Economy

How to Cut Emissions and Boost the Economy? Look to the Northeast.

RTO Insider: “The Regional Greenhouse Gas Initiative provides substantial economic benefits and has not raised prices or impaired reliability,” according to a new report by economic consulting firm Analysis Group.

“RGGI added $1.3 billion in economic value, created more than 14,000 new jobs and saved consumers $460 million on electricity and heating bills from 2012 through 2014 … ‘Based on an analysis of years of hard data, RGGI shows that multi-state, market-based carbon control mechanisms work and can deliver positive economic benefits,’ Analysis Group Vice President Paul Hibbard said.”

Figure ES-4 shows the net economic value broken out by the macroeconomic effects of RGGI on consumers and pow er plant owners, as well as effects that flow  from direct spending of RGGI auction revenues.

Figure ES-4 shows the net economic value broken out by the macroeconomic effects of RGGI on consumers and power plant owners, as well as effects that flow from direct spending of RGGI auction revenues.

“The report’s authors said the findings ‘provide valuable lessons for states’ preparing for the Environmental Protection Agency’s proposed Clean Power Plan.”

“RGGI regulates carbon emissions from power plants in the six New England states, New York, Maryland and Delaware. The states have received about $2 billion in auction proceeds over its existence, investing those funds in energy efficiency programs, low-income assistance and clean energy development.”

“The region also cut annual carbon emissions by about a third, from 140 million metric tons in 2008 to 90 million tons in 2014, according to the report. RGGI also reduced dollars used to pay for fossil fuels imported from outside the region by more than $1.27 billion in 2012-2014.”

U.S. Emissions Decline Attributed to Economy, Not Decrease in Coal

International Institute for Applied Systems Analysis: “From 2007 to 2013, US carbon dioxide emissions from fossil fuels decreased by about 11%. This decline was widely attributed to a shift from coal to natural gas in US electricity production. However, a new analysis published in the journal Nature Communications shows that, in fact, the recent economic recession accounts for the majority of the decline.”

“In the United States, coal-powered electricity went from 50% to 37% of the generation mix between 2007 and 2012, with the bulk of it replaced by natural gas, in large part due to new hydraulic fracturing, or fracking, and underground mapping technologies. Because this shift occurred at the same time as the reduction in emissions, many commentators linked the two.”

“From 2007 to 2009, when emissions declined the most, the study finds that 83% of the decrease was due to economic factors including consumption and production changes, and just 17% of the decline related to changes in the fuel mix. After 2009, emissions declined by only about 1%, and this was due to a mix of all three factors.”

“The study may indicate that further increase in use of natural gas may not have major benefits for the climate. While natural gas can substitute for coal, research also shows that cheap and abundant natural gas can limit the growth of carbon neutral energy sources including solar, wind, and nuclear.”

The Debate Over the Social Cost of Carbon

Cass Sunstein in Bloomberg addresses the debate over valuing the social cost of carbon.

“This month, the administration provided a big part of the answer with a new report from its Interagency Working Group on the Social Cost of Carbon, which is intended to capture in dollar terms the damage from 1 ton of carbon emissions … The central value is $36.”

“The working group argued forcefully that if all countries set policies only on the basis of domestic effects, their emissions reductions would end up being ‘economically inefficient,’ because no country would take the slightest account of the harms that it imposed on others. If the U.S. adopts a global estimate, on the other hand, it ‘can signal its leadership’ in the effort to obtain international cooperation on emissions reductions.”

“Many environmentalists object that the discount rate [of 3%] is unfair to future generations and that a far lower rate is needed to hedge against the risk of ‘climate catastrophes.’ The working group responded that the 3 percent rate is itself pretty low and that the range, with $105 at the high end, reflects the risk of catastrophe.”

“To be sure, the uncertainties involved here are real, and reasonable people can disagree with the working group’s choices and arguments. But it’s also true … that the working group has engaged in a highly technical — rather than political — exercise, building on existing academic research and promoting transparency about its assumptions and limitations.”

How Do American Incomes Compare Globally?

Washington Post: A recent analysis by the Pew Research Center of incomes across the globe shows “how wealthy a country is overall and what a dollar buys in any given country. The first of these is far more important. Take India, for example. India makes about $1,500 per person a year, and a dinner of chicken and potato might cost $1 there. The United States earns about $53,000 per person a year, and a dinner of chicken and potato might cost $5. And so while the cost of living in India might be a fifth of what it is in the United States, the earnings the average person might enjoy a year is a thirty-fifth of what it is in the U.S.”

“Curious how your income stacks up against the rest of the world? Here it is in a snapshot, or head over to Pew’s Web site to use their handy calculator.”

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Raising the Minimum Wage Won’t Cost Jobs

Paul Krugman asserts that there are “major changes, deeply grounded in evidence, in our understanding of what determines wages. And a key implication of that new understanding is that public policy can do a lot to help workers without bringing down the wrath of the invisible hand.”

“Our understanding of wage determination has been transformed by an intellectual revolution — that’s not too strong a word — brought on by a series of remarkable studies of what happens when governments change the minimum wage.”

“More than two decades ago the economists David Card and Alan Krueger realized that when an individual state raises its minimum wage rate, it in effect performs an experiment on the labor market. Better still, it’s an experiment that offers a natural control group: neighboring states that don’t raise their minimum wages.”

“The Card-Krueger study …. found, if anything, a positive effect [on wages]. Their result has since been confirmed using data from many episodes. There’s just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America.”

“There are important benefits, even to the employer, from paying [workers] more: better morale, lower turnover, increased productivity. These benefits largely offset the direct effect of higher labor costs, so that raising the minimum wage needn’t cost jobs after all.”

Americans Don’t Need to Work More. They Already Are.

Matt Breunig: “Jeb Bush has made it clear that growth is going to be a big part of his campaign … We should take a step back and ask ourselves what exactly we mean by growth, and why we think it’s important.”

Breunig shows that “if we divide total hours worked by total population, the US has actually increased work hours on a per-person basis since 1970.”

“Over this period, US hours worked per capita increased by 52 hours, or 7%. For comparison, Finland’s hours worked per capita decreased by 225 hours, or 23%.”

“The main reason for the difference [in work hours] is that Nordic workers simply cut their hours by a much greater magnitude than US workers.”

“In an ideal world, discussions of ideal work levels would be detached from discussions of unemployment, growth, and distribution. But in our narrow political frame, all of these things are mushed together, and tend towards the view that we must have more work hours to solve all the other stuff. This, of course, isn’t true. You can reduce overall work hours (through longer vacations and more paid leave) while reducing unemployment, increasing GDP/hour, and even boosting the incomes of the poor and working classes (despite reducing work hours) by increasing transfer incomes. Yet, because of market income fetishism and simplistic discussions of GDP growth, we don’t seem to have the political imagination to even consider such a program.”

The Green Energy Revolution is Here

Paul Krugman: “There’s another major Obama initiative that is the subject of similar delusions: the promotion of green energy. Everyone on the right knows that the stimulus-linked efforts to promote solar and wind were a bust — Solyndra! Solyndra! Benghazi! — and in general they still seem to regard renewables as hippie-dippy stuff that will never go anywhere.”

“So it comes as something of a shock when you look at the actual data, and discover that solar and wind energy consumption has tripled under Obama.”

“Only a combination of rigid preconceptions and sheer ignorance can explain the way right-wingers still go around sniggering about Obama’s green-energy promotion. Far from being a bust, that policy was at least a contributing factor to an energy revolution.”

Are We Really a ‘Nation of Takers?’

Paul Krugman comments on the reasoning behind Jeb Bush’s observation that “people should work longer hours.”

“Partly it’s Bush trying to defend his foolish 4 percent growth claim; but it’s also, I’m almost certain, coming out of the ‘nation of takers’ dogma that completely dominates America’s right wing.”

So “where are these welfare programs people are supposedly living off? TANF is tiny; what’s left are EITC, food stamps, and unemployment benefits. Spending on food stamps and UI soared during the slump, but came down quickly; overall spending on ‘income security’ has shown no trend at all as a share of GDP, with all the supposed growth in means-tested programs coming from Medicaid:”

“But none of this will, of course, make any dent in the right-wing narrative: they just know that the rising number of bums on welfare is a problem, even though there basically isn’t any welfare and there are no more bums than there ever were.”

Exxon Knew of Climate Change But Funded Deniers for 27 Years

The Guardian: “ExxonMobil, the world’s biggest oil company, knew as early as 1981 of climate change – seven years before it became a public issue, according to a newly discovered email from one of the firm’s own scientists. Despite this the firm spent millions over the next 27 years to promote climate denial.”

“The email from Exxon’s in-house climate expert provides evidence the company was aware of the connection between fossil fuels and climate change, and the potential for carbon-cutting regulations that could hurt its bottom line, over a generation ago – factoring that knowledge into its decision about an enormous gas field in south-east Asia. The field, off the coast of Indonesia, would have been the single largest source of global warming pollution at the time.”

“However, Exxon’s public position was marked by continued refusal to acknowledge the dangers of climate change, even in response to appeals from the Rockefellers, its founding family, and its continued financial support for climate denial. Over the years, Exxon spent more than $30m on thinktanks and researchers that promoted climate denial, according to Greenpeace.”

How Much More Do American Workers Need to Work?

Jonathan Chait comments on the division between conservatives and liberals over how to define and address worker productivity.

“Conservatives like to contrast American-style capitalism with Western European sloth. But the difference does not lie in how many Americans work. As Paul Krugman has pointed out, among people ages 25 to 54, a higher percentage of French than Americans work full-time:”

“Output per working hour is also similar. The main difference is that Americans work many more hours than French workers, or workers anywhere in the advanced world except South Korea and Japan.”

“Conservatives embrace that distinction, and seek to extend it further still. A major economic rationale for tax cuts, aside from the underlying moral desire to allow the winners of the market economy to keep their money, is to coax more labor out of the workforce. When faced with the choice of working more hours or enjoying more leisure time, a higher tax rate tends to encourage more leisure. (If you get to keep three quarters of the extra dollar you earn, you might work that extra shift. If you only keep half, you might not.) Liberals have less interest in coaxing those additional hours out of the labor force.”

“Much of the dispute centers not on incentives but on whether workers should have the freedom to choose more leisure time.”