Topicality Two

Topicality William Huang

DDI ‘08 Kernoff/Olney

TOC TOC..............................................................................................................................................................................................................1 RPS Topical..................................................................................................................................................................................................2 Regulations Topical......................................................................................................................................................................................3 Negative Incentives Topical.........................................................................................................................................................................4 Mandatory Untopical...................................................................................................................................................................................6 Mandatory Untopical...................................................................................................................................................................................7 Limits...........................................................................................................................................................................................................8 USFG Can’t Incentivize Itself...................................................................................................................................................................10 Mandatory =/= Voluntary...........................................................................................................................................................................12 Only Cash is Topical..................................................................................................................................................................................13 Taxes Are Topical.......................................................................................................................................................................................14 Incentives Are Economic...........................................................................................................................................................................15 Cap And Trade not Topical........................................................................................................................................................................16 Command and Control not Topical............................................................................................................................................................18 Cap and Trade Topical...............................................................................................................................................................................19 Cap and Trade Topical...............................................................................................................................................................................20 Incentives are Positive and Negative.........................................................................................................................................................21 Incentives are Vague..................................................................................................................................................................................22 AT: It’s Logical..........................................................................................................................................................................................23 Incentives =/= Tax Credits.........................................................................................................................................................................24 Regulation =/= Bans..................................................................................................................................................................................25 Alternatives Exclude Nuclear....................................................................................................................................................................26 Alternatives Exclude Nuclear....................................................................................................................................................................27 Alternatives = Nontraditional (list)............................................................................................................................................................28 Alternatives Include Nuclear.....................................................................................................................................................................29 Alt =/= Renewable.....................................................................................................................................................................................30 Alternative..................................................................................................................................................................................................31 Energy........................................................................................................................................................................................................38 Incentives...................................................................................................................................................................................................39

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Topicality William Huang

DDI ‘08 Kernoff/Olney

RPS Topical RPS is an alternative energy incentive Joshua Fershee, Assistant Professor of Law at the University of North Dakota School of Law, 2008, Energy Law Journal, “Changing Resources, Changing Market: The Impact of a National Renewable Portfolio Standard on the U.S. Energy Industry” L/N As might be expected, the retail electric suppliers in states with an RPS are expected to account for the bulk of the renewable energy generating capacity in the United States. n97 It is clear that RPS states have built, and are building, more renewable energy generation facilities than non-RPS states, but it is not clear to what extent this is the result of an RPS policy. That is, an RPS policy provides incentives for building new renewable generation capacity, but other factors, especially the availability of renewable energy resources, also play a significant role. n98

RPS and renewable credits provide an incentive for alternative energy Joshua Fershee, Assistant Professor of Law at the University of North Dakota School of Law, 2008, Energy Law Journal, “Changing Resources, Changing Market: The Impact of a National Renewable Portfolio Standard on the U.S. Energy Industry” L/N The mere existence of a national RPS would provide some incentive for all utilities to invest in renewable generation because that investment would have two markets - the market for its electricity and the market for its RECs - instead of just the market for its electricity for a traditional generation facility. n107 In [*64] addition, it is likely that power projects will require "more equity, less debt, and shorter debt repayment periods" than in the past. n108 "Developers will probably attempt to sign bilateral contracts with large end users, marketers, aggregators, and utilities, but contract terms are likely to be shorter than in the past." n109 In fact, "corporate balance-sheet financing may also become more common." n110 If a utility buys RECs and energy from another supplier, there is also a risk that purchase agreement would end up showing as a long-term debt on the utility's balance sheet. n111 Thus, how a national RPS would impact such capital-intensive investments is hard to predict.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Regulations Topical Incentives are either financial incentives or regulations Database of State Incentives for Renewables and Efficiency, North Carolina State University, 2007, http://www.dsireusa.org/faq/faq.cfm?&CurrentPageID=9&EE=1&RE=1 What types of renewable energy incentives does DSIRE track? The DSIRE project tracks information on state, utility, local, and selected federal incentives that promote the use of renewable energy technologies. For more information on federal incentives, see What federal incentives does DSIRE track. On the DSIRE website, incentives are grouped into two categories as follows: (1)Financial Incentives: tax incentives, grants, loans, rebates, industry recruitment, bond programs, and production incentives. (2) Rules, Regulations, & Policies: public benefits funds, renewables portfolio standards, net metering, interconnection, extension analysis, generation disclosure, contractor licensing, equipment certification, solar/wind access laws, and construction & design standards (including building energy codes and energy standards for public buildings), required utility green power options, and green power purchasing/aggregation policies.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Negative Incentives Topical Energy incentives can be positive or negative Economic Commission for Europe, “DRAFT 2006 REVIEW OF STRATEGIES AND POLICIES FOR AIR POLLUTION ABATEMENT,” 11/14/06 http://www.unece.org/env/documents/2006/eb/EB/ece.eb.air.2006.4.add.2.e.pdf 1. Positive incentives 53. Positive incentives include: grants, subsidies, tax rebates, tax incentives, credit guarantees, soft loans and tradable permits. All of these aim to have an impact on individual patterns of consumption and to minimize air pollution and its effects. In Canada, under the Wind Power Production Incentive, companies opting for wind generators were eligible for payments of up to 1.2 cents/kilowatt-hour produced. In Cyprus, since 2004, the owners of vehicles equipped with catalytic converters paid less tax than owners of non-catalytic vehicles. Additionally, the following tax incentives were introduced in November 2003: a 15% discount on the excise duty for cars with CO2 emissions of 150g/km or less and a 10% penalty on cars with CO2 emissions of 275g/km or more. From January 2006 the purchase of a hybrid car was subsidised by the Government by an amount of £800 CYP (about Euro 1,350) and incentives were offered for scrappage of vehicles over 15 years old. In Lithuania the Environmental Protection Investment Fund provided subsidies for environmental protection projects of up to 350,000 litas (approximately 101,000 euros) over a three-year period. The Fund financed 26 environmental protection projects, 18 of which (70%) were related to pollution reduction, conversion to cleaner fuels, renovation of home boilers, installation of air-treatment filters or other energy-saving measures. 54. Many Parties used subsidies and other financial incentives to promote the use of renewable energy such as solar power or wind turbines, including in Austria,Canada, the Czech Republic, Germany, Italy and the Netherlands. TheCzech Republic reported that it offered financial support for pilot projects for the supply of alternative energy, especially thermal energy. Subsidies could be obtained for the preparation of project documents and for the implementation of projects with a maximum of 100,000 euros over three years. Since July 2005, the Netherlands has stimulated the use of sulphur-free diesel by reducing the tax charged; since June 2005, the purchase of new diesel-powered cars equipped with soot filters was encouraged through a 600-euro discount on the tax for personal motor vehicles. Starting in mid-2006, a subsidy for retrofitting a soot filter into existing, trucks, vans, buses, personal cars, diesel powered locomotives and inland ships would come into force. A subsidy scheme was also in force since 2006 for catalytic converters for inland shipping. More than 100 techniques for the reduction of air pollution (e.g. wet scrubbers, desulphurisation processes, low NOx burners, catalytic reduction system, low emission animal housing systems, etc.) were eligible for fiscal benefits intended to stimulate environmentally friendly technologies. 55. In Slovenia, subsidies and soft loans were available for energy efficiency measures and for the use of renewable energy sources for households (e.g. solar heating technologies, energy efficient windows, biomass heating, heat pumps) and for companies (e.g. biomass technologies). The United Kingdom has allocated over £500 million (approximately 740 million euros) between 2002 and 2008 to support the development of renewable and low-carbon technologies. 56. Austria noted itoffered subsidies for the rehabilitation of old residential buildings in order to reduce their impact on air pollution. Positive incentives in Germany included tax incentives for the use of low sulphur fuels and for renewable energies and federal grants to promote public transport in municipalities. 57. Tradable permits were also being increasingly utilized to minimise emissions. Canadareported it had implemented tradable unit systems to reduce two toxic substances, tetrachloroethylene and trichloroethylene. At the provincial level, Ontario’s cap and trade system for NO and SO2 emissions from power plants and British Columbia’s differentiated fees for industrial polluters were noteworthy. At the federal level, a cap and trade system to phase out methyl bromide and HCFCs had been introduced. In theNetherlands, a NOxemission trading system, started in July 2005, was based on performance standard rates. It focused on extra overall reductions in addition to those resulting from the ELVs set forth in national legislation. Slovakia also had an emissions trading act for SO2 and CO2. 2. Negative incentives 58. Negative incentives include taxes, fees, and various charges. In the Czech Republic, the Air Protection Act imposed fees for air pollution for the operators of very large, large and medium-sized sources and small stationary sources. For large sources fees were paid into the State Environmental Fund, which then promoted projects intended primarily to reduce emissions. For small sources, the fees went directly to the municipality and were earmarked for environmental protection. Germany applied a range of dissuasive market measures including road user charges for heavy goods transport and emission-based vehicle taxes. Further planned measures included the reduction of the distance-related tax refund for commuters and the equalisation of fuel tax on petrol and diesel. In Estonia, a plant that emitted more than was stipulated in its permit was subject to higher taxes. 59. In Lithuania,charges on pollutants discharged to the atmosphere from stationary and mobile pollution sources were introduced through the 1991 Law on Pollution Charge. Energy plants with a capacity exceeding 1MW (0.5 MW if solid fuel was used) must possess an environmental permit. Charges on pollution from stationary sources were paid according to the amount of pollutants

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Topicality William Huang DDI ‘08 Kernoff/Olney actually emitted during a reporting period. If the polluter implemented measures to reduce pollutant emissions by at least 5 per cent from the maximum allowable, it would be exempted from the charge on the pollutants. Exemptions were valid for the period of implementation of the air pollution abatement measures, but not more than 3 years. 60. In Switzerland, two taxes were introduced in 2000. One was applied to VOCs whereby CHF 3 (approximately 2 euros) per kg of VOC was to be paid on imports of solvents. The second was on fuel with a sulphur content higher than 0.1%. Another dissuasive economic tool applied in Switzerland was the distance-related heavy-duty fee introduced in 2000. This followed the European norms (EURO 1, 2 or 3) according to the emission category. In Slovenia, taxes were applied to waste, depending on the level of methane emissions.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Mandatory Untopical Incentive are positive inducements – this excludes requirements Ann Turnbull et al, professor of Special Education and Courtesy Professor of Law, Co-Director of the Beach Center on Families and Disability, University of Kansas, 2001 The term "incentive" is different from the term "requirement." An incentive is a positive reason for acting; a requirement is a legal duty to act. The differ-ence in meaning is consistent with our argument above that the PBS provisions do create a presumption in favor of that technology. Negative ground – they make the topic bidirectional, including “disincentives” means we need an entire new category of negative arguments because the stick approach is radically distinct from the carrot Fred Harris, 1989, professor of law at the University of Illinois, “Automobile Emissions Control Inspection and Maintenance Program: Making It More Palatable to Coerced Participants” 53. The term "incentives," for purposes of this Article, means those devices that induce one into doing something because of the prospect of reward and, therefore, engender a positive feeling within the actor. An example of incentives in this sense would be tax incentives like credits and/or deductions. But it appears that Congress, some courts and a few commentators have taken a broader view of incentives and have categorized items such as extensions to compliance deadlines and, most notably, sanctions in the Act-denials of federal grants and bans on construction in the event of noncompliance-as incentives to compliance. To be sure, these latter items may induce compliance but surely not because of the extension of a "carrot." Instead,they epitomize the "stick" or "disincentive" approach to behavioral modification. Incentives – even broadly defined – must be positive. Duncan Knowler, UN Food and Agricultural Organization, 1999, “Incentive Systems for Natural Resource Management: The Role of Indirect Incentives”, ftp://ftp.fao.org/docrep/fao/007/x2247e/x2247e00.pdf) 1.8 Incentives may be broadly defined, as in “everything that motivates or stimulates people to act” (Giger 1996). What is important about such a broad definition is that it allows for incentives to be of either a passive or an active nature. In the former case, we can think of incentives as signals in the producer’s environment which influence decision-making about farming practices, whether intended or otherwise. Many macroeconomic policies, being remote from the producer and targeted at objectives other than promoting sustainable farming practices, would fit into this category. In contrast, the notion of ‘active’ refers to a government’s ability to actually design or modify policies with a desire to bring about certain conservation outcomes. McNeely (1988), for example, refers to this concept of incentive when he defines incentives as “any inducement which is specifically intended to incite or motivate governments, local people, and international organizations” (p.38-39). We draw this distinction because of the need to consider both active and passive aspects when assessing the importance of incentives for NRM. While governments may be most concerned with the design of good policies aimed at improving NRM, they need to be cognizant of the sometimes counterproductive influence exerted by a poor incentive structure, in the passive sense. 1.9 McNeely (1988) also makes the useful distinction between incentives, disincentives and perverse incentives.In contrast to incentives, which we have described above, disincentives are purposely designed to discourage particular behaviours and can include taxes, fines and various other penalties or moral suasion. For purposes of this study, we will not consider disincentives as distinct from incentives per se, but it is useful to be aware of the distinction. In contrast, perverse incentives incite resource users to damage or deplete the resources in question in a socially inefficient manner and are closely related to the concept of policy failure, which is discussed in Chapter 2. Incentives are subsidies and financial assistance Energy Information Administration, US Department of Energy, 2001, “Renewable Energy 2000: Issues and Trends”, February, http://tonto.eia.doe.gov/ftproot/renewables/06282000.pdf The term “incentive” is used instead of “subsidy.” Incentives include subsidies in addition to other Government actions where the Government’s financial assistance is indirect. A subsidy is, generally, financial assistance granted by the Government to firms and individuals.

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Topicality DDI ‘08 Kernoff/Olney

William Huang

Mandatory Untopical

Incentives are an offer of value meant to alter a course of action Ruth Grant, professor of political science at Duke, 2002, “The ethics of incentives: Historical Origins and contemporary understandings”, Economics and Philosophy, Proquest Increasingly in the modern world, incentives are becoming the tool we reach for when we wish to bring about change. In government, in education, in health care, between and within institutions of all sorts, incentives are offered to steer people's choices in certain directions. But despite the increasing interest in ethics and economics, the ethics of the use of incentives has raised very little concern. From a certain point of view, this is not surprising. When incentives are viewed from the perspective of market economics, they appear to be entirely unproble-matic. An incentive is an offer of something of value, sometimes with a cash equivalent and sometimes not, meant to influence the payoff structure of a utility calculation so as to alter a person's course of action. In other words, the person offering the incentive means to make one choice more attractive to the person responding to the incentive than any other alternative. Both parties stand to gain from the resulting choice. In effect, it is a form of trade, and as such, it meets certain ethical requirements by definition. A trade involves voluntary action by all parties concerned to bring about a result that is beneficial to all parties concerned. If these conditions were not met, the trade would simply not occur. And as inducements in a voluntary transaction, incentives certainly have the moral high ground over coercion as an alternative. Taxing bad behavior is an incentive David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print A. Taxes The government may tax pollution* to create an economic incentive to reduce pollution.6 In order for a tax to encourage innovation and superior environmental performance, it must have several characteristics.*' First, the tax must apply to activities of firms that already comply with all applicable emission limitations, or that have no applicable limitations. Second, the tax must exceed the marginal costs of making additional reductions.zzs A tax that lacks these features creates insufficient incentives to reduce emissions below current levels.29

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Limits Defining incentives broadly creates conceptual confusion and makes anything an incentive Ruth Grant, professor of political science at Duke, 2002, “The ethics of incentives: Historical Origins and contemporary understandings”, Economics and Philosophy, Proquest This history also allows us to define more clearly what `incentives' means. Currently, the term is used so broadly that it is often almost synonymous with motivation altogether. But, despite its current quite general usage, a distinctive specific meaning of the term remains, one that is easier to identify after taking this historical journey. The specific meaning can be illustrated by identifying those situations where only the word `incentive' will do. Very often, the term is now used where another would do equally well. For example, `incentive' is sometimes used as if it were a synonym for `reward', but they do not mean exactly the same thing. A reward or punishment, unlike an incentive or disincentive, is understood to be merited or deserved. Offering a reward may serve as a motivator or incentive to action, but the two are quite distinct in principle. People can win awards, for example, without even knowing in advance that they were eligible. They deserve the reward, and there is no element of motivation involved at all. Similarly, `incentive' is sometimes used as if it were synonymous with `motivation' generally speaking. But there are several important sorts of motivation that are not suggested by the term. When we speak in this way, we implicitly deny the phenomena of habitual behavior, or action motivated by a sense of responsibility or of the reasonableness of a course of action (with reasonableness here understood as something other than individual utility maximization), or the way in which a role model or ideal can serve as motivator. Action which is initiated by the individual or understood as internally motivated is not really compre-hended in the concept of motivation as incentive. Incentives are external prompts to which the individual responds. The use of `incentives' to speak of market forces is also problematic, though it is easy to see the logic of this development within the language of economics. If one company lowers the price of its product, we might readily say that other companies now have an incentive to lower theirs. But we would not say that the first company offered all other companies an incentive to lower their prices.55 Market forces are not conscious and intentional, and their rationale is intrinsic to the economic process itself. We might just as well say in this situation that the first company's lower price is a good reason for other companies to lower theirs given that they need to remain competitive. The term `incentive' says nothing that `reason' cannot say as well in this case. A similar logic applies to speaking of loan conditions as incentives. The International Monetary Fund may make a loan to a nation only on condition that it alter its inflationary policies. If the reason for the condition is intrinsic to the IMF's own financial aims, `incentive' may be a misnomer. The situation is like that of requiring a certain training as a condition for the practice of medicine; we would be unlikely to refer to this as an `incentive' to go to medical school for people who wish to become doctors.56 When the IMF is criticized for using financial incentives unethically to control the internal policies of borrowing nations, it is because the critics suspect that its real purposes are political rather than strictly limited to the legitimate concern to secure the financial health of the Fund. The distinction between market forces and incentives can be illustrated further by considering the difference between wages as compensation and incentives as bonuses in employment. Compensation means `rendering equal', a `recompense or equivalent', `payment for value received or service rendered', or something which `makes up for a loss' ± as in the term `unemployment compensation'. Compensation equalizes or redresses a balance, and so, to speak of `fair compensation' is entirely sensible. But to speak of a `fair incentive' is not. An incentive is a bonus, which is defined as something more than usually expected, that is, something that exceeds normal compensation. It is an amount intentionally added to the amount that would be set by the automatic and unintentional forces of the market. An incentive is also a motive or incitement to action, and so an economic incentive offered to an employee is a bonus designed to motivate the employee to produce beyond the usual expectation. It should be obvious then, that compensa- tion and incentives are by no means identical. The per diem received for jury service, for example, is a clear case of compensation which is not an incentive in any sense. It is not difficult to see how it might have happened that the boundaries were blurred between the specific conception of incentives and conceptions of the automatic price and wage-setting forces of the market. Both can be subsumed under very general notions of the factors that influence our choices or motivate action, and `incentives' carries this general meaning as well. Nonetheless, the blurring of that boundary creates a great deal of confusion. Incentives, in fact, are understood better in contradistinction to market forces than as identical to them. It is only by maintaining a clear view of their distinctive character that the ethical and political dimensions of their use are brought to light. Moreover, conceptual clarity and historical understanding go hand in hand in this case. It should no longer be surprising to find that the term `incentives' is not used by Adam Smith in first describing the operation of the market, but appears instead at a time when the market seemed inadequate in certain respects to the demands presented by changing economic circumstances. Other eighteenth and nineteenth- century ideas, often taken as simple precursors of contemporary analyses of incentives, can now be seen in their distinctive character as well. For example, Hume and Madison offer an analysis of institutional design which differs significantly from `institutional incentives', though the two are often confused. These thinkers were concerned with preventing abuses of power. They sought to tie interest to duty through institutional mechanisms to thwart destructive, self-

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Topicality William Huang DDI ‘08 Kernoff/Olney serving passions and to secure the public good. Contemporary institutional analyses, by contrast, proceed without the vocabulary of duty or public good and without the exclusively preventive aim. Institutional incentives are viewed as a means of harnessing individual interests in pursuit of positive goals.57 Similarly, early utilitarian discussions, Bentham's in particular, differ markedly from twentieth century discussions of incentives despite what might appear to be a shared interest in problems of social control. Again, Bentham is interested entirely in prevention of abuses or infractions of the rules. The rationale for his panopticon is based on the observation that prevention of infractions depends upon a combination of the severity of punishment and the likelihood of detection.58 If the latter could be increased to one hundred per cent, through constant super- vision and inspection, punishment would become virtually unnecessary. This is a logic that has nothing whatever to do with the logic of incentives as a means of motivating positive choices or of encouraging adaptive behavior. Their interpretation unlimits – deviating from the federal definition of alternative energy means alternative types of oil and natural gas use are also topical Russell Hasan, President of the Altenews Company, no date, “Introduction to Alternative Energy”, http://www.altenews.com/Alternative%20Energy%20Overview.pdf Aside from renewable energy, there are also alternative energy areas in oil and natural gas, which consists of alternative oil and gas exploration. The traditional reserves of oil and natural gas are becoming depleted, and the global economy’s insatiable demand for energy will make previously untapped reserves of oil and natural gas highly profitable. Alternative oil and gas exploration will find and exploit deposits of oil and gas that will help serve to supply energy to the global demand as resources become scarce. The various forms of alternative oil and gas exploration include oil sand, shale oil, basin centered gas accumulation, tight gas, and coal bed methane, as well as other areas. Two kinds of alternative oil exploration are oil sand, which is also called tar sand, and shale oil. Oil sand is a kind of sand from which oil can be extracted. There are large oil sand reserves in western Canada, centered in the Alberta region, so much so that it makes Canada a major potential source of oil on equal footing with the Middle East, and the exploration of oil sand is a very hot area. A growing oil extraction infrastructure has grown up around the Canadian oil sands, and there are many opportunities in that area. Shale oil is another kind of energy consisting of oil pressed from shale. There are shale oil reserves in Utah and elsewhere, and this is a very interesting field. Companies are competing for the rights to develop shale oil, and as the infrastructure comes on line shale oil could produce a lot of oil. Oil sand and shale oil represent sources of oil that have not been previously tapped, and if the oil can be extracted through cost effective methods then oil sand and shale oil could become highly profitable, as they will produce oil from nontraditional reserves that have not been depleted in a future when most traditional resources will have run out. This area is very exciting for energy companies as the traditional sources of oil dry up, and there are many companies currently working to exploit oil sand and shale oil reserves. Methods of alternative natural gas exploration include basin centered gas accumulation, in which gas in a basin is extracted, tight gas, in which the gas is difficult to get to, coal bed methane, in which natural gas is extracted from coal beds, and gas to liquid technology, in which natural gas from distant locations is converted to a liquid for the purpose of transportation. It should be noted that natural gas is the cleanest of all the fossil fuels in terms of the toxic emissions released when it is burned, and it can be useful for electricity generation and home heating. These technologies should be closely watched as traditional oil and gas reserves become depleted.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

USFG Can’t Incentivize Itself Incentives are a negotiated offer external to the agent offering it – this means the federal government can’t offer incentives to itself Ruth Grant, professor of political science at Duke, 2002, “The ethics of incentives: Historical Origins and contemporary understandings”, Economics and Philosophy, Proquest Similarly, `incentive' is sometimes used as if it were synonymous with `motivation' generally speaking. But there are several important sorts of motivation that are not suggested by the term. When we speak in this way, we implicitly deny the phenomena of habitual behavior, or action motivated by a sense of responsibility or of the reasonableness of a course of action (with reasonableness here understood as something other than individual utility maximization), or the way in which a role model or ideal can serve as motivator. Action which is initiated by the individual or understood as internally motivated is not really compre-hended in the concept of motivation as incentive. Incentives are external prompts to which the individual responds. The use of `incentives' to speak of market forces is also problematic, though it is easy to see the logic of this development within the language of economics. If one company lowers the price of its product, we might readily say that other companies now have an incentive to lower theirs. But we would not say that the first company offered all other companies an incentive to lower their prices.55 Market forces are not conscious and intentional, and their rationale is intrinsic to the economic process itself. We might just as well say in this situation that the first company's lower price is a good reason for other companies to lower theirs given that they need to remain competitive. The term `incentive' says nothing that `reason' cannot say as well in this case. A similar logic applies to speaking of loan conditions as incentives. The International Monetary Fund may make a loan to a nation only on condition that it alter its inflationary policies. If the reason for the condition is intrinsic to the IMF's own financial aims, `incentive' may be a misnomer. The situation is like that of requiring a certain training as a condition for the practice of medicine; we would be unlikely to refer to this as an `incentive' to go to medical school for people who wish to become doctors.56 When the IMF is criticized for using financial incentives unethically to control the internal policies of borrowing nations, it is because the critics suspect that its real purposes are political rather than strictly limited to the legitimate concern to secure the financial health of the Fund. The distinction between market forces and incentives can be illustrated further by considering the difference between wages as compensation and incentives as bonuses in employment. Compensation means `rendering equal', a `recompense or equivalent', `payment for value received or service rendered', or something which `makes up for a loss' ± as in the term `unemployment compensation'. Compensation equalizes or redresses a balance, and so, to speak of `fair compensation' is entirely sensible. But to speak of a `fair incentive' is not. An incentive is a bonus, which is defined as something more than usually expected, that is, something that exceeds normal compensation. It is an amount intentionally added to the amount that would be set by the automatic and unintentional forces of the market. An incentive is also a motive or incitement to action, and so an economic incentive offered to an employee is a bonus designed to motivate the employee to produce beyond the usual expectation. It should be obvious then, that compensa- tion and incentives are by no means identical. The per diem received for jury service, for example, is a clear case of compensation which is not an incentive in any sense. It is not difficult to see how it might have happened that the boundaries were blurred between the specific conception of incentives and conceptions of the automatic price and wage-setting forces of the market. Both can be subsumed under very general notions of the factors that influence our choices or motivate action, and `incentives' carries this general meaning as well. Nonetheless, the blurring of that boundary creates a great deal of confusion. Incentives, in fact, are understood better in contradistinction to market forces than as identical to them. It is only by maintaining a clear view of their distinctive character that the ethical and political dimensions of their use are brought to light. Moreover, conceptual clarity and historical understanding go hand in hand in this case. It should no longer be surprising to find that the term `incentives' is not used by Adam Smith in first describing the operation of the market, but appears instead at a time when the market seemed inadequate in certain respects to the demands presented by changing economic circumstances. Other eighteenth and nineteenth- century ideas, often taken as simple precursors of contemporary analyses of incentives, can now be seen in their distinctive character as well. For example, Hume and Madison offer an analysis of institutional design which differs significantly from `institutional incentives', though the two are often confused. These thinkers were concerned with preventing abuses of power. They sought to tie interest to duty through institutional mechanisms to thwart destructive, selfserving passions and to secure the public good. Contemporary institutional analyses, by contrast, proceed without the vocabulary of duty or public good and without the exclusively preventive aim. Institutional incentives are viewed as a means of harnessing individual interests in pursuit of positive goals.57 Similarly, early utilitarian discussions, Bentham's in particular, differ markedly from twentieth century discussions of incentives despite what might appear to be a shared interest in problems of social control. Again, Bentham is interested entirely in prevention of abuses or infractions of the rules. The rationale for his panopticon is based on the observation that prevention of infractions depends upon a combination of the severity of punishment and the likelihood of detection.58 If the latter could be increased to one hundred per cent, through constant super- vision and inspection, punishment

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Topicality William Huang DDI ‘08 Kernoff/Olney would become virtually unnecessary. This is a logic that has nothing whatever to do with the logic of incentives as a means of motivating positive choices or of encouraging adaptive behavior. We are now in a position to identify a core understanding or a distinctive meaning of the concept of incentives; what we might call incentives `strictly speaking'. Incentives are employed in a particular form of negotiation. An offer is made which is an extrinsic benefit or a bonus, neither the natural or automatic consequence of an action nor a deserved reward or compensation. The offer is usually made in the context of an authority relationship - for example, adult/child, employer/employee, government/citizen or government/organization. The offer is a discrete prompt expected to elicit a particular response. Finally and most importantly, the offer is intentionally designed to alter the status quo by motivating a person to choose differently than he or she would in its absence. If the desired action would result naturally or automatically, no incentive would be necessary. An incentive is the added element without which the desired action would not occur. For this reason, it makes sense to speak of `institutional incentives' when referring to arrangements designed to encourage certain sorts of responses. `Perverse incentives' is also an expression that implies that incentives are meant to direct people's behavior in particular ways. Central to the core meaning of incentives is that they are an instrument of government in the most general sense. The emergence of the term historically within discourses of social control is illustrative of this point.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Mandatory =/= Voluntary There is a contextual difference between mandatory regulations and voluntary incentives Sam Schoofs, Calvin College, 2004 [ 6 August 2004 A federal Renewable Portfolio Standard: Policy Analysis and Proposal, http://www.wise-intern.org/ journal/2004/WISE2004-SamSchoofsFinalPaper.pdf.] D. Renewable Energy Policy Overview There are two main categories of renewable energy policies. The first category gives some financial incentives to encourage renewable energy that includes tax incentives, grants, loans, rebates, and production incentives [13]. Tax incentives cover personal, sales, property, and corporate taxes and they help to reduce the investment costs and to reward investors for their support of renewable energy sources [12], [13]. As an example, 24 states currently have some form of grant program in place that ranges from as small as $500 up to $1,000,000 [13]. The second category of renewable energy policies is called rules and regulations, which mandate a certain action from an obligated entity. Included within this category are renewable portfolio standards, equipment certification, solar/wind access laws, and green power purchasing/aggregation polices [13]. As an example, equipment certification allows the states to regulate the performance criteria that equipment is required to meet in order to be eligible for financial incentives [12]. Seven states currently have equipment certification programs in place

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Only Cash is Topical Incentives are limited to cash or in-kind transfers to speed up adoption Suzannah Cooley, Cranfield University, Masters of Science, 2007, “GROWTH OF THE UK LOW CARBON DIOXIDE AND ALTERNATIVE TECHNOLOGY VEHICLE MARKET: INVESTIGATING INFLUENTIAL FACTORS IN THE ADOPTION OF LOW CARBON VEHICLES,” September, https://dspace.lib.cranfield.ac.uk/bitstream/1826/2401/1/Sue%20Cooley%20Thesis%20final%20v2.pdf) Incentives can be used to introduce or increase actual or perceived relative advantages. Rogers (2003) defines incentives as a direct or indirect payment of cash or in kind that is given to an individual or system in order to encourage behaviour change and speed up adoption. Incentives can take many forms for example, taxes, grants, penalties, finder’s fees, bonuses. Oltra & Saint-Jean (2006) suggest that government grants to support alternative fuel infrastructure, tax exemptions for inconvenience and negative taxation for ICEV could secure the switch from ICEVs to LCVs. Akerman & Hojer (2006) observes in the 1980’s tax incentives on unleaded petrol and lower emitting vehicles successfully promoted three-way-catalytic-converters. For high mileage users, Vries & Rouwendal (1999) and Wissen & Golob (1992) also found financial incentives encouraged LCV adoption. Moreover, Lane & Potter (2007) emphasises that the benefit of incentives in combating the barriers of high purchase price, serving costs and long payback periods associated with many LCVs, concluding that the UK company car tax is a crucial factor in determining employee’s car choice and the UK Government’s Powershift grant to be an important factor encouraging the purchase of the Toyota Prius hybrid.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Taxes Are Topical Taxes are incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print A tax, unlike emissions trading, may offer a continuous incentive for environmental improvement. The operator can always reduce the tax by making additional innovations until the taxed pollution reaches the zero level, at least in theory.244 A significant tax may be necessary to secure management work on developing and implementing innovation.2' But the tax may provide an adequate incentive to implement further control anytime an innovation shifts the marginal cost of control to a level less than that of the tax.246 If the government adopts pollution taxes, it must enhance monitoring of emissions and enforcement activities." Otherwise, it may allow taxable pollution to remain untaxed.24 Hence, an enforcement difficulty remains. In sum, taxes may provide a greater incentive for continuous innovation than traditional regulations or emissions trading. They do not require governments to set emission levels. Like emissions trading and traditional regulation, they rely upon difficult government decision making as the stimulant for emission reductions.2A9 Pollution taxes are incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print Part IV develops a true economic incentives theory to describe the requisites for programs that will actually induce more innovation and continuous improvement than traditional regulation or emissions trading.31 Pollution taxes may provide continuous incentives for innovation in theory, but taxes rely upon government decision making as the stimulant for reductions.32 Making economic competition to reduce pollution the source of economic incentives, rather than the magnitude of politically-determined fees may do more to stimulate innovation and continuous improvement.33 Emissions trading has limited utility, because it makes little use of economic incentives, suffers from many of the impediments that frustrate the traditional regulatory system, and creates new enforcement and design difficulties

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Incentives Are Economic Incentives have to be economic David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print IV. True Economic Incentives This Part develops a theory of true economic incentives as an alternative to reliance upon repeated governmental decisions concerning the scale of emission reductions. Emissions trading does not provide a meaningful alternative to traditional programs, because it relies upon government decisions about the scale of reductions instead of decentralized responses to continuous incentives to reduce pollution. Hence, it makes sense to distinguish true economic incentive programs, programs that rely solely on positive and negative economic inducements to secure reductions, from mixed programs like emissions trading and traditional regulation, that rely on a combination of negative economic inducements, in the form of monetary penalties for noncompliance, and government commands.' This Part discusses economic incentive programs that use economic incentives to overcome traditional regulation 's weak stimulation of innovation and continuous improvement. It discusses the classic economic incentive of a pollution tax.u4 While this incentive does create an incentive for continuous improvement, unlike emissions trading, it still relies largely on government decision making, which may weaken the incentive's ability to stimulate innovation. This Part also discusses the creation of more dynamic economic incentives that rely upon private initiative, rather than government decision making, to drive innovation. Incentives have to be economic David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print IV. True Economic Incentives This Part develops a theory of true economic incentives as an alternative to reliance upon repeated governmental decisions concerning the scale of emission reductions. Emissions trading does not provide a meaningful alternative to traditional programs, because it relies upon government decisions about the scale of reductions instead of decentralized responses to continuous incentives to reduce pollution. Hence, it makes sense to distinguish true economic incentive programs, programs that rely solely on positive and negative economic inducements to secure reductions, from mixed programs like emissions trading and traditional regulation, that rely on a combination of negative economic inducements, in the form of monetary penalties for noncompliance, and government commands.' This Part discusses economic incentive programs that use economic incentives to overcome traditional regulation 's weak stimulation of innovation and continuous improvement. It discusses the classic economic incentive of a pollution tax.u4 While this incentive does create an incentive for continuous improvement, unlike emissions trading, it still relies largely on government decision making, which may weaken the incentive's ability to stimulate innovation. This Part also discusses the creation of more dynamic economic incentives that rely upon private initiative, rather than government decision making, to drive innovation.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Cap And Trade not Topical Cap and trade is not topical, it net decreases incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print In theory, emissions trading probably weakens net incentives for innovation.2"' If a regulation allows facilities to use trading to meet standards, the low-cost facilities tend to provide more of the total reductions than they would provide under a comparable traditional regulation. Conversely, the high-cost facilities will provide less of the total required reductions than they would have under a comparable traditional regulation. The low-cost facilities probably have a greater ability to provide reductions without substantial innovation than high-cost facilities. A high-cost facility may need to innovate to escape the high costs of routine compliance; the lowcost facility does not have this same motivation. Hence, emissions trading, by shifting reductions from highcost to low-cost facilities, may lessen the incentives for innovation.

Cap and trade reduces incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print These observations are not meant to suggest that emissions trading is bad. Lowering short-term costs is desirable. But, short-term savings do not necessarily coincide with the encouragement of technological advancement or long-term savings.220 Significant upfront investment and stringent technical demands often play an important role in stimulating technological advances. C. Theoretical Lessons From Emissions Trading Emissions trading, traditionally considered an "economic incentive" program, may provide a less potent economic incentive to reduce pollution and innovate than a comparable traditional regulation.' An understanding of the reasons for this may contribute to a theory that would help guide design of better environmental programs. Analyzing a program's ability to provide economic incentives for pollution reduction requires an evaluation of all potentially relevant monetary flows. In simpler terms, "follow the money." Emissions trading programs are often characterized as economic incentives because they use positive economic inducements. The lower cost source can increase revenue by reducing pollution below regulatory limits and selling credits to the higher cost source. The money to provide a positive inducement, however, must come from somewhere. An emissions trading program produces no net incentive to do better than traditional regulation in any way because emission increases finance emission decreases. High-cost sources decrease costs by exceeding a regulatory limit. The savings the high-cost source realizes by exceeding a regulatory limit on pollution finance the low-cost source's "additional" pollution reductions. The emissions trading example teaches that mimicking free market features that do not coincide with desired policy outcomes proves counterproductive. Emissions trading programs, although they create no special net incentives to reduce emissions, encourage trade in emission reduction credits. As mentioned above, one can always motivate trading by allowing pollution sources to avoid real reduction obligations by purchasing paper credits or allowing poorly monitored emissions reduction claims to become creditable. While this may create a robust market, it produces cost savings through inferior performance.222 A theory focusing on developing robust markets leads to investment of scarce public resources in programs that fail to use economic incentives to motivate at least equivalent environmental achievement at lower cost. The emissions trading example reveals that the term "economic incentive" has very little meaning if defined to include everything that relies on some kind of monetary penalty or benefit. Indeed, to the extent the term "economic incentive" should not apply to traditional regulation, it also should not apply to emissions trading. Both types of programs rely on monetary penalties to induce compliance with government set limits. Neither creates incentives for sources to continuously realize net reductions substantially surpassing the specifically mandated reductions. The emissions trading example shows that one must carefully analyze programs to see which free market-like advantages they might offer. While emissions trading may have the capacity to use private sector compliance resources efficiently, it may use government resources for program design and enforcement inefficiently.

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Topicality William Huang DDI ‘08 Kernoff/Olney Emissions trading may provide no more incentive for continual improvement or innovation than traditional regulation. Emissions trading does not stimulate competition to maximize environmental performance. It simply authorizes some trading around of obligations the government has created.

- 17 -

Topicality William Huang

DDI ‘08 Kernoff/Olney

Command and Control not Topical Command and control regulations are not incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print Rather than define economic incentives, scholars employ a conventional dichotomy that contrasts "command and control" regulations (rules that dictate precisely how a polluter must clean-up) with economic incentives.5 They claim that command and control regulations work inefficiently, discourage innovation, and fail to provide continuous incentives to reduce pollution, but that emissions trading and other economic incentive programs overcome these problems.

- 18 -

Topicality William Huang

DDI ‘08 Kernoff/Olney

Cap and Trade Topical Cap and trade and other command and control regulations are incentives David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print This failure to define economic incentives leaves unsupported the suggestion that emissions trading realizes environmental goals through economic incentives, but that traditional regulations (rules that limit discharges of pollutants into the environment without allowing trading) do not. Both traditional regulation and emissions trading rely upon the threat of a monetary penalty to secure compliance with government commands setting emission limitations.3 Perhaps neither traditional regulation nor emissions trading should be considered economic incentive programs, because both rely upon government commands.4 Or perhaps both should be considered economic incentive programs, because monetary penalties provide a crucial economic incentive in both systems. Cap and trade is an economic incentive David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print The trading mechanism creates additional incentives for some polluters within the trading program, specifically where large differences in marginal control costs exist. It creates an economic incentive for polluters facing high marginal control costs to increase emissions above the otherwise applicable limit, at least to the extent that the high-cost polluters plans to purchase relatively cheap credits from other sources.2" It also creates an incentive for polluters facing low marginal control costs to decrease emissions, at least to the extent the polluter plans to sell credits to sources with high costs.20' If the market functions smoothly, then trading occurs, the incentives cancel each other out, and the net economic incentive mirrors that of a comparable traditional regulation (except for weakened enforcement's tendency to increase emissions). Because a well designed trading program may induce pollution sources with low marginal control costs to go beyond regulatory limits to a greater degree than they would under a traditional regulation, commentators focusing only on the low-cost sources have argued that emissions trading creates greater incentives for technological innovation than traditional regulation.208 As some economists have realized, this argument ignores the incentive for high-cost sources to avoid pollution reduction activities.209 Trading reduces the incentive for high-costs sources to apply new technology. Cap and trade is historically defined as an incentive program David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print The dichotomy between command and control regulations and economic incentives has had a powerful influence upon policy.7 On October 22, 1997, President Clinton outlined his plans to address global climate change, an increase in global mean surface temperatures that emissions of carbon dioxide and other "greenhouse gases" cause.8 The President's speech stressed the issue's importance by referring to some possible consequences of climate change including "disruptive weather events" (such as droughts and floods), the spread of "disease bearing insects," and receding glaciers (which might cause inundation of coastal areas).9 President Clinton did not mention a single new traditional regulatory program or propose any specific cuts in greenhouse gas emissions, such as carbon dioxide, below 1990 levels to combat this potential menace. Instead, he announced a "package of strong market incentives, tax cuts and cooperative efforts with industry."'o The President's package included emissions trading, which is the "economic incentive program" most often implemented. His proposal would allow polluters in one country to avoid greenhouse gas reductions at home in exchange for pollution reductions abroad." Not surprisingly, emissions trading became an important element of the subsequently negotiated Kyoto Protocol on climate change, in which the developed countries apparently agreed to modest cuts in greenhouse gas emissions.'

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Cap and Trade Topical Cap and trade is an economic incentive David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print The trading mechanism creates additional incentives for some polluters within the trading program, specifically where large differences in marginal control costs exist. It creates an economic incentive for polluters facing high marginal control costs to increase emissions above the otherwise applicable limit, at least to the extent that the high-cost polluters plans to purchase relatively cheap credits from other sources.2" It also creates an incentive for polluters facing low marginal control costs to decrease emissions, at least to the extent the polluter plans to sell credits to sources with high costs.20' If the market functions smoothly, then trading occurs, the incentives cancel each other out, and the net economic incentive mirrors that of a comparable traditional regulation (except for weakened enforcement's tendency to increase emissions). Because a well designed trading program may induce pollution sources with low marginal control costs to go beyond regulatory limits to a greater degree than they would under a traditional regulation, commentators focusing only on the low-cost sources have argued that emissions trading creates greater incentives for technological innovation than traditional regulation.208 As some economists have realized, this argument ignores the incentive for high-cost sources to avoid pollution reduction activities.209 Trading reduces the incentive for high-costs sources to apply new technology.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Incentives are Positive and Negative Incentives are both positive and negative therefore command and control regualtions are topical David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print An economic incentive program can be defined as any program that provides an economic benefit for pollution reductions or an economic penalty for pollution. Defining economic incentives to include both positive and negative incentives includes pollution taxes in the definition.' Does command and control regulation qualify as an economic incentive program under this definition? Imagine a pure command and control law. The law commands polluters to perform specific pollution reducing acts, but provides no penalties for non-compliance. This law would probably motivate little or no pollution reduction, because polluters could violate the commands without consequence.156 Command and control regulation only works when an enforcement mechanism exists.'57 Traditional regulation relies upon a negative economic incentive - a monetary penalty for non-compliance - as the principle inducement to comply with regulatory requirements, true command and control requirements, such as work practice standards, and the more common performance standards.lss Indeed, a traditional regulation's success depends heavily upon the adequacy of these monetary penalties.l59

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Incentives are Vague Incentives aren’t well defined. David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print Is an emissions trading program' an economic incentive program? Emissions trading programs allow polluters to avoid pollution reductions at a regulated pollution source, if they provide an equivalent reduction elsewhere.2 Most scholars, government officials, and practitioners equate emissions trading with economic incentives, but they do not define "economic incentives." Incentive is superbly vague word, even government actions confirm it can be regulations or deregulation. David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print A few days prior to Clinton's speech on climate change, the Environmental Protection Agency (EPA) released its proposal to address interstate pollution, an important impediment to delivering healthful air under the 1990 Amendments to the Clean Air Act.'3 The EPA, predictably, called for an interstate emissions trading program.'4 This Article develops a theory of economic incentives. Any program to regulate or to deregulate creates economic incentives.'5 The programs referred to as "economic incentive" programs all envision a substantial governmental role of some kind. That is why lawyers, experts in law, write about them.'6

This T is stupid David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print We should replace the command and control/economic incentive dichotomy with a more nuanced analytical approach to both traditional regulation and economic incentive programs. Quasi-religious faith in programs labeled economic incentives and demonization of traditional regulation will not suffice. II. The Command and Control/Economic Incentive Dichotomy This Part evaluates the conventional critique of traditional regulation as command and control regulation." An account of the claims made for emissions trading and some of its history follow. A. Traditional Regulation: Commanding and Controlling? Below, several conventional criticisms of traditional regulation are examined. First, critics claim that traditional regulation is excessively rigid and consequently discourages innovation.36 Second, critics argue that traditional regulation provides no incentive for continuous environmental improvement.3' Third, critics argue that the process of establishing technology-based regulations involves inordinate complexity and delay.38 Fourth, critics state that uniform standards are inefficient." These criticisms contain some truths, but they also include distortions that unfairly disparage traditional regulation and misinform discussion of economic incentives. 1. The Rigidity Critique: The Myth of Pervasive "Command and Control"Regulation

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Topicality William Huang

DDI ‘08 Kernoff/Olney

AT: It’s Logical Logic is stupid – anything can be considered an incentive positive or negative David Driesen, Assistant Professor of Law, Syracuse University College of Law, J.D., Yale University Spring 1998, “Is emissions trading an economic incentive program?: Replacing the command and control/economic incentive dichotomy”, Washington and Lee Law review http://findarticles.com/p/articles/mi_qa3655/is_199804/ai_n8791954/print A formal definition of an economic incentive program as any program relying on positive or negative economic inducements to secure pollution reductions plausibly applies to just about any regulatory program. To evaluate possible explanations for the dichotomy's assumption that emissions trading relies on economic incentives, but traditional regulation does not, a functional analysis is helpful. Parties to this debate need to analyze whether emissions trading overcomes traditional regulation's weaknesses in spurring innovation and providing continuous incentives. This will require examination of the sources of economic inducements, the financing mechanisms, the likely responses of regulated polluters (both strategic and desired), and the governmental role in emissions trading. These questions provide the tools to develop a functional theory of economic incentives.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Incentives =/= Tax Credits Incentives are distinct from tax credits – they require linking behavior to future action, not credit for actions already taken Gary Bingel, senior manager of state and local taxes with Smart and Associates LLP, summer 2004, “Getting to the STATE'S CAPITAL: Negotiating Business Incentives”, Pennsylvania CPA Journal, proquest When considering financial assistance from governmental authorities, it is important to keep in mind the definitions of "incentive" and "credit." "Incentive" is something that stimulates one to take action,1 and "credit" is to give deserved commendation for; to commend one for.2 These concepts are at the root of why governments give assistance to businesses in the form of incentives and tax credits. Incentive programs are usually offered to stimulate businesses to take some form of action, and are considered forward-looking. Tax credits are often offered to reward businesses that took some form of desired action, and are a reaction to steps already taken. There are some programs, however, that combine these concepts, such as negotiated tax credits and those that require preapproval, that are used to promote some future action. There are also incentives programs that, while negotiated and subject to preapproval, are only rewarded once a specified action, or promise, has been fulfilled. The following discussion will focus on true incentives programs, those that require preapproval and negotiation, as opposed to pure tax credits, which merely reward past behavior and that do not require any form of preapproval or negotiation.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Regulation =/= Bans Regulatory incentives are distinct from bans – they require some discretion Noel Uri, Senior Industry Economist in the Pricing Policy Division, Wireline Competition Bureau, Federal Communications Commission, 2003, “The change in technical and allocative efficiency of local exchange carriers in the United States” Info : the Journal of Policy, Regulation and Strategy for Telecommunications, Information and Media, Proquest) Incentive regulation is typically defined as the implementation of rules that encourage a regulated firm to achieve desired goals by granting some, but not complete, discretion to the firm. Three aspects of this definition of incentive regulation are important. First, regulatory goals must be clearly specified before incentive regulation is designed. The properties of the best incentive regulation plan will vary according to the goals the plan is designed to achieve. Second, the regulated firm is granted some discretion under incentive regulation. For example, while the firm may be rewarded for reducing its operating costs, it is not told precisely how to reduce these costs. Third, the regulator imposes some restrictions on relevant activities or outcomes under incentive regulation (Baron, 1991; Bernstein and Sappington, 1999). One popular incentive regulation plan is the price cap plan. The central idea behind price cap regulation is to control the prices charged by the regulated firm, rather than its earnings. Essentially, price cap regulation plans require the regulated firm's average real prices to fall annually by a specified percentage (Mitchell and Vogelsang, 1991). This percentage is nominally referred to as the "Xfactor" or the productivity offset[1].

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Alternatives Exclude Nuclear Alternative energy excludes nuclear and all fossil fuels Christopher Simon, professor of political science at the University of Nevada, 2007, Alternative energy: political, economic, and social feasibility, p. 39-40) The federal definition of alternative energy is best summarized by Title 26, chapter 79, §7701 of the revised U.S. Code: “the term ‘alternative energy facility’ means a facility for producing electrical or thermal energy if the primary energy source for the facility is not oil, natural gas, coal, or nuclear power.” The primary purpose of this definition relates to the issuance of tax credits to “alternative energy facility[ies],” which meet certain standards as defined in Title 26, chapter 1, §48 “Energy Credit.” Tax credits are one method by which the federal government encourages the private sector to make certain economic choices; in the case of energy policy, this definition of alternative energy will have a definitive impact on how alternative energy will be defined by those individuals and corporate bodies seeking federal recognition (and benefit) by adopting a particular definition of alternative energy. Many state definitions of alternative energy closely follow federal definitions. Case law confirms that federal guidelines supercede state-level guidelines. Federal standards also impact the state and local receipt of alternative energy grants, subsidies, and tax exemptions. It is reasonable, therefore that state and local definitions would be consistent with federal policy. Consistency between federal and state definitions does not mean there are not a few variations. In many ways, variation at the state level illustrates the dynamic and evolving alternative energy paradigm, which is by no means unique to the U.S. policy process. Alternative energy excludes nuclear and fossil fuels – U.S. code U.S. Code, 4/25/08, TITLE 26. INTERNAL REVENUE CODE, 26 USCS § 7701 (D) Alternative energy facility. For purposes of subparagraph (A), the term 'alternative energy facility' means a facility for producing electrical or thermal energy if the primary energy source for the facility is not oil, natural gas, coal, or nuclear power. Alternative energy excludes nuclear and fossil fuels Judge William Bertinelli, Court of Appeal of California, First Appellate District, Division Four, 1987, 195 Cal. App. 3d 982; 241 Cal. Rptr. 215; 1987 Cal. App. LEXIS 2255, 10/28, lexis) 17 Public Resources Code section 26003, subdivision (d), defines alternative energy sources as including geothermal sources of energy and any other source of energy, "the efficient use of which will reduce the use of fossil and nuclear fuels." Alternative energy is renewable energy – excludes uranium because it’s a single use resource ABS Alaskan, 2008 (“Alternative Energy Information”, http://www.absak.com/library/alternative-renewableenergy) The term "alternative energy" (also: renewable energy) encompasses a variety of power generation sources. Generally, it refers to electrical power derived from "renewable" resources such as solar or wind energy, as opposed to "single-use" resources such as coal or uranium. The most common forms of alternative energy available for homeowner use today are solar power, wind power and "microhydro" power.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Alternatives Exclude Nuclear Alternative energy excludes conventional sources of energy – nuclear power is a fully conventional source Kent Welter, Ph.D. in Nuclear Engineering from Oregon State University and Executive Committee Member, Enviromental Sciences Division, American Nuclear Society 5/9/07, “Nuclear Power,” http://en.allexperts.com/q/Nuclear-Power-2462/Alternative-Energy.htm Question Ok. I'm going to play devil's advocate and say, "There are alternative fuels instead of nuclear power plants that can replace fossil fuels. For instance, hydroleuic power, wind power, solar power, and geothermal power." What can you say about this? Answer Let's start by defining some terms, so that we're on the same page. Fuel is a substance that can be transformed (by burning, nuclear reaction, etc) into useful forms of energy through work (turning of a turbine, cylinders in a car, etc), to produce electricity (in our case). Usually, we speak of alternative fuels when talking about replacements for gas in car engines and alternative energy when speaking about power plants. By the nature of your question, I will assume we are speaking about alternative energy. This is a funny term to me, actually, because it is a catch phrase picked up by the mainstream news to describe everything but coal, gas, and nuclear power plants, which make up about 80% of our electricity generation. My opinion is that we always need a healthy mix of energy solutions at any one time and should strive for increasing our reliance on renewable and more environmentally conscious energy sources. Infrastructure development takes a long time. Power plants are ordered ten years in advance. Even if new technologies become more viable, we still need to wait a while for them to come online. They are very large structures and take a lot of time to build. Anyway, digressing a little again. Nuclear and coal are considered baseload power. They provide the backbone of the US energy grid. As power demands change daily, weekly, seasonally, other plants come online to fill in the gaps. Namely wind, hydro, gas, and solar. One of the reasons is that the energy density of these other power sources is much less than coal or nuclear. Because of its huge environmental impact, hydro dams probably won't be built anymore. I mean, you have to flood an entire valley! But we should rely on the ones we currently have, since they are considered renewable. As for solar, this technology is better suited for distributed power. In other words, better suited for individuals or organizations to power their own buildings, it will never become viable as a large scale energy source because you are limited by physics. There is only a certain amount of energy that gets transported by the sun to earth per square foot of ground. That will never change. Even if solar panels are 100% efficient, you can't change the fact that the sun only shines 50% of the time on the ground and really doesn't transfer a whole lot of energy to the earth at a local scale. In total, yes, but not on a square foot bases.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Alternatives = Nontraditional (list) Alternative energy must be nontraditional Environmental Protection Agency, 2006, Environmental Protection Agency Terminology Reference System, http://iaspub.epa.gov/trs/trs_proc_qry.navigate_term?p_term_id=688&p_term_cd=TERM alternative energy Energy derived from nontraditional sources (e.g., compressed natural gas, solar, hydroelectric, wind). Inventory of U.S. Greenhouse Gas Emissions and Sinks. Annex T: Glossary Term Detail)

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(Source: Office of Policy:

Topicality William Huang

DDI ‘08 Kernoff/Olney

Alternatives Include Nuclear Recent legislation defines nuclear power as alternative energy Drew Winter, EJ Magazine, 2007, “Nuclear Renaissance”, http://www.ejmagazine.com/2007b/pdfs/nuclear.pdf The reason for the sudden interest in nuclear power is due largely to a streamlined licensing process and the Energy Policy Act of 2005. The act, sponsored by Sen. Joseph Lieberman, D-Conn, and Sen. John McCain, R-Ariz., grants numerous subsidies to utilities building nuclear power plants. These plants are listed as an alternative energy source along with wind, solar and other so-called green options. Subsidies include up to $125 million in annual tax credit, an 80 percent loan on construction costs and other benefits for reactors using new technology. Nuclear power is alternative energy Russell Hasan, President of the Altenews Company, no date, “Introduction to Alternative Energy”, http://www.altenews.com/Alternative%20Energy%20Overview.pdf One last kind of alternative energy to discuss is nuclear power. Often classified as a traditional power source, it is possible to think of nuclear as an alternative to fossil fuels. Nuclear power plants do not produce air pollution, so they are clean compared to oil, gas and coal. However, nuclear power produces radioactive waste as a byproduct, and nuclear reactor accidents can have catastrophic effects, so the environmental value of nuclear is debatable. However, it cannot be denied that nuclear power can replace fossil fuels to some extent as they run out, and there are many countries around the world that are currently planning to build new nuclear power plants.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Alt =/= Renewable Alternative energy is distinct from renewable energy Russell Hasan, President of the Altenews Company, no date, “Introduction to Alternative Energy”, http://www.altenews.com/Alternative%20Energy%20Overview.pdf An overview of the various kinds of alternative energy follows. At the outset we must differentiate between alternative energy, and renewable energy. Alternative energy refers to any form of energy which is an alternative to the traditional fossil fuels of oil, natural gas and coal. Renewable energy are the forms of alternative energy that are renewed by the natural processes of the Earth, such as sunlight from the sun or wind from the air, and so are environmentally friendly. We cover all alternative energies, but we will begin the overview with the renewable energy sources.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Alternative Alternative can mean many things. Dictionary.com Unabridged, no date, http://dictionary.reference.com/browse/alternative 1. a choice limited to one of two or more possibilities, as of things, propositions, or courses of action, the selection of which precludes any other possibility: You have the alternative of riding or walking. 2. one of the things, propositions, or courses of action that can be chosen: The alternative to riding is walking. 3. a possible or remaining course or choice: There was no alternative but to walk. –adjective 4. affording a choice of two or more things, propositions, or courses of action. 5. (of two things, propositions, or courses) mutually exclusive so that if one is chosen the other must be rejected: The alternative possibilities are neutrality and war. 6. employing or following nontraditional or unconventional ideas, methods, etc.; existing outside the establishment: an alternative newspaper; alternative lifestyles. 7. Logic. (of a proposition) asserting two or more choices, at least one of which is true. You’re not allowed to look at my interpretation. Encyclopedia Britannica, no date To learn more about alternative visit Britannica.com Alternative is a noun, maybe. American Heritage Dictionary, no date n. The choice between two mutually exclusive possibilities. A situation presenting such a choice. Either of these possibilities. See Synonyms at choice. Usage Problem One of a number of things from which one must be chosen. adj. Allowing or necessitating a choice between two or more things. Existing outside traditional or established institutions or systems: an alternative lifestyle. Espousing or reflecting values that are different from those of the establishment or mainstream: an alternative newspaper; alternative greeting cards. Usage Problem Substitute or different; other. This one also says alternative might be a noun. Wordnet, no date alternative adjective1. serving or used in place of another; "an alternative plan" [syn: alternate] 2. necessitating a choice between mutually exclusive possibilities; "alternative possibilities were neutrality or war" 3. pertaining to unconventional choices; "an alternative life style" noun1. one of a number of things from which only one can be chosen; "what option did I have?"; "there no other alternative"; "my only choice is to refuse" [syn: option]

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Topicality William Huang

DDI ‘08 Kernoff/Olney Did you know you can say alternative in so many languages? Kernerman English Multilingual Dictionary, no date offering a choice of a second possibility Example: An alternative arrangement can be made if my plans don't suit you.

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Topicality DDI ‘08 Kernoff/Olney Arabic:

William Huang

‫بَدِيل‬

Japanese: 代りの

Chinese (Simplified): 可供替换的

Korean: 대신의, 양자 택일의

Chinese (Traditional): 可供替換的

Latvian: alternatīvs; izvēles-

Czech: jiný

Lithuanian: alternatyvus

Danish: alternativ

Norwegian: alternativ

Dutch: alternatief

Polish: alternatywny

Estonian: alterna- tiivne

Portuguese (Brazil): alternativo

Finnish: vaihtoehtoinen

Portuguese (Portugal): alternativo

French: autre

Romanian: alt

German: alternativ

Russian: альтернативный

Greek: εναλλακτικός

Slovak: alternatívny

Hungarian: alternatív

Slovenian: drugačen

Icelandic: sem um er að velja, annar (kostur)

Spanish: alternativo

Indonesian: alternatif Italian: alternativo

Swedish: annan, alternativTurkish: başka, öbür, alternatif

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Topicality William Huang

DDI ‘08 Kernoff/Olney alternative [oːlˈtəːnətiv] noun a choice between two (or sometimes more) things or possibilities Example: You leave me no alternative but to dismiss you; I don't like fish. Is there an alternative on the menu?

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Topicality DDI ‘08 Kernoff/Olney Arabic:

William Huang

‫خَيار بَيْن إ ْثنَين‬

Japanese: 二者択一

Chinese (Simplified): 两者挑一

Korean: 양자 택일, 대안

Chinese (Traditional): 兩者挑一

Latvian: alternatīva; izvēle

Czech: jiná možnost

Lithuanian: alternatyva, kitas pasirinkimas

Danish: alternativ; valg Dutch: alternatief Estonian: valikuvõimalus Finnish: vaihtoehto French: alternative German: die Alternative Greek: εναλλακτική λύση Hungarian: választás(i lehetőség) Icelandic: valkostur Indonesian: alternatif Italian: alternativa

Norwegian: valg, alternativ Polish: alternatywa, inna możliwość Portuguese (Brazil): alternativa Portuguese (Portugal): alternativa Romanian: alternativă Russian: альтернатива Slovak: iná možnosť Slovenian: (druga) izbira Spanish: alternativa Swedish: alternativ, val Turkish: *

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Topicality William Huang

DDI ‘08 Kernoff/Olney

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Topicality William Huang

DDI ‘08 Kernoff/Olney Lol. Webster’s Revised Unabridged Dictionary, no date Alternative Al*ter"na*tive\, a. [Cf. F. alternatif.] 1. Offering a choice of two things. 2. Disjunctive; as, an alternative conjunction. 3. Alternate; reciprocal. [Obs.] --Holland. I thought they just defined it. Webster’s Revised Unabridged Dictionary, no date

Al*ter"na*tive\, n. [Cf. F. alternative, LL. alternativa.] 1. An offer of two things, one of which may be chosen, but not both; a choice between two things, so that if one is taken, the other must be left. There is something else than the mere alternative of absolute destruction or unreformed existence. --Burke. 2. Either of two things or propositions offered to one's choice. Thus when two things offer a choice of one only, the two things are called alternatives. Having to choose between two alternatives, safety and war, you obstinately prefer the worse. --Jowett (Thucyd.). 3. The course of action or the thing offered in place of another. If this demand is refused the alternative is war. --Lewis. With no alternative but death. --Longfellow. 4. A choice between more than two things; one of several things offered to choose among. My decided preference is for the fourth and last of these alternatives. --Gladstone.

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Energy Lolcrabs. Online Etymology Dictionary, no date 1599, from M.Fr. energie, from L.L. energia, from Gk. energeia "activity, operation," from energos "active, working," from en- "at" + ergon "work" (see urge (v.)). Used by Aristotle with a sense of "force of expression;" broader meaning of "power" is first recorded in Eng. 1665. Energize "rouse to activity" is from 1753; energetic of persons, institutions, etc., is from 1796. Energy crisis first attested 1970. You’re totally not topical Wordnet, no date energy noun1. (physics) a thermodynamic quantity equivalent to the capacity of a physical system to do work; the units of energy are joules or ergs; "energy can take a wide variety of forms" 2. forceful exertion; "he plays tennis with great energy"; "he's full of zip" 3. enterprising or ambitious drive; "Europeans often laugh at American energy" 4. an imaginative lively style (especially style of writing); "his writing conveys great energy"; "a remarkable muscularity of style" 5. a healthy capacity for vigorous activity; "jogging works off my excess energy"; "he seemed full of vim and vigor" You are most definitely totally not topical US Gazetteer, no date Energy, IL (village, FIPS 24166) Location: 37.77537 N, 89.02575 W Population (1990): 1106 (408 housing units) Area: 3.3 sq km (land), 0.0 sq km (water)

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Topicality William Huang

DDI ‘08 Kernoff/Olney

Incentives zomgz American Heritage Dictionary, no date n. Something, such as the fear of punishment or the expectation of reward, that induces action or motivates effort. adj. Serving to induce or motivate: an incentive bonus for high productivity.

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