Global Issues >> Global Warming

Global Warming

Trading Emission Rights

The level of additional energy costs most Americans find acceptable is sufficient to fulfill the requirements of the Kyoto Treaty (according to US government estimates), but only if the US can get credit for purchasing emission rights from other countries. When Americans are presented the idea of such an emissions trading regime, initially the majority responds negatively. However, when Americans are presented arguments on both sides of the issue as well as the actual cost tradeoffs, a strong majority favors such a regime.

According to US government estimates, by increasing energy costs the amount most respondents said was acceptable -- $25 per month per household -- the US would be able to fulfill its Treaty requirements. However, this would only be true if the treaty allows the US to fulfill its requirements by also buying emissions rights from other countries where it is cheaper to control emissions, rather than making all the cuts in the US (See Appendix B).

However, in the April 1998 PIPA poll, most respondents reacted negatively when presented with the idea of such an emission rights trading regime.[1]

Other polls have also found a decided lack of enthusiasm for the idea. In the August 1997 Mellman poll, respondents were presented with a list of possible means to deal with global warming. One proposal was for the UN to "establish a worldwide limit on carbon dioxide emissions that is lower than current levels," with each member country "allocated the right to discharge a certain amount ... Countries could buy and sell these pollution rights to one another. This would allow them to choose between reducing their carbon dioxide emissions or paying to continue to pollute." Fifty-six percent opposed this idea, and 32% favored it. [2] Domestic emissions trading systems do not do much better.75 In the Mellman poll, when a proposal was presented for having a US domestic emissions trading rights system, support was about the same -- 57% were opposed and 29% favored.[3]

However, other poll questions show Americans expressing more uncertainty about how they feel about such trading rights regimes. In a November 1997 New York Times poll, respondents were presented the idea of a domestic trading rights system as follows:
The government would issue permits that allow companies to give off a certain amount of greenhouse gases. Companies that do better than required would be allowed to sell at a profit their leftover permits to companies that do worse than required. These permits would give companies a financial reason to reduce their emissions of greenhouse gases. Do you think that is a good idea, a bad idea, or don't you know enough about it to say?
Forty-nine percent said they didn't know enough, 15% thought it a good idea and 17% thought it a bad idea.[4] Also, when asked to choose between a market-based approach and the standard alternative of a government regulatory approach, the public does not take a clear position. The August 1997 Mellman poll asked, "In trying to reduce the threat of global warming, do you think we should rely mainly on strict regulations to limit emissions of carbon dioxide, or do you think we should rely mainly on incentives that will cause the free market to discourage carbon dioxide pollution?" Neither way won majority support. Thirty-seven percent chose "strict regulations," while 32% chose market incentives (9% were undecided, 21% didn't know).[5]

Evaluating Pro and Con Arguments

To delve deeper into the public's attitudes, in October 1998 PIPA first presented respondents with a series of pro and con arguments for the general principle of the US getting credit toward its treaty requirements by making reductions in other countries where it is cheaper to do so (sometimes called 'flexible implementation'). Despite the initial negative reaction to an emission rights trading regime (a form of flexible implementation), the pro arguments as well as the con arguments received majority endorsements. This suggests that the issue elicits conflicting values in respondents and that the public has not come to a clear judgment on the issue.

Consistent with the initial resistance to the idea, an overwhelming majority of 79% found convincing the argument "The US is emitting more greenhouse gases than any other country. To try to buy our way out of the responsibility to clean up our share of the problem just isn't right."[6] Seventy-four percent also found convincing the argument "Instead of spending our money to clean up air in other countries, we should clean up our own air and get these benefits here at home."[7]

However, the arguments in favor of a trading regime were nearly as strong. An overwhelming 75% found convincing the argument in support of making reductions in developing countries because "If we help [the developing countries] start out with cleaner, more efficient technology now, it will be better for the world environment in the future."[8] Interestingly, a weaker majority (56%) found convincing the more self-interested argument that "Fulfilling the requirements of the Kyoto Treaty will increase the costs of energy and this will create hardships for some Americans. If we get credit for reducing emissions where it can be done most efficiently this will save Americans money on their energy bills."[9]

Including Cost Tradeoffs

Naturally, it is not possible for respondents to fully evaluate the idea of making reductions in developing countries over making them in the US without attaching some economic assumptions. If nothing else, the ancillary benefits of making the reductions at home (e.g., cleaner air) make it more attractive unless the increased costs are significant. Using costs derived from a number of current estimates (see Appendix A), PIPA presented respondents with the following question that asked them to consider the question in the context of the economic tradeoffs entailed. By a three-to-one margin, the cheaper option with reductions made in the developing countries was preferred.[10]

Respondents were subsequently presented different ideas for how to structure a flexible implementation regime for crediting developed countries for making reductions elsewhere. Once the majority of respondents had embraced the principle of flexibility, most also embraced the idea of an emissions trading regime.[11]

Respondents were also presented another possibility for a flexible implementation regime that did not involve trading emissions rights but rather worked through a UN agency. Support was slightly lower, but still constituted a majority:
First a UN agency would determine how much it would cost to reduce emissions in less developed countries. Assuming this would be a less expensive way to make reductions, more developed countries could meet some of their treaty obligations by contributing to the UN agency. The UN agency would use the money to make reductions in the less developed countries.
Fifty-nine percent found this an attractive idea, with 32% opposed.[12]

A related idea was also presented in the August 1997 Mellman poll and was found appealing, even when the cost benefits were not previously spelled out. Sixty-seven percent favored "requir[ing] companies to pay for the right to pollute at lower levels than they do now and use the money raised to develop new technologies that will reduce carbon dioxide emissions even further," while only 27% were opposed.[13] While this is not precisely an emissions trading regime, it is a form of flexible implementation. Presumably, this idea was particularly attractive because it emphasized developing new technologies. Clearly, the way that such an idea is framed is critical to its acceptance or rejection.