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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Who Are the Nation’s Biggest Carbon Emitters?

Inside Climate News: “Although several of America’s biggest investor-owned utilities have seen a significant drop in their carbon footprints as they have shifted away from coal in recent years, just five––led by Duke Energy, American Electric Power and Southern––are still responsible for spewing out 25 percent of the nation’s power plant carbon emissions.”

“That’s a main takeaway of a comprehensive new report this week by Ceres, Natural Resources Defense Council, Bank of America and four utilities, and carried out by the Massachusetts consulting firm M. J. Bradley & Associates.”

“The report measures the carbon and other air pollution released by the country’s 100 largest power producers, accounting for more than a third of U.S. global warming emissions. It finds that while overall power sector emissions are declining … not all big utilities are rushing forward to go low-carbon.”

Americans Are Too Busy to Vote

Washington Post: “A meager 36 percent of eligible voters cast ballots [in the midterm elections], 5 points lower than in 2010 and the worst turnout rate since 1942, according to the U.S. Elections Project. So, why did so few Americans vote last year? The Census Bureau asked just that to people who chose not to cast ballots.”

“Being ‘too busy’ tops the list of excuses reasons, followed by general lack of interest, illness, being out of town, simply forgetting, and disliking the candidates or the issues. Few people blamed registration issues, inconvenience, transportation issues or bad weather.”

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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.”

Aversion to Obamacare Affects Republican Uninsured Rate

Washington Post: “Obamacare has not simply been an ideological victory for the Democratic Party. The percentage of Democrats with health insurance has increased dramatically since the ACA’s marketplace went online in October 2013, according to weekly surveys conducted by YouGov for the Economist. In fact, the display below suggests that Democrats’ uninsured rates have essentially been cut in half under Obamacare.”

“The Republican Party’s uninsured ranks, by contrast, have been much steadier over the past two years. The figure above even indicates that Democrats are now slightly more likely than Republicans to be insured after long trailing behind the GOP in health insurance coverage by wide margins.”

“The more interesting question is whether Democrats’ stronger support for the ACA has led them to sign up for health insurance at faster rates than Republicans who remain overwhelmingly opposed to Obamacare. While establishing the causal influence of partisanship on health insurance coverage is difficult, there are strong reasons to believe that Americans’ partisan attachments have played an important part in their Obamacare enrollments.”

Solar Prices Continue to Plunge

Seeking Alpha: “Despite decades of stunningly rapid cost drops, solar PV prices are still falling at a precipitous pace. In a span of one month, solar PV broke its own record twice in terms of electricity prices. The latest record comes in at 3.87 cents/kWh for one of NV Energy’s utility-scale solar plants. This price is well below the average electricity prices generated from coal or natural gas plants, which currently dominate the electricity landscape.”

“The most amazing part about these recent precipitous cost reductions is that they are not at all abnormal in the context of solar PV’s entire history. In fact, solar PV has been reducing costs at this rate for over three decades … Fortunately for the solar industry, there is still no end in sight for these cost-reductions.”

“Cost reductions are actually happening at a pace in which government subsidies will only play a significant role in the near-term. Perhaps no other major energy source has experienced price drops as rapidly as solar PV. In fact, utility-scale solar is now becoming one of the cheaper energy sources on a levelized cost of energy (LCOE) basis even when it is completely unsubsidized.”

“At its core, solar PV is a semiconductor technology. In this way, solar PV cost reductions have much more in common with those found in the integrated-circuit industry than with those found in any other energy industry.”

A Record-Breaking Year for the Earth’s Climate

Al Jazeera: “Sea levels, greenhouse gases and both land and sea temperatures reached record highs in 2014, according to the National Oceanic and Atmospheric Administration’s annual ‘State of the Climate’ report published Thursday. The annual report — which refutes claims of a pause or slowdown in global warming — was published in partnership with the American Meteorological Society.”

“Record temperatures were observed near the Earth’s surface, according to the report, with four independent global datasets confirming that 2014 was the hottest year on record.”

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“Ocean surface temperatures were also the warmest in 135 years, and researchers observed the highest heat levels ever recorded in the deep sea, according to report.”

“Summing up much of the report, NOAA climate monitoring chief Deke Arndt, co-editor of ‘State of the Climate,’ said the seas last year ‘were just ridiculous.’”

The Reality Behind Projected Obamacare Rate Increases

Sarah Kliff, in Vox, writes that she has talked to “experts about what to expect from Obamacare rates in 2016. And they do expect premiums to rise faster this year, largely because health-care costs are going up faster, too. But they caution against reading too much into the little information currently available — and they don’t expect the huge rate increases making headlines now to be the norm.”

“Health insurers look at dozens of factors when they set rates. They attempt to game out, for example, how much health care they expect members to use, how much they expect health-care prices to rise, and how much their competitors are charging for similar benefit packages. This means there’s a ton of variation in how much premiums rise and fall — and that one insurance plan’s proposal isn’t a great lens into larger trends in the market.”

The Kaiser Family Foundation’s annual report of the rate increases in 11 major cities shows that “the price of a midlevel plan (in more technical terms, the benchmark plan) will increase by an average of 4.4 percent in 2016. That’s a far cry from the double-digit hikes, but still higher than the average of 2 percent in 2015.”

“The more positive reading is that consumers here do have a choice. The individual market isn’t like the employer market where I buy insurance, and where I have exactly one insurance carrier to choose from.”

The Downside to Congressional Budgetary Gimmicks

Jonathan Chait comments on the Republican Congress’ insistence on “paying for” domestic spending only with offsetting measures.

“Obviously, this makes it extremely hard to increase domestic spending. Republicans oppose tax increases for any reason at all, because, as Grover Norquist has taught them, raising taxes even a tiny amount makes the baby Reagan cry. In theory, they like cutting spending, but in practice, the only spending programs they actually specify for reductions are the ones aimed at poor people, which Democrats don’t like to cut, creating a stalemate.”

“The problem for Republicans is that there are some domestic programs they not only don’t want to cut but prefer to expand. The inability to maintain transportation infrastructure has created huge problems for business, which has been lobbying for years to fix it.”

“So the bipartisan solution is to reform the international business tax, create a big onetime tax cut for companies that bring overseas profits home, and then use the windfall to finance roads. This plan would increase revenue in the short-run, then create a permanent long-term drain:”

“But these are the traps Congress finds itself in when it attempts to reconcile practical recognition of the need for government with rules designed to prevent pragmatism in any form. It’s possible to find temporary workarounds rather than confront the irrationality of the Republican anti-tax religion. But there are only so many gimmicks and they only last so long.”