Federal Carbon Tax Bill Introduced Into Senate

Dec 17, 2014 by  | Bio |  1 Comment »

Earlier this month, Rhode Island’s U.S. Senator Sheldon Whitehouse, who has made climate change his signature issue, introduced into the Senate the American Opportunity Carbon Fee Act (S-2940). The bill imposes a direct, simply-applied, economy-wide tax on carbon emissions. While the bill is not perfect, it is quite excellent (and has a number of very interesting features).

The centerpiece of the bill is that it immediately imposes an economy-wide tax on carbon at the rate of $42 a ton. This figure ratchets up at a rate of 2% annually plus inflation (as measured by the Consumer Price Index).  At that annual rate of increase, carbon would be priced at $85.68 a ton in 2050, a bit more than the $82/ton rate widely recommended by scientists for properly pricing carbon so as to avert a climate disaster.

That is, there are three very salient differences between the Whitehouse bill and the Regional Greenhouse Gas Initiative (RGGI), the current carbon-pricing scheme that has been adopted by nine northeastern states (including all six New England states):

  • RGGI covers only the electricity sector; the Whitehouse bill covers virtually the entire economy.
  • The most recent RGGI clearing price for carbon (Auction 26, December 3, 2014) was only $5.21 per ton; the Whitehouse bill imposes a much more appropriate price, because it starts at over 800% of that amount and then ratchets up.
  • RGGI prices carbon by means of cap-and-trade; the Whitehouse bill is a straight tax.

A key part of the Whitehouse bill is that it requires governmental agencies, notably EPA and the Department of Energy, to collect data on all methane emissions resulting from extraction (including coal mining and oil drilling!) and distribution (including all gas pipeline losses and fugitive emissions) – and to impose the same carbon tax (starting at $42/ton) on methane based on the methane’s CO2 equivalent! This is important because, depending on the time horizon used, methane is 21 times or more as powerful a greenhouse gas as CO2. Thus quantifying and pricing methane emissions must be an important component of any overall plan to address climate change – but methane is also one that is frequently overlooked (especially by people who push increased use of natural gas as a means of lowering greenhouse gas emissions).

Interestingly, the bill directs 100% of the carbon-tax proceeds to a new “American Opportunities Fund,” and specifies what the fund may be used for. This includes things like economic assistance to low-income households hurt by the newly-imposed tax, and providing transition assistance to workers and businesses in fossil fuel industries. However, the bill is not, and is not intended to be, revenue-neutral. Money in the Opportunity Fund can also go to the general fund to offset tax cuts, invest in domestic infrastructure, and go for climate mitigation and adaptation measures.

I discussed this last point with one of Senator Whitehouse’s staff aides. Obviously, one potential selling point with Tea Party and other fiscal conservatives would be if the bill were truly revenue neutral, with zero dollars going to enlarge the federal government, and 100% of the proceeds being returned to the American people. Senator Whitehouse’s staff aide acknowledged this point. However, Senator Whitehouse seems to be viewing the varied ways of using the money as a way of drawing in other sponsors for the bill: sponsor the bill and help us allocate this large new source of money. (Readers can consider whether or not they agree with this decision, but this is the decision that Senator Whitehouse made.)

The one major flaw I see in the bill is a provision on “Border Adjustments.” This provides that any mined or manufactured goods that are exported from the U.S. get a full refund on the carbon tax paid. The hypothetical I put to Whitehouse’s staffer was this: The bill creates a perverse incentive to mine zillions of tons of coal for export to China; and drill zillions of new oil and gas wells to export the oil and gas to China. No carbon tax is paid on that coal (or oil or gas), but when the coal is burned in China, the carbon goes into the same atmosphere as if it were burned in the United States. (That is, climate change is a global problem, not a U.S. problem.) The answer I got for Senator Whitehouse’s aide was two-fold: (a) Yes, my hypothetical accurately describes this provision of the bill; and (b) Senator Whitehouse did this on purpose, believing that the provision was a political necessity.

One final set of observations: it is worth comparing and contrasting the American Opportunity Carbon Fee Act to the 2009 Waxman-Markey bill (that passed the House but died in the Senate). (I am not thinking here of the obvious contrast that Waxman-Markey priced carbon by means of a cap-and-trade system, while the Whitehouse bill prices carbon by means of a carbon tax.) Waxman-Markey was a 986-page monstrosity; it took me a full week just to read through it and understand how it worked. In contrast, the Whitehouse bill runs 28 pages; it is short, direct, and easy to understand. Moreover, Waxman-Markey had huge give-aways to the fossil fuel industry. In fact, the immediate give-aways to certain coal companies would have tripled the book value of those companies overnight. At the time Waxman-Markey was pending, one environmentalist, with tongue firmly in cheek, said that if Waxman-Markey passed, investors would have been well advised to sink their entire retirement savings into coal mining companies (because of those give-aways). The Whitehouse bill has no such pernicious give-aways to fossil-fuel industries (though there is the export loophole that is significant).

All in all the American Opportunity Carbon Fee Act is a very significant bill well worth knowing about.

In the energy world, evidence that “clean” doesn’t mean “expensive”

Jun 3, 2011 by  | Bio |  Leave a Comment

Photo credit: Marilyn Humphries

For those of you looking for a good clean-energy read, check out this recent article by Climate Progress’s Stephen Lacey. Lacey focuses on the common myth that clean energy and climate reduction policies will mean higher energy costs for consumers, pointing out that two recently released reports show that the implementation of cleaner, more efficient energy systems will actually save them money in the long run. The same myth has been perpetuated regarding the Regional Greenhouse Gas Initiative (RGGI) here in the Northeast. To debunk that notion, Lacey quotes CLF’s VP for Climate Advocacy and Policy Seth Kaplan:

“The fact is, RGGI is a very, very, very small piece of the overall cost of electricity. There are so many costs that are much greater. Pulling out the cost of RGGI would be like factoring in the cost of mowing the lawn at the power plant or factoring in the property taxes. Some of the claims that groups are making about the cost of the program are patently absurd.”

To hear more from Seth on the subject, read the full article here.

Connecting the dots of denial

Sep 7, 2010 by  | Bio |  4 Comment »

(Updated 9/15/2010)

In a recent issue of the New Yorker staff writer Jane Meyer leads us all on a guided tour of the machinery, machinations and massive expenditures that the billionaire Koch brothers have poured into organizations like the Orwellian named “Americans for Prosperity” that, among other things, are dedicated to stopping progress in the war to protect our climate.

Not satisfied with having played a role in derailing (hopefully temporarily) sensible energy and climate policy in Washington DC these guardians of fossil fuel industry profits are seeking to halt good efforts in the states.  While their efforts in California have been the most noticed they are also busy laying astroturf in places like New Jersey where a “campaign” to roll back the mild, moderate and successful Regional Greenhouse Gas Initiative has been launched out of the corporate checkbooks supporting “Americans for Prosperity.”

This effort in New Jersey angrily rails that there is no clear line on electricity bills to show the price that consumers are paying for RGGI – ignoring the reality that there is not a bit of evidence that such a cost can be identified by anyone.  Indeed, the RGGI program is so mild and moderate that, as was anticipated when the program was created, the impact on consumers is so small that it is in fact invisible.   The fact that the New Jersey “anti cap and trade” website fails to actually describe a price impact for RGGI before ranting about the need to disclose such a cost is a clear signal that we are dealing with folks who are not playing straight.

And to add yet another bizarre twist to the tale, the Albany Times-Union reports that the company owned by the same Koch brothers who founded and have funded the organization protesting RGGI has been participating in the RGGI auction, presumably for profit and not just fun.

While David and Charles Koch, as detailed in the New Yorker article,  have focused their spending on nurturing “Americans for Prosperity” and similar national efforts their brother William Koch has been focused on local denial – heavily funding lobbying against the Cape Wind project which he apparently feels would damage the view from his vacation home.  But the Koch agendas are now converging as “Americans for Prosperity” levels a volley at an effort by the governor of New Jersey, a Republican who is generally regarded as conservative, for using RGGI funds to support offshore wind farm development.   Perhaps this is a result of the reconciliation between these brothers now that they have settled their infamous feud.

Ultimately, though this is about people who have made a lot of money from the current system of generating energy from fossil fuels fighting the future.  Not only are they tossing all of us, including their own families, under the bus of a dangerously changing climate but they are fighting against efforts like wind farms that generate stability in energy prices (something their fossil products simply can’t deliver) and programs like energy efficiency investments that generate real jobs and prosperity.  For example, the operator of the efficiency programs in New York State estimates, in their annual plan, that the programs funded by RGGI in that one state will create:

  • Customer energy bill savings of more than $445 million
  • 1.7 million barrel reduction in oil imports
  • Creation or retention of approximately 1,400 jobs
  • Greenhouse gas emissions reductions up to 2.0 million tons; equal to removing approximately16,500 cars from the road

Saving people money on energy bills and creating jobs – what a nightmare !!!

History of Cap and Trade Podcast

Jan 4, 2010 by  | Bio |  Leave a Comment

Determined journalist from Renewable Energy World takes the time in a long form NPR/radio style podcast to dig into this important topic.   If you are deeply ideologically committed to either “cap and trade” or to a carbon tax you should not listen to the last 5 or 10 minutes – or maybe you should . . .

Climate Change Reality Check

Aug 17, 2009 by  | Bio |  55 Comment »

climate_threatThere’s a lot of talk about 2012 being the end of the world. And if it’s not 2012, it’s the swine flu.

But how will it really end? If the latest scary climate science is any indicator, it looks like humans may be to blame. We know that climate change is happening all around us, but it looks like things are changing a lot quicker than any of us expected. As such, it’s time for a climate change reality-check. Did you know?

  • Temperatures are already on the rise. Since 1970, winter temperatures in the Northeast have increased by an average of 1.3 degrees per decade—changing and damaging marine life, forests, agriculture, recreation and human health.
  • Extreme storms are becoming more frequent. Boston and Atlantic City, for example, can expect a coastal flood equivalent to today’s 100-year flood every two to four years on average by mid-century, and almost annually by the end of the century.
  • The oceans are rising. Scientists project that sea levels could rise another 4.5 feet by the end of the century—inundating our coastline and claiming countless low-lying communities from Portland, Maine to Boston to Hyannisport and beyond.
  • Heat waves are expected to increase. Within our children’s lifetimes, Northeast cities like Boston or Hartford could experience 20-30 days above 100 degrees causing pain, distress and even increased mortality for our vulnerable citizens.
  • Our snow season is becoming shorter and shorter. By late this century, the length of the snow season could be cut in half across northern New York, Vermont, New Hampshire, and Maine, and reduced to a week or two in southern parts of the region, a trend that may have already begun.
  • Plant and animal populations are shifting northward. Species like the fir and spruce are expected to all but disappear from the region by the century’s end. The Baltimore oriole, American goldfinch and song sparrow populations will become much less abundant.
    (Source: NECIA’s “Confronting Climate Change in the U.S. Northeast: Science, Impacts, and Solutions”)

The facts speak for themselves. It’s clear that the road on which we’re traveling is a dead end. Fortunately, we have the opportunity to make a u-turn—but it’s going to take your help to turn this country and this planet around.

What can you do about it?

As we catapult towards the point of no return, it’s time to hit the brakes. Confront the climate threat today and demand a new energy and climate law now!

It takes less than 30 seconds to use and customize our pre-written letter to your Senators urging them to pass a smart and effective “cap and trade” climate law. Click here to do your part.