Abe Greenwald writes in the Commentary The Paris Climate Discord Not in my wallet. Excerpts in italics with my bolds.

Global-warming activists predicted that Donald Trump’s withdrawal from the Paris agreement on climate change would claim innocent lives. Trump pulled out over a year ago, and the death toll from the American snub stands at zero. In France, however, violent protests against President Emmanuel Macron’s efforts to mitigate climate change have killed one person and injured 227.

On Saturday, French mobs were protesting a tax hike on fuel. And they, not Macron, are directly to blame for the death and destruction. But the fact that these massive demonstrations happened at all—that they involved some 283,000 protestors—shows how little anyone really worries about climate change.

Macron is trying to get France off of fossil fuels. The French government recently raised diesel taxes by seven euro cents and had planned to raise the gasoline tax by four euro cents. But it turns out that people—not just Americans—care deeply about melting ice caps and rising sea levels only under specific circumstances. Namely, when they can be blamed on the greed and stupidity of their political enemies. They find that they suddenly care a lot less when addressing climate change means shelling out a few extra euro cents. So the French came out in droves, lit bonfires, tore up some buildings, blocked streets, and chanted slogans.

Last year, Trump fought back against critics of the Paris withdrawal by saying, “I was elected to represent the citizens of Pittsburgh, not Paris.” But he might have represented the citizens of Paris, too. “We no longer know what kind of car to buy, petrol, diesel, electric, who knows?” said one protester interviewed by the Guardian. “I have a little diesel van, and I don’t have the money to buy a new one, especially as I’m about to retire. We have the feeling those from the countryside are forgotten.”

Another protestor said that “the fuel tax was just the final straw.” He went on: “All we can do is show that people are angry, that they are not alone and that they can do something about it. I hope there is no violence, but people are angry. I can understand why, for years they have voted for things and nothing has changed for them.” The protestors, known as gilets jaunes, for their signature yellow vests, enjoy 79-percent support among the French working class, according to IFOP.

Meanwhile, as Parisians turn against the core ideas of the Paris agreement, Americans are worked up over the Trump administration’s seeming indifference to a new U.S. government report on climate change. The Fourth National Climate Assessment was prepared by “300 leading scientists,” according to CNN. And like all sober scientific documents, it’s packed to the gills with apocalyptic predictions for the coming century.

The U.S. economy could lose 10 percent of its GDP; crops will shrink, much ocean life will die off, and more people will have less food. Illness will spread, pollution will get worse, floods and wildfires will increase, and, naturally, many people will die. Now, imagine the public response in our own low-trust, grievance-obsessed nation if the Trump administration actually instituted a policy that required every American to pay up to keep that theoretical future at bay.

There’s a curious contradiction in climate activism. On the one hand, we’re told that the effects of climate change are already happening all around us—that we no longer have to wait for signs of devastation. On the other hand, huge resources swing into action to lay out disaster-movie scenarios of a dystopian future. If the effects of climate change are already so evident, why go to all the trouble of scaring us about what’s going to happen? Maybe because even sympathetic people don’t really believe—in their marrow—that anything alarming is currently happening. If they did, perhaps they’d give up their cars and shrink their lifestyles on the spot. But as it stands, they scream for government intervention and then protest when called to share in the cost.

Update Nov. 22, 2018

With the Democrats taking control of the US House of Representatives, we can expect attempts to again “fight climate change” by means of counter productive regulations.  This post explains why such policies are ineffective and produce unintended consequences, with results worse than doing nothing.

Background:  Heisenberg Uncertainty

In the sub-atomic domain of quantum mechanics, Werner Heisenberg, a German physicist, determined that our observations have an effect on the behavior of quanta (quantum particles).

The Heisenberg uncertainty principle states that it is impossible to know simultaneously the exact position and momentum of a particle. That is, the more exactly the position is determined, the less known the momentum, and vice versa. This principle is not a statement about the limits of technology, but a fundamental limit on what can be known about a particle at any given moment. This uncertainty arises because the act of measuring affects the object being measured. The only way to measure the position of something is using light, but, on the sub-atomic scale, the interaction of the light with the object inevitably changes the object’s position and its direction of travel.

Now skip to the world of governance and the effects of regulation. A similar finding shows that the act of regulating produces reactive behavior and unintended consequences contrary to the desired outcomes.

An article at Financial Times explains about Energy Regulations Unintended Consequences  Excerpts below with my bolds.

Goodhart’s Law Regarding Policy Effects

Goodhart’s Law holds that “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes”. Originally coined by the economist Charles Goodhart as a critique of the use of money supply measures to guide monetary policy, it has been adopted as a useful concept in many other fields. The general principle is that when any measure is used as a target for policy, it becomes unreliable. It is an observable phenomenon in healthcare, in financial regulation and, it seems, in energy efficiency standards.

When governments set efficiency regulations such as the US Corporate Average Fuel Economy standards for vehicles, they are often what is called “attribute-based”, meaning that the rules take other characteristics into consideration when determining compliance. The Cafe standards, for example, vary according to the “footprint” of the vehicle: the area enclosed by its wheels. In Japan, fuel economy standards are weight-based. Like all regulations, fuel economy standards create incentives to game the system, and where attributes are important, that can mean finding ways to exploit the variations in requirements. There have long been suspicions that the footprint-based Cafe standards would encourage manufacturers to make larger cars for the US market, but a paper this week from Koichiro Ito of the University of Chicago and James Sallee of the University of California Berkeley provided the strongest evidence yet that those fears are likely to be justified.

Mr Ito and Mr Sallee looked at Japan’s experience with weight-based fuel economy standards, which changed in 2009, and concluded that “the Japanese car market has experienced a notable increase in weight in response to attribute-based regulation”. In the US, the Cafe standards create a similar pressure, but expressed in terms of size rather than weight. Mr Ito suggested that in Ford’s decision to end almost all car production in North America to focus on SUVs and trucks, “policy plays a substantial role”. It is not just that manufacturers are focusing on larger models; specific models are also getting bigger. Ford’s move, Mr Ito wrote, should be seen as an “alarm bell” warning of the flaws in the Cafe system. He suggests an alternative framework with a uniform standard and tradeable credits, as a more effective and lower-cost option. With the Trump administration now reviewing fuel economy and emissions standards, and facing challenges from California and many other states, the vehicle manufacturers appear to be in a state of confusion. An elegant idea for preserving plans for improving fuel economy while reducing the cost of compliance could be very welcome.

The paper is The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel-Economy Standards Koichiro Ito, James M. Sallee NBER Working Paper No. 20500.  The authors explain:

An attribute-based regulation is a regulation that aims to change one characteristic of a product related to the externality (the “targeted characteristic”), but which takes some other characteristic (the “secondary attribute”) into consideration when determining compliance. For example, Corporate Average Fuel Economy (CAFE) standards in the United States recently adopted attribute-basing. Figure 1 shows that the new policy mandates a fuel-economy target that is a downward-sloping function of vehicle “footprint”—the square area trapped by a rectangle drawn to connect the vehicle’s tires.  Under this schedule, firms that make larger vehicles are allowed to have lower fuel economy. This has the potential benefit of harmonizing marginal costs of regulatory compliance across firms, but it also creates a distortionary incentive for automakers to manipulate vehicle footprint.

Attribute-basing is used in a variety of important economic policies. Fuel-economy regulations are attribute-based in China, Europe, Japan and the United States, which are the world’s four largest car markets. Energy efficiency standards for appliances, which allow larger products to consume more energy, are attribute-based all over the world. Regulations such as the Clean Air Act, the Family Medical Leave Act, and the Affordable Care Act are attribute-based because they exempt some firms based on size. In all of these examples, attribute-basing is designed to provide a weaker regulation for products or firms that will find compliance more difficult.

Summary from Heritage Foundation study Fuel Economy Standards Are a Costly Mistake Excerpt with my bolds.

The CAFE standards are not only an extremely inefficient way to reduce carbon dioxide emission but will also have a variety of unintended consequences.

For example, the post-2010 standards apply lower mileage requirements to vehicles with larger footprints. Thus, Whitefoot and Skerlos argued that there is an incentive to increase the size of vehicles.

Data from the first few years under the new standard confirm that the average footprint, weight, and horsepower of cars and trucks have indeed all increased since 2008, even as carbon emissions fell, reflecting the distorted incentives.

Manufacturers have found work-arounds to thwart the intent of the regulations. For example, the standards raised the price of large cars, such as station wagons, relative to light trucks. As a result, automakers created a new type of light truck—the sport utility vehicle (SUV)—which was covered by the lower standard and had low gas mileage but met consumers’ needs. Other automakers have simply chosen to miss the thresholds and pay fines on a sliding scale.

Another well-known flaw in CAFE standards is the “rebound effect.” When consumers are forced to buy more fuel-efficient vehicles, the cost per mile falls (since their cars use less gas) and they drive more. This offsets part of the fuel economy gain and adds congestion and road repair costs. Similarly, the rising price of new vehicles causes consumers to delay upgrades, leaving older vehicles on the road longer.

In addition, the higher purchase price of cars under a stricter CAFE standard is likely to force millions of households out of the new-car market altogether. Many households face credit constraints when borrowing money to purchase a car. David Wagner, Paulina Nusinovich, and Esteban Plaza-Jennings used Bureau of Labor Statistics data and typical finance industry debt-service-to-income ratios and estimated that 3.1 million to 14.9 million households would not have enough credit to purchase a new car under the 2025 CAFE standards.[34] This impact would fall disproportionately on poorer households and force the use of older cars with higher maintenance costs and with fuel economy that is generally lower than that of new cars.

CAFE standards may also have redistributed corporate profits to foreign automakers and away from Ford, General Motors (GM), and Chrysler (the Big Three), because foreign-headquartered firms tend to specialize in vehicles that are favored under the new standards.[35] 

Conclusion

CAFE standards are costly, inefficient, and ineffective regulations. They severely limit consumers’ ability to make their own choices concerning safety, comfort, affordability, and efficiency. Originally based on the belief that consumers undervalued fuel economy, the standards have morphed into climate control mandates. Under any justification, regulation gives the desires of government regulators precedence over those of the Americans who actually pay for the cars. Since the regulators undervalue the well-being of American consumers, the policy outcomes are predictably harmful.

Nevada voters passed Question 6 on Tuesday, which calls for the state to use 50 percent renewable energy by the year 2030. Supporters say Question 6 will generate hundreds of millions of dollars in economic activity and create thousands of new Nevada jobs (sic)

“Clean energy is putting Nevadans to work, with more than 25,000 strong employed in 2017,” said Ray Fakhoury, state policy manager with the national business group Advanced Energy Economy, in statement. “By increasing the state’s renewable standard, Nevada has set itself up to continue reaping the economic benefits for years to come.”

Major corporations, including casinos and data centers, have recently been investing heavily in renewable energy in Nevada. With the passage of Question 6, Alli Gold Roberts, senior manager of state policy with Ceres, said the state is “poised to continue to attract corporate renewable energy investment.”

Question 6, to boost the RPS to 50 percent, will now have to pass again in 2020 in order to become law. AEE’s Fakhoury said consumers could see benefits sooner than that. “Passing with wide support, the legislature and governor-elect should move forward in the upcoming legislative session to enact this landmark increase,” he said.

Corporate clean energy buyers invested heavily in a separate Nevada ballot measure, Question 3, which sought to deregulate Nevada’s retail electricity market, but the measure was ultimately unsuccessful. Question 3 was the subject of fierce debate. According to the Nevada Independent, it was backed by Sheldon Adelson’s Sands Corp. (Adelson also happens to be a major Republican donor) and the data company Switch, as well as many clean energy and environmental groups.

But there were also concerns about how Question 3 would affect electricity rates and clean energy adoption. The Natural Resources Defense Council, the Sierra Club, Southwest Energy Efficiency Project, and Western Resource Advocates came out against deregulating Nevada’s electricity market because of the disruption they said it would cause to the state’s clean energy progress. NV Energy also opposed Question 3, and planned to spend $30 million on defeating it.

Arizona rejects 50% RPS
Arizona voters overwhelmingly rejected Proposition 127 on Tuesday, a constitutional amendment that would have required 50 percent of the state’s electricity to come from renewable sources by 2030. It’s a significant victory for the state’s largest utility, Arizona Public Service (APS), which spent heavily to oppose the measure. California billionaire Tom Steyer’s political group NextGen America funded efforts in support of the measure.

Proposition 127 was by far the most expensive ballot initiative in Arizona state history. Opponents said the measure would increase electric bills by forcing utilities to build new solar and wind plants, which would result in the early closure of coal plants and the state’s lone nuclear plant. Supporters argued those claims were unfounded given that renewable energy resources are now competitive with fossil fuels, even when coupled with battery storage.

APS was particularly outspoken about losing the Palo Verde nuclear plant if the RPS measure passed. If that plant goes offline, the utility argued, greenhouse gas emissions in the state would rise.

While Proposition 127 has failed, Arizona regulators are still considering a proposal to increase Arizona’s RPS to 80 percent by 2050 and broaden it to also include nuclear power. APS generally supports that plan.

Colorado votes down a fracking ban
Colorado voters rejected a measure Tuesday that would have blocked new oil and gas drilling within 2,500 feet of homes, schools and other occupied areas.

Proposition 112 stemmed from complaints that fracking was encroaching on populated areas, creating health and safety concerns. An analysis showed that the measure would have blocked new oil and gas wells on 85 percent of nonfederal land in Colorado, which is America’s fifth-largest gas-producing and seventh-largest oil-producing state.

Washington state rejects a carbon price — again
Washington state has failed, once again, to pass a carbon tax. Initiative 1631, the Carbon Emissions Fee Measure, would have set a carbon fee starting at $15 per ton in 2020, rising to around $55 per ton in 2035, depending on inflation.

This is the second major election in a row in which Washington voters have rejected a ballot initiative that would put a price on carbon emissions. The first such ballot was proposed in 2016 and failed.

Tuesday’s loss may cast doubt on the broader narrative that states will lead on climate action in the absence of federal leadership, or it could signal that Americans simply aren’t ready to get behind a carbon tax. Alternatively, it could have all come down to spending. Supporters of Initiative 1631 spent at least $12 million to advance the measure, while opponents spent more than $25 million.

Source: Greentech Media  Midterms 2018: Mixed Results for the Renewable Energy Agenda

Background: Five States to Vote on Futile Climate Proposals

At Institute of Economic Affairs, IEA’s Director of Research Dr Jamie Whyte explains (here) why taxing carbon is a bad economic idea. Excerpts in italics with my bolds.

The emission of greenhouse gases – CO2 from burning fossil fuels and methane from flatulent livestock – is warming the global climate. Let’s not quibble about this scientific consensus, even if there are grounds for scepticism. The question for economists is the proper policy response.

The standard view is that greenhouse emissions are a classic negative externality, and that a Pigouvian tax should be applied. For example, farmers should pay a “fart tax” for each cow they own. This would internalise the external cost of the farts, and cows would be farmed only when the total benefits of doing so exceeded the total cost.

This is preferable to a cap-and-trade system, because the cap is arbitrary. If the price of emitting CO2 under such a scheme were to exceed the external cost (the Pigouvian tax), then too little CO2 would be emitted.

Ronald Coase’s insights about managing external costs through private bargaining are irrelevant here because no one owns the climate and, even if such rights were assigned, the owners would be so numerous and dispersed that the costs of bargaining would be prohibitive.

Climate change is a stool standing only if all three assertions are true. This post is addressing the last one.

But does anthropogenic global warming warrant a Pigouvian tax on the emission of greenhouse gases?

The first difficulty is estimating the external cost of greenhouse gas emissions and, hence, the size of the tax. Begin by noting that global warming will have benefits. Increased CO2 emissions have caused a great greening of the planet over the last 20 years. If the climate warms as predicted, vast tracts of land in Russia and Canada, now too cold for agriculture, will become arable. We should expect food to become more abundant and cheaper. More generally, the costs created by cold weather – heating, delays in construction work, etc – should decline. Many people like warm weather. They pay good money to travel to it. I would willingly pay £2,000 a year to make London five degrees warmer.

Of course, there will be costs too. Sea levels may rise, swamping some now inhabited areas. Some places may become too hot for comfortable habitation or agriculture (though these are sure to be smaller than the cold areas made usable). The number of storms may increase, destroying property and interrupting economic activity.

So what is the net cost? No one knows. They don’t even know if it is negative or positive. So they don’t know if greenhouse gas emissions should be taxed or subsidised.

This not an anti-science position. Scientists can predict physical outcomes (with varying degrees of certainty, which, in the case of climate science, is low). But they cannot predict economic outcomes. They cannot tell you the value of those physical outcomes. Global warming will have many effects – some positive, some negative – on a vast number of people with very different environmental circumstances, incomes and preferences. Anyone who claims to know the net aggregate value of global warming displays amazing overconfidence.

Some will say that ignorance itself gives us reason to impose the Pigouvian tax (at some arbitrarily chosen level, as is unavoidable given our ignorance). We should think of it as an insurance policy. The dire warnings may be true and, just in case they are, we should take measures to reduce emissions. Think of the tax as an insurance premium paid against the risk of global warming being net negative.

Yet this logic fails by simply reversing the argument. Global warming might benefit mankind. It would be a tragedy if we didn’t take the opportunity this presents. To avoid this risk, we should tax people to subsidise greenhouse gas emissions. Think of the tax as an insurance premium paid against the risk of missing out on global warming.

This ignorance argument against taxing or subsidising greenhouse gas emissions applies to many things with spill-over effects. Revealing clothes, for example. They affect people besides those who choose to wear them. Are these external effects positive or negative? The answer differs from beholder to beholder and context to context.

There is also a political problem to applying Pigouvian taxes to greenhouse gas emissions – namely, that it is likely to simply relocate emissions rather than cut them. A carbon tax applied in the US will shift (marginal) industrial production to places that don’t apply it. Carbon taxes are one of those cases where there is no point doing something unless (almost) everyone else does it too. Those who advocate applying one in their own country are implicitly committed to the idea that all other relevant countries will also apply one. But that is implausible. The gains from breaking ranks are too great.

Given our ignorance and the implausibility of a globally enforced Pigouvian tax, we should just wait and see. We can adapt to the ill-effects of global warming – relocating activities if need be or building sea defences – while taking advantage of the gains. And we can do this without incurring any immediate cost. Let future people, who will be richer than us, pay for the costs that may arise.

Hats off to all for arriving at an agreement for economic transactions unburdened by obsessions with CO2 and unfounded claims of humans controlling the weather. A survey of the text shows the terms “climate” and “warming” do not appear even once. Good job!

Of course, greens are up in arms. Imagine signing a trade agreement that does nothing to destroy our economies in order to save the planet from CO2.

The deal does have a chapter on the environment, but critics such as the Council of Canadians call it weak and unenforceable.

It mentions pollution, marine traffic, endangered animals and ozone, but ignores what many call the world’s largest environmental challenge.

“The deal doesn’t even mention climate change,” Stewart said.

What has been thrown out is a provision in the old North American Free Trade Agreement that allowed corporations to sue governments for lost profits if they were injured by public-interest regulations such as environmental laws. The Council of Canadians pointed out that Canada was sued 37 times, mostly by American companies, under the old clause.

Update October 2, 2018

The new NA trade accord also strengthens energy security and trade. From offshore-technology.com:

The US oil and gas industry has urged Congress to approve the Trump administration’s renegotiated North American Free Trade Agreement (NAFTA), saying that the deal will support US oil and gas exports across North and South America.

American Petroleum Institute president and CEO Mike Sommers said: “We urge Congress to approve the United States-Mexico-Canada-Agreement (USMCA). Having Canada as a trading partner and a party to this agreement is critical for North American energy security and US consumers. Retaining a trade agreement for North America will help ensure the US energy revolution continues into the future.”

There were concerns in the industry that Trump would scrap the NAFTA, which was pivotal in making Mexico the largest exporter of US oil, transportation fuel, and natural gas.

Meanwhile, with support from the trade agreement, Canada is the largest supplier of foreign oil and a significant exporter of electricity to the US.

The deal also makes Canada’s heavier crude oil more attractive to refiners in the Mexican Gulf, especially at a time when Venezuela’s production has reduced amid political and financial worries. Fracked US crude oil is lighter, and refineries in the Gulf, which traditionally deal with heavier crude, are still adjusting their processing practices.

The new NAFTA deal ensures a ‘zero-tariff’ on energy products traded between the US, Mexico and Canada.