Carbon Tax Center

Arising from the Senate’s Ashes?

07/22/2010 by Charles Komanoff Comments (15)

And now, ve may begin?

Readers of a certain age, and a certain literary bent, will recognize the words of Alexander Portnoy’s psychiatrist, spoken at the close of Philip Roth’s transgressive 1969 novel, Portnoy’s Complaint.

After lo these many years, they popped into my head today as I read that Senate Democrats had finally thrown in the towel on an energy bill that would have included a partial cap-and-trade provision for limiting carbon emissions from power plants. The bill, written by Senators John Kerry and Joe Lieberman, was touted by Washington insiders and some major environmental groups as this year’s last hope for federal climate legislation. Yet it would have relied on carbon offsets and other dodges to postpone the day of reckoning with true, visible carbon emissions pricing — the cornerstone of meaningful climate policy.

Instead, reported the New York Times, Senate Democrats will pursue a limited bill aimed at increasing oversight of oil drilling and tightening energy efficiency standards — with no direct assault on climate-destabilizing CO2. (For a later Times story amplifying the first, click here.)

Yes, now, we may begin — “we” being Americans who care about climate, sustainability, and Earth — to unite around a climate approach that is effective, equitable and transparent enough to win the support of our fellow citizens and a Congressional majority.

I’m referring of course to the idea advanced by climatologist Jim Hansen as fee-and-dividend and by the Carbon Tax Center as a revenue-neutral carbon tax, by which fossil fuel extractors and importers pay the U.S. Treasury fees pegged to the carbon content of the coal, oil and gas they take from the ground or bring into U.S. ports, and the Treasury distributes the revenues to all Americans via equal monthly dividends (“green checks”), or by tax-shifting from regressive taxes such as payroll taxes.

The Senate’s antipathy to even the partial cap-and-trade proposed by Sen. Kerry will doubtless be spun as indicating that for the foreseeable future the well for climate legislation has been poisoned. The Carbon Tax Center says that the opposite may be true: with cap-and-trade out of the way at last, the political well can begin to be de-toxified so that the effective, equitable and transparent carbon fee-and-dividend can be seriously considered.

For this to happen, however, the Big Green groups like EDF and NRDC that for years have dominated climate discourse among environmentalists, and that convinced Congressional Democrats and the White House that the only way to “put a price on carbon” in America was via carbon cap-and-trade, will have to abandon that approach and allow others, and themselves, to try a fresh start.

It will be said that cap-and-trade failed because Fox News and other climate deniers branded it as “cap-and-tax” and, therefore, a carbon tax (or fee) cannot possibly succeed. And it is true that carbon cap-and-trade was looked to, years ago, as a way to build on the success of acid rain cap-and-trade, win over Republican free-marketers, and put a price on carbon without having to parade the dreaded t-a-x word before the public.

In the event, though, carbon cap-and-trade did none of these things.

Instead, Big Green’s pursuit of carbon cap-and-trade tethered the climate movement to complex financial instruments and branded us as servants of Wall Street elites. It opened the legislative floodgates to off-the-charts Beltway deal-making that rightly repulsed the public. Perhaps most importantly, the co-optation of climate advocacy by the cap-and-traders robbed us of the high moral ground we might have shared with abolitionists, suffragists, labor agitators and civil rights workers — true American heroes who fought to liberate our society of oppression and injustice.

If you’re in the climate movement, you recognize that fossil fuels’ assault on Earth’s climate is an ultimate form of oppression and injustice: of rich against poor, of the profligate against the frugal, of the present against the future. Ending this assault will require concerted action on many fronts; and it starts by internalizing the climate-damage costs of coal, oil and gas into their prices, so that the free ride for fossil fuels is ended and all of the alternatives, from energy efficiency, renewable energy and low-carbon fuels to conservation-based behavior and mindfulness toward energy consumption, may compete fairly and effectively.

Political action to accomplish this must be done in bright sunlight, not in Beltway shadows.

Cap-and-trade, let us hope, is dead. And now, we may begin!

Photo: Flickr / generica.

Nat’l Academy of Sciences Tells Citizen-Lobbyists: First Priority is Economy-Wide Carbon Price

06/23/2010 by James Handley Comments (1)

On Monday, Dr. Laurie Geller, director of the National Academy of Sciences’ new blue-ribbon climate change report, briefed the Citizens’ Climate Lobby’s National Conference, kicking off CCL’s Washington lobby week.  Part I of NAS’s report stresses the strong evidence and broad scientific consensus that Earth’s surface is warming due to human-caused fossil fuel burning. NAS recommends further research on managing impacts on ecosystems, food production, public health and climate policy.

Part II, “Limiting the Magnitude of Future Climate Change” calls for immediate, urgent action; its top recommendation is to “Adopt an economy-wide carbon pricing system.”  It also urges additional clean energy R&D, research into how behavior and technology interact and incentives for low greenhouse gas energy technologies.  Part III, on adaptation, suggests responses to the inevitable consequences of climate change already in motion.  Recommendations include: “develop hot weather early warning systems” as Philadelphia has done, and “Alaska: Retreat from the Coast” beginning the process of relocation from areas where thawing and erosion are rendering present settlements untenable.

Lester Brown, whose book “Plan B 4.0” is an inspiring blueprint for a sustainable, low-carbon future, also addressed the CCL conference. Brown reminded listeners that the Japanese attack on Pearl Harbor sparked President Roosevelt to call on industrialists to convert automobile and steel manufacturing into wartime production, leading to victory in WWII. Brown sketched a similarly broad transformation away from fossil fuels and toward efficiency and renewables that is now urgently needed to avert climate disaster — a far more profound threat to our security than Japanese invasion was in 1942. Brown stressed that a gradually and predictably-rising carbon tax is a key policy needed to drive the energy transformation required for climate stability essential to human civilization.

Obama Likens BP Spill to 9/11 But Still Misses Main Message

06/14/2010 by Charles Komanoff Comments (3)

In an Oval Office interview last Friday with Politico columnist Roger Simon, President Obama likened the Gulf oil disaster’s impact on the national psyche to that of 9/11:

In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape how we think about the environment and energy for many years to come.

Unfortunately, judging from the portions of the interview published by Politico over the weekend, we shouldn’t expect this reshaping to include a carbon fee or similar tax on dirty energy.

Obama did stress the environmental costs:

I have no idea what new energy sources are going to be available, what technologies might drive down the price of renewable energies. What we can predict is that the availability of fossil fuel is going to be diminishing; that it’s going to get more expensive to recover; that there are going to be environmental costs that our children, … our grandchildren and our great-grandchildren are going to have to bear.

Yet there was nothing in the Politico interview to match the seeming commitment to legislating a carbon emissions price that the President made in his June 2 energy speech in Pittsburgh, as reported in the New York Times:

If we refuse to take into account the full cost of our fossil fuel addiction — if we don’t factor in the environmental costs and national security costs and true economic costs — we will have missed our best chance to seize a clean energy future.  The votes may not be there right now, but I intend to find them in the coming months.

Needless to say, it’s a long shot that renewable technologies will ever be able to undercut fossil fuels in price unless at least some of those environmental and security costs are factored into coal and oil prices, as the Christian Science Monitor noted in an editorial published the same day that Politico interviewed the President.

Gov’t Panel Estimates Cost of C02 pollution: $21/t and rising

06/3/2010 by James Handley Comments (0)

An inter-agency panel estimated this week that each additional (metric) tonne of CO2 emitted into Earth’s atmosphere inflicts at least $21 in damage to agricultural productivity, human health, property damage from flooding, and the value of ecosystem services lost due to climate change.  (According to EPA,  the U.S. emitted 5.6 billion tons of CO2 in 2008.)  The panel, representing the consensus of 12 federal agencies, provided its climate damage analysis for use in cost/benefit calculations assessing major federal actions, including regulatory changes.

The panel applied “conservative” assumptions: a relatively high (3%) discount rate which tends to downplay the present value of future damage, they excluded large categories of costs such as military intervention or humanitarian assistance to failed states, and gave only minimal consideration to potential catastrophic climate tipping points.  Even with those assumptions holding damage figures down, their mid-range assessment supports a $21/t initial CO2 price rising by 2050 to $45 in low-risk scenarios and to $136 in their high-risk scenario.   The analysis can be seen as a low-end “benchmark” that will only go up as we learn more about (and can better quantify) climate damage.   And it clearly underlines the need for a carbon tax of at least $21/t and rising, to reflect more of the true cost of CO2 pollution and create economy-wide incentives to minimize climate damage.

Plan B: After KGL / Cap-Trade-Offset

04/26/2010 by James Handley Comments (2)

Earth Day weekend’s headlines set the stage: “Sen. Graham Walks Away from Climate and Energy Bill” and “Climate consensus collapses in Senate.”

Speaking at the Earth Day rally, Friends of the Earth President Erich Pica called for everyone to “use less stuff,” looked to a future beyond fossil fuels and urged Congress to “get serious” about climate.  In turn, Dr. Hansen pointed to our “false economy of cheap fossil fuels” and proposed a “People’s Climate Stewardship Act” — a steadily-rising carbon fee with revenue returned to Americans.  Rep. Chris Van Hollen (D-Md.) spoke immediately following Dr. Hansen. Afterwards, Dr. Hansen and I congratulated Van Hollen for his “dividend” proposal to return carbon revenue to Americans.  Van Hollen thanked Dr. Hansen and agreed: a price on carbon is essential; a fee with revenue return is the “cleanest” way. He said, “I will work with you” and encouraged us to continue educating the public and pressing for bipartisan support.

Here’s Dr. Hansen’s report: Earth Day on the Mall.

SEC Charges Goldman Fraud — Warning: Skip Subprime Carbon

04/18/2010 by James Handley Comments (1)

Wall Street banking firm Goldman Sachs intentionally sold “toxic” mortgage-backed assets to clients to generate fees and bonuses, according to fraud charges filed by the Securities and Exchange Commission Friday.  (Washington Post, 4/17.)  SEC’s suit alleges that Goldman vice president Fabrice Tourre wrote: “The whole building is about to collapse anytime now,” in an e-mail months before creating and marketing the mortgage-backed investment.  (Goldman denies that they “bet against… clients.”)

And, earlier this week, police in Spain arrested nine people for alleged fraud involving trading of carbon credits.

Carbon “offsets,” like mortgages underlying the investments Goldman marketed, vary tremendously in quality and value.  GAO has reported that verification of offsets in the EU’s carbon trading system has been spotty; many have little or no value.  The incentives that apparently led Goldman to oversell repackaged subprime mortgages would also prevail in a cap-and-trade carbon market, setting the stage for another bubble and collapse.  The SEC’s case is a loud, clear warning to Congress: Skip the markets, traders, volatility, offsets and fraud; set a predictable, rising carbon price directly.