The Washington Post reported last weekend that Senators Kerry (D-MA), Graham (R-SC) and Lieberman (ID-CT) ("KGL") are likely to propose a multi-sector price on carbon that includes a declining cap on emissions for power generators, a carbon tax for transportation fuels and, eventually, a cap for the industrial sector. After several days of follow-up news stories, it's still unclear whether the KGL cap on power generators will be a cap- and-trade or a cap-and-dividend approach similar to that proposed by Senators Cantwell (D-WA) and Collins (R-ME) in their Carbon Limits and Energy for America's Renewal (CLEAR) Act. Speculation is rampant and analysis at this time is premature. We do know, however, that agreements are "in sight" to incorporate agricultural and forestry offsets, so there will likely be the same problems with potentially fraudulent offsets as would have occurred under Waxman-Markey/Kerry-Boxer. The use of offsets in lieu of actual emissions reductions will result in a low and ineffective price on carbon and continued emissions from coal-fired generators in the United States.
It's the carbon tax, of course, that is of greatest interest to the Carbon Tax Center. Does the prospect that KGL may propose a carbon tax represent real progress? Could this constitute a new approach combining the best of a cap-and-trade scheme with the type of easily understood and transparent, revenue-neutral carbon tax/fee that the Carbon Tax Center has long proposed -- a carbon tax/fee with steadily increasing rates that sends a clear price signal to consumers and manufacturers of energy-using products and transportation to use energy more efficiently and reduce reliance on high-carbon fuels? Or, are the senators just making the Waxman-Markey/Kerry Boxer cap-and-trade fiasco even worse?
Early indications are that the prospective KGL carbon tax on transportation fuels is the polar opposite of a well-designed, revenue-neutral carbon tax. A well-designed carbon tax would be imposed upstream where carbon enters the stream of commerce, such as the wellhead, refinery or mine mouth. The carbon tax would be imposed upon all fossil fuels based upon the carbon content of the fuel. It would gradually increase so consumers have a clear price signal that will encourage decisions to reduce carbon emissions through increased energy efficiency and switching to less carbon-intensive fuels.
In addition, an optimal carbon tax would return most of the carbon tax revenues to consumers through either a dividend or an offsetting tax deduction. A comprehensive, revenue-neutral carbon tax, imposed on all fossil fuels, lets consumers choose the least carbon intensive means to obtain needed energy, for practically all purposes, based upon the carbon content of different energy sources.
The KGL carbon tax will obviously not be comprehensive, since it will be imposed only upon the transportation sector. While the carbon tax rate will likely be based upon power sector compliance costs, that does not mean that consumers will see the same price on carbon for the transportation sector and the power generation sector. Once again, power generators are demanding free allowances and the use of offsets to protect their customers from price increases. Worse, there will be no price on carbon for industrial customers for some yet to be determined period of time. Industrial customers may actually see reduced costs for carbon fuels, if the price on carbon on other sectors is high enough to reduce demand for fossil fuels. While this may sound like good news, it would put the brakes on industry's transition to a low-carbon economy.
The KGL carbon tax will apparently not be imposed upstream. News reports indicate that it may be imposed at the gasoline pumps (with signs blaming the carbon tax on efforts to combat climate change). It's an approach rife for pleas for exemptions. An upstream tax would not be similarly vulnerable; the tax would be paid when the fossil fuel enters the marketplace and the company paying the tax would treat it as a cost of business to be passed on to customers to the extent possible.
The greatest virtue of a properly designed carbon tax is that it provides a clear price signal. Customers can count on a steadily increasing price on carbon and make economic decisions regarding investment in energy efficiency and substitution of other fuels that factor in that increasing price. In contrast, one of the major flaws in cap-and-trade is the inevitable volatility of prices, since prices will rise and fall based upon weather and the state of the economy; the volatility is increased by the gaming and speculation that are endemic to cap-and-trade systems.
Bizarrely, the KGL carbon tax is likely to incorporate one of the worst features of cap-and-trade; the carbon tax rate will apparently be based upon the compliance costs in the power generator sector. It's unclear whether there will at least be a ratchet, so that prices can only go up. If prices are allowed to decrease, consumers may see the type of volatile gas prices that they've experienced for years at the gas pump. When gasoline prices are volatile, consumers get skittish about investing in fuel-efficient cars, since they're reluctant to pay extra for an energy-efficient hybrid for fear of buyer's remorse when prices at the pump drop precipitously.
The KGL carbon tax is described as returning revenues to customers, but it apparently will do so in a convoluted and counter-productive way. An undetermined portion of the carbon tax revenues will flow to transportation projects and the Highway Trust Fund. The result could be more and bigger roads, increased driving and increased benefits for those who drive the most. You can't make this stuff up!
The good news is that Senators Kerry, Graham and Lieberman appear to recognize that carbon taxes make sense and can fly politically. The bad news is that the type of carbon tax that is likely to be proposed for the transportation sector bears little or no resemblance to a well-designed carbon tax, incorporates some of the worst elements of cap-and-trade and would be ineffectual and counterproductive. It almost makes cap-and-trade look good.
In regards to CO2, if the US did pass a carbon tax, and IF that carbon tax did reduce US CO2 output by 42% by 2030, the net impact on world atmospheric CO2 levels would be between 2 ppm and ZERO ppm with ZERO being the more likely outcome. This is straight from US DOE data sets. Anyone who can create a spread sheet can replicate that data.
O.K. but why ZERO? Because the industries that produce the most CO2, refining, steel, cement manufacturing, etc.. will simply move from the US to Mexico, China and India.
That said, there are new generation plants in the works that ARE much cheaper to build and a great deal safer. Lets start developing the new nuclear infrastructure now, and live cleaner for less.
France sups it's waste all over the world.
France has unusually high Cancer rates.
Cancer: http://www.tapcanada.org/wp-content/uploads/2009/03/tap_fact_sheet1.pdf
http://www.ncbi.nlm.nih.gov/pubmed/12938722 France has very high radiation type cancers rates.
25 cent per kwh nukes 9$ per W average. http://energyeconomyonline.com/uploads/Is_New_Nuclear_Competitive_July_10_2009_FNS_Event.pdf
25 cents per KWH for new Nuclear.
http://climateprogress.org/2009/01/05/study-cost-risks-new-nuclear-power-plants/
10$ per W nuclear minimum.
http://climateprogress.org/2009/07/15/nuclear-power-plant-cost-bombshell-ontario/
solar wind and bio fuels are all available far cheaper.
see my profile for proof and links.
http://www.huffingtonpost.com/users/profile/research?action=profile
Nukes failed during deadly heatwave: 15,000 deaths in France, 32,000 all of Europe.
http://www.usatoday.com/weather/news/2003-09-25-france-heat_x.htm
http://www.earth-policy.org/index.php?/plan_b_updates/2003/update29
http://www.guardian.co.uk/environment/2006/jul/30/energy.weather
http://www.publiccitizen.org/documents/HotNukesFactsheet.pdf
Remove all the fossil and Nukes subsides,
Apply them to purchase and subsidize green energy.
see my profile for details.
I know you are probably tired of mw by now, but one more point.
The cap and dividend approach taxes fossil carbon at the source. At the mine of wellhead.
Only fossil carbon we dig out of the ground is a problem. All other carbon we release came from the atmosphere in our time. It is the millions of years old stuff that is a problem.
Please read all the points at:
http://www.capanddividend.org/?q=readfirst
And by the way this is not my website nor am I connected to them in any way.
No shipping millions of tons of coal across the great leaks to burn in a midwestern plant to escape the tax by going to point of initial consumption/refinement.
A carbon tax is far superior to targeted incentives. A carbon tax provides a powerful price signal that will affect the millions of decisions made every day regarding how much energy to use and what to invest in more energy efficient homes, cars, factories and every other machine we use at home and in business. A carbon tax will also send a powerful price signal to switch from high-carbon coal and oil to renewable energy such as wind, solar and geothermal. As the cost of fossil fuel energy increases, renewable energy will become competitive even without targeted incentives. Congress can, of course, supplement the carbon tax price signal with targeted incentives to renewables and energy efficiency.
One could then using a portion of tax proceeds grant a tax credit not carbon tax credit to a company that achieved a reduction greater than some decided upon percent in efficiency above that standard. If you did a rolling adjusted number that could create industry picking winners to become more efficient. Vs say a credit to do X we the government think is best. One could even use that as a tool to subsidize the negative costs of downstream businesses reducing upstream production demand.
This would also help insure the carbon tax created additive emission reduction beyond initial price pressure and create incentives for R&D investment greater than the tax.
You'ld really need to use intensity factors so someone can't create credits by slowing production and carbon use itself.
Legalize hemp we need our big rigs running 50% hemp diesel in 5 years.
http://www.youtube.com/watch?v=4yqHRXcT0ss&feature=fvsr
Releases in 1982 from worldwide combustion of 2800 million tons of coal totaled 3640 tons of uranium (containing 51,700 pounds of uranium-235) and 8960 tons of thorium. The population gets 100 times more radiation from a coal plant than from a nuclear plant. So in 2004 by burning 4.6 billions tons of coal, we released 5980 tons of uranium into the air and 14720 tons of Thorium.
This is like 80 truck size dirty nuclear bombs releasing 1 ton of radioactive material every day.
A Chernobyl twice a week.
http://advancednano.blogspot.com/2006/10/coal-chernobyl-twice-week-and-coal-9.html
PLUS:
Coal ash that contains arsenic, beryllium, chromium, lead, and mercury. are leached into groundwater from it's storage in coal ash "surface impoundments." Impoundments which are in fact are no more or less than big holes in the ground that remain open to rainfall from above and water seepage from below.
http://www.huffingtonpost.com/rena-steinzor/oiras-time-is-up-on-coal_b_460678.html
Of course, not a single one of our Congressmen and Senators want to guarantee that a carbon tax would be revenue neutral either (with many economist saying it should be used to offset payroll taxes for Medicare/Medicaid and Social Security since a carbon tax would be regressive). Instead they want to use the money to again demonstrate that they are the worst venture capitalists in the world - picking business segments that "feel" right to them irrespective of whether thay have any long term prospects for viability.
This is all a bad joke and it's oriented so minimally to actually reducing greenhouse gas emissions that it's a joke.
Most of us old enough to remember the 1970’s see the overall joke in this whole conversation.
I can remember seeing brown snow from coal ash. Most people thought Nuclear was a much better and cleaner solution. This was way before anyone talked about CO2.
The so-called environmentalists fought Nuclear; they said use Natural Gas and Coal “it’s natural” or “if God wanted us to use Nuclear he wouldn’t have gave us coal and gas and oil”! Never mind we dig uranium out of the ground just like coal or oil or iron.
Environmental groups TOLD US to put all of the CO2 from Coal and Gas used in power production in the air for the last 40 years.
And now that environmentalists are concerned about CO2, instead of just saying we were wrong, lets build Nuclear, many are still fighting it. (In fairness many environmental groups are now supporting Nuclear or at least not opposing it.)
And one environmental group or another is fighting every other solution.
Environmental groups fight wind farms because of birds or “sight pollution”.
Environmental groups fight solar farms in the desert that harm desert life.
Environmental groups fight biofuels as not “clean enough” or “compete with food for cropland”.
But even today the extreme environmentalists are STILL trying to stop Nuclear power, and they don’t seem even to realize that means more coal, or electric bills at least 5 times higher.
That’s the joke!
Your energy bills go up and you get nothing back. Supposedly the government will use this money to subsidize inefficient power sources, but who knows, it’s gone in any case. That is why Obama included this money in his budget.
Under cap and dividend, there is a “tax” on carbon but 100% of that is rebated back to consumers on a per capita basis, the government keeps none. CO2 free energy sources have to compete fairly with each other on cost.
For example, if you lived in a state where most power came from nuclear, you would in effect be “paid” with money from people in states that burned Coal. This would provide an almost irresistible political force to adopt CO2 free sources. I really do not like coal for many reasons.
Under either system nuclear power, if competing on cost and not stopped by extremists, would grow.
If we are forced to accept some government intervention to switch to CO2 free sources, it is the best option I have seen.
http://www.capanddividend.org/?q=readfirst
How? Will it be direct payments to ALL citizens equally?
"define more carefully the acceptable uses of the 25% of revenues that will not be returned to consumers"
That of course is always the problem, example the Social Security Trust Fund.
Did you read the proposal at:
http://www.capanddividend.org/?q=readfirst
It really seems to be a well thought out solution.
Revenue neutral good if it's doable but be honest might have to divert revenue to push early efficiency gains. get it neutral on those at median income I can pay my share and I'll be happy.
BUT, Congress won't allow that. There will be all kinds of subsidies, exclusions and after-the-fact "make-rights" because of SOCIAL arguments about regressivity, etc.
I'm all for a transparant tax on carbon but ONLY if the Congress has NO ROLE in modifying it's uniformity OR the dividend distribution.
Without arguement, there is a problem with pollution. We see debris laying in the street, polluted streams, etc. But we have laws on the books and programs in place to address these issues. We should let these work.
The reluctance to move from fossil fuels is simply the fact that the new 'green energy' is not at a sustainable level yet. It is coming. And as the technology matures, it will grow in the marketplace. But levying taxes as punishment, and building legislation based on disproven science is ludicrous. Any Congressperson who votes for this deserves to be removed from office.
Nobody is talking about levying taxes as punishment. The Carbon Tax Center proposes a revenue-neutral carbon tax, with the revenues returned through dividends or offsetting tax deductions. For details, please take a look at our web site at www.carbontax.org.
A carbon tax should be revenue-neutral: government can soften the impacts of added costs by paying back the tax revenues (“dividends”) or reducing other taxes (“tax-shifting”).
It must be dividends. The "tax-shifting" approach really means in goes down the government rat hole.
http://www.capanddividend.org/?q=readfirst