Glenn Hubbard and Gregory Mankiw, the chairmen of Bush’s Council of Economic Advisers from 2001 to 2005. Is McCain calling Wall Street conservatives “extreme”?

And what “crippling regulation”? The only thing McCain describes as a “regulation” is an energy efficiency standard for building codes. The global investment firm McKinsey & Company has found that mandatory energy efficiency standards, far from being crippling, overcome present market failures and policy distortions and can drive massive return on investment. Is McCain calling McKinsey “extreme”?

McCain’s just trying to have it both ways — his campaign is trying to promote the complex system of government regulation necessary to establish a fair and national carbon market and still pay homage to a right-wing ideology that considers any governmental solutions anathema.

I don't think this balancing act will work. As we can see, the right is going apeshit just from McCain daring to let the world "global warming" pass his lips. People committed to fighting global warming understand that his program doesn't go far enough. His cap-and-trade program includes weaker targets than Obama's. It includes all kinds of offsets that can be bought and sold by polluters to extend beyond those caps. And it doesn't sell carbon credits to polluters but instead gives them away, which is a completely insufficient proposal.

Third, McCain's cap-and-trade plan initially gives away emission permits instead of auctioning them. I mentioned a few days ago that that a 100% auction of emission permits is what distinguishes a real plan from a fake one, and later that day Mike O'Hare begged to differ: "The difference between a giveaway and an auction of the same total emissions is not a difference in environmental outcome or the economic cost of getting to it; it's only a matter of whose ox is gored." That's true, but it's worth unpacking that gored ox a bit.

Environmentally speaking, it doesn't matter whether you auction permits or give them away. What matters is the cap. If you cap total emissions at 90% of current levels (and enforce it), then that's what you'll get no matter which kind of system you use. And since both systems allow permits to be traded between companies, they each provide similar levels of economic efficiency. Our ox lurks elsewhere.

Here's the difference. If you auction permits, then power plants and other GHG emitters have to buy permits to operate, and this raises their cost of doing business. This will get passed along to consumers and energy prices will go up. The revenue from the permits will go to the government, just like a tax.

If you give away permits instead, common sense suggests that since there are no additional costs to emitters, they won't raise their prices. But it turns out this isn't true. Thanks to the opportunity cost of the permits, they'll raise their prices just as much as if they'd bought the permit in an auction. (This isn't just a theory, either. That's how the European cap-and-trade system worked initially, and prices really did go up. If you want the gritty detail on why it works this way, read this paper.) So: power plants end up raising their prices, but since the emission permits are free their costs don't change. Result: a huge windfall profit for GHG emitters. Some get more and some get less, but the overall net result is lots of extra profit, with the biggest polluters getting the biggest profit.

The proceeds for such an auction can go toward investment in renewable energy or mass transit, or directly to the public in the form of a rebate. Plus, polluters would be encouraged to innovate and produce their goods without using as much carbon. Any cap-and-trade program which gives away the right to pollute doesn't work.

There's also the little added knowledge that McCain is historically pretty bad on the environment - his lifetime rating from the League of Conservation Voters is just 24% - and his priorities are very erratic:

But an examination of McCain's voting record shows an inconsistent approach to the environment: He champions some "green" causes while casting sometimes contradictory votes on others.

The senator from Arizona has been resolute in his quest to impose a federal limit on greenhouse gas emissions, even when it means challenging his own party. But he has also cast votes against tightening fuel-efficiency standards and resisted requiring public utilities to offer a specific amount of electricity from renewable sources. He has worked to protect public lands in his home state, winning a 2001 award from the National Parks Conservation Association for helping give the National Park Service some say over air tours around the Grand Canyon, work that prompts former interior secretary and Arizona governor Bruce Babbitt to call him "a great friend of the canyon." But he has also pushed to set aside Endangered Species Act protections when they conflict with other priorities, such as the construction of a University of Arizona observatory on Mount Graham.

Obama attacked McCain on his record on the environment just yesterday.

Look, we know that something needs to be done almost immediately. World CO2 levels are at their highest point in 650,000 years. Bill McKibben and top climate scientists have designated this as a battle to "preserve a planet similar to that on which civilization developed". While politicians are primarily concerned with dropping gas prices to save their political necks, the technology exists to significantly lower greenhouse gas emissions right now. We can power 20 percent of the US energy grid with wind power within 20 years. There are concrete steps available to us. It's not enough to try and triangulate between solving the problem and denying it exists and automatically see that at the proper strategy. McCain is acknowledging man-made global warming, but patting ourselves on the back saying how right we were while the world goes underwater is not an attractive option. We can't wait for so-called "bipartisan" solutions.