1 00:00:02,100 --> 00:00:06,000 You're listening to the reversing climate change podcast 2 00:00:06,000 --> 00:00:10,400 by Nori the world's first carbon removal Marketplace here. 3 00:00:10,400 --> 00:00:13,300 Are your hosts Ross Kenyon and Kristoff. 4 00:00:13,300 --> 00:00:16,500 Jospeh. Hello. 5 00:00:16,500 --> 00:00:19,100 Welcome to the reversing climate change podcast with Nori. 6 00:00:19,100 --> 00:00:21,500 I'm Ross Kenyan here with Kristoff Jaws Bay and Paul 7 00:00:21,500 --> 00:00:23,800 gamble in the Seattle Nori office. 8 00:00:24,000 --> 00:00:26,800 We're here today with Alden Donnelly the director of carbon 9 00:00:26,800 --> 00:00:29,800 economics for Nori and we are talking about cap and trade. 10 00:00:30,000 --> 00:00:33,000 And the carbon tax we get a lot of questions about what we think 11 00:00:33,000 --> 00:00:35,800 might be problems with these why don't they seem to work as well 12 00:00:35,800 --> 00:00:38,900 as we would hope that they would and we're Nori things that we 13 00:00:38,900 --> 00:00:41,800 can do better would you say that's a fair summation here 14 00:00:41,800 --> 00:00:46,800 Christoph, I think so only only think that because I think Alden 15 00:00:46,800 --> 00:00:50,100 is director of so much more and it's not just carbon economics. 16 00:00:50,100 --> 00:00:52,500 So we probably should reconsider her title. 17 00:00:52,600 --> 00:00:55,800 I mean that impetus behind this podcast is there's a foreign 18 00:00:55,800 --> 00:00:59,900 affairs article why carbon prices isn't working and we 19 00:01:00,000 --> 00:01:02,400 Response and then we read it and then we said no this is way too 20 00:01:02,400 --> 00:01:04,099 nuanced. No one's actually going to read 21 00:01:04,099 --> 00:01:06,100 this we would get a lot more bang for our buck. 22 00:01:06,100 --> 00:01:09,500 If we just did a podcast with probably the most knowledgeable 23 00:01:09,500 --> 00:01:13,100 person in the world who we are humbled to have sitting across 24 00:01:13,100 --> 00:01:14,900 from us. We're trying to make her blush 25 00:01:15,300 --> 00:01:17,700 it slightly working looks like a little bit. 26 00:01:17,700 --> 00:01:19,000 Yeah. Okay. 27 00:01:19,000 --> 00:01:20,600 So, where do we start? Should we start with saying 28 00:01:20,600 --> 00:01:22,200 Alden? Did you read that article? 29 00:01:22,200 --> 00:01:26,900 I did. Okay, so we read this Foreign 30 00:01:26,900 --> 00:01:28,900 Affairs. Peace, and we responded to it, 31 00:01:28,900 --> 00:01:31,200 but it was a little too. Complicated I wouldn't make a 32 00:01:31,208 --> 00:01:33,700 good newspaper piece that you always need a really strong lead 33 00:01:33,700 --> 00:01:35,400 there. You can't have me wants in a 34 00:01:35,400 --> 00:01:38,200 newspaper unless it's like the New Yorker where you have 10,000 35 00:01:38,200 --> 00:01:40,600 15,000 words, like that's where it goes. 36 00:01:40,800 --> 00:01:42,800 So we thought it'd be easier to do a podcast here and this 37 00:01:42,800 --> 00:01:45,800 article covers the history of various carbon markets cap and 38 00:01:45,800 --> 00:01:47,900 trade markets and why they haven't always done. 39 00:01:47,900 --> 00:01:51,900 So well covers what Europe and California I can remember the 40 00:01:51,908 --> 00:01:53,400 other ones that made it back in Ontario. 41 00:01:53,500 --> 00:01:55,500 Did they discuss it in great detail there. 42 00:01:55,800 --> 00:01:57,800 I don't think it was. Yeah, no talked about China's 43 00:01:57,800 --> 00:01:58,500 Market. Come on. 44 00:01:58,500 --> 00:01:59,800 I want to shine. So that was a big one. 45 00:02:00,000 --> 00:02:02,900 To yeah, and I remember when I first got into this space and I 46 00:02:02,900 --> 00:02:06,100 started looking at markets. I didn't understand why but my 47 00:02:06,100 --> 00:02:08,900 sort of spider-sense one off and I thought intuitively it just 48 00:02:08,900 --> 00:02:11,200 doesn't make sense. This is not the most effective 49 00:02:11,200 --> 00:02:14,300 way to address emissions and part of that comes from very 50 00:02:14,300 --> 00:02:16,800 simple arithmetic that I learned from Klaus lackner. 51 00:02:16,900 --> 00:02:19,700 Who said well if you put a ton of carbon into the atmosphere it 52 00:02:19,700 --> 00:02:21,200 stays there for hundreds of years. 53 00:02:21,200 --> 00:02:23,700 And so you need to put another tongue back and then what I 54 00:02:23,700 --> 00:02:26,700 thought all right, well money of emitters needs to go to people 55 00:02:26,700 --> 00:02:29,500 who are putting tons back and we could have always started there 56 00:02:29,700 --> 00:02:33,900 and That's the premise by which Nori is operating and probably 57 00:02:33,900 --> 00:02:36,800 the hook through which we were able to attract Alden to take 58 00:02:36,800 --> 00:02:38,600 these young bright-eyed Millennials. 59 00:02:38,600 --> 00:02:41,200 Seriously that like, oh these guys are onto something. 60 00:02:41,200 --> 00:02:44,100 This is the right way to start even though obviously emitting 61 00:02:44,100 --> 00:02:46,400 carbon dioxide into the atmosphere isn't as simple as 62 00:02:46,400 --> 00:02:48,700 just canceling it out. You need to do things like 63 00:02:48,700 --> 00:02:51,200 reduce emissions and replace emissions and all these 64 00:02:51,200 --> 00:02:54,800 important things but the fundamental challenge is markets 65 00:02:54,800 --> 00:02:57,400 have been set up to do pricing mechanisms that have not worked. 66 00:02:57,400 --> 00:02:59,800 They've merely shifted around emissions. 67 00:03:00,000 --> 00:03:03,700 One place to another all the while CO2 is accumulating into 68 00:03:03,700 --> 00:03:05,400 the atmosphere. That was a mouthful. 69 00:03:05,400 --> 00:03:09,500 So Alden Where Do We Begin? I think I want to start by 70 00:03:09,500 --> 00:03:12,900 saying I was certainly on the team that thought cap and trade 71 00:03:12,900 --> 00:03:16,600 was the right answer and when I formed through experience the 72 00:03:16,600 --> 00:03:19,400 opinion that cap and trade isn't the right answer being a well 73 00:03:19,400 --> 00:03:22,300 trained Economist. I assume that taxing carbon 74 00:03:22,300 --> 00:03:25,600 would be the right answer and it didn't take me very long to look 75 00:03:25,600 --> 00:03:28,700 at the history to see it wasn't the right answer it took me a 76 00:03:28,700 --> 00:03:31,800 long long time. Time to start forming opinions 77 00:03:31,800 --> 00:03:33,700 about why it wasn't the right answer. 78 00:03:33,700 --> 00:03:37,600 So all I've got to say is if everybody out there that just 79 00:03:37,600 --> 00:03:40,400 started thinking taxing carbon was the right answer a couple of 80 00:03:40,400 --> 00:03:43,000 years ago figures out. It's the wrong answer in the 81 00:03:43,000 --> 00:03:45,100 next couple of years. That just makes them five times 82 00:03:45,100 --> 00:03:47,400 smarter than me because it took me so long. 83 00:03:48,000 --> 00:03:51,500 So we love our listeners. They're very Savvy but if I say 84 00:03:51,500 --> 00:03:54,100 cap-and-trade to my mother who might be listening she doesn't 85 00:03:54,100 --> 00:03:57,100 have the slightest clue. So what is cap and trade cap and 86 00:03:57,108 --> 00:03:59,800 trade is something that's familiar to people. 87 00:04:00,300 --> 00:04:03,900 In countries that have dairy quotas regimes it's a quota base 88 00:04:03,900 --> 00:04:06,400 Supply management regime. So that was what we talked about 89 00:04:06,400 --> 00:04:07,900 last podcast, right? Okay. 90 00:04:07,900 --> 00:04:13,000 Yeah, and so basically governments decide to create a 91 00:04:13,000 --> 00:04:16,300 limited amount of entitlements to discharge CO2 to the 92 00:04:16,300 --> 00:04:19,500 atmosphere. And then if you look back at the 93 00:04:19,500 --> 00:04:24,600 44 presidents that I've looked at since 1978, they give away 94 00:04:24,600 --> 00:04:29,500 freely 90 to 98 percent of those entitlements to large emitters. 95 00:04:29,900 --> 00:04:34,400 And they create a quota Supply in every president up to and 96 00:04:34,400 --> 00:04:37,400 including but not uniquely the California cap and trade market 97 00:04:37,400 --> 00:04:41,600 a supply of quota that is well in excess of the maximum 98 00:04:41,600 --> 00:04:45,300 physical capacity of the covered operators to emit. 99 00:04:45,600 --> 00:04:48,900 So you start with an oversupply and it gets bigger and bigger 100 00:04:48,900 --> 00:04:51,600 and bigger over time and the markets crashed typically within 101 00:04:51,600 --> 00:04:56,500 seven years or less to put more color into it a government that 102 00:04:56,500 --> 00:04:59,800 is implementing a cap-and-trade scheme tells, okay. 103 00:04:59,900 --> 00:05:02,500 You regulated entities. So these are like energy 104 00:05:02,500 --> 00:05:05,800 producers or people in the transportation industry 105 00:05:05,800 --> 00:05:08,300 manufacturing industry that sort of thing and they say, all 106 00:05:08,300 --> 00:05:09,700 right. There's a cap on the number of 107 00:05:09,700 --> 00:05:12,400 emissions that you're allowed to emit every single year. 108 00:05:12,700 --> 00:05:16,000 We're going to give you these allowances or entitlements as 109 00:05:16,000 --> 00:05:20,200 Alden said one of them represents one ton of greenhouse 110 00:05:20,200 --> 00:05:24,400 gases CO2, and you're allowed to emit up to that many are allowed 111 00:05:24,400 --> 00:05:29,800 to use these allowances for your emissions and if you go over, 112 00:05:29,900 --> 00:05:33,100 Over that amount then you need to acquire more allowances from 113 00:05:33,100 --> 00:05:34,700 someone who has a surplus of them. 114 00:05:34,800 --> 00:05:36,800 Now. If you go over that amount, 115 00:05:36,800 --> 00:05:39,500 let's say you're given a hundred allowances in the year. 116 00:05:39,500 --> 00:05:41,100 You're allowed to MIT a hundred tons. 117 00:05:41,300 --> 00:05:44,800 You have a few different options for how you might deal with that 118 00:05:44,800 --> 00:05:48,600 as you operate your business one way in this is the preferred way 119 00:05:48,600 --> 00:05:52,400 of the people who set up these markets is that you take some 120 00:05:52,400 --> 00:05:55,700 sort of action to reduce the overall amount of emissions in 121 00:05:55,700 --> 00:05:58,800 your operations or supply chain. That's a Bateman's right 122 00:05:58,800 --> 00:05:59,600 abatements. Yes. 123 00:05:59,900 --> 00:06:02,800 Yeah, so if you're an energy producer, they want you 124 00:06:02,800 --> 00:06:05,700 investing in Renewables and trying to get your energy 125 00:06:05,700 --> 00:06:09,500 customers to switch over to better conservation methods more 126 00:06:09,500 --> 00:06:12,000 efficient appliances better light bulbs that sort of thing 127 00:06:12,400 --> 00:06:14,800 you can only do so much with that though. 128 00:06:15,000 --> 00:06:18,500 And so the other opportunities that you have our options, you 129 00:06:18,508 --> 00:06:22,500 have our to purchase more allowances from either people 130 00:06:22,500 --> 00:06:26,700 who have a surplus or in some cases purchase them from the 131 00:06:26,700 --> 00:06:28,900 issuing entity. So from the government they'll 132 00:06:28,900 --> 00:06:31,600 auction off. Additional allowances if people 133 00:06:31,600 --> 00:06:36,300 can buy you can also buy carbon offsets and this is a really 134 00:06:36,300 --> 00:06:39,200 important thing for people to understand because the carbon 135 00:06:39,200 --> 00:06:42,300 offsets are not the same thing as allowance its carbon offset 136 00:06:42,300 --> 00:06:47,100 projects are certified by different entities, like verify 137 00:06:47,100 --> 00:06:50,100 carbon standard climate action Reserve gold standard and so on 138 00:06:50,300 --> 00:06:53,400 and there are projects that are either doing some sort of carbon 139 00:06:53,400 --> 00:06:55,700 avoidance. So that could be building a wind 140 00:06:55,700 --> 00:06:59,700 farm some sort of abatement. I project a dairy digester or 141 00:06:59,900 --> 00:07:02,400 Planting trees. There are literally hundreds of 142 00:07:02,407 --> 00:07:06,600 different ways that people might do an offset project in markets 143 00:07:06,600 --> 00:07:11,000 like California, for example, they have a maximum amount of 144 00:07:11,000 --> 00:07:13,900 percentage of meeting their obligation that they're allowed 145 00:07:13,900 --> 00:07:18,100 to use by purchasing offsets. And I think it's 8% in 146 00:07:18,100 --> 00:07:20,900 California. It's 8% but that works down to 147 00:07:20,900 --> 00:07:23,600 4% because there's a complicated formula. 148 00:07:23,600 --> 00:07:25,600 So the government is saying, all right. 149 00:07:25,600 --> 00:07:28,300 You have a surplus you need to buy something. 150 00:07:28,300 --> 00:07:29,700 You need to buy either allowances. 151 00:07:29,800 --> 00:07:34,000 Has or offsets to represent the amount that you've gone over 152 00:07:34,000 --> 00:07:37,800 your cap, but we're only going to let you buy a certain amount 153 00:07:37,800 --> 00:07:41,100 of them in terms of offsets forcing you to buy the rest of 154 00:07:41,100 --> 00:07:43,900 them in allowances. And the reason that they do that 155 00:07:43,900 --> 00:07:47,900 is because it's important that the price of the allowances stay 156 00:07:47,900 --> 00:07:49,200 high. So the government is trying to 157 00:07:49,200 --> 00:07:53,100 create demand for these allowances and if you think 158 00:07:53,100 --> 00:07:56,500 about it, if you were an energy producer in your an emitter in 159 00:07:56,500 --> 00:07:59,000 your forced to buy these things and you have the option of 160 00:07:59,000 --> 00:08:01,800 buying allowed. Is which are not actually 161 00:08:01,800 --> 00:08:05,600 representing any reduction in emissions or you have the option 162 00:08:05,600 --> 00:08:09,300 of buying a carbon offset project that is a real project. 163 00:08:09,300 --> 00:08:12,100 There's a narrative to it. It created jobs. 164 00:08:12,200 --> 00:08:15,000 It might have had some other co-benefits that helped local 165 00:08:15,000 --> 00:08:17,700 community around it. You can go tell a story it can 166 00:08:17,700 --> 00:08:21,000 affect your PR strategy like which one would you prefer to 167 00:08:21,000 --> 00:08:22,900 buy the one? That's real? 168 00:08:23,000 --> 00:08:24,700 Yeah. How did you Alden was that 169 00:08:24,700 --> 00:08:26,800 pretty good? It was pretty good to give them 170 00:08:26,800 --> 00:08:29,000 a or b. Well, I would say there's a bit 171 00:08:29,000 --> 00:08:31,000 of a difference. Between the theory and the 172 00:08:31,000 --> 00:08:32,799 reality. So when you read about cap and 173 00:08:32,799 --> 00:08:35,600 trade or you go see the educational videos or the 174 00:08:35,600 --> 00:08:40,000 basically the story you get is everybody who's a large emitter 175 00:08:40,000 --> 00:08:43,900 receive so many quota units entitlements and if they reduce 176 00:08:43,900 --> 00:08:47,500 their emissions and don't use all their quota they can sell 177 00:08:47,500 --> 00:08:50,700 real interest in that emission reduction to somebody else. 178 00:08:51,000 --> 00:08:56,400 So the theory is that when I buy an allowance or quota unit from 179 00:08:56,400 --> 00:09:01,100 you you've reduce the emission and you're selling The right to 180 00:09:01,100 --> 00:09:03,500 add more one more time because you've over complied with your 181 00:09:03,500 --> 00:09:05,100 limit. What's the problem? 182 00:09:05,100 --> 00:09:09,800 The problem is in that 43 out of 44 cap and trade systems that 183 00:09:09,800 --> 00:09:13,000 have been launched to control pollution. 184 00:09:13,000 --> 00:09:18,200 So not just CO2 but SO2 when smog precursors worldwide and 185 00:09:18,200 --> 00:09:22,300 that's me counting the European system as one as opposed to 27 186 00:09:22,500 --> 00:09:27,000 in every precedent the government supplies way more 187 00:09:27,000 --> 00:09:32,500 quota than everybody needs. So for the first five years of 188 00:09:32,500 --> 00:09:35,100 every quota regime including the u.s. 189 00:09:35,100 --> 00:09:38,800 SO2 Market, which people talk about is a great success story 190 00:09:39,100 --> 00:09:42,900 the pollution entitlement rights that you're buying don't have 191 00:09:42,900 --> 00:09:46,600 any pollution reduction behind them is it's just politics is 192 00:09:46,600 --> 00:09:48,800 that why they oversupply of they're worried about polluters 193 00:09:48,800 --> 00:09:52,200 are going to balk at the whole system took me a long time to 194 00:09:52,200 --> 00:09:54,700 understand the history. When you go back to the very 195 00:09:54,700 --> 00:09:59,000 first cap and trade regimes it made sense when you went to the 196 00:09:59,000 --> 00:10:02,700 very first regime. Eames legislators realize that 197 00:10:02,700 --> 00:10:07,800 in roughly 40 States property law is state law not federal the 198 00:10:07,800 --> 00:10:10,800 United States that if you adopted a regulation that 199 00:10:10,800 --> 00:10:14,500 essentially expropriated property rights the government 200 00:10:14,500 --> 00:10:17,200 might have to compensate the asset owner. 201 00:10:17,300 --> 00:10:21,000 This is eminent domain. Yes, and so when they were 202 00:10:21,000 --> 00:10:25,100 contemplating putting in these limited entitlements declining 203 00:10:25,100 --> 00:10:30,000 over time entitlements to emit pollution, obviously that That 204 00:10:30,000 --> 00:10:32,900 is over time if fully implemented is going to cause a 205 00:10:32,908 --> 00:10:35,800 reduction in the market value of the assets that can't fully 206 00:10:35,800 --> 00:10:37,800 operate without full entitlements because they have 207 00:10:37,800 --> 00:10:39,500 an eminent domain case that prevents. 208 00:10:39,500 --> 00:10:43,100 So when the very first cap and trade regimes came in place the 209 00:10:43,100 --> 00:10:49,200 government said how do we design this so that when we have the 210 00:10:49,200 --> 00:10:53,100 quota Supply declining tightly enough that there's an eminent 211 00:10:53,100 --> 00:10:57,000 domain issue. We had provided enough early 212 00:10:57,000 --> 00:10:59,600 additional income in the oversupply. 213 00:10:59,800 --> 00:11:03,200 To compensate have compensated them so that we don't have to 214 00:11:03,200 --> 00:11:06,900 compensate the neck. It was our rational decision. 215 00:11:07,000 --> 00:11:11,300 It was a logical decision. But what happened in every cap 216 00:11:11,300 --> 00:11:15,200 and trade regime without exception so far every time they 217 00:11:15,200 --> 00:11:17,800 got to that point where the allowance Supply was supposed to 218 00:11:17,808 --> 00:11:20,500 tighten up everything stopped seahorse, right? 219 00:11:20,500 --> 00:11:24,800 Because I now have to actually do the expensive and hard things 220 00:11:24,800 --> 00:11:26,800 and I don't want to and I'm going to complain to the 221 00:11:26,800 --> 00:11:29,200 government and the government will listen to me because I'd 222 00:11:29,200 --> 00:11:31,800 say I'm going to Take my jobs elsewhere and I've learned that 223 00:11:31,800 --> 00:11:33,900 you know responsible well-meaning people that are 224 00:11:33,900 --> 00:11:36,800 designing cap and trade markets today actually don't know that 225 00:11:36,800 --> 00:11:40,600 history that there was actually logic embedded in the idea of 226 00:11:40,600 --> 00:11:43,500 oversupply in the Market at first but it only works out if 227 00:11:43,500 --> 00:11:47,000 you stick with the commitment to tighten up the supply quickly. 228 00:11:47,300 --> 00:11:49,600 It's politically too hard to do that. 229 00:11:49,600 --> 00:11:53,000 So the captain is too hard to do that happen trade may work as an 230 00:11:53,008 --> 00:11:56,300 idea and a policy if the politics could work, but you 231 00:11:56,308 --> 00:11:59,600 think the politics just when it comes time to tighten the belts. 232 00:11:59,800 --> 00:12:03,200 it's politically unpalatable it will not happen I actively 233 00:12:03,200 --> 00:12:06,500 actively was probably one of the earliest and most aggressive 234 00:12:06,500 --> 00:12:09,600 leaders in the world advocating for cap and trade for 15 years 235 00:12:09,600 --> 00:12:12,100 because I thought it could be made to work and I had to give 236 00:12:12,100 --> 00:12:16,500 up so go ahead yeah admitting you're wrong means you're a 237 00:12:16,500 --> 00:12:20,800 weaker person I think I've been doing this thing where I 238 00:12:20,808 --> 00:12:23,400 interrupt a lot and I've just got to get my words in their 239 00:12:23,400 --> 00:12:26,300 first I think I've spoken 9 of the dominatrix you right now if 240 00:12:26,300 --> 00:12:30,400 you've earned it okay so you said forty three out of 44 so 241 00:12:30,400 --> 00:12:33,100 there's one market that work it's a market that the Brokers 242 00:12:33,100 --> 00:12:36,800 hate and is operated continuously from 1992 through 243 00:12:36,800 --> 00:12:41,800 March 2017 and it was the reclaim cap-and-trade Market in 244 00:12:41,800 --> 00:12:45,800 the Los Angeles area so tell us about that how did it and also 245 00:12:45,800 --> 00:12:50,100 Define what working means people also need to understand that 246 00:12:50,100 --> 00:12:54,000 when we talk about creating a market that functions means that 247 00:12:54,000 --> 00:12:57,600 you have suppliers and there's some sort of demand or buyers 248 00:12:57,600 --> 00:13:02,100 for whatever the asset is there Exchanging and if you look at 249 00:13:02,100 --> 00:13:07,000 say the California Market the demand for these allowances it's 250 00:13:07,000 --> 00:13:10,200 resulted in a situation where the government had to Institute 251 00:13:10,200 --> 00:13:13,500 a price floor. And if you look at the trading 252 00:13:13,500 --> 00:13:16,800 price of the allowances in the California markets from the very 253 00:13:16,800 --> 00:13:18,200 beginning it started out pretty high. 254 00:13:18,200 --> 00:13:21,100 I think somewhere around $22 based on speculation. 255 00:13:21,100 --> 00:13:24,200 It dropped down to very very low somewhere around a dollar and 256 00:13:24,200 --> 00:13:27,300 then it goes up every year on a step function that's clearly 257 00:13:27,300 --> 00:13:30,100 showing that people aren't valuing these above Whatever the 258 00:13:30,100 --> 00:13:33,900 price floor is that set by the government operators, which 259 00:13:33,900 --> 00:13:36,900 means that you don't really have a functioning Market well and 260 00:13:36,900 --> 00:13:40,500 just to going to California before I go back to what working 261 00:13:40,500 --> 00:13:43,900 look like in reclaim. The state of California has 262 00:13:43,900 --> 00:13:48,500 considered and adopted some procedures to somehow reduce 263 00:13:48,500 --> 00:13:52,000 Supply including tightening up the limits on how many offset 264 00:13:52,000 --> 00:13:56,300 credits you can use so that the allowances that are Surplus have 265 00:13:56,300 --> 00:13:59,400 greater demand but the state of California there are two things 266 00:13:59,400 --> 00:14:03,600 that are Who in their last auction as a result of some of 267 00:14:03,600 --> 00:14:07,700 these tightening up procedures after a number of auctions where 268 00:14:07,700 --> 00:14:11,000 they didn't sell out all of the allowances that were for sale. 269 00:14:11,000 --> 00:14:14,200 They did sell out current vintage allowances in the last 270 00:14:14,200 --> 00:14:18,600 couple of auctions, but the market bought less than 60% of 271 00:14:18,600 --> 00:14:20,900 all of the future vintage allowances, they put up for 272 00:14:20,900 --> 00:14:23,400 sale. So the market saying I don't see 273 00:14:23,400 --> 00:14:27,900 these allowances having this year did really well, but 2019 274 00:14:27,900 --> 00:14:30,700 2020 20 did really bad. Um 60% Yeah. 275 00:14:31,000 --> 00:14:33,400 Yeah. Yeah, and that's a normal Market 276 00:14:33,400 --> 00:14:36,700 response the other thing and there's another not so positive 277 00:14:36,700 --> 00:14:39,200 lesson in reclaim. The California state's own 278 00:14:39,200 --> 00:14:42,900 advisers are saying that with all of the adjustments they've 279 00:14:42,900 --> 00:14:46,000 made to improve the supply-demand imbalance. 280 00:14:46,100 --> 00:14:50,900 The market will be sitting on a bank of at least 290 million 281 00:14:51,100 --> 00:14:56,000 unused allowances by 2020. So the question is are they 282 00:14:56,000 --> 00:14:59,600 actually willing to cut back the free allocations the issue? 283 00:14:59,700 --> 00:15:04,300 Year after 2021 to bleed out that stockpile of 290 million 284 00:15:04,300 --> 00:15:08,500 allowances while historically going back to 1978 43 out of 44 285 00:15:08,500 --> 00:15:11,300 times that a government was facing that challenge. 286 00:15:11,300 --> 00:15:15,300 They abandoned the cap and trade regime rather than fix it. 287 00:15:15,300 --> 00:15:18,000 So they're all these unsold allowances and they're 288 00:15:18,000 --> 00:15:22,000 continuing to create new ones every year for free and giving 289 00:15:22,000 --> 00:15:25,500 them out and you're suggesting that what they need to do is 290 00:15:25,500 --> 00:15:29,300 stop giving out so many for free so that the people who have to 291 00:15:29,300 --> 00:15:32,500 buy a Allowances buy them from this extra Surplus. 292 00:15:32,500 --> 00:15:35,500 They have to come up with a strategy to do with the Surplus 293 00:15:35,500 --> 00:15:40,900 again, politically your choices become impossible choices and 294 00:15:40,900 --> 00:15:46,400 reclaim the market that did operate for 25 years made a 295 00:15:46,400 --> 00:15:50,300 choice, which I don't like but at least it kept the market 296 00:15:50,400 --> 00:15:53,800 which is what made me decide to oppose cap-and-trade altogether. 297 00:15:54,100 --> 00:15:57,800 So when the reclaim Market you really have only two choices one 298 00:15:58,300 --> 00:16:00,900 you cut back the supplies. Allowances you're making 299 00:16:00,900 --> 00:16:05,600 available for free for now on what do you do when you do that 300 00:16:05,700 --> 00:16:08,600 you're making life very very difficult for New Market 301 00:16:08,600 --> 00:16:12,600 entrants and you're providing a artificial Financial windfall to 302 00:16:12,600 --> 00:16:15,400 the incumbent largest emitters who are able to bank all their 303 00:16:15,400 --> 00:16:17,800 free allowances. Now, that's not a good solution, 304 00:16:17,800 --> 00:16:21,800 right the alternative which is what they did in the reclaim 305 00:16:21,800 --> 00:16:24,600 Market was to say okay, you know, those two hundred ninety 306 00:16:24,600 --> 00:16:28,500 million allowances that you have in the bank as of tomorrow. 307 00:16:28,600 --> 00:16:31,700 Each one is only worth a half a ton when you go to use it to 308 00:16:31,700 --> 00:16:34,900 retire it like the cypriot haircut and kind of thing. 309 00:16:34,900 --> 00:16:38,000 Yeah, and that's what they did in reclaim multiple times. 310 00:16:38,000 --> 00:16:40,900 So in reclaimed they kept issuing more allowances than 311 00:16:40,900 --> 00:16:43,800 anybody could use and then once every three or four years they 312 00:16:43,800 --> 00:16:46,300 said guess what all those allowances you have in the bank. 313 00:16:46,300 --> 00:16:49,500 They're worth half as compliance to instruments that they were 314 00:16:49,500 --> 00:16:51,900 when you bought them. That's not a good idea either 315 00:16:51,900 --> 00:16:54,700 for a lot of reasons not least of which it communicates to the 316 00:16:54,700 --> 00:16:58,400 marketplace that if you over comply and Bank your allowances, 317 00:16:58,400 --> 00:17:01,800 you're not gonna be punished. Can be punished so neither one 318 00:17:01,800 --> 00:17:04,000 works. I spent a lot of time saying 319 00:17:04,000 --> 00:17:06,099 okay. What is a solution that works? 320 00:17:06,099 --> 00:17:08,400 And you know what I couldn't come up with one. 321 00:17:08,400 --> 00:17:13,700 So I had to find another way. This is the perfect point to put 322 00:17:13,700 --> 00:17:16,400 a little cherry on top and move over to carbon tax. 323 00:17:16,400 --> 00:17:18,900 Would you agree you want to lead us there not? 324 00:17:18,900 --> 00:17:19,700 Yeah. Yeah. 325 00:17:19,800 --> 00:17:22,800 Can we get back to like, what's the point of these markets? 326 00:17:22,800 --> 00:17:27,099 Right the point of these is to reduce the amount of carbon 327 00:17:27,099 --> 00:17:28,900 dioxide that's going into the air. 328 00:17:29,600 --> 00:17:31,000 And can we look at these markets? 329 00:17:31,000 --> 00:17:32,500 And what can we say is happening? 330 00:17:32,500 --> 00:17:34,800 Is it reducing the amount of CO2 in the air? 331 00:17:35,000 --> 00:17:38,400 And also when we're talking about carbon pricing and 332 00:17:38,400 --> 00:17:42,300 thinking that these allowances that are being traded and you 333 00:17:42,300 --> 00:17:45,300 know Look at California people think oh, this is such a great 334 00:17:45,300 --> 00:17:49,500 example the price that people are paying they're like, oh this 335 00:17:49,500 --> 00:17:52,600 is the price for CO2 that we're pulling out but it doesn't 336 00:17:52,600 --> 00:17:55,600 actually represent that so the price you're paying per 337 00:17:55,600 --> 00:17:59,500 certificate 14 almost 15 dollars a ton right now. 338 00:17:59,700 --> 00:18:02,600 Is a fraction of the marginal cost of actually permanently 339 00:18:02,600 --> 00:18:06,000 reducing emissions over the population of covered sources, 340 00:18:06,200 --> 00:18:08,500 so it's really interesting. It's where you have academics 341 00:18:08,500 --> 00:18:09,800 chain cap-and-trade really works. 342 00:18:09,800 --> 00:18:13,200 Well because look at how low compliance costs are compared to 343 00:18:13,208 --> 00:18:15,900 what people thought they would be they're low because you're 344 00:18:15,900 --> 00:18:19,700 not getting incremental emission reductions happening at a market 345 00:18:19,700 --> 00:18:21,800 price of 12 bucks. You're just trading pieces of 346 00:18:21,800 --> 00:18:24,700 paper for 12 bucks. And the other thing is that what 347 00:18:24,700 --> 00:18:27,400 I was mentioning earlier that if you're a regulated entity and 348 00:18:27,400 --> 00:18:30,900 you're buying these allowances to meet your Orkap obligations 349 00:18:31,100 --> 00:18:33,700 and be like energy Creator a utility. 350 00:18:33,700 --> 00:18:36,000 Yes. Yeah, your utility or find a 351 00:18:36,000 --> 00:18:38,200 Refinery something like that. You have the option of buying 352 00:18:38,200 --> 00:18:43,200 allowances or offsets and what that means is that because of 353 00:18:43,200 --> 00:18:46,100 what Alden just said that you're just trading paper around and so 354 00:18:46,100 --> 00:18:48,000 the price of this doesn't actually really represent 355 00:18:48,000 --> 00:18:52,300 anything but to the buyer of these things the offsets in the 356 00:18:52,300 --> 00:18:55,200 allowances are equivalent. And so that means that because 357 00:18:55,200 --> 00:18:58,900 of Standard Market forces you're going to see the offset prices 358 00:18:59,200 --> 00:19:02,300 ruff. Least similar to the allowances 359 00:19:02,400 --> 00:19:05,000 except for in many cases particularly when you're talking 360 00:19:05,000 --> 00:19:08,900 carbon removal that certificate and an offset Market that 361 00:19:08,900 --> 00:19:11,800 represents a ton of carbon removed from the atmosphere and 362 00:19:11,800 --> 00:19:15,600 store it in a farmer's soil has an underlying value of 1 ton, 363 00:19:15,900 --> 00:19:18,600 but it's being forced to compete On a par in a market with the 364 00:19:18,600 --> 00:19:22,600 commission certificate allowance that maybe an aggregate has an 365 00:19:22,600 --> 00:19:27,100 underlying value of 0.25. So removing and storing carbon 366 00:19:27,100 --> 00:19:31,600 in croplands looks really expensive because everybody says 367 00:19:31,600 --> 00:19:34,700 a ton only cost 12 bucks. No a piece of paper that 368 00:19:34,700 --> 00:19:39,500 represents that best 25% of a ton cost 12 bucks, which is 60 369 00:19:39,500 --> 00:19:41,700 bucks a ton. Is that a hot enough take for 370 00:19:41,700 --> 00:19:43,800 you guys though, you're looking for here. 371 00:19:43,900 --> 00:19:46,800 What I want the listeners to take away from this is that when 372 00:19:46,800 --> 00:19:50,200 you look at the prices that people are reporting at what is 373 00:19:50,200 --> 00:19:54,300 being treated for carbon. They do not actually represent 374 00:19:54,300 --> 00:19:59,500 real signals on what the value is for avoiding a ton of CO2 or 375 00:19:59,600 --> 00:20:03,200 Removing a ton of CO2. These markets are set up with 376 00:20:03,200 --> 00:20:06,500 different incentive structures. So this is why what we're doing 377 00:20:06,500 --> 00:20:09,500 at Nori is so interesting and can be so useful because we're 378 00:20:09,500 --> 00:20:13,400 creating a marketplace where people place real value on 379 00:20:13,400 --> 00:20:18,100 removing one ton of CO2 and it actually represents one ton of 380 00:20:18,100 --> 00:20:20,200 CO2. And so that means that the Nori 381 00:20:20,200 --> 00:20:24,300 token price can really become a reference price for the world 382 00:20:24,300 --> 00:20:27,100 that is truly market-driven that actually represents one ton of 383 00:20:27,100 --> 00:20:29,400 CO2. It's not this abstracted thing. 384 00:20:29,600 --> 00:20:32,500 NG or just slips of paper that represent something else will 385 00:20:32,500 --> 00:20:35,500 you let me move us now to the carbon tax generally very 386 00:20:35,500 --> 00:20:37,800 satisfied. I want to talk about carbon 387 00:20:37,800 --> 00:20:41,100 thin. So no not yet. 388 00:20:41,600 --> 00:20:43,500 Carbon is Tim seems like a great tool. 389 00:20:43,500 --> 00:20:47,200 I actually I was off on an airplane so I could not play but 390 00:20:47,200 --> 00:20:50,600 everyone else I know he got to play it was put together by Josh 391 00:20:50,600 --> 00:20:55,600 Margolis of the EDF, which is the Environmental defense fund 392 00:20:55,800 --> 00:21:00,000 from my understanding Paul. You did exactly what the Quote 393 00:21:00,000 --> 00:21:02,800 unquote Bad actors do which is game the system and figure out 394 00:21:02,800 --> 00:21:05,600 how to make money. Yeah. 395 00:21:05,600 --> 00:21:08,000 So yeah. So yeah, it's this trading 396 00:21:08,000 --> 00:21:10,900 simulation game. It's supposed to function in the 397 00:21:10,900 --> 00:21:13,600 same way that if you were a regulated entity in a cap and 398 00:21:13,600 --> 00:21:17,100 trade market how it would work and you play it over. 399 00:21:17,100 --> 00:21:20,700 I think we did a two year time span and it's broken up into 400 00:21:20,700 --> 00:21:22,800 four quarters. So we had eight different time 401 00:21:22,800 --> 00:21:26,000 periods that you switch through the whole Nori team was playing 402 00:21:26,000 --> 00:21:29,800 and the goal of it is it's a competition just like like a 403 00:21:29,800 --> 00:21:33,100 real business is to try to end up with at the end of the game. 404 00:21:33,100 --> 00:21:36,500 You want to have met your obligations for hitting your cap 405 00:21:36,500 --> 00:21:38,800 numbers and you want to make the most amount of money which is 406 00:21:38,800 --> 00:21:41,800 how a real life works. And so I met my obligations and 407 00:21:41,800 --> 00:21:45,300 I had made the most money out of everyone else and all that. 408 00:21:45,300 --> 00:21:51,000 I did was trade allowances. I bought low and sold High I 409 00:21:51,000 --> 00:21:54,500 bought low in the auctions. I didn't buy any offsets. 410 00:21:54,500 --> 00:21:57,600 I did the minimum amount of abatements that made Financial 411 00:21:57,600 --> 00:21:59,400 sense and in the end, I made a lot of money. 412 00:21:59,500 --> 00:22:04,000 And I made virtually no impact on actually reducing the amount 413 00:22:04,000 --> 00:22:04,900 of carbon dioxide in the atmosphere. 414 00:22:04,900 --> 00:22:09,200 So it was a really really useful and instructional exercise for 415 00:22:09,200 --> 00:22:12,100 me to see like what are the different incentives that are 416 00:22:12,100 --> 00:22:16,200 playing into this and why people make decisions that they do I 417 00:22:16,200 --> 00:22:19,100 got suckered into buying a bunch of the abatements that were like 418 00:22:19,100 --> 00:22:21,200 three years out in the future for the time. 419 00:22:21,200 --> 00:22:23,300 They started to pay off like why did I do this? 420 00:22:23,300 --> 00:22:27,200 I should have just been screwing around with these these yeah, 421 00:22:27,200 --> 00:22:29,300 that's always one of the drawbacks. 422 00:22:29,500 --> 00:22:32,300 These simulations we saw that when we did our simulation game 423 00:22:32,300 --> 00:22:35,900 at reverse of palooza was that if you have a defined end period 424 00:22:35,900 --> 00:22:38,000 then people are going to play towards the end period they're 425 00:22:38,000 --> 00:22:40,500 not going to play as if like times just yeah, I think I would 426 00:22:40,500 --> 00:22:43,000 have caught up and started to hammer you there after a while, 427 00:22:43,000 --> 00:22:47,100 but I've missed my chance, but there's another complication to 428 00:22:47,100 --> 00:22:50,200 we talked about in those kinds of markets governments are 429 00:22:50,200 --> 00:22:53,700 creating the allowance Supply and again starting. 430 00:22:53,900 --> 00:22:57,400 I'm willing to accept with all of the best intentions and the 431 00:22:57,400 --> 00:23:00,200 best designers and everything and And you start with the 432 00:23:00,208 --> 00:23:03,000 Surplus to create the compensation that you think 433 00:23:03,000 --> 00:23:06,000 you're going to need later regardless what the initial 434 00:23:06,000 --> 00:23:09,500 attention was once government start generating revenues from 435 00:23:09,500 --> 00:23:12,800 selling quota at auction. Even if they're only selling 10% 436 00:23:12,800 --> 00:23:16,300 of quota, they willing to give up those revenues and you can 437 00:23:16,300 --> 00:23:19,500 have the revenues from Kota sales or you can have the 438 00:23:19,500 --> 00:23:22,000 emission reductions, but typically over time you can't 439 00:23:22,000 --> 00:23:25,300 have both is this like taxing cigarettes you kind of hope that 440 00:23:25,300 --> 00:23:27,800 the people don't stop smoking. They said it will discourage 441 00:23:27,800 --> 00:23:30,700 smoking, but if it does you lose a resume You know, it's like a 442 00:23:30,708 --> 00:23:33,600 lottery taxes or that you know, what it is. 443 00:23:33,600 --> 00:23:36,800 The reason I would argue it's exactly like taxing cigarettes 444 00:23:36,800 --> 00:23:40,500 is because two things are true and the early 1980s when our 445 00:23:40,500 --> 00:23:42,800 governments first started taxing cigarettes. 446 00:23:43,300 --> 00:23:45,900 They were absolutely convinced. It was going to cause a 447 00:23:45,900 --> 00:23:50,000 reduction in smoking. Did it know when did the 448 00:23:50,000 --> 00:23:53,000 significant measurable reductions in smoking happen 449 00:23:53,000 --> 00:23:57,200 like the Public Health Camp when the first company banned smoking 450 00:23:57,200 --> 00:24:00,600 in the office? Oh, really and First companies 451 00:24:00,600 --> 00:24:03,600 to say you can't do it here because staff were complaining 452 00:24:03,600 --> 00:24:07,500 those bands came entirely from the private sector responding to 453 00:24:07,500 --> 00:24:10,800 complaints by non-smokers staff and then government started 454 00:24:10,800 --> 00:24:14,300 saying that and if you actually look at the numbers smoking 455 00:24:14,300 --> 00:24:18,300 reduction happened when people governments and companies 456 00:24:18,300 --> 00:24:21,000 started saying you can't smoke in here you have to go over 457 00:24:21,000 --> 00:24:22,100 there. Okay. 458 00:24:22,100 --> 00:24:24,600 So we love metaphors. Let's play this one out speak 459 00:24:24,600 --> 00:24:27,700 for yourself. Arvin is smoking and if you 460 00:24:27,700 --> 00:24:30,800 start saying you can't put Put your carbon here. 461 00:24:30,900 --> 00:24:33,900 You need to manage the carbon in your supply chain. 462 00:24:33,900 --> 00:24:36,700 Saw the emissions, but the carbon that's right that takes 463 00:24:36,700 --> 00:24:39,300 you all the way back to where does that carbon come from? 464 00:24:39,300 --> 00:24:41,400 Oh, maybe you want to keep it in the ground and track how much 465 00:24:41,400 --> 00:24:43,400 you have in the garage right? Keep it there. 466 00:24:43,400 --> 00:24:45,300 That's right. If it's gonna come out at least 467 00:24:45,300 --> 00:24:48,600 track it and focus on reducing the carbon if your supply chain 468 00:24:48,600 --> 00:24:51,700 and it only took me as I said 15 years to figure that out and you 469 00:24:51,708 --> 00:24:54,600 want to hear the like the dumbest thing I could ever admit 470 00:24:54,700 --> 00:24:56,600 after I figured out cap-and-trade wasn't going to 471 00:24:56,600 --> 00:24:59,400 work even if it theoretically could be made to work. 472 00:24:59,900 --> 00:25:03,100 And then after I figured out carbon taxes don't work, which 473 00:25:03,100 --> 00:25:08,800 we'll get to I actually finally said, you know, we have some 474 00:25:08,800 --> 00:25:12,100 pretty interesting historical pollution reduction success 475 00:25:12,100 --> 00:25:13,300 stories. We've got the lead out of 476 00:25:13,300 --> 00:25:16,100 gasoline and the let out of paint and the ozone-depleting 477 00:25:16,100 --> 00:25:19,200 substance of the atmosphere in term to stop the growth of the 478 00:25:19,200 --> 00:25:21,800 hole in the ozone layer. So maybe I should look and see 479 00:25:21,800 --> 00:25:25,000 how we actually did those things and you know what? 480 00:25:25,000 --> 00:25:27,200 I thought I was going to find out a whole bunch of different 481 00:25:27,200 --> 00:25:29,000 countries did very different things. 482 00:25:29,700 --> 00:25:32,800 Time we log to historical pollution reduction success 483 00:25:32,800 --> 00:25:36,100 story. We did it the same way every 484 00:25:36,200 --> 00:25:40,900 time whether we're Japan United States Canada Europe same way 485 00:25:41,200 --> 00:25:45,400 every time master of suspense. What a what was it? 486 00:25:45,500 --> 00:25:48,700 We didn't put a cap on tailpipe. Let emissions. 487 00:25:48,700 --> 00:25:52,300 We said if you sell gasoline, you got to reduce the lead 488 00:25:52,300 --> 00:25:56,900 content in your gasoline when we really wanted SO2 reductions and 489 00:25:56,900 --> 00:25:59,100 fuel. We didn't regulate emissions we 490 00:25:59,100 --> 00:26:04,100 said, Guess what sulfur has to come out coincident with our 491 00:26:04,100 --> 00:26:06,600 regulation of SO2 emissions and power plants. 492 00:26:06,900 --> 00:26:10,500 We regulated maximum sulfur content in the coal that goes 493 00:26:10,500 --> 00:26:13,500 into the plants. I actually talked to some older 494 00:26:13,500 --> 00:26:16,500 people and I'm old enough who were part of Designing those 495 00:26:16,700 --> 00:26:20,800 when we wanted to get ozone-depleting substances out 496 00:26:20,800 --> 00:26:24,100 of refrigerant chemicals. We didn't regulate ozone 497 00:26:24,100 --> 00:26:26,300 discharges. We regulated the 498 00:26:26,300 --> 00:26:29,500 chlorofluorocarbon content the pollution precursor out. 499 00:26:29,700 --> 00:26:33,300 Supply chain in know what the efficient way to get fossil 500 00:26:33,300 --> 00:26:37,100 carbon reductions out of the energy supply chain is to order 501 00:26:37,100 --> 00:26:40,200 fossil carbon reductions in the supply chain. 502 00:26:41,600 --> 00:26:44,200 So put up more no smoking signs effectively. 503 00:26:44,200 --> 00:26:46,700 And this is where there's a connection to Nori. 504 00:26:46,700 --> 00:26:49,200 However much it sounds like I'm not going there. 505 00:26:49,500 --> 00:26:52,800 So if you were going to say, let's repeat the lessons we 506 00:26:52,800 --> 00:26:55,500 learned from our pollution reduction success stories. 507 00:26:55,500 --> 00:26:59,600 Do not go to all of this expense of trying to figure out how How 508 00:26:59,608 --> 00:27:02,700 to measure an estimate and track commissions at the end of some 509 00:27:02,700 --> 00:27:07,900 stack somewhere or tailpipe say if you sell energy in this 510 00:27:07,900 --> 00:27:10,800 country, I don't care if you sell some combination of 511 00:27:10,800 --> 00:27:14,400 gasoline Diesel and propane and you sell some combination of 512 00:27:14,408 --> 00:27:18,200 electricity and natural gas and whatever you take your total 513 00:27:18,200 --> 00:27:23,200 energy sales, you tell me what they equal and millions of BTU 514 00:27:23,200 --> 00:27:28,200 equivalent and your fossil carbon content in the supply you 515 00:27:28,200 --> 00:27:31,300 discharged on this Marketplace. Has to go down 3 percent per 516 00:27:31,300 --> 00:27:34,400 annum then if you exceed three percent this year, you can sell 517 00:27:34,400 --> 00:27:37,700 some credits to another guy governments not dishing quota. 518 00:27:37,800 --> 00:27:40,500 I'm not measuring emissions. I'm saying get the fossil carbon 519 00:27:40,500 --> 00:27:43,500 all the supply to and that gives the market the opportunity to 520 00:27:43,500 --> 00:27:46,000 figure out different ways. I might be more efficient for 521 00:27:46,000 --> 00:27:48,800 one company over another on how they want to do that. 522 00:27:48,800 --> 00:27:53,100 We are not telling them what to do and we're not telling them 523 00:27:53,100 --> 00:27:56,900 what price to pay when we regulated in North America the 524 00:27:56,900 --> 00:27:59,500 lead out of gasoline every expert. 525 00:27:59,700 --> 00:28:04,600 In the world in every part of the economy fuel suppliers auto 526 00:28:04,600 --> 00:28:08,200 manufacturers academics governments were absolutely 527 00:28:08,200 --> 00:28:12,000 certain that ethanol was going to replace lead as the oxygen 528 00:28:12,000 --> 00:28:16,300 and gasoline and everybody was absolutely certain in North 529 00:28:16,300 --> 00:28:18,500 America. The price of gasoline was going 530 00:28:18,500 --> 00:28:22,600 to increase by seven eight nine cents a gallon which was a big 531 00:28:22,600 --> 00:28:25,300 price increase and that they decided they were willing to 532 00:28:25,300 --> 00:28:28,600 make that sacrifice. They ordered the lead out and 533 00:28:28,600 --> 00:28:30,800 within four years. Years of ordering the lead out 534 00:28:30,800 --> 00:28:36,000 there were four count them four competing unleaded gasoline fuel 535 00:28:36,000 --> 00:28:39,400 formulations in the marketplace and we got let out ahead of 536 00:28:39,400 --> 00:28:43,400 schedule while the real price of gasoline fell 12% I'm always 537 00:28:43,400 --> 00:28:46,000 wondering when I was a kid looking at the gas pump and I 538 00:28:46,008 --> 00:28:48,100 think we'll why is it unloaded? They're always unleaded it and 539 00:28:48,100 --> 00:28:50,300 even by leaded gasoline. Why are you telling me it's 540 00:28:50,300 --> 00:28:54,000 unleaded because of the success story what I'm just do a carbon 541 00:28:54,000 --> 00:28:55,600 tax. Why not just do something like 542 00:28:55,600 --> 00:28:57,200 that. We don't necessarily like it 543 00:28:57,208 --> 00:28:59,300 when the government just doesn't mean by Fiat wouldn't be more 544 00:28:59,300 --> 00:29:01,100 marketable. Friendly to do something with 545 00:29:01,100 --> 00:29:03,500 the tax. There's two answers to that and 546 00:29:03,600 --> 00:29:07,300 more interesting one is why in my view a carbon tax doesn't 547 00:29:07,300 --> 00:29:10,900 work, but the general response is if you start by looking at 548 00:29:10,900 --> 00:29:14,100 our historical pollution reduction success stories, what 549 00:29:14,100 --> 00:29:19,100 you see is the private sector has only two arms to compete 550 00:29:19,100 --> 00:29:21,900 with one is innovation one is price. 551 00:29:22,200 --> 00:29:26,700 So anytime you regulate in a way that is dictating to the market 552 00:29:26,700 --> 00:29:29,500 either the solution or the price. 553 00:29:29,600 --> 00:29:32,100 Nice, you're putting the private sectors hands and your time and 554 00:29:32,100 --> 00:29:35,300 behind your back. So first of all what the lessons 555 00:29:35,300 --> 00:29:41,200 teach you is an efficient government measured says reduce 556 00:29:41,200 --> 00:29:45,800 the fossil content per million. Btu of energy sales and you 557 00:29:45,900 --> 00:29:47,900 compete on price and through Innovation. 558 00:29:47,900 --> 00:29:51,300 I'm not telling you what to do. So that's the big picture. 559 00:29:51,400 --> 00:29:53,900 I just like to note for our listeners all didn't put her 560 00:29:53,900 --> 00:30:00,000 hands and tied them behind her back a circle when you Set the 561 00:30:00,000 --> 00:30:05,100 market participants to compete when you're saying Get the Lead 562 00:30:05,100 --> 00:30:08,100 Out get the fossil carbon out all of a sudden you've spawned a 563 00:30:08,100 --> 00:30:12,200 huge competition for market share in the new green economy. 564 00:30:12,800 --> 00:30:16,200 Every time we've done that the market participants have come up 565 00:30:16,200 --> 00:30:18,700 with solutions that the brainiest people never thought 566 00:30:18,700 --> 00:30:20,600 of before. We set them down the path 567 00:30:20,600 --> 00:30:25,800 imagine that I have very strong opinions about what the 568 00:30:25,800 --> 00:30:28,800 solutions will be. I will be proved wrong. 569 00:30:29,000 --> 00:30:30,800 So a good regulation says two things. 570 00:30:30,900 --> 00:30:32,600 I don't care about tracking admissions. 571 00:30:32,600 --> 00:30:35,500 It's easy to track fossil carbon content reduce your fossil 572 00:30:35,500 --> 00:30:39,000 carbon content per million. Btu units of energy sold in 573 00:30:39,000 --> 00:30:42,100 supply chain. And in that regulation, you have 574 00:30:42,600 --> 00:30:46,000 maximum three, but one essential what we would call and 575 00:30:46,000 --> 00:30:48,600 Regulatory turns alternative compliance option. 576 00:30:48,800 --> 00:30:51,100 This is sort of the offset. What's the other thing? 577 00:30:51,100 --> 00:30:54,200 You can do Beyond changing the structure of your business and 578 00:30:54,200 --> 00:30:57,200 your product offering you could earn credits towards that 579 00:30:57,200 --> 00:30:59,500 obligation by removing carbon from the atmosphere. 580 00:30:59,600 --> 00:31:02,400 Beer and storing it and I think everything that you're saying 581 00:31:02,600 --> 00:31:07,400 fits within the Mantra of the sustainability community that is 582 00:31:07,400 --> 00:31:10,100 trying to do the right thing. They say reduced what you can 583 00:31:10,100 --> 00:31:13,700 offset the rest, but they're stuck in a regime that just 584 00:31:13,700 --> 00:31:17,500 doesn't make them operate. So I'm kind of curious if you 585 00:31:17,500 --> 00:31:21,200 were speaking to some of the heads of sustainability who 586 00:31:21,400 --> 00:31:23,900 might want to do the right thing or talking to government 587 00:31:23,900 --> 00:31:26,100 officials and saying hey look this climate change. 588 00:31:26,100 --> 00:31:28,700 It's a real problem and we want to do our part and we want to 589 00:31:28,700 --> 00:31:31,200 lead and doing our Art what sorts of things would you like 590 00:31:31,200 --> 00:31:34,400 them to know or to be better informed about and what sort of 591 00:31:34,408 --> 00:31:37,800 advice would you want them to be giving so one of the reasons I'm 592 00:31:37,800 --> 00:31:42,800 so committed to Nori is in every possible set of solutions. 593 00:31:42,800 --> 00:31:47,300 I can imagine including better regulation or no regulation or 594 00:31:47,300 --> 00:31:50,000 whatever. We're now at a point where the 595 00:31:50,000 --> 00:31:52,700 atmospheric concentrations are high enough that removing carbon 596 00:31:52,700 --> 00:31:55,100 from the atmosphere is an essential component of any 597 00:31:55,100 --> 00:31:58,200 strategy. So first of all, I'd say it's 598 00:31:58,200 --> 00:32:01,100 got to be on the table. It's To be there for real now. 599 00:32:01,100 --> 00:32:04,000 We live in a world right now. For example, the United States 600 00:32:04,000 --> 00:32:09,200 where you actually have a budget that is offering 35 to 50 601 00:32:09,200 --> 00:32:12,800 dollars a ton of tax credit to operators of gas-fired power 602 00:32:12,800 --> 00:32:15,900 plants if they install carbon capture and storage, but we're 603 00:32:15,900 --> 00:32:19,700 not offering 35 to 50 dollars of tax credit to Farmers who can 604 00:32:19,700 --> 00:32:23,200 store carbon in their fields probably more cost effectively 605 00:32:23,200 --> 00:32:26,900 and efficiently than CCS will work on gas plants. 606 00:32:26,900 --> 00:32:30,200 That's kind of theological. I think I would immediately has 607 00:32:30,200 --> 00:32:34,800 that there's a except is probably a lot easier for the 608 00:32:34,800 --> 00:32:39,100 oil and gas industry to lobby for those that credits that only 609 00:32:39,100 --> 00:32:42,600 works in the short term because you know what happens if this 610 00:32:42,600 --> 00:32:46,600 strategy doesn't work, which is not going to yeah how many years 611 00:32:46,600 --> 00:32:49,000 before finally government throws up his hands and says, okay. 612 00:32:49,000 --> 00:32:51,100 I'm just going to regulate the hell out of you and shut you 613 00:32:51,100 --> 00:32:52,800 down and I'm going to get the regulation wrong. 614 00:32:53,400 --> 00:32:56,500 We're trying to squeeze in there and hopefully make a dead before 615 00:32:56,500 --> 00:32:58,000 that happens, right? Yeah. 616 00:32:58,100 --> 00:33:00,600 Let's cut to the chase. Why don't carve Access work a 617 00:33:00,600 --> 00:33:03,700 great Economist Herman Daly will tell you it depends on how you 618 00:33:03,700 --> 00:33:06,400 design them. But there's a couple of things 619 00:33:06,400 --> 00:33:08,000 one. Think about what we're trying to 620 00:33:08,000 --> 00:33:10,300 do here. We're trying to get suppliers to 621 00:33:10,300 --> 00:33:13,200 reduce the fossil carbon content in our energy and Building 622 00:33:13,200 --> 00:33:17,100 Products supply chain. One reason carbon taxes. 623 00:33:17,100 --> 00:33:21,600 Haven't worked to date there are multiple but one is probably 624 00:33:21,600 --> 00:33:27,000 putting a tax on a retail gas pump over here trying to send a 625 00:33:27,008 --> 00:33:31,000 price signal to a consumer is about out as far away from the 626 00:33:31,000 --> 00:33:33,700 decision whether or not to have put fossil carbon into the 627 00:33:33,700 --> 00:33:35,800 energy Supply chains. One of the reasons it doesn't 628 00:33:35,800 --> 00:33:39,700 work is it's so far away from the decisions that we're trying 629 00:33:39,700 --> 00:33:42,500 to influence you think the incidence of the tax would be 630 00:33:42,500 --> 00:33:44,600 the same though, when they just pass it all the way to the 631 00:33:44,600 --> 00:33:46,700 consumer. Well, you know, what a lot of 632 00:33:46,700 --> 00:33:50,300 economists say that so I offer you the following prepared 633 00:33:50,300 --> 00:33:53,900 response over the last 12 months. 634 00:33:53,900 --> 00:33:57,000 The average retail price of gasoline in the United States 635 00:33:57,000 --> 00:34:01,200 has increased 56 cents a gallon. Total gasoline sales in the 636 00:34:01,200 --> 00:34:03,700 United States. So that's a price increase that 637 00:34:03,700 --> 00:34:07,200 people have incurred total gasoline sales in the United 638 00:34:07,200 --> 00:34:13,500 States are up not down now 56 a gallon if you applied it and 639 00:34:13,500 --> 00:34:18,400 this is one of the things say the equivalent price at the 640 00:34:18,400 --> 00:34:22,699 Wellhead is twenty four dollars a barrel now all the modeling 641 00:34:22,699 --> 00:34:27,300 says on average the price of a barrel has gone up $24 in the 642 00:34:27,300 --> 00:34:30,699 last 12 months now all of the economic nah models and all the 643 00:34:30,699 --> 00:34:35,800 economists will tell you there's no difference between putting in 644 00:34:35,800 --> 00:34:39,400 a new tax or tariff. That's 24 dollars a barrel and 645 00:34:39,400 --> 00:34:42,600 putting in an increase in the retail price of 66 cents a 646 00:34:42,600 --> 00:34:45,699 gallon stop for a minute. Do you think the oil industry 647 00:34:45,699 --> 00:34:50,300 would say a new Tariff of twenty four dollars a barrel apply to 648 00:34:50,300 --> 00:34:54,699 the Wellhead will have no impact on their investment in Energy 649 00:34:54,699 --> 00:34:57,300 Products will have no impact on their return. 650 00:34:57,400 --> 00:34:59,400 Why wouldn't they just pass it on to the consumer? 651 00:34:59,900 --> 00:35:01,800 Where does it stop or how is it different? 652 00:35:01,800 --> 00:35:06,900 The market is perplexing. Yeah, can you tell the audience 653 00:35:06,900 --> 00:35:08,600 why you're so familiar with gas prices? 654 00:35:08,900 --> 00:35:13,600 Because for two years I set gas prices for 568 retail stations 655 00:35:13,600 --> 00:35:17,600 for a large US Oil Company. It is a mystery. 656 00:35:24,900 --> 00:35:28,600 It's totally logical that a new tax at $24 a barrel at the 657 00:35:28,600 --> 00:35:31,000 Wellhead. Is the same as 66 cents Elite 658 00:35:31,400 --> 00:35:36,700 gallon sort of basic medium is the same but it's not it's not 659 00:35:36,700 --> 00:35:39,800 it's not I swear to you. Just ask anybody in the oil 660 00:35:39,800 --> 00:35:42,800 patch if the government said, okay, we're going to hit you 661 00:35:42,800 --> 00:35:45,900 with a new tax right at the Wellhead the new tariff Revenue 662 00:35:45,900 --> 00:35:48,600 Severance charge of 24 bucks a barrel that's going to have no 663 00:35:48,600 --> 00:35:49,700 impact on you. Right? 664 00:35:50,500 --> 00:35:53,200 It's not how they're going to react because that utterly 665 00:35:53,200 --> 00:35:56,100 changes the signals that the investors in the production in 666 00:35:56,100 --> 00:35:59,900 the supply chain are getting and the retail pump price is The 667 00:35:59,900 --> 00:36:03,600 same signal I don't care if it on paper is the same value. 668 00:36:03,700 --> 00:36:06,500 It's not the same signal. There are two reasons. 669 00:36:06,500 --> 00:36:10,100 It's not the same signal and this is true in every developed 670 00:36:10,100 --> 00:36:12,400 Nation. It took me a little while to 671 00:36:12,400 --> 00:36:15,100 figure out this is true. The data clearly shows it took 672 00:36:15,100 --> 00:36:17,800 me a long time to figure out why it's true but individual 673 00:36:17,800 --> 00:36:21,800 non-industrial energy demand is what we call quite price 674 00:36:21,800 --> 00:36:26,000 inelastic if gas prices go up all of the u.s. 675 00:36:26,000 --> 00:36:29,300 European Canadian data shows that we put off. 676 00:36:29,400 --> 00:36:33,900 Other Capital expenditures to Bear The increased fuel prices 677 00:36:34,400 --> 00:36:39,500 and in academic analysis, they call it revealed internal 678 00:36:39,500 --> 00:36:43,600 discount rates. We have a tendency to avoid New 679 00:36:43,600 --> 00:36:46,700 Capital expenditures or things that feel like new capital 680 00:36:46,700 --> 00:36:50,500 expenditures at all costs. So if you were trying to design 681 00:36:50,500 --> 00:36:54,200 a tax with the sole purpose of raising new government revenues 682 00:36:54,300 --> 00:36:57,000 and not actually changing Behavior, you would put it at 683 00:36:57,000 --> 00:37:01,500 the gas pump which is where But he's putting so this internal 684 00:37:01,500 --> 00:37:04,300 discount rate thing. That's like saying that I'm a 685 00:37:04,300 --> 00:37:09,600 typical American family and I have a eight year old car and it 686 00:37:09,600 --> 00:37:14,100 doesn't get great gas mileage, but I would rather continue 687 00:37:14,100 --> 00:37:17,800 driving this car instead of buying a new car and getting 688 00:37:17,800 --> 00:37:21,500 better gas mileage all of that discount rate all of 30 years of 689 00:37:21,500 --> 00:37:24,600 data household expenditure data, not just for the us but all 690 00:37:24,600 --> 00:37:28,300 developed Nations say that rather than respond to the 60 691 00:37:28,300 --> 00:37:31,000 cents a gallon. A price increase and replace 692 00:37:31,000 --> 00:37:33,400 that old car. When you thought you were going 693 00:37:33,400 --> 00:37:38,200 to you will save the money not replacing the old car to be able 694 00:37:38,200 --> 00:37:41,300 to finance the gas purchases. And when you do that when we 695 00:37:41,300 --> 00:37:45,200 translate that choice into an internal District count rate the 696 00:37:45,200 --> 00:37:48,500 data suggest that very well educated people who manage their 697 00:37:48,500 --> 00:37:52,000 stock portfolio like meticulously a know the 698 00:37:52,000 --> 00:37:56,800 difference between a 7% and 8% return reveal an internal 699 00:37:56,800 --> 00:38:00,800 discount rate on their energy. In their energy consuming 700 00:38:00,800 --> 00:38:04,100 equipment purchases of at least 20% and over the whole 701 00:38:04,100 --> 00:38:06,800 population. You're looking at a revealed 702 00:38:06,800 --> 00:38:10,300 discount rate of 40 to 50% So when a government is choosing to 703 00:38:10,300 --> 00:38:14,200 tax at that point of retail out there that's a conscious 704 00:38:14,200 --> 00:38:18,400 decision to proceed with a measure that's least likely 705 00:38:18,400 --> 00:38:21,100 among all the measures you can choose least likely to change 706 00:38:21,100 --> 00:38:23,300 Behavior, which might explain why some of the big oil 707 00:38:23,300 --> 00:38:25,800 companies actually advocate for these days. 708 00:38:25,900 --> 00:38:28,300 It's behavioral economic a cognitive. 709 00:38:28,300 --> 00:38:31,600 Yes, and Failing and it's not like we're just trying to 710 00:38:31,600 --> 00:38:34,600 estimate based on models. Like this has been tried before 711 00:38:34,600 --> 00:38:37,300 especially in Europe. Why isn't it working over there 712 00:38:37,300 --> 00:38:39,400 or what are the effects in like Sweden? 713 00:38:39,600 --> 00:38:42,900 Well, that's interesting again. I argue that most of the times 714 00:38:42,900 --> 00:38:46,900 Regulators start with the best of intentions Sweden Denmark and 715 00:38:47,000 --> 00:38:51,500 Norway those countries with the oldest carbon taxes and highest 716 00:38:51,500 --> 00:38:57,000 to write and highest started by saying much like we say in the 717 00:38:57,000 --> 00:39:00,100 United States and Canada. Let's do a hybrid of Maxine 718 00:39:00,100 --> 00:39:03,500 retail so residential and small business consumption and doing 719 00:39:03,500 --> 00:39:05,700 cap-and-trade this quota training thing for big 720 00:39:05,700 --> 00:39:09,900 industrial those governments for the most part started off 721 00:39:09,900 --> 00:39:11,400 thinking that's the right way to do things. 722 00:39:11,400 --> 00:39:14,400 But when they start you got to give Big Industry a break 723 00:39:14,400 --> 00:39:19,100 because this is hard well by mistake, they figured out wait a 724 00:39:19,100 --> 00:39:23,900 second here. I can pack a load of new large 725 00:39:24,000 --> 00:39:28,200 energy-intensive industrial subsidies into the electricity 726 00:39:28,200 --> 00:39:31,500 rate infrastructure. ER called up my carbon policy my 727 00:39:31,500 --> 00:39:34,900 government costs of putting this subsidy in place. 728 00:39:35,100 --> 00:39:38,100 Don't show up on any government balance sheet is debt. 729 00:39:38,100 --> 00:39:42,200 I just say okay, if you're an important large industry and 730 00:39:42,200 --> 00:39:45,900 Sweden a Refinery, I government are going to guarantee that you 731 00:39:45,900 --> 00:39:49,800 get your electricity on a 30-year firm price agreement for 732 00:39:49,800 --> 00:39:53,700 four cents a kilowatt hour and all of the cost you don't pay to 733 00:39:53,700 --> 00:39:57,900 get your electricity show up as a carbon or emission reduction 734 00:39:57,900 --> 00:40:01,200 or renewable energy. In household and small business 735 00:40:01,200 --> 00:40:03,600 bills. So what's the reality today? 736 00:40:03,800 --> 00:40:08,700 The reality today is first of all a relatively small overall 737 00:40:08,700 --> 00:40:12,300 reduction and Swedish Nationwide emissions emissions. 738 00:40:12,500 --> 00:40:15,500 And if you're the average household in Sweden right now, 739 00:40:15,500 --> 00:40:20,400 you're paying the equivalent of 44 cents us a kilowatt hour and 740 00:40:20,400 --> 00:40:22,600 the refinery down. The street is paying the 741 00:40:22,607 --> 00:40:26,600 equivalent of six cents us a kilowatt hour significantly less 742 00:40:26,600 --> 00:40:29,700 than the typical us. Refinery is pain for Contacts 743 00:40:29,700 --> 00:40:33,000 that average American Energy prices about 10 cents an hour. 744 00:40:33,000 --> 00:40:36,400 So here in Seattle at six so they've used their carbon 745 00:40:36,400 --> 00:40:41,000 pricing to package a whole bunch of opaque news subsidies for 746 00:40:41,000 --> 00:40:44,900 large emitters into the electricity bills that 747 00:40:44,900 --> 00:40:48,500 households and small businesses pay if you're in Denmark your 748 00:40:48,500 --> 00:40:51,300 pain closer to 50 cents a kilowatt hour. 749 00:40:51,300 --> 00:40:55,100 If you're in Norway for legacy large hydroelectricity, you're 750 00:40:55,100 --> 00:40:58,900 paying 40 cents a kilowatt hour. So as soon as government started 751 00:40:58,900 --> 00:41:00,800 down the path With whatever their intentions were they 752 00:41:00,800 --> 00:41:02,200 thought. Oh my goodness. 753 00:41:02,200 --> 00:41:05,900 Well, what's the reality go? Look at the oecd statistics 754 00:41:06,100 --> 00:41:11,500 Norway Denmark Netherlands Sweden the top carbon taxing 755 00:41:11,500 --> 00:41:14,600 longest carbon tax histories among developed nations in the 756 00:41:14,600 --> 00:41:17,100 world. We think of these open 757 00:41:17,100 --> 00:41:21,900 socialist, you know, Farrah society's biggest household 758 00:41:22,000 --> 00:41:25,000 private debt increases per dollar of disposable income in 759 00:41:25,000 --> 00:41:28,600 the whole oecd. Their household debt numbers are 760 00:41:28,600 --> 00:41:31,000 through the roof. If you live in Sweden, you're 761 00:41:31,000 --> 00:41:35,000 living typically in a home that is 70% to 80% of the square 762 00:41:35,000 --> 00:41:39,200 footage of an average u.s. Home and it's probably way more 763 00:41:39,200 --> 00:41:42,300 efficient than the average u.s. Home and you were spending 764 00:41:42,300 --> 00:41:46,700 twelve percent of your disposable income just to heat 765 00:41:46,700 --> 00:41:50,400 your space and your water. So the net effect of this is 766 00:41:50,400 --> 00:41:53,800 that negligible emission reductions massive shift of the 767 00:41:54,000 --> 00:41:57,000 cost burden of delivering electricity to all the society 768 00:41:57,000 --> 00:42:01,300 to the smallest consumers so a car Tax is about as regressive 769 00:42:01,300 --> 00:42:04,600 of attacks as you could possibly do unbelievably regressive. 770 00:42:04,800 --> 00:42:08,000 If you're looking in these nations the disposable income of 771 00:42:08,000 --> 00:42:12,300 the 40% richest families is there's different ways of 772 00:42:12,300 --> 00:42:15,900 measuring it but says anywhere from 5 to 12 times the 773 00:42:15,900 --> 00:42:19,300 disposable income of the poorest families, but the richest 774 00:42:19,300 --> 00:42:23,300 families only consume one point seven two two point eight times 775 00:42:23,300 --> 00:42:27,000 as much carbon containing energy as the poorest families if 776 00:42:27,000 --> 00:42:29,200 you're going to finance income tax rate. 777 00:42:29,300 --> 00:42:33,400 Cuts with carbon tax revenues by definition you're massively 778 00:42:33,400 --> 00:42:37,800 shifting tax burden from the rich to the poor a tax rate that 779 00:42:37,800 --> 00:42:41,300 is significant enough to cause the wealthy families to even 780 00:42:41,300 --> 00:42:44,800 consider buying a more efficient car is a tax rate that's 781 00:42:44,800 --> 00:42:48,800 bankrupted every family in the bottom forty percent of society. 782 00:42:49,300 --> 00:42:52,900 So it's a tax rate the burden of which is born entirely by the 783 00:42:52,900 --> 00:42:55,600 poor and if you look at British Columbia where I come from and 784 00:42:55,600 --> 00:42:58,500 everybody says we've had this great successful carbon tax 785 00:42:58,700 --> 00:43:03,000 since we had Carbon tax there's only one 18 month period where 786 00:43:03,000 --> 00:43:08,000 British Columbia per capita gasoline use actually dipped and 787 00:43:08,000 --> 00:43:11,000 we have publicly available household expenditure data. 788 00:43:11,200 --> 00:43:15,100 The dip was small a hundred percent of the dip was 789 00:43:15,100 --> 00:43:18,400 low-income families no longer being able to drive their cars. 790 00:43:18,900 --> 00:43:22,400 And in fact gasoline used by the higher income families went up 791 00:43:22,400 --> 00:43:24,000 and what happened at the same time. 792 00:43:24,000 --> 00:43:25,400 You were telling me about this yesterday. 793 00:43:25,700 --> 00:43:29,200 Well British Columbia that gets credit for this carbon tax if 794 00:43:29,300 --> 00:43:32,700 you actually look over that period and look at the average 795 00:43:32,700 --> 00:43:37,100 typical cost of commuting from our biggest sub verb to 796 00:43:37,100 --> 00:43:41,000 Vancouver downtown to go to work over a five year period the 797 00:43:41,000 --> 00:43:44,400 carbon tax added a hundred and Seventeen dollars a year to the 798 00:43:44,400 --> 00:43:50,000 typical person's commute by car everyday over the same period 799 00:43:50,000 --> 00:43:53,900 the government of British Columbia increased the cost of 800 00:43:53,900 --> 00:43:57,700 doing that same commute by transit public transit by 480 801 00:43:57,700 --> 00:44:00,300 dollars a year. So the Carbon tax was just 802 00:44:00,300 --> 00:44:04,700 enough to force underemployed and unemployed people during the 803 00:44:04,700 --> 00:44:09,000 2008 through 2011 recessionary time out of their cars and when 804 00:44:09,000 --> 00:44:11,900 they found themselves unable to run their cars anymore, they 805 00:44:11,900 --> 00:44:15,500 faced a 480 dollars a year increase in the cost of doing 806 00:44:15,500 --> 00:44:18,800 that commute by transit. How does every Economist in the 807 00:44:18,800 --> 00:44:22,800 country that has written about BC successful carbon tax story 808 00:44:23,000 --> 00:44:24,800 say that's the picture of success. 809 00:44:24,900 --> 00:44:27,500 I don't get it. I'd like to throw down the 810 00:44:27,500 --> 00:44:29,100 gauntlet on your behalf and safe. 811 00:44:29,300 --> 00:44:31,900 There's anyone who wants to make the claim that it is. 812 00:44:31,900 --> 00:44:35,700 We welcome them on a podcast and we should talk to them about it 813 00:44:35,700 --> 00:44:38,300 on the air. I would love that all of the 814 00:44:38,300 --> 00:44:42,900 studies that say ABCs current tax was successful compared what 815 00:44:42,900 --> 00:44:48,300 actual BC energy consumption was to a theoretical counterfactual 816 00:44:48,600 --> 00:44:52,100 a hypothetical demand rate. And if you accept the 817 00:44:52,100 --> 00:44:56,200 hypothetical demand rate that the leading economists pause it 818 00:44:56,200 --> 00:44:59,600 is the right comparable. You have to accept Their 819 00:44:59,600 --> 00:45:04,400 assertion that between 2008 and 2011 during an economic 820 00:45:04,400 --> 00:45:07,800 recession British Columbia in the absence of a statistically 821 00:45:07,800 --> 00:45:12,300 insignificant carbon tax would have realized the biggest 822 00:45:12,300 --> 00:45:16,700 three-year increase in fuel use in recorded history because if 823 00:45:17,000 --> 00:45:20,000 they're making some assumptions around the counterfactual 824 00:45:20,000 --> 00:45:23,600 they're using to come to the conclusion that CAT tax was 825 00:45:23,600 --> 00:45:28,900 effective is completely Beyond any reasonable assertion. 826 00:45:29,500 --> 00:45:34,600 I think we can say that cap and trade compliance carbon markets 827 00:45:34,600 --> 00:45:39,100 have not reduced emissions. We can say carbon taxes have not 828 00:45:39,100 --> 00:45:42,300 only not reduced emissions but have also placed an enormous 829 00:45:42,300 --> 00:45:46,300 financial burden on the poorest of residents in those 830 00:45:46,300 --> 00:45:50,100 jurisdictions and they spawned some non-transparent industry 831 00:45:50,100 --> 00:45:52,600 subsidy behavior and governments that even the same governments 832 00:45:52,600 --> 00:45:54,700 that are engaged in that pave. Your didn't think they were 833 00:45:54,700 --> 00:45:57,200 going to so it's just crony capitalism. 834 00:45:57,300 --> 00:46:01,300 Yeah, so these attempts Been made with the best of intentions 835 00:46:01,600 --> 00:46:06,200 have resulted in such negative effects and ultimately it's 2018 836 00:46:06,200 --> 00:46:09,700 and we still haven't reduced emissions in any significant 837 00:46:09,700 --> 00:46:12,500 measurable way. So what is left to us? 838 00:46:12,900 --> 00:46:16,000 The market has to see that we have to start removing carbon 839 00:46:16,000 --> 00:46:19,400 from the atmosphere which is why Nori so important to me and 840 00:46:19,400 --> 00:46:23,100 maybe on a schedule that's much more efficient in than my own 841 00:46:23,100 --> 00:46:25,800 they have to ask the question that started getting me see 842 00:46:25,800 --> 00:46:29,900 things which is we got a bunch of really really a significant 843 00:46:29,900 --> 00:46:32,500 pollution reduction success stories in our past. 844 00:46:32,600 --> 00:46:35,500 How do we do that? And you know what the way we 845 00:46:35,500 --> 00:46:38,700 were successful in the past from a regular story standpoint is 846 00:46:38,700 --> 00:46:43,100 exactly the way to move forward, but I can't point to a single 847 00:46:43,300 --> 00:46:47,700 carbon greenhouse gas emissions academic expert in the world who 848 00:46:47,700 --> 00:46:51,200 when they're looking at and analyzing the policy options 849 00:46:51,500 --> 00:46:55,200 include in their list of policy options the way we've done it 850 00:46:55,200 --> 00:46:59,100 well in the past, it's not on the table excellent words. 851 00:46:59,300 --> 00:47:01,200 To close with thank you so much Alden. 852 00:47:01,300 --> 00:47:01,900 Thank you all.