NEWEST ITEMS

Last year I released a Discussion Paper on the problem of implementing emission (carbon) taxes in economies where emissions are already regulated. I have revised the model and corrected some errors in the set-up. The results are now a bit clearer and more transparent.


The focus is still on the way second-best tax interaction effects create a damage threshold that can make emission control policy welfare-reducing even when marginal damages are positive. Partial regulation of emissions causes the damage threshold to be higher. In the application to Canadian carbon pricing, unless CO2 emission regulations are repealed first, there is no guarantee that carbon pricing ("making the polluter pay") can improve economic welfare even if one accepts the conventional estimates of the social cost of carbon. 

​MARCH 29, 2018

​REVISED PAPER ON CARBON TAXES AND PRE-EXISTING REGULATIONS

RECENT ITEMS

Newspaper Columns, Commentary and Other


CORRECTING FALSE CLAIMS IN THE NYC LAWSUIT

The City of New York has filed a lawsuit against a group of large oil and gas companies including Exxon Mobil, alleging among other things that they conspired to mislead the public about the dangers of global warming. Paragraph 87 of the complaint alleges that I was paid by Exxon to do the "hockey stick" work for the Fraser Institute. The claim is completely false and the paragraph is full of untrue statements. I have issued this statement in response:

WHAT'S IN THE NUNES MEMO?

In a departure from my usual fare, I have taken a stab at predicting what will be in the Nunes memo, and what the US Department of Justice Inspector General will report.
​This may be amended or edited as new information comes to light. To my mind this story is as fascinating and convoluted as any Le Carre-style spy thriller. 

​FIVE QUESTIONS ABOUT CLIMATE CHANGE

In late 2017 I was contacted via email by a group of high school students in Europe who asked if I would answer some questions about global warming for a project they were doing. Here are the questions they posed, and the answers I gave them.  
ARE CLIMATE MODELS OVERSTATING WARMING?

There has been a lot of discussion about a new paper tying model over-estimation of warming to the policy agenda; viz., there is more time than previously claimed to implement emission controls. I have written on this previously but in light of the current discussion I put up a blog post at Judy Curry's Climate Etc. blog:
Basically I go through a couple of indicators and arrive at an affirmative answer. 
Data/code here. 
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Yourenvironment.ca

The idea of this site is very simple: to build the complete environmental record of every community across Canada. The site currently shows air emissions by source (back to 1990), air contaminant levels (back to 1974), monthly average high temperatures (back to 1900) for hundreds of places across the country, and water pollution records for several provinces. 

The layout is self-explanatory and it's very easy to use. The data are all from government agencies, but most of it has not hitherto been disseminated in a usable form to the public. All my sources are linked and the data I use are easily-downloadable.

So the next time you find yourself in a conversation about some aspect of the environment and you wonder what is actually going on, look at yourenvironment.ca to find out.

Journal Articles and Discussion Papers

THE IMPACT OF HIGH ELECTRICITY COSTS ON ONTARIO MANUFACTURING EMPLOYMENT

Elmira Aliakbari and I completed a report for the Fraser Institute looking at the changes in Ontario's manufacturing sector since 2005, isolating as best we can the effects of rising electricity costs. We estimate that energy cost increases cost the province about 75,000 manufacturing jobs since 2008, roughly 2 jobs lost for every 1 the province claims was created by its Green Energy Act. 
The study received a higher-than-normal amount of media attention including articles in almost all daily papers across Canada, and countless radio interviews including 6 CBC affiliates.

EMISSION TAXES AND DAMAGE THRESHOLDS IN THE PRESENCE OF PRE-EXISTING REGULATIONS

Many commentators on carbon taxes have only a superficial grasp of the economic theory, which leads them to think that pricing carbon at the marginal damage rate is economically efficient, even though this is only true under very limited and unrealistic circumstances. Lots of previous studies have shown that the rule breaks down under pre-existing taxes, but no one has looked at the effect of pre-existing regulations. I have released a new working paper looking at this topic. Studies have shown that the optimal emission tax should be reduced when pre-existing taxes are present (i.e. always, everywhere) to take account of the distortionary burden of the tax system. Some numerical studies have also found a threshold effect whereby damages have to exceed some minimum level before the emission tax should go above zero, but theoretical treatments typically rule this out by construction. I derive a model with two polluting sectors and show that a threshold effect can arise under non-optimal taxes and pre-existing regulations, which are common real-world conditions. This means that emission taxes can potentially be welfare-reducing even if marginal damages are positive. 
EMPIRICALLY-CONSTRAINED CLIMATE SENSITIVITY AND THE SOCIAL COST OF CARBON
I have completed a study with Kevin Dayaratna of the Heritage Foundation in Washington DC and David Kreutzer of the EPA, which recomputes standard Social Cost of Carbon (SCC) estimates using updated empirical estimates of the equilibrium climate sensitivity (ECS). We applied the 2015 Lewis and Curry ECS distribution to the widely-used DICE and FUND Integrated Assessment Models. Previously the developers of these models (and others) have relied on model-simulated distribution of ECS values, especially from a 2007 paper by Roe and Baker. The Roe-Baker distribution underpins the US government's current SCC values used for regulatory purposes. We critique this aspect of SCC computation, explaining why the Roe-Baker distribution is unsuitable. A major reason is that simulated ECS distributions have been superseded by a suite of empirically-estimated distributions. Using a recent, well-constrained empirical ECS distribution we find the estimated SCC drops substantially in both the DICE and FUND models, and in the latter there is a large probability it is no longer even positive.
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Since 30 July 2010