Bruce Yandle says CAFE Regulation is a Sham and a Shame

Bruce Yandle writes wisely. Here are two nuggets.

1. CAFE standards imposed in the 1970's had the unintended consequence of increasing demand for SUVs and light trucks.
2. "instead of overhauling the aging fuel efficiency apparatus—perhaps even moving to a straightforward tax on carbon emissions—politicians added more ornaments to the fuel economy Christmas tree." ... "Now we're left with a maze of regulations and rules that I doubt anyone can fully explain. The industrial organization that results is so opaque that no one can tell what anything really costs when factoring for the credits, subsidies, or tax breaks paid for or enjoyed by all involved."
3. "Why not wipe the slate clean, support carbon and other offset markets to reduce undesirable emissions, and let the chips fall where they may? It may take time, but customers and automakers can respond more effectively than the regulatory state has."

The Administrative State is a Sham and a Shame

Using regulation to achieve ends not intended when legislators passed a law is increasing. Revising regulations allows the Executive Branch to exercise unprecedented control over the economy and personal liberties WITHOUT the bother of getting a majority vote in both the House of Representatives and the Senate. Moreover, costs of many of the revisions will substantially exceed their benefits.

This recent opinion by the Editorial Board of the WSJ identifies a recent onslaught of new and proposed regulations.

1. "The Transportation Department on Friday proposed a 696-page rule raising corporate average fuel economy (Cafe) standards that would effectively require 100% of new cars to be electric by 2032." ... "The Administration claims the proposal will reduce CO2 emissions through 2050 by 885 million metric tons—about half as much as Canada’s wildfires are projected to release this year."
2. "The Administration on Friday also proposed a 236-page revision to National Environmental Policy Act (NEPA) guidelines that will require federal agencies to consider climate change and “environmental justice” in project reviews. If a utility wants to build a gas pipeline, agencies might have to evaluate if a solar plant would better promote environmental justice, however regulators define it."
3. "The Administration is also quietly using collusive legal settlements with green groups to end-run judicial review of rules—a practice known as “sue and settle.”
4. "Last week Securities and Exchange Commission Chair Gary Gensler jammed through a rule requiring public companies to disclose to investors cyber-security breaches within four days of discovering them—no matter if they are still trying to repair their systems." ... "the unprecedented rule could 'tell successful attackers when the company finds out about the attack, what the company knows about it, and what the financial fallout is likely to be (i.e., how much ransom the attacker can get)' and 'will signal to other would-be attackers an opportune time to attack.'”
5. "the Public Company Accounting Oversight Board, a quasi-private entity overseen by the SEC, in June proposed rules that would vastly expand the remit of auditors under the Sarbanes-Oxley Act."

Regulation to reduce emissions is a sham and a shame

I favor a smartly-conceived carbon tax over regulation of energy consumption. The costs of regulating consumption directly usually far exceed the benefits. For example, the Paris Climate Accord would yield on $0.11 in benefits in climate change for every $1 spent even if every country meets its promise.  A well-conceived carbon tax, on the other hand, could yield up to $2 in climate benefits for every $1 spent. 

For more information, I encourage you to read https://imprimis.hillsdale.edu/thinking-smartly-about-climate-change/.

My preferred proposal is the Carbon Dividend Plan. This plan uses the tax to pay administrative costs and then return the remainder to Americans on a per capita basis. The result is to increase the price of carbon-intensive goods and services, reduce the production and consumption of carbon-intensive goods and services, increase the incentive for finding new and better ways to capture emissions and to produce energy. Moreover, since the vast majority of the tax revenues return to people on a per capita basis and rich people tend to consume more carbon-intensive goods and services than poor people, the Plan reduces income inequality and rich people bear the brunt of the cost of reducing emissions. The Plan could easily be expanded to address methane and other emissions that contribute to global warming.

Reducing emissions efficiently requires answers to many questions. What is the best way to produce energy? Is producing energy differently better than using technology to capture carbon as or after it is emitted? Is geo-engineering or painting all roofs with reflective white paint the best solution to climate change?

No one person or group knows the answers to these questions. I trust the decisions of millions of people making billions of decisions with good incentives more than the decisions of less than 1000 politicians in Washington DC. The Carbon Dividend Plan is a good start to creating good incentives.

Focus on reducing emissions is a shame and a

Steven Levitt is wise and knowledgeable. 

The Green Agenda is a Shame and a Sham

I agree with Lomborg's assessment of climate change with the WSJ assessment that politicians pursuing the "Green Agenda" insist "on ignoring reason, logic, truth and economics." Here are some key points on which I think we agree.

1. The climate is warming.
2. Human activity is contributing to the warming.
3. How much human activity contributes is unknown.
4. Efforts by the USA and Europe to address climate change will be ineffective unless China and India cooperate. 
5. A smartly-conceived carbon tax is a much more efficient way to reduce emissions than government regulation of production and consumption. 
6. The Carbon Dividend Plan put forward by the Climate Leadership Council is a blueprint for a smartly-conceived tax.
7. The costs of regulating consumption directly usually far exceed the benefits. For example, the Paris Climate Accord would yield on $0.11 in benefits in climate change for every $1 spent even if every country meets its promise. 
8. A well-conceived carbon tax, on the other hand, could yield up to $2 in climate benefits for every $1 spent.
9. I trust the decisions of millions of people around the world making billions of decisions to achieve efficient reductions in emissions more than the decisions made by 535 politicians in Washington, D. C.

I fear, however, that politicians prefer government regulations to reduce emissions to a smartly-conceived carbon tax. Four factors create my fear. 

1. Regulation gives the appearance of doing something and politicians love to be able to claim that they have done something to solve a problem. 
2. Regulation gives politicians the ability to reward some constituents to create a base for funds and votes. 
3. Politicians love power and regulation puts them in charge.
4. The inefficiency of regulation relative to a smartly-conceived carbon tax is not obvious.