Jul 1, 2015
Judge's comment: This proposal suggests an insurance premium be paid by producers of products in proportion to the risk that the products end up as "waste." To the extent that the waste is GHG emissions, then this makes some sense. To the extent that waste is something else, it is not clear what risks exactly the premium is meant to price. In principle, if there are environmental costs associated with landfills, air pollution, etc., then those impacts could be priced. My reply: I believe the proposal was very clear, that the risk being priced is waste-risk, the likelihood of a product ending up as wastes in ecosystems. This waste-risk is a proxy for a wide range of other tangible risks including climate risks. This provides a preventive alternative to the conventional approach to externalities that you mention, of attempting to price environmental costs. The conventional approach has had little success over the 40+ years that it has been proposed so I'd hoped that judges may have been open to new solutions. Judge's comment: The problem is that a producer had no information about or control over the range of ways in which consumers use or dispose of their products. It is difficult to see how you would avoid double counting. Should the glass manufacturer, the soda manufacturer, the distributor, or the retailer be responsible? And how does one set the fee? On a ton basis? It would also be good to see how insurers would fit into this system. Finally, it would be hard to see Congress passing such a policy. This proposal is a great conceptual piece, but would benefit from more specificity. My reply: Your claim about producer's influence over product end-of-life seems poorly-considered and unfounded. Fossil fuel producers know very well that their product ends up as wastes in the atmosphere and oceans. Other producers know, or can easily learn, what happens to their type of product. Producers have great influence over the waste-risk of their products, for example by choosing robust and recyclable or biodegradable designs rather than flimsy toxic throwaway designs. Double counting is easily avoided, since the proposal clearly states it is producers who are responsible, not distributors or retailers. Per-product fees would reflect waste-risk, material weights and material impacts (eg toxicity or climate disruption). Insurers fit into this system as clearly stated in the proposal by collecting the premiums and spending (or allocating to others to spend) on actions that cut waste-risk. The proposal offers Congress a way around the perpetual roadblock of climate denial by changing the argument from 'climate action' to 'economic efficiency'. However if the community of experts are not seeking new methods and arguments then what chance does Congress have? The judge's comment suggests the Climate CoLab may itself need review to genuinely encourage the massive innovation breakthroughs needed to escape the locked-in dreary futility of conventional climate efforts.
Jan 18, 2016
I think this proposal seeks to break through the inertia found in manufacturing and resource extraction by valuing risk of harm to our commons. While I am not a fan of any sort of pricing or fees which can easily be passed down to consumers when financial responsibility ought lie with those who produce harmful products, I think there is good cause to embrace this climate solution idea.
There are ways to ensure costs don't get passed down, though some may still find ways around that. Monitoring of pricing schemes may need to be part of the solution. If industry finds the cost of risk is too high due to climate protection solutions, they will naturally "shift" their business practices. Financial "incentives" are known to curtail industrial behavior that causes harm (such as lawsuits). Traditionally, such incentives are after the fact - climaterescue makes the case for putting the cost of risk at the front end. That's a great idea whose time has come.
It may be useful to include publicly supported product information tools such as theopenlabel.com so consumers can directly assist in monitoring and managing waste risks.
Jan 19, 2016
Many thanks Pia! Yes the idea is to handle risk to climate as an aspect of waste-risk. Fuels can end up as wastes in the air; in general any product can end up as wastes in any ecosystem. Producers are allocated this responsibility, since they are are already responsible for the decisions that affect waste-risk - and the profit! The premiums are just a business cost so could be passed onto buyers, though the circular/renewable options will be more competitive. We would see a helpful rearrangement of what's offered in the market, not just different prices. Thanks for theopenlabel link! :-) James