Archive for the ‘Thorning’ Category

Margo Thorning / ACCF to WVa. Conservative Foundation: we need a carbon tax and other policies to reduce greenhouse gas emissions

August 28th, 2009 No comments

Margo Thorning, Chief Economist and SVP at the influential American Council for Capital Formation (and director of research for its tax and environmental policy think tank (ACCF Center for
Policy Research) and managing director of its new international affiliate, the International Council for Capital Formation) has been a persistent and vocal long-term opponent of most climate change policy, so much so that she`s got her own “ExxonSecrets FactSheet” (alongside similar ones for ACCF). 

She`s also the author of widely-quoted studies of the costs of climate change legislation, and has been busy explaining the study jointly released earlier this month by ACCF and the National Association of Manufacturers that assesses the potential impact of the Waxman-Markey Bill on manufacturing, jobs, energy prices and our overall economy,

(The rollout of the study, executive summary, etc. are here; criticisms of the study`s assumption are here, here, here, here, here and here.)

All of which makes her remarks on August 25 at a “Cap and
Trade Town Hall meeting”
sponsored by the West Virginia Conservative Foundation (and reportedly the West Virginia Manufacturers Association as well) – to the effect that we DO need federal and global policies to reduce GHG emissions and to prepare to adapt to changes that we will be unable to forestall – even the more remarkable. 

I quote below from an August 27 report of Thorning`s remarks in the online version of The State Journal (emphasis added):

Thorning believes that climate change is happening, that it is at least
in part caused by human activity and that some type of policy to reduce
greenhouse gas emissions is warranted.

But while climate scientists recommend keeping atmospheric
concentrations of greenhouse gases below 450 parts per million to avoid
the very worst effects of climate change, Thorning said it’s too late
for that.

“We’re probably, because of China and India and developing countries,
going to have to adapt to a higher level of CO2 concentrations in the
atmosphere,” Thorning said in an interview before the event. “We might
be able to keep it to 550, but I think we better focus on adapting to a
changing environment.”

There is no rush in Thorning’s mind.

“CO2 stays in the atmosphere 100 years,” she said. “I think we can afford to take a thoughtful approach.”

Congress currently is considering a cap-and-trade program that would
place a cap on carbon emissions, issue permits that companies could
trade in an emissions market and then ratchet the cap down over time to
ensure emissions reductions.

Rather than a cap-and-trade program, Thorning advocates a carbon tax
that would put a price directly on greenhouse gas emissions and would
rise over time.

Now this might have startled her audience and readers here, but close observers might have noted that Thorning made a similar statement two years ago when, as I previously reported, she said in an interview that “Senator Lieberman and Warner are to be commended for their
efforts to reduce greenhouse gas emissions, because I think we’re all
united that that’s a goal we need to put a lot of resources into.

Thorning spoke further in West Virginia about why a carbon tax is preferable to cap and trade:

In general, economists say, a cap on greenhouse gas emissions gives
certainty about emissions but uncertainty about the price of emissions,
while a tax on the emissions gives certainty about the price but not
about the quantity.

Companies need that price certainty, Thorning said, so they can make investment decisions.

A study sponsored in part by the ACCF and released earlier this month
found that the program Congress is considering could reduce U.S. Gross
Domestic Product between 1.8 and 2.4 percent from a baseline projection
in 2030.

It did not compare the effects of a carbon tax.

Thorning also spoke of the need for revenue.

President Barack Obama initially planned to auction the cap-and-trade
emissions permits and to direct some of the proceeds to the development
of renewable energy sources and carbon capture and storage technology.

However, as the program has come to be structured, the permits would be
given for free to emitters in at least the first decade of the program.

A tax, Thorning said, would bring in those revenues and enable the
government to support the development and deployment of important

From a broader perspective, Thorning underlined the growth of emissions
in China, India and other emerging economies. She champions the
exchange in both directions of the most effective technologies to
reduce greenhouse gas intensiveness.

She pointed to the Major Economies Initiative housed in the U.S.
Department of State to foster cooperation among 17 countries that
represent 85 percent of greenhouse gas emissions.

The initiative can help promote business-to-business transactions like
one in which Caterpillar Inc. is turning methane captured at 60 Chinese
coal mines into electricity,
she said.

“So Caterpillar is making money on that, and we’re suppressing a gas
that’s even more harmful than CO2 — and the Chinese are getting
electricity,” she said. “There are about eight key areas like that that
have been identified in this Major Economies Initiative.”

Thorning believes that a gradually increasing U.S. carbon tax combined
with international cooperation on best practices is the least
economically disruptive approach to reducing greenhouse gas emissions
over time.

“Remember that economic growth and stronger economies allow people to
adapt to a changing environment,”
she said. “We have to keep our eye on
the bigger picture.”


What else does Thorning want to see done on climate policy?  In a presentation in June to the Midwest Energy and Climate Policy Conference in St. Louis, Thorning argued that practical strategies for reducing global greenhouse growth would include the following steps:

  • Use cost / benefit analysis before adopting policies
  • If U.S. puts a price on carbon emissions, a carbon tax is preferable to cap and trade
  • Reduce cost of U.S. energy investment through tax code improvement and incentives for non profits
  • Remove barriers to developing world’s access to more energy and
    cleaner technology by promoting economic freedom and market reforms
  • Increase R&D  for new technologies to reduce energy intensity, capture and store carbon, and develop new energy sources 
  • Promote nuclear power for electricity
  • Promote truly global solutions and consider expanding the Asia
    Pacific Partnership on Development with its focus on economic growth
    and technology transfer to other major emitters

These prescriptions expand on her November 2007 interview:

Q:So, if you were given the opportunity
to sort of write your own proposal of how the U.S. should reduce
emissions and not hurt itself economically, you’d go with the carbon

Margo Thorning: I would go with the
carbon tax and more incentives for new technology development. And I
would change the U.S. tax code, because we have the slowest
depreciation allowances for new energy investment of 12 countries that
we compared recently. We have very high capital costs for new
investment because depreciation is so slow and our effective tax rate
is very high, because our corporate tax rate is the highest in the
industrial world. So our companies are disadvantaged vis-à-vis our
trading partners because of our tax system.

This would seem to align Thorning`s views fairly closely with those of the still-villified Exxon, which has been a generous supporter of ACCF, and whose CEO Rex Tillerson is an express advocate of carbon taxes.  The nail-biting question is whether these voices are too little and too late in the game to steer the cap and trade pork train on to a more productive track.

Categories: ACCF, carbon pricing, Exxon, Thorning, Tillerson Tags: