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CARBON PRICING AND DRIVING.

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  • Eric Britton
    Thanks to Robert Moskowitz for the heads-up. Very nice Bob.
    Message 1 of 4 , Oct 8, 2008
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      Thanks to Robert Moskowitz for the heads-up. Very nice Bob.

       

      CARBON PRICING AND DRIVING.

      The Congressional Budget Office has an interesting analysis (http://cboblog.cbo.gov/?p=175) showing that a carbon pricing plan like cap-and-trade would not primarily exert pressure by dissuading people from taking a drive. Which is largely to be expected. Folks tend to wildly overestimate how much of our fossil fuels problem is a result of driving. In part, that's a simple availability bias: The main place where we consciously interface with fossil fuels is at the gas pump, and so we assume that that activity, being carried out countless times a day by endless numbers of people, is responsible for the problem. But it's really not:

      greenhousegasemissions.jpg

      Now, that chart slightly understates the role of transportation in carbon emissions, as it also tracks gases like methane which aren't emitted by SUVs, but nevertheless. And of these various emission sources, vehicles are among the least sensitive to carbon pricing. "CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions."

      Indeed, even as carbon pricing is mildly raising the relative price of gas, CAFE standards and consumer choices are going to be pushing towards cars whose increased fuel efficiency is enough to basically wipe out the price hike at the pump. Add in that driving has a heavy cultural and geographical and historical elements, and can only really be lessened with a large increase in alternative transportation infrastructure, and it's hard to see how it cuts down in the near future (Ryan Avent disagrees with this, but the CBO is evaluating a limited universe of legislation here, and so the possible impacts of stringent congestion pricing -- which has not seen much political success -- isn't really part of their analysis).

      But that doesn't mean cap-and-trade won't be effective. Rather, carbon pricing will force sharp efficiencies in more price-sensitive sectors: Electricity, and construction, and industrial processes and so forth. Efficiencies, in other words, that will be much less obvious, and painful, for consumers than rising gas prices would be.

      Posted at 10:55 AM | Comments (10)

      http://www.prospect.org/csnc/blogs/ezraklein


      Climate change and gas prices: Less impact than you might think

      CBO released a brief today on climate-change policy and CO2 emissions from passenger vehicles (for the PDF, click here  http://www.cbo.gov/doc.cfm?index=9830).

      Discussions about addressing climate change (e.g., through a cap-and-trade program or a carbon tax) often focus on the transportation sector. The brief argues, however, that most of the reduction in CO2 emissions would occur in other sectors (e.g., the electricity sector) and that the effects on vehicle emissions would be modest, especially in the shorter run.

      To be sure, a cap-and-trade system or a carbon tax would raise the price of gasoline, encouraging consumers to drive less and to buy more fuel-efficient cars– but the magnitude of these effects would be relatively small. For example, CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions.

      Several factors account for the relatively small influence that a price on CO2 emissions would have on passenger vehicles and driving behavior. First, a CO2 price of $28 per metric ton would raise gas prices by about 25 cents per gallon, far less of an increase than consumers have recently born with little behavioral result. (Between 2003 and 2007, gas prices increased from $1.50 to more than $3.00 per gallon. Vehicle miles driven, driving speeds, and the purchase of larger vehicles have all responded only modestly despite the dramatic increase in prices.) An increase in gas prices of 25 cents or so per gallon is unlikely to generate massive changes in driving behavior.

      In addition, recent changes to corporate average fuel economy (CAFE) standards will require substantial gains in fuel economy over the next dozen years. Especially over the longer term, gas price increases are not likely to have a large effect beyond what CAFE standards will require.

      Finally, cultural, historic, and geographic considerations drive the extent to which Americans have become dependent on automobile travel, and their choices tend towards larger and more powerful (and less fuel efficient) automobiles. While dramatic increases in gasoline prices (or shifts in cultural norms) might eventually influence these considerations, the magnitude of gas price increases under most legislation under consideration would likely have little effect.

      The brief was written by David Austin of our Microeconomic Studies Division.


       

    • Lee Schipper
      Let s think of it this way. CO2 emissions from driving cars are all variable costs, i.e., each km driven is chosen. I don t buy I am forced to drive because
      Message 2 of 4 , Oct 8, 2008
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        Let’s think of it this way.  CO2 emissions from driving cars are all variable costs, i.e., each km driven is chosen. I don’t buy “I am forced to drive” because Americans make around four daily car trips per capita – which could be three or two if we made a habit of combining our trips. Try to find “driving” in the national accounts. You can’t except when you pay someone (a taxi driver or rental car) for that. What that tells me is that driving, while Americans love to call it essential, is only a means of connecting different tasks, people etc, most of which can be connected other ways.

         

        So rather than calling that sliver of our emissions that won’t change, I disagree. Emissions in the power sector can only change after heavy fuel substitution. We can and should stop frying ourselves in the winter and chilling ourselves in the summer (I did a piece on this for Time in early July) .     Same thing – much of the savings come from changing how we manage our lives. 

        In the longer run we will get more efficient, smaller vehicles, we will live closer to each other, and those emission will shrink more.

         

        Since the early 1990s VKT in personal vehicles in the US has stopped tracking GDP growth. Since 2001, when the price of fuel started to rise, the gap between GDP and vkt started to expand. Vkt stopped growing a few years ago and has falling, so they say, in 2008 over 2007.  Compared to trends I put the difference between trends and actual now at between 10 and 15%, which is voila almost 1 million barrels of oil per day.  And only two presidential candidates complained (last spring), with one still complaining.

         

        So I see that sliver as a BIG piece of the puzzle because it can change with little impact our economy or our lives. If we just think about it.  

         

        Lee Schipper, Ph.D

         

        CARBON PRICING AND DRIVING.

        The Congressional Budget Office has an interesting analysis (http://cboblog.cbo.gov/?p=175) showing that a carbon pricing plan like cap-and-trade would not primarily exert pressure by dissuading people from taking a drive. Which is largely to be expected. Folks tend to wildly overestimate how much of our fossil fuels problem is a result of driving. In part, that's a simple availability bias: The main place where we consciously interface with fossil fuels is at the gas pump, and so we assume that that activity, being carried out countless times a day by endless numbers of people, is responsible for the problem. But it's really not:

        greenhousegasemissions.jpg

        Now, that chart slightly understates the role of transportation in carbon emissions, as it also tracks gases like methane which aren't emitted by SUVs, but nevertheless. And of these various emission sources, vehicles are among the least sensitive to carbon pricing. "CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions."

        Indeed, even as carbon pricing is mildly raising the relative price of gas, CAFE standards and consumer choices are going to be pushing towards cars whose increased fuel efficiency is enough to basically wipe out the price hike at the pump. Add in that driving has a heavy cultural and geographical and historical elements, and can only really be lessened with a large increase in alternative transportation infrastructure, and it's hard to see how it cuts down in the near future (Ryan Avent disagrees with this, but the CBO is evaluating a limited universe of legislation here, and so the possible impacts of stringent congestion pricing -- which has not seen much political success -- isn't really part of their analysis).

        But that doesn't mean cap-and-trade won't be effective. Rather, carbon pricing will force sharp efficiencies in more price-sensitive sectors: Electricity, and construction, and industrial processes and so forth. Efficiencies, in other words, that will be much less obvious, and painful, for consumers than rising gas prices would be.

        Posted at 10:55 AM | Comments (10)

        http://www.prospect.org/csnc/blogs/ezraklein


        Climate change and gas prices: Less impact than you might think

        CBO released a brief today on climate-change policy and CO2 emissions from passenger vehicles (for the PDF, click here  http://www.cbo.gov/doc.cfm?index=9830).

        Discussions about addressing climate change (e.g., through a cap-and-trade program or a carbon tax) often focus on the transportation sector. The brief argues, however, that most of the reduction in CO2 emissions would occur in other sectors (e.g., the electricity sector) and that the effects on vehicle emissions would be modest, especially in the shorter run.

        To be sure, a cap-and-trade system or a carbon tax would raise the price of gasoline, encouraging consumers to drive less and to buy more fuel-efficient cars– but the magnitude of these effects would be relatively small. For example, CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions.

        Several factors account for the relatively small influence that a price on CO2 emissions would have on passenger vehicles and driving behavior. First, a CO2 price of $28 per metric ton would raise gas prices by about 25 cents per gallon, far less of an increase than consumers have recently born with little behavioral result. (Between 2003 and 2007, gas prices increased from $1.50 to more than $3.00 per gallon. Vehicle miles driven, driving speeds, and the purchase of larger vehicles have all responded only modestly despite the dramatic increase in prices.) An increase in gas prices of 25 cents or so per gallon is unlikely to generate massive changes in driving behavior.

        In addition, recent changes to corporate average fuel economy (CAFE) standards will require substantial gains in fuel economy over the next dozen years. Especially over the longer term, gas price increases are not likely to have a large effect beyond what CAFE standards will require.

        Finally, cultural, historic, and geographic considerations drive the extent to which Americans have become dependent on automobile travel, and their choices tend towards larger and more powerful (and less fuel efficient) automobiles. While dramatic increases in gasoline prices (or shifts in cultural norms) might eventually influence these considerations, the magnitude of gas price increases under most legislation under consideration would likely have little effect.

        The brief was written by David Austin of our Microeconomic Studies Division.


         

      • Chris Bradshaw
        Lee, Although you are correct that the transportation is not the largest, the chart is confusing about just how it stacks up against other sectors. First, it
        Message 3 of 4 , Oct 10, 2008
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          Lee,

          Although you are correct that the transportation is not the largest, the
          chart is confusing about just how it stacks up against other sectors.

          First, it has a category for "fossil fuels" to cover the retrieval and
          processing to get the carbon-based fuels to the customers. This should be
          redistributed to the various individual-choice sectors: space heating,
          industrry, transportation, agriculture.

          Second, the manufacturing sector is probably at least 1/3 for the
          manufacture of automobiles and related replacement and after-market items.
          "Waste disposal and treatment" must include disposal of automobiles
          (although not as large a proportion). A regime that promotes carsharing,
          for instance, can greatly reduce manufacturing more dramatically than
          vehicle-miles traveled.

          Third, "Land Use and Biomass Burning" is unfathomable.

          Fourth, "Power stations", on the eve of the plug-in electric cars, will
          increase to fuel the new car models.

          Fifth, the "residential, commercial" (must be for space heating) is closely
          related to the amount of space each person 'acquires,' which is less for
          people living in more dense environments. And with more other people living
          nearby and less space to store personal 'stuff,' a shift to higher density
          should reduce consumption, even if wealth (as it should) increases as a
          result. Of course, such living arrangements will shorten regular trips by
          as much as 90%, making the small-footprint modes more natural and practical.

          The only sector not affected by 'lifestyles' (low-density living,
          consumption-reflects-success orientation) is "agricultural."
          However, other spin-off effects of new lifestyle and value choices --
          organic foods, 100-mile diets, slow foods, and healthy eating -- all might
          be facilitated by a shift to walking-cycling-transit and to more compact,
          mixed use living. All will contribute to lower carbon emissions via
          fertilizers, transportation, or human flatulence.

          Chris Bradshaw
          Ottawa
        • Lee Schipper
          A bit more explanation (the diagrams were not mine but can be seen in each nation s inventory). Chris raises other good points. The fossil fuels , e.g., fuel
          Message 4 of 4 , Oct 11, 2008
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            A bit more explanation (the diagrams were not mine but can be seen in each nation’s inventory). Chris raises other good points.

             

            The “fossil fuels”, e.g., fuel cycle burden for fuels AND electricity from power stations should be distributed. The IEA provides it that way if you like. Agree cars may show up there, but no one thinks the numbers will be big for a very long time because most (sane) electric cars will be small, slow, and stay close to home.

             

            Manufacturing is decidedly NOT 1/3 automobiles – I don’t have the full inventory, but per $ autos are NOT carbon intensive products – while they contain a few thousand dollars of raw materials, increasingly they contain knowledge – computers etc – whose carbon footprints per $ of value are small.  And ( fortunately) most of our economy does not engage in making motor vehicles. (I’m counting imported cars here implicit). Missing from our manufacturing is the CO2 for making a few hundred billion dollars of surplus imports, mostly from China..

             

            Land Use and biomass burning – aka deforestation – is less significant in the US but VERY significant in brasil. Either CO is released when we till or burn existing biomass,  OR the capacity to absorb CO2 is reduced when we chop down valuable forests unsustainably for wood or clear any kind of plant material for development or just less CO2 absorbing activities, like raising beef.

             

            The residential and commercial – density connection is a good one. American’s have 65 sq meters per person of home living space, subsidized by almost unrestricted deduction of mortgage interest from taxes – at least until mortgages became worthless an important stimulus of larger homes and, imho, greater sprawl to find room for larger homes.

             

            Agriculture in the US IS a facet of our lifestyles (see Oct 12 NY Times Sunday mag on this matter) – not simply the amount of beef we eat, but the way we eat it that requires so much force fed, aka feedlot beef. California grows rice on subsidized water, and what we don’t’ grow we bring in from around the world. (Not to let Asia off the hook, but rice growing is a major GHG/ methane source, so are cows and sheep down under etc).

             

            The “problem” is not simply that Americans are for the most part rich, rather they are careless and have turned to carbon intensive ways of both producing and consuming wealth.  That may begin to change for many reasons, both the high cost of oil and sadly the high cost of living the way we live, which others call the financial meltdown!

             

            Lee Schipper, Ph.D

            Project Scientist

            Global Metropolitan Studies

            http://metrostudies.berkeley.edu/

             

            Street/Mail Address: 

            2614 Dwight Way 2nd floor

            University of California Berkeley 94720-1782

             

            +1 510 642 6889,

            FAX +1 510 642 6061

            Cell +1 202 262 7476

             

            skype: mrmeter

             

             

            From Oct. 1, also

            Senior Research Engineer

            Precourt Institute for Energy Efficiency

            Stanford University

             

             

            Analyst Emeritus, EMBARQ,

            the WRI Center for Sustainable Transport

             

            From: WorldTransport@yahoogroups.com [mailto:WorldTransport@yahoogroups.com] On Behalf Of Chris Bradshaw
            Sent: Friday, October 10, 2008 5:55 PM
            To: WorldTransport@yahoogroups.com
            Subject: Re: WorldTransport Forum CARBON PRICING AND DRIVING.

             

            Lee,

            Although you are correct that the transportation is not the largest, the
            chart is confusing about just how it stacks up against other sectors.

            First, it has a category for "fossil fuels" to cover the retrieval and
            processing to get the carbon-based fuels to the customers. This should be
            redistributed to the various individual-choice sectors: space heating,
            industrry, transportation, agriculture.

            Second, the manufacturing sector is probably at least 1/3 for the
            manufacture of automobiles and related replacement and after-market items.
            "Waste disposal and treatment" must include disposal of automobiles
            (although not as large a proportion). A regime that promotes carsharing,
            for instance, can greatly reduce manufacturing more dramatically than
            vehicle-miles traveled.

            Third, "Land Use and Biomass Burning" is unfathomable.

            Fourth, "Power stations", on the eve of the plug-in electric cars, will
            increase to fuel the new car models.

            Fifth, the "residential, commercial" (must be for space heating) is closely
            related to the amount of space each person 'acquires,' which is less for
            people living in more dense environments. And with more other people living
            nearby and less space to store personal 'stuff,' a shift to higher density
            should reduce consumption, even if wealth (as it should) increases as a
            result. Of course, such living arrangements will shorten regular trips by
            as much as 90%, making the small-footprint modes more natural and practical.

            The only sector not affected by 'lifestyles' (low-density living,
            consumption-reflects-success orientation) is "agricultural."
            However, other spin-off effects of new lifestyle and value choices --
            organic foods, 100-mile diets, slow foods, and healthy eating -- all might
            be facilitated by a shift to walking-cycling-transit and to more compact,
            mixed use living. All will contribute to lower carbon emissions via
            fertilizers, transportation, or human flatulence.

            Chris Bradshaw
            Ottawa

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