Global Energy Policy Center

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Pricing Is A Better Climate Commitment
The Economists' Voice
January, 2010



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Our Approach to Global Energy Policy

  • Success can only be achieved with dependable cooperation.
  • Cooperation can only be achieved with good strategy -- not exhortation.
  • Good strategy must consider
    • Free rider problems
    • Costs and benefits
    • Ease of negotiation
    • Perceived fairness
  • Energy security can and should strongly motivate climate policy.

What We Are Doing

Related Sites:

UK Policy Network's Energy-Climate Papers

Global Energy Policy News

Climate Econ Papers Collection

VOX EU Energy  &  Climate  Articles

   Global Policy

Climate Games:  Cooperation vs. "Math"

New: Climate Game goes live at Beloit College, Feb. 1, 2009.

Todd Stern, the US Climate Envoy, famously remarked, "It's not a matter of politics or morality or anything else. It's just math." Concern over widespread naïveté regarding cooperative strategies motivates the research on this site. "It" is not just about emissions "math." And cooperation must come first.

Climate policy is a multi-player "prisoners' dilemma" game and the science of strategy can help design the policy to encourage cooperation.

Why Kyoto Failed:  

Game theory shows the Protocol was (accidentally) designed to fail.

The Future:  A Better Climate Commitment

Binding commitments from China and India are essential, but as Copenhagen proved, these will not be emissions caps. Fortunately, even better commitments are possible. This opens the door for strategically-sound policy design.

Energy / Climate:  They Can Work Together

Concern over energy security is a powerful force. Because climate advocates try to suppress it, it works against them. If they understood it, they could transform it into a powerful force to help curb emissions.

National Policy

The government should try to avoid picking winners. That's a special case of an important treatment principle. When possible, treat the disease not the symptom. In our case, diseases are market failures, and there are three main failures:
  • Carbon emissions are priced near zero
  • Consumers ignore long-term benefits of efficiency investments
  • Basic research is under-rewarded by the market
This diagnosis leads to three prescriptions: (1) price carbon with caps or taxes, (2) use feebates or standards, but not to correct for low carbon prices, and (3) subsidize basic research. It also tells us to stop subsidizing alternative energy as soon as we can price carbon. The national policy section is divided into four subsections:
  • Cap and trade
  • Carbon and fossil-fuel taxes
  • Distributional effects of carbon pricing
  • Alternative-energy and efficiency policies

Climate Science

Jim Hansen's new book, Storms, lets non-climate-scientists take a look at the evidence for global warming, because he works from paleoclimate data instead of with huge computer models. The GEP Center presents his argument with some missing details filled in.

Climate sensitivity is defined as how much global temperature will rise if atmospheric CO2 is doubled from 1750 levels (from 280 to 560 ppm). Hansen's method of answering this question (ultra simplified) runs as follows: 

  • The earth warmed 5° C from the coldest part of the last ice age until 1750.
  • That was caused by (1) CO2, and (2) less ice to reflect sunlight.
  • We know the changes in CO2 and ice and their warming potential.
  • Dividing the 5° C temperature increase proportionally between the two tells the impact of CO2.

The climate science pages present more details and convincing graphical data.

Skip the science, what's the answer?

Energy Science

A focus on the most policy-relevant aspects of energy science.

  • Alternative energy:  What works?  What doesn't?
  • How much can climate policy reduce the world price of oil
  • The global rebound effect
  • Peak fossil? How soon will supply peak?  Will that save us or doom us?