Does Todd favor carbon taxes, cap-and-trade, both, or neither?

1. Does Todd favor carbon taxes, cap-and-trade, both, or neither? Carbon taxes Cap-and-trade Both Neither

2. What does Todd suggest doing with the revenue? Clean energy R&D Per-capita rebate Sales and business tax cuts Property tax cuts

3. How much would Todd’s proposal increase the value of gasoline? $0.03 per gallon $0.13 per gallon $0.23 per gallon $0.33 per gallon $3.33 per gallon

4. Climate Change Choices for Washington Uncertainty, Cost and Policy

5. Cost and Certainty in Climate Change • Addressing climate change involves some key assessments • What is the level of risk? • How certain are we of that risk? • Paul Krugman • “It’s true that scientists don’t know exactly how much world temperatures will rise if we persist with business as usual. But that uncertainty is actually what makes action so urgent. While there’s a chance that we’ll act against global warming only to find that the danger was overstated, there’s also a chance that we’ll fail to act only to find that the results of inaction were catastrophic.”

6. Cost and Certainty

7. How Can We Make Decisions? • IPCC Likely Temperature Scenarios • The scenarios with the greatest potential cost have the most uncertainty • Those scenarios have “fat tails” • But they also demonstrate that we know little about the relative forcing of CO2 and other climate elements

8. What are Implications? • Scientific Consensus and High Risk? • No. Risk comes from uncertainty. • Uncertainty indicates that much about the science of climate change is not understood. • Why Not Be Precautionary on Global Warming? • We are trying to maximize wellbeing • Spending trillions chasing ghosts is a waste • Could solve every one of these problems instead: • Malaria • Malnutrition • Worldwide childhood immunization • Provide rural water supply

9. The Market vs. Government • Hybrids v. Electric v. Hydrogen • California required zero emissions vehicles be sold by auto manufacturers • Now California has changed to meet the market • “California air regulators on Thursday gutted rules seeking to place tens of thousands of zero-emission vehicles on the road, instead ordering automakers to produce a fleet of cleaner-burning hybrids. The decision is expected to affect 12 other states -- including Washington -- that had adopted California's target for zero-emission vehicles, defined as those powered solely by batteries or hydrogen fuel cells.” – AP, March 27

10. Individual Choices Reduce Emissions • Seattle Kyoto Announcement • Announced that their efforts had met Kyoto targets • A closer look shows that market forces caused reductions • Economic forces caused much of the reduction • 5 percent improvement in fuel efficiency for cars • 10 percent reduction in CO2 from residential heating due to “economic reasons” • Market created reductions, not government policies • US CO2 emissions fell by 1.6 percent in 2006 while European CO2 emissions increased

11. Carbon Taxes • Are better at addressing uncertainty • “Because supply, demand, and regulatory conditions evolve unpredictably over time, quantity type regulations are likely to cause volatile trading prices of carbon emissions. Price volatility for allowances is likely to be particularly high because of the complete inelasticity of the supply of permits, along with the highly inelastic demand for permits in the short run.” • Are more Simple • Cap-and-Trade is likely to be gamed • Carbon offsets are likely to create cheating • Cost less to administer

12. Improving Lives Through Market Solutions