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The Fake Factory That Pumped Out Real Money

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Re: The Fake Factory That Pumped Out Real Money

#81

Post by dredmorbius »

Alex3917 wrote: post #64
ThrustVectoring wrote: post #53

Earlier quoted context omitted.

Of course the goal isn't to punish polluters. It's to convince them to pollute less. This is why tax things and behaviors we don't want - to make it more expensive, so that there's less of it.

> It's to convince them to pollute less. That's not the goal. What matters is the total amount of pollution, not how much any individual pollutes.

Raising the price of a thing tends to reduce the quantity demanded.

There are perverse cases. Veblen and Giffen goods (higher prices increase consumption). But generally, the relationship holds.

A cap-and-trade or carbon tax system, to work, has to establish how much carbon can be emitted (I'm ignoring for the moment the argument that the answer may well be "none").

A tax or trade mechanism both invoke market mechanisms to allow individual carbon emitters or absorbers to determine how much activity they'll undertake, including seeking alternatives.

If a tax or C&T at a given level isn't sufficient, then the solution is to change the basis level. The result is still (in theory) achieved in the market.

You and ThrustVectoring are arguing two components of the same mechanism.

See also the Jevons Paradox: increasing efficiency (without also increasing prices) increases the amount of a good or resource consumed.

If you want less of something, raise its price. E.g., tax it.

Re: The Fake Factory That Pumped Out Real Money

#82

Post by dredmorbius »

jacquesm wrote: post #36
pmorici wrote: post #19

Earlier quoted context omitted.

"The interesting bit here is that is actually quite hard to figure out why what they did was illegal" I wouldn't go that far. Each RIN needs to correspond to some physical bio-fuel. They were generating RINS but not manufacturing the corresponding fuel. Seems like straight forward fraud. Now had they been actually making the fuel but then dumping it in the trash and just selling the RIN I agree it would be harder to…

You can't exactly affix a number to a specific gallon of bio-fuel. That's where the whole scheme goes off the rails, to create unique ids that only exist in spreadsheets with no 1-1 link to some quantity of product. It's a liquid, not a box of stuff.

Affixing numbers to specific units of fuel is actually pretty much precisely what happened under US Interior Secretary Harold Ickes and the "certificates of clearance" oil production quota system implemented by DOI and the Texas Railroad Commission (it confusingly neither regulated railroads nor was called by the sensible acronym, it's referred to as the TRO). This system was in place from 1933 until 1972, and effectively regulated the global price and supply of oil over that period. Absent some initial hiccups and a slightly market disruption known as World War II, the result was a phenomenally stable price and match of oil to global demand from 1945 - 1973.

Daniel Yergin covers this in detail in chapter 13 of his truly epic history of oil, The Prize (1992).

https://www.worldcat.org/title/prize-the-epic-quest-for-oil-...

Also:

https://tshaonline.org/handbook/online/articles/mlc03

https://www.law.cornell.edu/uscode/text/15/715f

And a good, concise overview of the history here: http://www.reuters.com/article/2015/01/29/us-usa-crude-stock...

Re: The Fake Factory That Pumped Out Real Money

#83

Post by murbard2 »

Alex3917 wrote: post #8
Pxtl wrote: post #3

Earlier quoted context omitted.

Yes, that's why most economists I've read seem to agree that carbon tax is better than co2 credit cap-and-trade systems - simpler and harder to game, flawed only because it includes the word "tax" which is unpalatable to the public.

A tax is actually vastly more complicated and easier to game. Remember, the goal is to cap emissions, not to raise money. When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target. Also, the point of cap and trade is that it lets societies meet their emi…

There is another advantage to cap and trade as opposed to tax.

With cap and trade, you may have a politically motivated allocation of emission rights initially, but it's a one-off transfer and soon enough they end up the hands of the people with the most productive use of emissions.

With a carbon tax, people will continuously expand resources in the form of lobbying to try and receive the proceeds of the tax. The government has to stay in the loop forever.

Re: The Fake Factory That Pumped Out Real Money

#84

Post by RockyMcNuts »

rayiner wrote: post #46
RockyMcNuts wrote: post #39

Earlier quoted context omitted.

How the eff does it work? Who gets the credits to start with? Why do you think the companies prefer cap-and-trade? of course it's more complicated to end up monitoring both the pollution and who owns what credits. the whole point of cap-and-trade is to avoid the word 'tax', and to create a vast rent-seeking system and potential for gaming the system, and make it politically palatable by paying off the people who migh…

The ethanol credits are linked to ethanol production.

my comment referred to a choice between carbon tax vs. cap-and-trade for reducing emissions, which seems unrelated to ethanol credits.

I just think taxing coal/oil/natural gas as it's produced and sold, based on how much carbon it contains, is easy and effective, enforcing a carbon credit system is hard and prone to shenanigans, fraud, corruption.

Economically they're essentially the same and the shenanigans are a massive bug. But politically, shenanigans are a feature.

Re: The Fake Factory That Pumped Out Real Money

#85

Post by shard972 »

edkennedy wrote: post #72

Other hilarious and frightening "business ideas" with US government issued carbon credits: Dumping giant piles of iron sulfate into the ocean in Northern Canada: http://www.timescolonist.com/news/local/haida-readying-for-s... Driving a train full of biodiesel across the border and back again numerous times while never unloading it: http://www.cbc.ca/news/canada/biofuel-credits-behind-mystery...

I tried to find a follow up to the iron sulfate story but couldn't find one, would be interesting to hear what happened.

Re: The Fake Factory That Pumped Out Real Money

#86

Post by josinalvo »

Nevermind the scam. How is the system supposed to work?

A company produces biodiesel and can sell, separately, the biodisel and the RIN. A fuel company can buy the RIN instead of biodiesel, and, in theory, that would mean that another fuel company bought the biodiesel, and is using more biodiesel and less petroleum. Correct?

What if, instead, the biodiesel is used in a previously non existent or previously carbon neutral industry? That does not seem to reduce pollution at all. How does the system prevent it? Does the system prevent it?

Re: The Fake Factory That Pumped Out Real Money

#87

Post by ars »

Retric wrote: post #66
Alex3917 wrote: post #50

Earlier quoted context omitted.

> An optimal tax system taxes things and behaviors we don't want Except for that the goal isn't to punish polluters, it's to get carbon to a level that won't result in the end of human civilization. By moralizing the issue you're just making it more likely that we won't get there.

But 'producers' are not the polluters, it's consumers driving cars that are polluting. The goal is not to punish everyone, it's to get them to make other choices.

> it's consumers driving cars that are polluting.

Cars are not the problem, there is no one thing that is the problem. Simply being alive and doing things uses energy, there is no way around that.

And BTW if you do the math a bicyclist (in the US, eating a typical US diet) emits more CO2 per mile than a small car. Assumptions: The bicyclist is riding in addition to any exercise, the riding is not exercise, and the bicyclist eats normal food. A bicyclist who prefers organic, or local, would definitely emit more (both of those emit more CO2 in the growing than regular food).

It's a surprising result, I know. But it's because humans are not very efficient in turning food energy into miles, and cars are reasonably efficient. It doesn't help that growing food takes a lot of energy, especially if you force yourself to only eat local, if you do that energy really goes up.

Re: The Fake Factory That Pumped Out Real Money

#88

Post by EnigmaticLion »

ars wrote: post #87
Retric wrote: post #66

Earlier quoted context omitted.

But 'producers' are not the polluters, it's consumers driving cars that are polluting. The goal is not to punish everyone, it's to get them to make other choices.

> it's consumers driving cars that are polluting. Cars are not the problem, there is no one thing that is the problem. Simply being alive and doing things uses energy, there is no way around that. And BTW if you do the math a bicyclist (in the US, eating a typical US diet) emits more CO2 per mile than a small car. Assumptions: The bicyclist is riding in addition to any exercise, the riding is not exercise, and the bi…

Source? This study says bicycling is way better than cars: http://bikeportland.org/2011/12/12/new-study-compares-bicycl...

Re: The Fake Factory That Pumped Out Real Money

#89

Post by emp_zealoth »

EnigmaticLion wrote: post #88
ars wrote: post #87

Earlier quoted context omitted.

> it's consumers driving cars that are polluting. Cars are not the problem, there is no one thing that is the problem. Simply being alive and doing things uses energy, there is no way around that. And BTW if you do the math a bicyclist (in the US, eating a typical US diet) emits more CO2 per mile than a small car. Assumptions: The bicyclist is riding in addition to any exercise, the riding is not exercise, and the bi…

Source? This study says bicycling is way better than cars: http://bikeportland.org/2011/12/12/new-study-compares-bicycl...

I would be rather wary of bike endorsing studies posted on sites called "bikesomething" just as I would be wary of "rightwingnut.com" publishing studies on immigration or any other contentious issue.

Re: The Fake Factory That Pumped Out Real Money

#90

Post by aoeuasdf1 »

winstonewert wrote: post #60
fsargent wrote: post #18

Earlier quoted context omitted.

Cap and Trade and a Carbon Tax are equivalent in outcome. Cap and trade would impose fees on everyone regardless of how much it costs them to lower emissions also. The problem with Cap and Trade is that it targets the large scale emitters rather than the item desired to be limited. Imagine that you had five major producers putting out 30% of airborne carbon, and 50,000 minor producers putting out 70%. The cost of adm…

"The cost of administering a cap and trade system to the minor producers would be incredibly expensive - the legislation would instead focus on gouging the five major producers" Why is that different from the tax approach? Wouldn't taxing the 50,000 minor producers appropriate to their levels of pollution be equally as expensive?

No, if they're producing by buying oil or coal. Just tax the source.
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