El Niño raises the spatial correlation of agricultural yields, making the gains from trade more unequal. Just Accepted new paper by J. I. Dingel @tradediversion.bsky.social & K. C. Meng @kylemeng.com zurl.co/8JdIE
And if anything, California's efforts to increase EV adoption reduce the pain of high gasoline prices. When EVs are widely available, households are more able to substitute away from gasoline usage during moments like this. And California has the highest per capita adoption of EVs. /n
Furthermore, California's gasoline prices are rising similarly to that of other U.S. regions, as shown in the plot below. This counters arguments that California's policies such as cap-and-invest are worsening the gas price impact of the Iran bombings. 3/
Let's get the causality and economics of this straight. The higher gas prices we're seeing is driven by the Iran bombings. That is a global supply shock that has nothing to do with California's cap-and-invest program. 2/
There's some misguided messaging out there in California trying to take advantage of high gas prices from the Iran bombings and CARB's cap-and-invest rule making.
Some are using this moment of high gas prices to delay CARB's cap-and-invest rule making. 1/
So much coverage on the EPA endangerment repeal but has anyone actually seen the final rule?
Not on WH, EPA, or Federal Register sites.
Where is this actual repeal?
My commentary for @csis.org on the U.S. Clean Competition Act.
It covers where CCA situates in the geopolitical/climate landscape and our @emlab.ucsb.edu modeling of CCA's U.S. & global economic and climate impacts.
emLab policy brief: linkly.link/2YlqQ
emLab executive summary: linkly.link/2YlqB
In summary:
-CCA lowers emissions and raises U.S. revenue
-A domestic performance fee is critical to CCA benefits
-CCA’s climate club provisions amplify global emissions reductions
Full policy brief and appendix: linkly.link/2YlqQ
Executive Summary: linkly.link/2YlqB
/n
Our results also suggest that sequencing a carbon tariff first before a domestic performance fee may be ineffective. Once a carbon tariff is adopted, a domestic fee lowers output relative to the tariff, making the domestic fee less attractive. This amounts to granting the carrot before the stick. 7/
RESULT 3: CCA climate clubs magnify global emissions reductions. For example, when clubs require domestic policies, global CITE emissions decrease by 24.2% in an OECD+Brazil+China+Indonesia+India club. Without domestic policies, the same club decreases global CITE emissions by 1.2%. 6/
RESULT 2: If CCA were implemented as a carbon tariff without a domestic performance fee, U.S. GHG emissions rise and emissions abroad fall. Without a domestic performance fee, CCA cut global GHGs by two-thirds as much, raise one-third the revenue, and deliver smaller U.S. GDP & welfare gains. 5/
Result 1: CCA lowers U.S. CITE emissions by 8%. CCA lowers global CITE emissions by 44.9 mtons, 16.3 mtons from U.S. and 28.6 mtons from abroad. It raises $10.6B in revenue annually. While CITE output is slightly lower, CCA has essentially no effect on U.S. GDP. If anything, GDP rises slightly. 4/
Greg Casey (Williams), Ivan Rudik (Cornell) and I use a general-equilibrium global trade model custom-built for climate and trade policies to analyze CCA’s U.S. and global economic and climate impacts.
Here are key results. 3/
CCA pairs a U.S. domestic carbon performance fee applied to dirtier-than-average U.S. firms with a carbon import tariff in carbon-intensive, trade-exposed (CITE) sectors. It also has climate club provisions that waive carbon tariffs for trade partners with comparable domestic climate policies. 2/
In our geopolitical turmoil, here’s an example where trade can constructively advance U.S. & global interests.
Last month, Congress introduced the Clean Competition Act to further decarbonization & maintain U.S. competitiveness.
Today, we at @emlab.ucsb.edu release modeling of CCA impacts. 1/
If you you miss reading a proper cost-benefit analysis of environmental policy, one that fully accounts for costs AND benefits, here's California CARB's proposed GHG cap-and-invest regulations, dropped at noon.
No "we won't value public health benefits just because they're uncertain" shenanigans.
And it obviates the very reason why the EPA even exists, which is to balance the public health benefits and compliance costs of U.S. environmental policies.
Why do anything to clean up the environment if one assumes there are no benefits? /n
This runs counter to how cost-benefit analyses have been conducted by the U.S. government for decades, across both Republican and Democratic administrations. 2/
Human health benefits are by far the largest benefit from most environmental regulations.
By not monetizing these benefits moving forward, the Trump EPA is essentially saying there are no human health benefits to reducing air/toxic/climate pollution, improving drinking water quality, etc. 1/
Stay tuned in the coming weeks as we apply this model to analyze CCA’s impacts on U.S. competitiveness, GHG emissions, GDP, and government revenue, as well as the impacts on our trading partners. /n
My team at @emlab.ucsb.edu has been building a state-of-the-art global computable general equilibrium (CGE) trade model to evaluate the economic and climate implications—both for the U.S. and globally—of paired domestic and trade climate policies like CCA. 8/
Together, these three pillars provide a comprehensive system of carrots and sticks for both domestic and foreign producers.
CCA recognizes the challenges of domestic industrial decarbonization and the geopolitical opportunities of trade agreements. 7/
Pillar #3: Domestic decarbonization investments
CCA returns revenue from the domestic performance fee & carbon import tariffs through grants, loans, & rebates to accelerate US industrial decarbonization.
In this era of budget deficits, CCA provides climate spending in a budget-neutral package. 6/
Importantly, CCA waives the US carbon tariff if a trade partner adopts comparable domestic climate policy.
This is crucial, as it lays the groundwork for a US-led global climate club: a trade agreement that rewards domestic climate action with market access. 5/
Pillar #2: Carbon import tariff with climate club provisions
US decarbonization is of little use if the rest of the world doesn’t also act.
To level playing field, CCA imposes a carbon tariff on imports from countries that are dirtier on average than the U.S., at the same $60/ton CO2e rate. 4/
Pillar #1: Domestic performance fee
CCA applies a performance fee of $60/ton CO2e to U.S. firms that are dirtier than U.S. average. Firms that are cleaner than average face no fee.
This creates an incentive for dirtier firms to clean up, and for cleaner firms to stay ahead. 3/
Manufacturing is where climate policy meets global competition.
In some sectors, US is among cleanest (eg metals). In others US is falling behind (eg EVs, renewables).
CCA aims for US industries to be globally competitive while achieving GHG cuts at home and abroad through 3 pillars. 2/
Sen. Whitehouse, Rep. DelBene, & co-sponsors just introduced a revamped Clean Competition Act (CCA).
CCA is the most ambitious & meticulously crafted climate policy from this Congress. It lays a marker for what US policy looks like in this era of geopolitical competition. 1/
#climatesky #energysky
Our "Dodging Day Zero" paper is out in JEEA. We uncover how Cape Town avoided 2017's catastrophic drought. But in doing so, created longer term sustainability challenges and weakened the fiscal viability of public water. A lesson for the 1B living in drought vulnerable cities.
#climatesky #econsky
