Lessons learned from MGA

I returned yesterday from the Midwestern Governors Association’s GHG Advisory Group meeting in Traverse City, Michigan. It was the eighth meeting for the group since last March. They have been struggling to fulfill the wishes of the Governors of Iowa, Illinois, Kansas, Michigan, Minnesota, and Wisconsin and the Premier of Manitoba, who, on November 15, 2007 sought to “develop a market-based and multi-sector cap-and-trade mechanism to help achieve GHG reduction targets.” (See Midwestern Greenhouse Gas Reduction Accord at www.midwesternaccord.org). It was also the second to last meeting; the last meeting of the group will be in six weeks on May 11-12 in Minneapolis.

It is less than entirely clear what will occur at that last meeting. While much of the design modeling will have been completed, the group has yet to resolve some key design components. And, even more troublesome, none of the modeling of the economic impacts of those designs will have been completed. Thus, I’m not sure how the group can make any final conclusions let alone recommendations to the Governors.

I certainly did not envision this situation when I, and others serving their governors, embarked on this regional effort in the Spring of 2007. We were so confident and optimistic. What happened?

No blame can be placed on the advisory group members, facilitators or the Governors’ representatives. They all worked very hard, committing hundreds if not thousands of hours to this effort. No, I think the cause stems from the complexity of the issues involved, the need to thoughtfully balance the inherently competing interests and from an overly optimistic goal.

What would I do over I asked myself? Here are some of the things that occurred to me:

One thing I’d do over again is to be more realistic about the timetable. The Accord the Governors signed called for agreement to be reached within 12 months (that would be by last November) with all the states adopting of the model rule 30 months later. Well that’s not going to happen.

Another thing I’d have done over is to be more conscious of how big a task we were undertaking. If the Accord were to be implemented, it would be one of the largest carbon markets in the world. That’s huge on a lot of levels; size matters and in this case that size magnifies the difficulties of achieving the goal.

But size is only one complicating factor that I did not appreciate. I did not appreciate the difficulties trying to create a carbon market in the heart of the country with so many national interconnections that do not lend themselves to easy boundaries. A flawed policy costs jobs as entities move outside of the region.

Another blind spot for me was my faith in the cap and trade concept. I believed that, like a tennis racquet, cap and trade would be the tool that could solve all problems (or make every shot) when properly used. Not only do I no longer have that faith; I believe it to be dangerously wrong. Instead of playing tennis, addressing GHGs is more like golf: we need a whole bag full of clubs, each used when and where it is best suited. For example, applying a cap and trade to transportation fuels reduces GHGs very little if at all, raise gasoline & diesel costs and there is no way to compensate every fuel user for those higher costs through the redistributing of any collected revenues. It is like using a sandwedge off the tee: just not the right club.

Another thing I would do over is expand the membership of the advisory group. There are no people of color or representatives of low-income; there is no member who drives truck or manufactures cars or mines ore or builds engines…these are important perspectives that need to be heard.

I contributed to these shortcomings and regret them. While it’s too late to do things over, it's not to late to learn their lessons and take the appropriate corrections.