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NYC Climate March: Unsettling but Inspiring

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Sunday’s March to End Fossil Fuels in midtown Manhattan was big, loud and vibrant. The organizers put the tally at 75,000. While that may have been over-generous, the march was far and away the largest U.S. climate assemblage in some time.

It was also an occasion to ponder the goals and tactics of the climate movement.

The customary signs and chants denouncing Big Oil and its funder banks were out in force. What felt new, and unsettling, was the vitriol directed at President Biden. Last year’s passage of the Inflation Reduction Act, with its promise to hasten the transition from fossil fuels by accelerating wind and solar and electrification, might as well have been an hallucination.

This photo by Sarah Blesener ran above the fold in the New York Times’ print edition the next day. The paper’s online caption caught the focus of the march: “Protest organizers used Sunday’s event to send a message to President Biden as he begins his push for re-election: Do more if you want our votes.”

Ganging Up On Joe

The signs and chants castigating the president flowed like a river. Biden: Declare a climate emergency … Cancel Willow … I didn’t vote for fires and floods.

Yikes. Whatever happened to the Inflation Reduction Act’s nearly half-a-trillion dollars worth of tax credits and other subsidies paying down the cost of renewable electricity from solar and wind farms while also cutting consumer costs to purchase electric vehicles, electric heat pumps, and home and commercial electric battery storage?

The intent of the IRA’s myriad and synergistic incentives isn’t just to grow the U.S. green manufacturing base with good-paying green jobs. It’s to displace fossil-fuel use by retiring petrol-fueled engines and furnaces and simultaneously “greening the grid” by speeding the rate at which wind and solar power usurp electricity generation from coal and methane gas.

As the IRA was snaking through Congress last August, energy analysts were scoping the potential carbon and methane reductions from those displacements, along with estimates of increased emissions from new federal oil and gas leasing that Biden committed to expedite to win the tie-breaking Yes vote from West Virginia Senator Joe Manchin. One leading think tank, Energy Innovation, concluded that “The bill’s clean energy measures will yield 24 times more emissions reductions than its fossil fuel provisions will increase emissions.” (The firm subsequently raised its 24-to-1 emissions ratio to 28-to-1.)

Seven months later, Biden held up his end of the deal, issuing a permit okaying ConocoPhillips’ $6 billion Willow oil-and-gas drilling venture on Alaska’s North Slope — and threw away the climate good will due him from the IRA. Never mind that the additional carbon emissions from the Biden-Willow “hydrocarbon bomb” will only negate a fraction of the emission reductions from his legislation’s clean electricity and end-use electrification, as I pointed out back in March. Even more poignantly, those additional emissions are more properly estimated to be close to zero. Why? Because what actually burns the carbon fuels and puts the CO2 into the atmosphere is fossil fuel consumption, not supply. If Biden had rejected Willow, the same supply would have been called forth from Nigeria, or Kuwait or some other oil region or state to fill U.S. cars, planes and trucks.

In other words, Willow or any new U.S. drilling activity is nearly irrelevant from a climate standpoint because, as we wrote then, “demand finds a way to create supply,” rather than the reverse.

As we marched, I asked a smattering of anti-Biden sign-holders if the president merited praise for the green energy unleashed by his IRA, rather than criticism for okaying Willow or the other contentious project, the Mountain Valley Pipeline through West Virginia. The typical response was No, we’re in a climate emergency. Any new fossil-fuel infrastructure is too much.

To be sure, trade-offs are hard to wrestle with even in calm moments, much less among a big crowd on the move. But the blank stares about the IRA and occasional flashes of venom against Biden were disquieting, nonetheless. The Times‘ headline for its print report on the march was all too accurate: “Fingers Pointed at President, Protesters Demand End to Fossil Fuels.” Left unsaid is whether protesting Biden climate bombs will seed electoral bombs in 2024, placing our democracy as well as climate in irredeemable peril.

Who’s Really Funding Fossil Fuels?

If the anti-Biden sentiment was novel, the anti-big banks rhetoric was old hat. Blaming the climate crisis on Big Oil and demanding that universities, pension funds and the like “divest” by dumping fossil fuel securities from their holdings, has been a staple of climate organizing for nearly a dozen years, as I decried a year-and-a-half ago, in Exxon doesn’t care if you divest. Neither does climate:

When the writer and climate activist Bill McKibben kicked off the [divestment] campaign in a July 2012 Rolling Stone article, Global Warming’s Terrifying New Math, the rationale was three-fold: (1) dry up capital and make it harder for the fossil fuel industry to create new mines, wells, pipelines and terminals; (2) weaken the industry’s social and political standing so it couldn’t easily block pro-climate policy; and (3) by hanging a “Dump Me” sign around Big Oil, amp up climate organizing. Not for nothing did McKibben subtitle his Rolling Stone article, “Make clear who the real enemy is.” It was Exxon and its brethren.

A climate marcher with Third Act helpfully displayed the biggest U.S. banks’ fossil-fuel financing over the past seven years.

That path has proven to be a dead-end, I concluded in my post. One piece of evidence was a simple graph showing that Exxon-Mobil’s share price had outperformed the stock market as a whole since the onset of the Covid pandemic. More evidence, if any were needed, was available in the wonderfully wonky signboard at left that was borne by one of yesterday’s marchers, a vibrant senior citizen affiliated with the McKibben-inspired Third Act.

The amounts that the four banks — Chase, Citi, Bank of America, and Wells Fargo — have funneled into fossil fuels since the start of 2016 sum to an impressive-seeming $1.27 trillion ($1,270,000,000,000). Yet over the same period, consumption of petroleum products by U.S. families and businesses earned the oil companies a revenue haul nearly three-and-a-half times as great: an estimated $4.29 trillion ($4,290,000,000,000).

[I calculated that figure from the average 19.9 million barrels per day of gasoline, diesel fuel, jet fuel and other petroleum products  kerosene and so forth consumed per day over the same seven years, 2016-2022. (See Energy Information Administration, Monthly Energy Review, Table 3.5 Petroleum Products Supplied by Type.) Factoring in (1) there are 42 gallons of petrol per barrel, (2) the seven years total 2,555 days (365 x 7), and 3) an average retail price per gallon sold of $2.00 — a conservative markdown from the actual $2.82 average retail price of gasoline over that period — yields $4.29 trillion.]

Who’s really funding fossil fuels? American households, businesses and institutions, locked into grotesque consumption levels that U.S. climate activists studiously ignore.

To be sure, my dollar comparison has apples-and-oranges elements. Only some of the $4 trillion or more in petrol sales is available for investment in exploration and other petroleum infrastructure. And other banks beyond the Big Four also fund oil investment. On the other hand, U.S. consumption of methane gas and coal fossil fuels now exceeds consumption of petroleum on a Btu basis by 20 percent, suggesting that total fossil fuel revenues over the past six years was probably in the vicinity of $8 billion rather than the $4.3 billion from petroleum products alone.

My point is that bank financing is a much weaker linchpin for creating new fossil fuel infrastructure than most climate activists suppose. What really makes fossil supply possible is the lock-in of consumption of fossil fuels themselves, in billions of routine purchases that, day in and day out, fork over many more dollars to the fossil fuel industry than do the banks.

(Owens was responding to a Cameron Murray, PhD, who was decrying the idea of asking Americans to take some responsibility for their personal carbon footprint.)

Or, as Darrell Owens, an analyst with CA YIMBY (Yes In My Back Yard), the pro-housing group that has spearheaded the recent revolution of expansionary zoning in California, put it recently on Twitter, “Oil drilling [and such] isn’t for fun, it’s in service of carbon intensive demand that can be stopped.” Stopped how? By undoing automobile dependence, incentivizing smaller vehicles, densifying suburbia, introducing congestion and road pricing, and of course, federal-level carbon taxing, as I detailed last year for The Nation magazine (The Climate Movement In Its Own Way).

Uprooting the Source: Carbon Consumption

Happily, some at Sunday’s march saw past Biden and the banks and critiqued the structures of consumption that enforce dependence on fossil fuels, whether directly at the gas pump or the furnace or stove, or indirectly in purchases of products whose manufacture and transportation entail massive quantities of fuel, or in inefficient or indulgent use of electricity, most of which is still made by burning coal or methane gas.

These included stalwarts from Citizens Climate Lobby, including an enthusiastic contingent from Pittsburgh as well as folks from across the Northeast; and individuals whose handcrafted signs called out U.S. car culture not only for its gasoline profligacy but for its stifling of human life and health.

Some marchers saw beyond Biden and bankers to demand enduring solutions: carbon fee-and-dividend and liberation from automobiles.

“Tax Pollution, Pay People” packs so much into four words, I said to the sign-holder, a CCL member from Pittsburgh,  who told me his name, which I failed to write down. When I told him mine, he nearly jumped out of his shoes and shouted it to his fellow CCL’ers as if I was Greta Thunberg and Steelers legend Franco Harris rolled into one.

I started to apologize for CTC’s relative quiescence over the past year or two and to explain that I’ve been consumed with helping get NYC’s congestion pricing plan across the goal line. He stopped me short, thanking me for CTC’s work and insisting that, together, we’ll win a nationwide price on carbon before it’s too late.

So there’s my take. Singling out Biden for attack felt excessive and worrisome, since any falloff in enthusiasm will crimp the chances of small-d democratic, climate-aware outcomes in the elections next year. Similarly, more than a decade’s worth of targeting Big Oil and the banks doesn’t appear to have moved the needle for effective climate policy. Going after “luxury carbon,” as Extinction Rebellion did in a small but resonant climate action last week that I helped organize, feels to me like a more empowering path, one that might capture both the populist moment and climate urgency in a single stroke.

But notwithstanding the mis-directions, it was uplifting to be amidst tens of thousands with a like mind: A better world is possible. A better world is necessary. I want a fossil-free president. Amen to that!

War, oil, and carbon taxes: A primer

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Prices of gasoline and other petroleum products as well as methane (“natural”) gas were already unusually high in the U.S. before Russia invaded Ukraine on Feb. 24. Less than two weeks on (March 9), they’re at levels not seen since 2008, prompting the usual motorist grumbling but also creating hardship for squeezed families. Here we shed light on four key questions:

  1. Is the backlash against high pump prices an argument against pursuing carbon taxes?
  2. How big a hit are U.S. consumers taking from the higher fuel prices?
  3. Is demand for gasoline sensitive to the price at the pump? If so, how much?
  4. How much could the U.S. cut oil demand, right away?

Q1: Is the backlash against high pump prices an argument against pursuing carbon taxes?

A1: No.

Joseph Majkut explains:

Let’s unpack the tweet from Majkut, former Senate staffer and Niskanen Center climate specialist now with the national security think tank CSIS.

Supply shocks, like today’s, exact monies from businesses and consumers and transfer it to the oil industry — extractors, refiners, traders, brokers, insurers.

Carbon pricing, in contrast, is imposed by governments. And though it leads, deliberately, to higher fuel prices, the tax monies are collected by government and become revenues that can be used for public purposes. The “canonical” outlet — the one increasingly urged by carbon-pricing advocates in NGO’s and government — is to distribute (“transfer,” in Majkut’s phrase) the revenues as equal “dividends” to households.

The wealthiest U.S. household quintile spends 3.3 times as much on gasoline as the poorest. So dividing the revenue pie equally among all households yields a big net plus to lower-income families.

This fee-and-dividend approach, pioneered by Citizens Climate Lobby, is income-progressive because lower-income households spend fewer dollars on fuels (directly plus indirectly) than wealthier households. Fuel price shocks, on the other hand, are regressive because lower-income households spend a larger share of their budgets on fuel.

If these points appear contradictory, please study the donut chart at right, or consult our page, Ensuring Equity. It’s the dividend that makes carbon pricing progressive, and the lack of a dividend that makes oil shocks regressive.

Q2: How big a hit are U.S. consumers taking from the higher fuel prices?

A2: A pretty big one, though it’s probably transitory.

In 2019, the last pre-pandemic year, the U.S. consumed 32.2 quads of methane (“natural”) gas and 43.5 quads of petroleum products. (A quad, or quadrillion Btu, is a standard metric for characterizing enormous energy quantities.)

Methane gas is used for power generation, heating of homes and commercial buildings, and as process heat for industry. Petroleum products encompass not just gasoline but home heating oil, diesel fuel burned by large trucks and machinery, kerosene for aircraft, residual oil for large commercial ships, propane for heating (largely in rural areas that aren’t connected to gas lines) and lubricants. Non-gasoline fuels typically account for a little over half of petroleum usage, with gasoline a bit less than half. (CTC’s carbon-tax model breaks down a lot of these uses.)

On a per-btu basis, i.e., for an equivalent amount of heat or energy, petroleum products are far more costly than methane gas. Gasoline at $4.00 a gallon, the approximate national average pump price in early March, equates to $32 per million Btu; whereas during 2016-2020 methane gas averaged only a little more than $2 per million Btu at the wellhead and $6 delivered to the average customer. (Yes, refining crude oil into petroleum products is really costly.)

We made a back-of-the-envelope estimate of what the disruption of global energy markets due to the Russian invasion of Ukraine is costing U.S. consumers. We assumed a 15 percent rise in petroleum-product prices, along with a 50 percent rise in the wellhead price of methane gas as profit-maximizing owners diverted some supplies to LNG tankers bound for Europe. With these assumptions, the impacts on U.S. consumers — businesses along with households — are in the neighborhood of $400 million a day for higher petroleum fuels and $100 million a day for costlier methane gas. (Gasoline accounts for “only” $150 to $200 million of the $500 million total.)

Mathematically, the total, around $500 million a day, works out to around $4 a day in added costs for an average U.S. household. With a robust carbon tax in place, the supply shock would be far smaller. Households wouldn’t be consuming as much oil, and the increased slack in the world oil business would shrink the opportunities for profiteering by oil owners and traders.

Q3: Is gasoline use sensitive to the price at the pump?

A3: More than most people think, though less than we wish.

We examined the price-elasticity of gasoline in 2015, in a post, What an Energy-Efficiency Hero Gets Wrong about Carbon Taxes. The post presented a linear regression model that correlated year-to-year changes in U.S. gasoline consumption with changes in economic activity (GDP) and in the real (inflation-adjusted) price of gasoline. Here’s what we wrote then:

We “regressed” the annual percentage changes in U.S. gasoline consumption from 1960 through 2014 on three independent variables: (i) the same year’s percentage change in economic activity (GDP); (ii) the same year’s percentage change in the average real retail price of gasoline; and (iii) the average percentage change in that price over the 10 years prior to the current year. The third variable was intended to reflect lags inherent in Americans’ responses to changing gasoline prices, insofar as automobile purchases and location choices that affect usage tend to change over years rather than weeks or months. The parameters may be referred to as income-elasticity, immediate price-elasticity, and lagged price-elasticity, respectively.

Imagine the benefits from impounding vehicles like these for the duration of the Ukraine War — or the climate crisis!

This week we updated the model with gasoline consumption and price data through 2021. Here’s what we found:

  • The  income-elasticity of gasoline consumption is a little over 0.5 (0.53, to be precise), meaning that a 1 percent rise in GDP is associated with a 0.5 percent rise in gas use.
  • The immediate price-elasticity of gasoline consumption is (minus) 0.11, meaning that it takes nearly a 10 percent hike in the average price at the pump to bring about an immediate 1 percent drop in usage; this validates the perception that in the short run. gasoline use is only barely responsive to price changes.
  • The lagged price-elasticity of gasoline consumption is (minus) 0.19. The sum of the immediate and lagged price-elasticities is (minus) 0.30, indicating modest sensitivity of usage to price over a longer time horizon. A sustained 10 percent hike in gasoline prices would tend to elicit a 3 percent drop in usage.

(Incidentally, this 3-variable model — actually, we used 5 variables, including “dummy” variables to isolate gas use in 2020 and 2021, the pandemic years — explains nearly 80 percent of the year-to-year variation in U.S. gasoline consumption.)

Here are four takeaways from our modeling:

  1. Holding prices constant, gasoline usage in the U.S. has been partly decoupled from economic activity, since two units of economic growth lead to only one unit of growth in gasoline use.
  2. U.S. gasoline demand isn’t entirely price-inelastic, though it is nearly so in the immediate (short) run.
  3. Over a longer period, demand for gasoline displays some price-sensitivity, suggesting that by raising pump prices, carbon taxes can have some sway over usage.
  4. Still, the relative price-inelasticity of gasoline indicates that even robust carbon taxes won’t have a big direct effect on usage; the bigger impacts will come from speeding the transition to electric vehicles and, we hope, fostering turns in the culture that promote and valorize reduced fuel use

Q4: How much could the U.S. cut oil demand, right away?

A4: By a lot. (But we won’t.)

In early 2002, not long after the Saudi-enabled attacks that destroyed the World Trade Center, I published a blueprint for achieving an immediate (“overnight”) 5% cut in U.S. oil consumption, with the reductions reaching 10% within six months.

I produced this U.S. oil-saving plan in early 2002, hoping to rally post-9/11 public opinion to slash U.S. oil dependence.

Given the reality that changes in capital stocks that underlie oil consumption — the cars people own, the cities and towns where they live — can’t change overnight, the booklet’s guiding idea was to “collectively change individual behaviors” that added up to the 19.3 million barrels of petroleum products being consumed daily in the U.S.

My thinking then was that behavior changes away from petroleum consumption could finally explode from niche to commonplace if the changes were hitched to a higher purpose — national security and patriotism, in this case. Bicycle commuting, carpooling, thermostat setbacks, electricity conservation would become widespread as their aura changed from fringe-y to patriotic.

Sadly, this never caught on. Our declaration “that we face a choice between love of oil and love of country” and our call to the Bush administration “to break with past policies of subsidizing oil consumption and treating every oil-consuming activity, no matter how discretionary or wasteful, as essential,” fell on deaf ears.

Today, U.S. oil consumption is greater than it was on 9/11. U.S. households, businesses and industry consumed an average of 20,540,000 barrels of petroleum products in 2021, around 5 percent more than the 19,700,000 barrels used daily in 2000.

If anything, calls to alter individual behavior to cut down on consumption of oil and other fossil fuels, whether for geopolitical purposes (to shrink Russian government and oligarch cash reserves) or for climate (to dial back carbon emissions), are frequently derided on the left as “lifestyle-shaming” and diversions from the “urgent task of system decarbonization.” In a New Yorker magazine profile of Sunrise Movement organizers earlier this month, for example, one activist dismissed Al Gore’s exhortation in 2006 to replace electricity-gulping lights because “even if you change all the light bulbs in the country, you don’t come close to preventing catastrophe.” In fact, multitudes of bulb swaps since then have helped flatten U.S. electricity demand, keeping hundreds of millions of tons of coal in the ground — this country’s biggest climate triumph to date.

We conclude this post with a screenshot of the opening pages of “Ending the Oil Age.” The full 44-page report may be downloaded here (pdf). Readers with an historical bent, take note: The report also proposed hefty taxes on gasoline and jet fuel that, in my telling, could replace the patriotic impulse to conserve petroleum as the murderous, petro-dollar-fueled attack on the World Trade Center began to recede into the past.

Pages 1 & 2 from “Ending the Oil Age.” Link to the report is in the last text paragraph, above.

Inflation Reduction Act

The U.S. 2022 Inflation Reduction Act is intended to reduce carbon emissions in vehicular travel and other economic sectors through a broad range of energy incentives and subsidies led by measures to reduce the cost to manufacture and sell electric vehicles. This page links to coverage of the IRA and explores its likely implications for both carbon emissions and the project to enact economy-wide carbon taxes in the U.S.

Biden Administration Detailed Guide to the IRA

In December 2022 the White House released a 182-page guide to the energy and climate provisions of the Inflation Reduction Act. Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action is a 15 MB pdf.

Introduction

In a head-spinning 20-day legislative whirlwind from late July to mid-August, the Inflation Reduction Act of 2022 was unveiled by Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin, passed by the Senate and the House, approved by the Senate parliamentarian (and thus immunized against the filibuster), and signed by the President.

In the climate-policy firmament, the Inflation Reduction Act could be seen as an antithesis of carbon pricing. Rather than making dirty (fossil) energy costlier in the marketplace, it seeks to make clean energy cheaper by subsidizing low- or zero-carbon power sources. It also aims to leverage low-carbon electricity by paying vehicle and building owners to switch to electric power from combustion fuels that can’t themselves be decarbonized.

Nevertheless, the “IRA” stands as a landmark legislative achievement — the most ambitious as well as costliest federal initiative to reduce carbon and other greenhouse gas emissions. Moreover, the affirmative nature of the legislation — “upending the debilitating narratives of U.S. climate helplessness and Biden-Democratic Party haplessness,” as we wrote in early August in a post in The Nation (cross-posted here as well) — could some day open the door to federal legislation pricing carbon emissions.

What the Inflation Reduction Act Does

The IRA (download summary or full text) commits $370 billion in federal subsidies over the next decade to bring down the cost of “clean” (ultra low- or zero-carbon) energy and accelerate the electrification of U.S. vehicles, buildings and industry so that increasingly low-carbon power displaces carbon-spewing direct combustion of oil and gas. The designated spending pots are depicted in the New York Times graphic below.

NY Times Aug. 17, 2022 graphic depicts projected IRA spending pots over the next ten years.

Another section of the omnibus legislation authorizes the federal government to negotiate down prescription drug prices and expands subsidies for health insurance under the Affordable Care Act — measures intended to bolster and expand the Obama administration’s signature “Obamacare” legislation and  also situate climate legislation in a more popular context. And, in a potentially important precedent, the IRA sets in motion a greenhouse gas fee — not on CO2 but on “excess” methane emitted from oil and gas extraction and transportation infrastructure — to take effect in 2024.

Passage of the IRA ended a protracted period of U.S. backsliding from climate action. It also fulfills, if only as a first, albeit major, step, campaign commitments by Joe Biden and other national Democrats to tackle U.S. emissions and climate change. Its enactment was viewed as boosting the Democratic Party’s chances a retaining control of Congress in the 2022 midterms. [Post-election addendum: the Democrats did in fact surpass expectations in the Nov. 2022 voting, increasing their Senate majority by one and limiting their House losses to nine, though that was enough to flip control to the Republicans.]

This page presents and distills informed commentary on and analysis of the Inflation Reduction Act. We hope to soon tend to the legislation’s implications for advancing comprehensive, national-level U.S. carbon pricing.

A veteran journalist’s take: “It makes clean energy cheap.”

An excellent early entry point into the IRA is from the pen of veteran journalist Mark Hertsgaard. His Aug. 11, 2022 essay in The Nation, Does The Climate Bill Throw Environmental Justice Under The Bus?, touted the legislation as by far the biggest pro-climate policy by the U.S. or any other country, while making clear that it’s not enough by itself.

Mark’s piece is worth quoting at length, especially up front, where he said, Yes, the legislation is a big deal:

“It makes clean energy cheap, that’s the bottom line,” said Jesse Jenkins, an engineering professor at Princeton who conducted independent modeling of the spending. New federal money, often in the form of tax credits, will subsidize consumers who switch to electric vehicles or install heat pumps and other energy efficient household technologies. It will incentivize electric utility companies to shift from gas to renewables and oil and gas companies to minimize leaks of methane, an exceptionally potent greenhouse gas. It will pay to clean up America’s ports, a concentrated source of emissions that not only overheats the planet but poisons nearby communities, which tend to be disproportionately poor and people of color.

By doing all this and more, the Inflation Reduction Act will create 9 million jobs over the next decade in clean energy, clean manufacturing, and natural infrastructure (e.g., forests and parks), according to the Blue Green Alliance. The bill’s backers further assert that it will reduce annual US emissions by 40 percent from 2005 levels by 2030, a claim supported by three independent analyses that is further examined below. If achieved, that reduction would approach the 50 to 52 percent reduction that scientists say is needed to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels.

(We at Carbon Tax Center are less sanguine about 2030, in part because we question the apparent modeling assumption that the U.S. was already on track for a 30 percent reduction by 2030; U.S. 2021 emissions were only 14 percent below the 2005 baseline figure, not 20 percent, a figure calculated with 2020 emissions, an obvious aberration due to temporary Covid-related economic and energy contractions, yet one advanced by a high-profile NY Times climate columnist in May and repeated a month later in a NYT editorial. Note also that the bill’s backers didn’t credit the IRA with reducing U.S. emissions by 40 percent; rather, they pointed to the bill as a big assist to accomplish that job, tacking a high single-digit reduction onto that putative 30 percent “business-as-usual” reduction level.)

That’s another reason this bill is a big deal: It gives the United States much-needed credibility to urge other countries to slash their own emissions. The U.S. has taken many big steps on climate over the years, just mostly in the wrong direction. Instead of cutting emissions, it boosted them through subsidies and lax regulations. It has repeatedly cast doubt on whether there is even a problem, with the last president calling climate change “a hoax” to applause from fellow Republicans. At international conferences dating back to the Earth Summit in 1992, the same script has played out again and again: Other big emitters that don’t want to cut back hide behind the U.S. refusal to do so. If the Inflation Reduction Act becomes law, that dodge will no longer be credible.

Hertsgaard’s Q&A. On #3 (EJ), the legislation may be stronger than the graphic suggests.

Hertsgaard put G.O.P. climate obstructionism in a harsh light, asking “How much longer will the Republican Party be given a pass on its climate wrecking?” Here’s his answer:

Until Manchin’s surprise announcement that he was ready to support a climate bill after all, both wings of the movement, along with 99 percent of press coverage, was giving him all the blame for blocking climate progress on Capitol Hill. This was understandable, but bizarre given that his vote only mattered because Republican senators have been in lockstep opposition to climate action since, well, forever. Republicans in Washington have opposed real climate action for more than 30 years … Yet they never pay a political price for it. News coverage and political adversaries treat the GOP’s opposition as unchangeable as gravity. Thus Republicans get away with scorning Democrats’ ideas for combating the climate crisis, even as they offer no credible plans of their own. (emphasis added)

“No more hiding behind a free pass,” Hertsgaard wrote, as he called on climate activists to challenge climate-do-nothing Republicans, not a single one of whom voted for the IRA, in midterm campaigning. Alongside parallel challenges to regain reproductive autonomy and stop deranged 2020 election conspiracy-mongering, the Democrats’ newfound climate voice just might give them a fighting chance to hold Congress in November. [Note addendum above, reporting the Democrats’ greater-than–expected electoral strength in the 2022 midterms.]

Perhaps the most intriguing part of Hertsgaard’s article was his discussion of the IRA’s environmental justice implications. He gave EJ advocates, from environmental justice godfather Robert Bullard to the upstart Climate Justice Alliance (whom we called out on our Carbon Pricing and Environmental Justice page), plenty of space to decry the provisions nominally authorizing more drilling and other fossil fuel extraction, which historically has disproportionately damaged BIPOC communities. But Hertsgaard also spotlighted the assertion by the consultancy Energy Innovation (one of the three bullish “independent analysts” of the IRA noted earlier) that “the bill’s clean energy measures will yield 24 times more emissions reductions than its fossil fuel provisions will increase emissions.” [Addendum, Sept 2023: Energy Innovation subsequently raised its 24-to-1 emissions ratio to 28-to-1; details here.]

This claim, even if only half-valid, could be catalytic, as Hertsgaard explains:

That 24-to-1 ratio hints at why the bill’s environmental justice impacts might be less destructive than predicted. The fundamental strategy behind this bill is to make clean energy dramatically cheaper — so much cheaper that fossil fuels are squeezed out of existence, not by government fiat but by the workings of the marketplace.

Let’s go ahead and say what Hertsgaard only hinted: Environmental justice stands to win enormously under the Inflation Reduction Act. Not just from the millions of new jobs. Not just from its down payment against climate pollution that disproportionately threatens communities of color from the US to the Global South. And not just from “the good things in it,” per Prof. Bullard, “that are greatly needed by low-income, people of color and environmental justice communities — such as incentives for clean energy technologies, electric vehicles, school buses and transit; helping families who are energy insecure with their electric bills; retrofits and tax credits to assist with making homes more energy efficient; and targeted investments to address legacy pollution and environmental ‘hot-spots’ created by racial redlining.”

All these matter greatly. But the big EJ payoff from the IRA will come from reducing the “need” to extract and process fossil fuels, by strangling the source: demand.

The omission of this point by the many EJ activists and allies whom Hertsgaard interviewed or cited — not just Bullard and the Climate Justice Alliance but also Greenpeace USA co-director Ebony Martin and Erich Pica of Friends of the Earth — raises an intriguing question: If it is true that climate justice campaigners downplay or ignore policy legislation that, at least on paper, seems destined to reduce extractive and exploitative pressures on communities of color, is it because they regard connections between demand and extraction as tenuous or even chimerical? Or is it because their movement is built on solidarity (see for example the 1991 founding Principles of Environmental Justice) and thus they cannot countenance sacrifice by a few (if indeed it’s only “a few”) for the benefit of the many communities that will be spared because the large-scale restructuring of energy demand will allow the plague of extraction or exploitation to pass over them?

Fabulous Weeds: The Jesse Jenkins Interview by David Roberts

Our heading references “The interview” because this podcast conversation achieved cult status among climate and energy policy types. We say “Weeds” because the 72-minute podcast went deep into the workings of the IRA. And we say “Fabulous” because Jenkins’ command of the intricacies of the legislation and their implications — for U.S. energy supply and use, for emissions and climate, and for the surrounding politics — is nothing short of brilliant. In this conversation the weeds sway and sing.

Roberts, a veteran political + energy + climate journalist whom we have followed closely (and occasionally tangled with) for more than a decade, posted his conversation with Jenkins, an assistant professor of mechanical engineering at Princeton, on Aug. 19 as Diving further into the Inflation Reduction Act: Part Two.

Among the topics covered and the points made:

  • The IRA greatly liberalizes companies’ and non-profit organizations’ ability to sell clean electricity tax credits earned from renewable investments, thus expanding capital pools to finance clean power.
  • New zero- or low-carbon generating facilities located in transitioning fossil fuel communities and on Indigenous lands receive extra tax credits. The same applies to electric vehicle and battery component manufacturing plants.
  • Unionized manufacture likewise receives greater tax advantages, as do vehicles and batteries manufactured with especially high domestic content.
  • Wind and solar projects are guaranteed tax credits for an entire decade (to 2032), thus removing an habitual source of uncertainty that had helped bottle up clean energy supply. The time horizon is lengthened even further as long as the U.S. falls short of 75% electricity decarbonization from today’s level.

This brief list barely scratches the surface of the details enumerated by Jenkins. “It’s like a roulette wheel that just happened to settle out at a decent place at just the right moment,” enthuses Roberts, marveling not just that Manchin climbed aboard the legislative train at all but that seemingly every smart nudge ever dreamed up by Congressional Democrats and their staff made it into the bill that got passed.

Politics of clean energy subsidies vs. carbon taxes

Princeton’s Jesse Jenkins on why the Inflation Reduction Act’s clean-energy subsidies are likely to prove durable, even impregnable.

For carbon tax proponents, the podcast’s signal moment comes just before the close, at the one hour, six minute mark, when Roberts asks Jenkins how durable he thinks the IRA policies and programs in the Inflation Reduction Act will be “in the nightmare scenario in which [climate-uncaring] Republicans pull off a trifecta in 2022 and 2024″ and gain power.

Jenkins’ answer, which we’ve put in the graphic at left, is worth pondering. And unlike Roberts, who has the same outlook, Jenkins seems to state his with no animus against carbon pricing, which makes his view even more important.

“Over the next decade there will be hundreds of billions of new tax revenues tied to these [clean-energy] facilities,” says Jenkins, “and dozens and dozens of new factories, there will be over a million new jobs in manufacturing and a million more in installation and construction and maintenance … and they will be spread all over the country and they will be … driven specifically into energy communities that have traditionally been tied to the fossil energy economy, and so their affiliation with and self-interested ties to the fossil economy may not be eliminated but will certainly be complicated over time.”

“Moreover, [the IRA] will deliver very near-term salient environmental health benefits, particularly to environmental justice communities … that will be felt in the short term way before we can see any signal in the climate chaos that is unfolding around us. [Which makes the legislation] more economically durable, instead of delivering a backlash that has to be defended against,” in the case of a carbon emissions price.

If you try to repeal any of the provisions of the IRA, Jenkins says, “You’re going to have billion-dollar companies lined up to fight you because they’re making money off of this [and you’ll have] local elected officials pissed off because you’re jeopardizing investments in their districts. It’s just not a good idea,” he concludes, to try to roll back the legislation.

“A constituent creation machine,” Roberts calls the Inflation Reduction Act, “shooting money out every which way.”

We find Jenkins’ (and Roberts’) viewpoint cogent, though more as a defense of the IRA than a final nail in the carbon-tax coffin. We hope to say more on this score soon, in this space.

Red States’ IRA Windfall

It shouldn’t be surprising that investment in green-energy infrastructure is concentrated in Republican-leaning states and counties. Solar arrays and, especially, wind farms are land-intensive and, as Republicans never tire of pointing out, the area of U.S. counties that voted for Trump over Biden in 2020 was triple the area that went for Biden. Manufacturing too is more prevalent in rural areas, relative to population, than urban.

Still, it’s startling how much of new investment in green energy is taking place in what is considered “red” voting territory. An August 2023 preliminary analysis by the Treasury Department reports that more than 80 percent of IRA-related investments are in areas with below-average college graduation rates. Around 65 percent are in areas with above-average poverty rates, and the same share, 65 percent, are in areas with below-average  employment levels. Even more striking is that almost 90% of the announced investments are in counties with below-average weekly wages. (Percentages are based on 2021 data; hat tip to New York Times columnist David Brooks, who featured these figures in his Sept 7, 2023 column, The American Renaissance is Already at Hand.)

This is pork-barrel politics with a twist, or, at least a wide purview. The Biden administration’s hope is that the anticipated surge in green energy and reductions in carbon emissions will resonate with climate-concerned urban and suburban voters while the job benefits for red-leaning areas will entice some vote switches there. (The Treasury Dept. should also express its data in absolute terms to allow a sense of the strength of the employment effects.) Some cutting-edge political commentators disparage this, of course, based on anecdotal plus polling evidence that the IRA has yet to register with the electorate. Even so, the IRA facts on the ground, which will only grow with the passage of time, should help to inoculate the legislation against Republican roll-back efforts.

Lording It Over Carbon Pricers

We were taken aback that veteran climate writer (formerly NY Times, now Energy Innovation) Justin Gillis didn’t just badger carbon tax proponents to get aboard the “Make Clean Energy Cheap” train but also blamed our ilk for “the most epic wrong turn in the history of climate policy,” one that, in his telling, delayed passage of the Inflation Adjustment Act for decades.

Sure, if you believe the kind of industrial policy brilliantly written into the Inflation Reduction Act can decarbonize the U.S. economy in a decade or so? We’re doubtful.

Goodness! Whatever happened to magnanimity in victory? Not to mention historical accuracy. Fact is, climate policy hit a dozen-year wall after 2010 not because carbon taxers held sway in climate discourse — believe me, we did not — but because Tea-Party Republicans took over Congress. As for the 1990s, climate policy’s failure to lift was more because climate dangers appeared hypothetical, a mere speck on the horizon, than because of the long shadow cast by Clinton’s failed 1993 Btu tax.

Even in the in-between decade of 2000-2010, carbon taxing never got a real shot in Congress. The big green groups, seeking to duplicate the success of the 1990 Clean Air Act Amendments creating the SO2 trading system, and determined to “hide the price” rather than level with Americans over the true costs of cheap fuels, insisted on the convoluted, Wall Street-tinged, devilishly complex cap-and-trade approach, only to see it crash and burn under its immense weight. The rightward, xenophobic cultural shifts that arose after 9/11 hurt as well, as did eight years of oil-allegiant George W. Bush and Dick Cheney.

Moreover, it is only fairly recently that zero-carbon energy became readily available at prices low enough to allow them to scale rapidly and massively without subsidies that would blow up the national debt (remember that bugaboo?). Arguably, the wind and solar sectors also had to be granted time to edge far enough into the mainstream that an industrial policy built on subsidizing them into ubiquity wouldn’t meet with widespread ridicule.

All of which is to say that what started as Build Back Better and eventually became the Inflation Reduction Act probably couldn’t have come into fruition until now. Sure, David Roberts — he of the Jesse Jenkins podcast celebrating the IRA — presaged the theory behind that legislation in mid-2020, with his Standards-Investment-Justice formulation (which we dutifully praised at the time in our post, If the Democrats Run the Table in November). But it’s a hell of a stretch to argue, as Gillis did on Twitter, that something like the IRA could have been conceived and enacted a lot sooner if not for people “who chased the will-o-the-wisp of a carbon tax for 30 years.”

As for Recalculating on Climate, Lydia DePillis’ NY Times commentary Gillis was touting, the less said the better. Not for the first time, it conflates nominal carbon pricing proponent Bill Nordhaus with climate-damage modeler Bill Nordhaus whose blinders about global climate chaos’s prospective toll on ecosystem services and economic productivity contributed greatly to the economic profession’s persistent lowballing of the likely costs of unchecked fossil fuel emissions.

The second headline of DePillis’s piece, “They underestimated the impact of global warming, and their preferred policy solution floundered in the United States,” is true enough. But while it was perhaps inevitable that a piece of this sort would lead with Nordhaus, winner of the 2018 Nobel Memorial Prize in Economic Sciences, it was off-pitch to place him at the center of carbon tax advocacy. To its credit, the article granted space for Columbia Business School climate economist Gernot Wagner to point out that Nordhaus’s proposed “optimal carbon price” of just $43 per metric ton in 2020 was and is a “woeful underestimate of the true cost.”

(For CTC’s brief and partly laudatory commentary on Nordhaus’s 2018 Nobel, see our post, From Sweden, A Deeper Dive Into Last Weeks’ Economics Nobels. For a deeper and more critical look, see our 2017 post, Showing the Cost Side of the Climate Equation in a New Light.)

Perils of Making Clean Energy Cheap

“The [IRA] is designed to make clean energy cheaper which means mak[ing] energy and energy technologies cheaper for everyone.” That’s Princeton energy savant Jesse Jenkins, speaking with podcaster David Roberts just after the Inflation Reduction Act was signed into law in August 2022 (quote excerpted from earlier graphic).

The political benefits of making clean energy cheap are clear: It creates large, diverse constituencies strong enough not just to enact the subsidies but to maintain them through shifting political winds. Moreover, monetary firepower from the clean-energy subsidies can help counter NIMBY pressure to block the new wind farms, solar arrays and transmission lines needed to generate the clean power and to help bring into being the supply chains (mines, factories, etc.) needed to crank out the hundreds of millions of vehicles and appliances needed to replace the incumbent ones that run on fossil fuel combustion.

That’s the political logic and the vision behind the IRA, which Jenkins and Roberts depict so alluringly. But it comes with a potentially large downside: more total energy consumption, not less. That’s because the artificial lowering of energy prices — artificial because the wind and solar facilities and allied infrastructure will be heavily subsidized — will militate against efficiency investments and choices.

EV subsidies probably won’t make right-wing radio guy Erick Erickson drive more. But they definitely won’t motivate him to drive less.

How? The subsidies that make the IRA work politically will tend to weaken the micro-economic case for virtually every conservation investment, from HVAC upgrades and moderately sized homes to increased residential density and less-car-dependent street designs. That’s due to longer payback periods and worsened benefit-cost ratios stemming from the reduced monetary value of the saved energy.

In addition to lesser conservation investment, conservation behaviors such as driving less, re-using more and just plain lowering consumption will similarly be buffeted by the powerful tide of cheaper energy. And while it’s true that carbon- and climate-mindful behavior has never gained much of a foothold in the U.S., cheap energy will further discourage it.

The IRA’s bending of consumption curves toward more overall energy use rather than less might not matter much if complete grid decarbonization could be accomplished quickly and with little ecosystem and community disruption. After all, why fret about energy overuse if (i) all of the energy is electric, and (ii) all of the electricity is ultra-low or zero carbon, and (iii) installing and deploying those seemingly benign electricity sources and the devices that use them (EV’s, heat pumps, etc.) don’t unduly damage nature and communities?

The answer is that none of those three conditions will be met anytime soon. And the day on which all three obtain is way out on the horizon, if at all.

The Methane Fee

The Inflation Reduction Act includes a fee on “excess” methane emissions from oil and gas extraction and processing. The fee looks to be impactful not only on future methane emissions but as a potential stepping stone to possible carbon emission fees.

The text box at right, courtesy of the Akin Gump law firm, contains key details but little context. We hope soon to add metrics indicating the fee’s “bite” including projected revenue and estimated impact on emissions.

The Transmission Trap

The vast buildout of renewable capacity that the Inflation Reduction Act is intended to catalyze won’t happen without two enormous, complementary developments: easier and quicker siting of wind, solar and battery installations; and accelerated construction of large-scale electric transmission lines to connect those installations to power grids and also better interconnect the nation’s disparate power grids to each other.

Underscoring transmission’s critical importance, in September 2022, just a month after the IRA was signed into law, the law’s most prominent modeler and proponent, Jesse Jenkins (see his interview with journalist David Roberts, above), acknowledged in an elaborate slide deck that failure to accelerate the historical rate of U.S. transmission buildout would cancel 80 percent of its emission reductions he projected for 2030.

We’ve embellished the Jesse Jenkins team’s key slide. As our large-type text notes, the full-potential GHG reduction of 1.0 billion tons a year in 2030 (shown in green) shrinks to just 0.2 billion (purple) unless the historical rate of electric transmission capacity is boosted sharply.

Jenkins’ key chart on the consequences of stalled transmission capacity growth is copied at left, with our embellishments. The takeaway: subsidizing green energy, even via the enlightened, innovative paths in the Inflation Reduction Act, is no panacea. Enacting a U.S. robust carbon tax is hard, obviously, but attacking climate change without carbon pricing has its own pitfalls, and they’re not incidental.

Changes in the Wind in Wyoming’s Carbon County

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Four states — Pennsylvania, Montana, Utah and Wyoming — have counties named Carbon, after their wealth-generating coal deposits. The last, in the south-central part of the nation’s least populous state but, by some measures, its windiest, is hosting construction of a giant wind farm called the Chokecherry and Sierra Madre Wind Energy Project — 700 wind turbines that within a few years will generate a combined 3,000 MW.

An image from the carbonwy.com home page. The wind turbines are best glimpsed by looking right to left.

The transition to wind of any county named for coal is bound to conjure both irony and poetry, a dynamic captured in a resonant photo-essay in today’s New York Times, Carbon County, Wyoming, Knows Which Way the Wind Is Blowing. (After we posted, the Times changed its headline to the anodyne “Wyoming Coal Country Pivots, Reluctantly, to Wind Farms.”)

For the Carbon Tax Center, the change is extra-delicious. More than 40 years ago, I toured a power plant and strip mine at the northern end of the region’s massive Powder River Basin, in Colstrip, Montana, before a backpacking trip deep into Wyoming’s Big Horn and Wind River mountain ranges. I wondered if the Northern Rockies would ever evolve from coal mining to wind harvesting, a question I put into a post here, A Struggling Wyoming Is Slow to Embrace Its Renewable Future, in 2016.

Now, at last, that embrace is gathering force. Last year, wind turbines in Wyoming generated 5,143,000 megawatt-hours of electricity, 20 percent more than in 2019, though less than Texas, Iowa and 14 other states. The Chokecherry and Sierra Madre project will add around 9,000,000 MWh, assuming the turbines spin the equivalent of full speed for one-third of the time. Other projects are expected to bring the state’s total to 27,000,000 MWh by 2029.

What’s driving the transition? Not a carbon tax, since neither the U.S. nor any coal-consuming state has one. And not federal policies. The long-standing production tax credit for renewables, though slightly shrunk last year, still grants wind developers $18 for each megawatt-hour their projects produce.

Rather, energy-efficiency gains that have flattened U.S. demand for electricity, along with an inability to cut operating costs, have handed coal-fired plants the short straw in today’s power-generation zero-sum game. When one source’s share goes up, another’s goes down. Meanwhile, wind turbines grow ever-larger, more powerful and more reliable, bringing down their costs. And developers have gotten savvier about obtaining permits and negotiating deals.

None of this seems lost on Terry Weickum, the 68-year-old mayor of Rawlins, the seat of Carbon County, whom the Times portrays as the embodiment of every wind energy paradox. The permitting and taxing guidelines that he wrote as head of the county’s wind task force helped unlock the state’s wind siting gridlock; but that displeased other, pro-coal county commissioners, costing him his county post. Like many of his neighbors, Weickum is said to disparage concerns over climate change and to “disapprove of the way the glossy turbines interrupt the emptiness of the sagebrush-spotted landscape.” Nonetheless he went to bat for wind power as a way to save Rawlins from the ghost-town fate that traditionally has befallen towns in the hardscrabble west that could neither keep up nor reinvent themselves.

“If it wasn’t for wind farms, [Carbon County and Rawlins] would be in terrible shape,” Weickum told the Times. Wind is also now a godsend for Weickum’s printing and sign-making business. Last year it took in nothing from coal-mining companies but garnered $150,000 of business from wind companies.

In another sign of wind power’s evolution in Wyoming, debate could be starting to shift from “Wind yes or no?” to “How much should we tax wind power?,” judging from a story from Wyoming Public Media, Proposal To Raise Wind Tax Dies Again In Committee (hat tip to the Times for the link).

Last December, the legislature’s Joint Revenue Committee voted down a proposed doubling in the state’s wind tax royalty, to $2 per MWh from the current $1. The debate was earnest and thoughtful, as reported by WPM. A businessman from Lander, in the western part of the state, who opposes wind power and supported the increase, testified “There’s a fear that by imposing realistic taxes on renewable energy, producers will go elsewhere. But that argument supposes that citizens in other states will not value their contributions to production as lovingly as we do in Wyoming.”

On the anti-taxing side, a number of local government officials, ranchers and residents argued in tandem with the wind-energy companies that even at just $1/MWh, the royalty payments have been “a bright revenue spot for a state used to a boom-bust cycle,” as WPM put it, but that raising it risked branding the state as unreliable and driving wind developers elsewhere.

Image from Power Company of Wyoming LLC, developer of the Chokecherry and Sierra Madre project in Carbon County, WY.

CTC aligns with Wyoming’s higher-tax folks. Yet it’s safe to say that no one at the hearing brought up the possibility that a national carbon tax could create room to raise Wyoming’s royalty rate without hamstringing the state’s fledgling wind sector. The numbers are intriguing. A middling carbon tax of $50 per ton of CO2 — more than the token $20 rate that occasionally escapes Exxon’s lips, but less than the triple-digit charge that CTC and others eye as the needed level to reach by the end of this decade — would add a hefty $54 to the cost of each megawatt-hour generated by burning coal. The effective tax on natural gas-fired generation would be less, just $22.50, though with an ancillary tax on methane emissions that would probably rise to around $30 per MWh. Either figure dwarfs the $1 a MWh increase that died in the legislature.

Such carbon-tax-driven increases in the merchant price of gas- and coal-fired electricity, which still accounted for nearly 60 percent of U.S. electricity last year, would give cover for Wyoming (and other states) to raise wind-power royalty rates by much more than a dollar per megawatt-hour. And while asking Wyoming’s hard-right Senators John Barrasso and Cynthia Lummis and its lone Rep. Liz Cheney to join the carbon-tax camp is surely a fool’s errand — coal mining still provides more employment than wind energy in Wyoming — the transformative power of carbon taxing is something Wyomingites may want to bear in mind as they continue their state’s transition from carbon to wind.

In the meantime, the rest of us would do well to ponder what Wyoming state senator Cale Case, an opponent of rapid wind development in his state (and a proponent of raising the royalty fee), told the Times: “This is one of the largest undeveloped places in the United States. There’s a pure existence value on its own to see what the early people saw, what the pioneers saw, just to be able to breathe.”

Amen. And while it’s true that any sentiments in the last century against turning Wyoming into the nation’s coal colony went unheeded, that doesn’t lessen the fact that even machines that magically turn air into power can’t be invisible.

Note: Calculations translating $50/ton carbon tax to $ per MWh assume 2.16 lb of CO2 per coal-fired kWh (heat rate = 10,080 Btu/kWh) and 0.90 lb for natural gas (assuming combined-cycle generation with heat rate = 7,658). 

The Unique Power of Carbon Taxes? These Climate Hawks Are Missing It

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Pricing carbon pollution brings out the knives. In 2009, right-wing denialists scuttled the ambitious Waxman-Markey bill by carving up its cap-and-trade centerpiece. In 2016, lefty ideologues like Food and Water Watch butchered what would have been a groundbreaking Washington state carbon tax.

Now comes a new twist: attacks from brainy pro-climate types like activist-scholar Leah Stokes, poli sci professor at the University of California’s Santa Barbara campus and a popular climate commentator on progressive media.

Laying down the gauntlet

Stokes let loose last month with a broadside: The Trouble With Carbon Pricing, an extended essay in Boston Review co-written with her departmental colleague Matto Mildenberger. “Carbon pricing has dominated conversations around climate policy for decades, but it is ineffective,” intoned the subhead. “Only a bold approach that centers politics can meet the problem at its scale.”

Calling carbon taxing ineffectual is odd, when it’s barely been tried, and never at the triple-digit level ($100 or more per ton of carbon dioxide) that could slash emissions by a third or more. As we show below, the Mildenberger-Stokes article holds carbon pricing to a standard — closing down the U.S. and world fossil fuel sectors in a few decades  — that no stand-alone policy could possibly meet. Their article also stereotypes carbon tax proponents as blinded by carbon pricing’s elegance, when what dazzles many of us is its potential to yield deep emission cuts while also neutering the fossil fuel companies.

Nevertheless, Mildenberger and Stokes have thrown down the serious gauntlet of whether carbon pricing should be the centerpiece of climate organizing and legislating. Their article is also useful for assembling so many criticisms of carbon pricing in one place.

To hold their article up to the light, we’ve posted key excerpts, with our responses alongside. (NB: except for the section heads, everything in the left column is quoted verbatim.)

The trouble with carbon pricing

By Matto Mildenberger & Leah C. Stokes, Boston Review

1. Carbon pricing isn’t working in California.

Over a decade ago, California put a price on carbon pollution. At first glance the policy appears to be a success: since it began in 2013, emissions have declined by more than 8 percent. Today the program manages 85 percent of the state’s carbon pollution: the widest coverage of any policy in the world…

But while the policy looks good on paper, in practice it has proven weak. Since 2013 the annual supply of pollution permits has been consistently higher than overall pollution. As a result, the price to pollute is low, and likely to remain that way for another decade…

This is not a surprise. Though legislators aimed to tighten the law in 2017, oil and gas lobbyists thwarted their efforts. One powerful labor union initially supported ending free permits for big polluters, but reversed its position after Chevron  offered it a union contract to retrofit refineries. The final legislation prohibited enacting new regulations on California’s fossil fuel industry — regulations that could have done more than the state’s weak carbon price.

CTC director Charles Komanoff was lead author of this report lauded by M+S.

Rather than carbon pricing, other regulations — clean electricity standards, clean car programs, and aggressive energy efficiency — deserve much of the credit for the state’s progress.

Why carbon taxes still matter

By Charles Komanoff, Carbon Tax Center

1. California carbon pricing is off to a fine start.

While CTC would have preferred California price its carbon pollution directly with a carbon tax, we’re glad to see Mildenberger & Stokes report that the state’s carbon emissions have fallen more than 8 percent since cap-and-trade started up. That decline exceeds by at least half the 5.4 percent drop for the U.S. as a whole in 2013-2019 (calculated from national emissions data in the BP Statistical Review of World Energy, 2020), even as California’s economy was booming relative to the rest of the country.

It’s regrettable that industry hardball watered down the program. But the authors present no evidence that emission reductions from unspecified “new regulations on California’s fossil fuels industry” would have surpassed those from carbon pricing. (The ProPublica story they linked to is silent on that score.)

We’ve studied and applauded the state’s clean electricity standards and aggressive energy efficiency for more than four decades. M+S even cited our 2019 report documenting and quantifying these policies’ accomplishments, California Stars: Lighting the Way to a Clean Energy Future, shown at left. (They linked to it at “regulations,” in the last paragraph.) But much of energy demand and the resultant use of fossil fuels falls into huge pockets that even the best-crafted standards can’t touch, as we’ve discussed many times, at length (e.g., here and here).

Unlike M+S, we don’t shy from touting the synergies between carbon pricing and energy standards. And there’s this benefit, too: Carbon pricing has already narrowed California’s “environmental justice gap,” as we documented in a new post earlier this week.
2. Carbon pricing enrages right-wing populists.

California is one of only twelve U.S. states to have adopted any carbon price — the idea has simply proven difficult to enact. When Oregon attempted to vote on a carbon pricing bill in 2019, Republican legislators fled the state and hid in Idaho to prevent the quorum necessary to pass the law. And this isn’t just happening in the United States — the policy is politically unpopular around the world.

When Australia passed a modest carbon tax in 2011, things got ugly quickly: right-wing radio hosts hurled misogynistic invectives against Prime Minister Julia Gillard; angry protesters descended on the parliament building in Canberra; and climate-denying opposition leader Tony Abbott crisscrossed the country, accusing the government of “economic vandalism.” When he took office three years later, Abbott quickly repealed the policy.

In France a proposed carbon tax fueled the country’s yellow vest movement, triggering the worst domestic riots since 1968. The proposal was soon abandoned.

 2. Win over populists with wealth taxes. 

As M+S surely know, the U.S. right is in open revolt against all climate action (even light-bulb efficiency standards!), not just carbon pricing. Ditto Australia.

Journalist Chris Ketcham on the Champs Elysee. March 2019 photo by Agnes Dherbeys.

France’s “yellow vesters” weren’t protesting climate action, they were rising up against the yawning gap separating them from the super-rich, a gap that President Macron cruelly widened when he dialed back wealth taxes just before he pushed through a modest carbon levy that exempted aviation fuel. (See Christopher Ketcham’s vivid, on-the-ground reporting for Harper’s on the gilet jaunes, which we summarized last year.)

The climate movement can harness the growing fury at the ever-expanding wealth gap with a program to tax both extreme wealth *and* carbon emissions and invest the proceeds into the Green New Deal, as we’ve written here.
3. “Carbon pricing lets markets do the job.”

Part of [carbon pricing’s] enduring appeal is that it provides an elegant response to a complex problem. Carbon pollution is everywhere. So, economists argue, increase the cost of releasing it into the atmosphere, and let markets take care of the rest. [emphasis added]

 3. Repeat: carbon pricing is not a market measure.

Taxing carbon emissions has nothing to do with “markets” and everything to do with fixing the enormous market failure that allows fossil fuel companies and monster-truck drivers and frequent flyers pay zero for climate pollution. Please, can we all retire the “lets markets do the job” nonsense?
4. Good on paper, poor in practice.

As climate change research grew more prominent in the 1980s, economists described pollution as a “negative externality” — polluters kept the profits from selling fossil fuels while society at large picked up the tab for the harm they caused. (emphasis added) If problems such as acid rain were “market failures,” then pricing forced polluters to “internalize” the costs. Anyone who released carbon pollution into the atmosphere would have to pay for the harm they caused. Policymakers have consistently pushed this idea at every level since the 1990s. And many economists remain attached to it: over 3,500 U.S. economists, including twenty-seven Nobel laureates, have signed a letter supporting carbon pricing…

The idea developed into two main forms: a carbon tax and cap and trade. Carbon taxes impose a price on every unit of carbon pollution released. Cap and trade — also called emissions trading — limits the quantity of carbon pollution that can be released, with polluters trading permits to cover their emissions. Both methods promise the same theoretical result: a reduction in pollution.

Like the roots of a tree branching out in search of water, a carbon price would find carbon wherever it was released. Goods made with fossil fuels would rise in cost. In response, people would make a million tiny decisions to get off carbon: buying the electric-powered lawn mower rather than the gas guzzler, jumping on a bicycle for the last mile rather than calling an Uber, switching to an induction stovetop and ditching the fossil gas. And it wouldn’t just be the public changing its ways; industries would also find places to cut back on carbon as their cost of doing business rose. Policymakers dreamed of sending these signals out across the economy to coordinate distant actors wherever the messages found them. The government could not possibly regulate all the myriad ways that carbon was emitted, but the power of the market could solve the problem — at least in theory.

The problem with carbon pricing is not the idea on paper—it is its application in practice. According to economists, an effective carbon price must be high enough to make polluters pay for the externalities they generate. It must also cover all economy-wide sources of carbon pollution.

 4. Don’t let the perfect be the enemy of the good.

First, a shoutout to Mildenberger & Stokes for elegantly articulating the rationale for carbon pricing in their third paragraph at left (“Like the roots of a tree branching out in search of water …”). Bravo!

Nevertheless, their formulation betrays a significant fallacy: The vast externalities from burning fossil fuels aren’t pocketed by the companies that extract and sell them, despite what M+S imply (“polluters kept the profits from selling fossil fuels”). Rather, so long as there’s a modicum of competition — as there is in the oil business — the monetary difference between the market price and the true social cost accrues to consumers. Absent carbon pricing, everyone who flips a switch, operates a vehicle or buys a manufactured product pays less than full price for the fossil fuels that enable the activity.

Worldwide, the richest 1% of consumers cause double the carbon emissions of the poorest 50%, notes Oxfam in new research reported by The Guardian. In other words, the lion’s share of the multi-trillion dollar fossil fuels externality is pocketed by the global rich. The class disparity in U.S. emissions, though rising, is less stark, but here too, an outsize share of the carbon subsidy accrues to those who drive the oversized vehicles, jet around the globe, heat and cool their multiple dwellings, and so forth.

If any fact deserves to be “centered” in progressive discourse about climate change and carbon pricing, it’s this one. Lately, though, the idea of human participation in fossil fuel use has been discarded. Current dogma pins all climate responsibility on the fossil fuel industry, even though the industry’s lifeblood is the gas pump and the light switch.

The fossil fuel purveyors have plenty to account for. But centering them in policy seems to have lulled Mildenberger & Stokes into a binary view of carbon pricing, e.g., “an effective carbon price must be high enough to make polluters pay for the externalities they generate.” Actually, no. Any carbon price will set off a cascade of actions (as captured in that marvelous M+S third paragraph) causing cuts in carbon emissions. The higher the price, the greater the cascade. There is no single carbon price threshold or tipping point. The task before us is to win the highest carbon prices possible.
5. Anyway, carbon prices are too low.

Carbon prices now exist in 46 countries, covering about 22 percent of the carbon pollution that humans release each year. But these policies are riddled with loopholes… Big carbon polluters — fossil fuel companies, electric utilities, automakers, petrochemical companies, and other heavy industries — have used their structural power to receive policy exemptions, handcuffing the invisible hand of carbon pricing. The result is that carbon pricing passes in the places that already have little pollution. For example, all U.S. states with [some] carbon pricing already had below average per capita energy-related carbon pollution in 2006, before these policies came into effect…

Even when prices do exist, they are quite low. According to the World Bank, countries need policies between $40 to $80 per tonne to meet the Paris Agreement targets. Yet half of the world’s carbon prices are less than $10 per tonne, while only five countries — Sweden, Norway, Liechtenstein, Switzerland and France — are in the target range. Even the prices in these countries are probably too low. Estimates for the social cost of carbon — a measure of the societal harm carbon pollution causes—range from a couple dozen to several hundred dollars per tonne of CO2. University of California San Diego climate scientist Kate Ricke and colleagues estimate this social cost could be a staggering $417 per tonne. No carbon price in the world comes close to that number.

 5. The stall in carbon prices isn’t immutable.

It’s true that carbon pricing has stalled throughout the world. Too few countries have it, too few sectors are covered, and prices are far too low.

This wasn’t pre-ordained. A promising moment for carbon pricing in 2008, sparked by British Columbia’s successful carbon tax launch, was snuffed out when the Great Recession unleashed a storm of right-wing nationalism. A second window — the 2014 U.S.-China bilateral agreement and the ensuing 2015 Paris climate accord — slammed shut a year later when Trump took power in Washington.

We don’t wave away these facts, and we acknowledge how easily carbon pricing becomes kindling for climate resistance. This knowledge informed our decision to refrain from protesting the downplaying of carbon pricing in the Democratic Party’s 2020 platform. Likewise our decision in late 2019 to expand CTC’s mission to include taxing extreme wealth along with carbon emissions (see Point 2).

Nevertheless, the fact that CO2 taxes of four hundred dollars a ton aren’t on the horizon doesn’t invalidate the ability of robust carbon taxes to propel large-scale reductions in emissions (see Point 6). We don’t have to “center” carbon taxing in climate policy, it just needs to be in the mix. And by making the carbon tax income-progressive, we can ensure that the mix is progressive as well.
6. Carbon pricing won’t deliver the goods anyway.

In Norway, which has one of the highest carbon prices in the world, emissions in the oil sector rose by 78 percent between 1990 and 2017. One reason emissions didn’t fall is because of a problem economists call “demand inelasticity”: if an economic activity is extremely profitable, or if there are no easy alternatives, people and companies may not demand less even as prices increase…

The evidence is mixed, however, on whether carbon prices can drive innovation and provide more of these cheaper substitutes we need. In her study of the national U.S. cap-and-trade program for sulfur dioxide, Margaret Taylor found that innovation actually declined after the system went into effect. As Tobias Schmidt has shown, cap-and-trade systems tend to produce incremental improvements in polluting technologies rather than driving new, clean alternatives.

Other research suggests limited innovation. In their study of the EU’s carbon market, economists Raphael Calel and Antoine Dechezleprêtre estimate that patenting increased by 9 percent for regulated firms. However, given how few companies fell under the carbon price, overall low carbon technology patenting increased by less than 1 percent. Carbon price-induced patenting in the UK may have been considerably higher. Still, we lack strong evidence that carbon pricing has rapidly induced the innovation we need in new, cleaner technologies. By focusing on the low-hanging fruit—the “cheapest” ways to cut carbon pollution —we fail to build the ladder necessary to curb the more difficult emissions to reduce.

And that shouldn’t surprise us. Consider this scenario: if the United States managed to implement a $50 per tonne carbon price, gasoline prices would increase by $0.44 per gallon. That means Americans’ monthly driving costs would increase by about $25, enough to put a dent in many families’ budgets. Some people might drive a bit less; a few might set up a carpool. But corporations will not innovate new technology because of minor tweaks in the price of energy. The prices of oil already fluctuate greatly year to year, and that hasn’t exactly produced the climate technology we need.

 6. Really? Look again. 

Norway’s oil and gas extraction sector makes for a strange anti-pricing example, insofar as the sector’s carbon emissions have risen no faster than its growth in output (see calculations at end of section). Moreover, because Norway’s carbon tax hasn’t changed since the early 1990’s, it wouldn’t be expected to be driving cuts in emissions today. What the tax may have done is contribute to Norway’s oil and gas sector’s superior emissions intensity, nearly 60 percent less than the world average, according to research by Denis Hoffman, a chemical engineer working in Canada’s petrochemical industry, resulting partly from removing CO2 from natural gas and injecting it into undersea caverns — precisely the kind of innovation that M+S insist isn’t driven by carbon prices.

The deeper truth is that while alternatives to buying and burning fuels may be easy or hard, depending on circumstance, they are almost always more available than most folks imagine or than M+S imply. Our own statistical analysis of U.S. gasoline usage since 1960 points to a price-elasticity of around (minus) 0.35, which translates to at least a 20 percent reduction in use from doubling the price. How would the reduction happen? Through daily behavior changes (trip-chaining, choosing closer destinations, more walk-bike-bus-train, less lead-footed driving) and, over time, changes in capital stocks (fewer guzzlers, more investment in and purchase of EV’s, greater infill development, and so forth).

If we don’t see much give in gas use due to price swings, it’s because of the swings themselves. A carbon tax with a highly transparent annual ramp-up in the tax level would have less noise and more signal, spurring greater reductions.

Our Norway calculations, unpacked: Per BP, Norway extracted 0.91 exajoules of fossil gas in 1990 along with 1,716,000 bbl/day of crude oil in 1990, and 4.12 EJ of gas in 2019 and 1,731,000 bbl/day of oil in 2019. Using 1 Btu = 1055 J and ascribing 5.8 million Btu to each barrel of crude oil, we have 1990 extraction of 0.863 quadrillion Btu’s (“Q”) of gas and 3.633 Q of oil totaling 4.496 Q, and, for 2019, 3.905 Q of gas and 3.665 Q of oil totaling 7.570 Q. The 1990-2019 increase in quads is 68.4 percent. We thank Prof. Mildenberger for updating his emissions figure to a 70 percent rise to 2019 and for clarifying that the figure covers oil and gas extraction.
7. The emission reductions are too small.

If it hasn’t driven the necessary innovation, perhaps carbon pricing has delivered emission cuts? One model suggests Norway’s carbon tax reduced carbon pollution by about 2 percent in its first decade. Similarly the EU cap-and-trade system likely reduced emissions by about 4 percent between 2008 and 2016. In British Columbia, Canada, the carbon tax may have been more successful, reducing emissions by 5–15 percent between 2008 and 2015. But these reductions, while laudable, are nothing compared to what needs to be done — we need annual cuts of almost 8 percent a year until 2030 to limit warming to 1.5 degrees Celsius.

Evidence suggests carbon pricing won’t drive emissions reductions quickly enough. It is like bringing a stick to a knife fight. The policy might help for a little while, but it’s unlikely to secure a victory without other weapons to attack the problem. Economists have tried to sharpen the stick, pushing for better policy design, higher prices, and broader coverage. But their efforts have largely failed.

 7. Solid evidence, wrong conclusion.

The percentage figures from M+S at left seem right to us, especially for British Columbia, which we examined in depth in 2015, finding that per-capita emissions there fell 3-4 times faster than in non-taxing Canadian provinces during the first five years of BC’s carbon tax.

That tax started in 2008 at $10 per ton of CO2 and topped out in 2012 at $30 — close to the limit of what a lone province or state can bear without huge gaming or leakage. If a $30 tax can cut emissions by 5-15 percent, imagine what triple-digit carbon taxes could accomplish. Rather than demonstrating that carbon pricing can’t drive emissions reductions quickly, BC’s success points to robustly rising carbon taxes’ vast potential.

Mildenberger & Stokes are absolutely right that carbon pricing needs complementary policies. Few proponents of carbon pricing disagree. Economists haven’t failed, it’s the political system that hasn’t delivered. Criticism by climate hawks like M+S isn’t helping.
8. Carbon dividends: just another try.

Carbon pricing … makes it easy for fossil fuel companies to rally opposition. Presenting themselves as champions of the little guy, these companies highlight how the policy would increase gasoline and electricity costs for the public. Polluters have even helped school boards and local governments estimate impacts from a carbon tax on their budgets. It’s not difficult to draw attention to these costs when everywhere we drive, giant signs declare the price of gasoline. If that number rises, people notice. There are no roadside signs displaying the devastating costs of climate change: wildfires, stronger hurricanes, rising sea levels, and new infectious diseases like COVID-19.

What if we could make the benefits of carbon pricing more visible? This is the logic behind the price-and-dividend approach. Canada and Switzerland are the only two countries that have adopted this policy, though it is also part of proposed legislation in Congress. Like traditional cap and trade, this policy would cap emissions and require that companies buy pollution permits. Then U.S. residents with Social Security numbers would receive money back from the program, gathered from polluting firms. According to political scientist Theda Skocpol, a dividend would give the public a tangible benefit to organize around, thus contesting the power that entrenched polluters have over U.S. policymaking. Give the public a green check every month, the thinking goes, and it might just embrace climate policies.

This is especially true for low-income households. Recent models by economists Anders Fremstad and Mark Paul show that a U.S. carbon tax, without compensation, would impose the greatest burdens on low-income households. A dividend could be designed to disproportionately return revenues to poor households.

Carbon price and dividend gives greater attention to the politics of climate policy than earlier approaches, but it still struggles to make the benefits more salient than the costs. In the two countries with a price and dividend, the benefits are buried in income tax or health insurance forms. In our own research, we find these policies do not substantively increase public support for climate policy. This shouldn’t surprise us. Dividends are, at best, a band-aid solution to carbon pricing’s political woes. They create a debate over whether people want a check to cover their increased energy costs. Yes, some would rather have the check, but most would still prefer cheap energy.

 8. Do M+S know the policy they’re critiquing?

We’ve already noted (in Point 5) how easily carbon pricing is made a flash point. And we appreciate the authors’ relative openness to the “dividend” approach for distributing the revenues from carbon pricing. Alas, their treatment is muddled.

We’ve rarely if ever seen reference to “price-and-dividend.” Rather, the guiding idea, popularized since 2009 by Citizens Climate Lobby as “fee and dividend,” is a straight-up levy (which CCL labels a fee) on the carbon content of fossil fuels, with the proceeds distributed to U.S. households in equal amounts (“dividends” or “green checks”).

M+S aptly write, “Give the public a green check every month, the thinking goes, and it might just embrace climate policies.” Not just that, increase the size of the green check each year, and the public will buy in further. The expanding check could give lawmakers cover to ramp up the carbon tax rate, allowing it to start gradually at just $15 or $20 per ton but reach triple digits — a level that every economic model predicts will set off big (30-40 percent) emission reductions within a half-dozen years. And the promise of the ramp-up will spur households, planners and entrepreneurs to raise their decarbonization sights, unleashing waves of products and actions — infill development, higher product efficiencies, zero-energy buildings — locking in even larger cuts in fossil fuel use.

Contrary to M+S, there’s no need to tailor carbon dividends to benefit poorer households; the policy’s very design does that automatically, by virtue of the pronounced tendency of poorer families to spend less on energy and fuels and richer families to spend more. We’ve lost track of the number of studies documenting that fee-and-dividend would be income-progressive in the aggregate, with few actual households losing ground.

Again contrary to the authors, neither Canada nor Switzerland nor any other country has a carbon price with dividend. And why the straw man of burying the green check in other pots of money, when electronic benefit transfers could keep the dividend separate and make it manifest?

Last, why the defeatism that most Americans would take cheap energy over the dividend check especially when most households’ green checks would outpace their higher energy expenses? (More on that score here.) And we ask Mildenberger and Stokes to bear in mind: the longer we keep energy cheap, the more time it will take to phase out fossil fuels and the greater the climate damage while we’re doing it.

This takes us two-thirds of the way through the Mildenberger-Stokes article. The remainder mostly treads the same territory with the same strawmen: The gusher of renewables we need “cannot be achieved through carbon pricing alone.” “The objective should not be getting ‘the prices right.’” “Economists and climate policymakers must ask themselves: is insistence on theoretical efficiency more important than delivering climate stability?”

What are they talking about? Who are they talking to? Maybe because I’m not in academia, I don’t know a soul whose ardor for a carbon tax is driven by its theoretical efficiency. We want to tax carbon emissions because we believe doing so can deliver huge emission reductions fast — and equitably.

Where we do agree is in “breaking fossil fuel companies’ stranglehold on our political system.” And we appreciate the Mildenberger-Stokes argument that “large-scale industrial policy” including establishing and meeting clean energy targets, is the way to do that. That’s the Green New Deal, which CTC has backed from the git-go. But getting the GND rolling to the point where it muscles in on the fossil fuel companies won’t happen overnight — same as carbon pricing.

That carbon pricing doesn’t have the visceral appeal of a program centered on standards, investment and justice doesn’t warrant throwing it overboard. The carbon tax silver bullet may be a dead letter, but carbon taxing needs to live on. Even with millions of us in the streets and majorities in Congress, the Green New Deal will be a huge mountain to climb. Without pricing the climate damage from fossil fuels, getting to the net-zero mountaintop will take an awful lot longer.

 

CO2 emissions will shrink this year. How much?

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Note: We’ve revised this post to reflect an April 15 update from Carbon Brief in which it raised its CO2 reduction projections for 2020. More details appear at end of post. — C.K., April 29.

A new post this week from Carbon Brief’s Dr. Simon Evans, Coronavirus set to cause largest ever annual fall in CO2 emissions, projects a 5-6 percent fall this year in worldwide emissions of carbon dioxide from last year’s level on account of the coronavirus.

Courtesy, Carbon Brief. Geographical estimates exclude oil since that is subsumed in “Global oil in 2020” figure. Link in opening paragraph leads to CB post which has full graph notes and sources. Note that “tonne” unit is metric ton, or thousand kilograms.

Dr. Evans is highly regarded for his analyses of global energy trends, and his new post does not disappoint. His projections, shown at left, draw on what he calls “five key datasets and projections covering roughly three-quarters of the world’s annual CO2 emissions, including the entire output of China and the US, the EU carbon market, the Indian power sector and the global oil sector.” Those sectors’ projected reductions, shown in the rust-red bar near the top, sum to around 2,000 million metric tons, equivalent to 5.5 percent of the 2019 worldwide total.

The five trailing blue bars in the Carbon Brief graphic underscore the prospective downturn’s unprecedented extent. They denote actual reductions during traumatic world events, from the 1919 Spanish flu pandemic and the 1945 close of World War II to the 2009 financial crisis, which shows the smallest emissions drop. Using tons of decline as the metric — after all, the climate system responds to tonnages of CO2, not percentage changes — none of the earlier five contractions rivals Carbon Brief’s projected 2020 downturn. The closest is the 845 million tonne reduction in 1945, caused not just by the collapse of economic activity in defeated Germany and Japan but also by the battered economies of victor states such as the Soviet Union and the United Kingdom.

Last month, we at Carbon Tax Center published a post estimating that global emissions this year could plunge by as much as 7,640 million metric tons from their business-as-usual level. That would be nearly four times as great a reduction as the 2,000 million tonne drop in Dr. Evans’ Carbon Brief post, a huge gap but one largely explainable by these differences between our respective approaches:

CTC’s “dire case” projections of CO2 declines by sector are copied from our March 24 post, Could COVID-caused economic cratering trim 1 ppm from atmospheric CO2?

  1. Carbon Tax Center’s figures are in Btu’s, a good but imperfect proxy for carbon emissions, whereas Carbon Brief employs CO2 directly.
  2. CB’s calculations omit sectors outside of its “top five,” which account for 24% of worldwide carbon emissions.
  3. CB conservatively applies its estimated reductions to a 2020 baseline that would have exceeded 2019 emissions by 1,000 million tonnes, effectively handicapping its 2020 reductions.
  4. CB chose to base its top five sector reductions on official, and necessarily conservative, sources such as the U.S. EIA, the IEA, and CB’s own mid-Feb. analysis of China’s CO2 reductions.
  5. CTC took a deliberately aggressive approach to estimating reductions in order to stake out an outer limit.

 

We add this sober warning from Dr. Evans’ post:

To put the potential 2020 coronavirus effect in a broader climate context, it is worth adding that global emissions would need to fall by more than 6% every year this decade – more than 2,200MtCO2 – in order to limit warming to less than 1.5C above pre-industrial temperatures. (This figure is based on the 2018 Intergovernmental Panel on Climate Change (IPCC) special report, which found that global emissions in 2030 needed to be 45% below 2010 levels, in order to limit warming to 1.5C.)

It should go without saying that the forced nature of the 2020 emissions contraction disqualifies it as a model for going forward. Nevertheless, surpassing, even under great duress, and even for just one year, the recurring 2,200 million tonne per year contraction cited as essential by Carbon Brief, is not to be sneezed at.

A useful way to think about CTC’s “extreme” 7,600 million tonne estimate is that it would buy the world three to four years worth of the 2,200 Mt reduction otherwise needed each year to the next … and that in 2023 or 2024 worldwide emissions would need to fall, from the reduced level, by 2,200 million tonnes each year, to get onto the IPCC trajectory for keeping warming to less than 1.5C.

Point being: while Covid-19 is not how the world should have started down the road to reducing emissions, it has gotten our attention and is, at least, a start.

Carbon Brief’s April 15 amendment to its original April 9 post (linked to at the top of our post) reads: Update 15 April 2020: This analysis was updated in light of new forecasts for global oil demand in 2020, which suggest a significantly larger drop this year. The original version had put the potential impact of coronavirus at 1,600MtCO2 in 2020, equivalent to 4% of 2019 emissions.

Could COVID-caused economic cratering trim 1 ppm from atmospheric CO2?

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Calculations by the Carbon Tax Center suggest that the worldwide economic contraction from steps being taken to slow the spread of deadly COVID-19 could halve this year’s rise in the atmosphere’s carbon dioxide concentration.

The last time average atmospheric CO2 rose less than 1 ppm was 1993. Could 2020 do likewise? (Graph is from “Our World in Data” website mentioned and linked to below.)

This finding is largely illustrative and encased in caveats. First, the average CO2 level wouldn’t actually fall; rather the business-as-usual annual rise of around two ppm would be trimmed to just one. And for that to happen, the slowdowns in travel, industrial production, goods movement and commercial activity, and the accompanying reductions in use of fossil fuels and carbon emissions, would have to be steep and prolonged, as our calculations show below.

The most critical caveat, of course, is the widespread deaths and massive dislocations bound up with these events. Megadeaths and cataclysmic job losses are not anyone’s preferred path for slowing climate change. Nevertheless, the calculations provided here may be instructive.

U.S. Reductions
Federal bean-counters divide U.S. energy use into four categories: Industrial, Transportation, Commercial, Residential. We assume that the first three contract by 50 percent as factory production tumbles, aviation evaporates, commuting recedes, recreational travel dissipates, and offices, stores and performance spaces remain empty. (April 2 addendum: U.S. gasoline demand for the week ending March 27, before the economy fully shut down in all 50 states, was 27 percent less than in the same year-earlier week, according to Energy Information Administration data.) We assume that residential energy use, which currently is around a fifth of the total, rises by 10 percent due to enforced home-stays.

These assumptions add up to a 37 percent shrinkage in U.S. energy use measured in Btu’s. The fall in carbon emissions might be a bit greater since carbon-free energy sources — nuclear power, wind turbines and solar panels — would keep humming while dirtier coal and petroleum bore the brunt of the cutbacks. We’ll watch to see how other modelers handle the complex calculations.

See table below for bar details.

Rest of World
U.S. carbon emissions now (2017) account for only 15 percent of the world’s total. To baseline the rest of the world’s CO2 we turn to the superb data compilations and visualizations assembled under the aegis of “Our World in Data.” Analysts Hannah Roser and Max Ritchie divide the globe into nine regions, plus International Transport (largely long-distance shipping and aviation).

We assigned various percentage reductions to each region as shown in the graph at right, starting with our U.S. figure of 37% derived above. Other reductions range from highs of 40% (International Transport) and 30% (European Union) to lows of 10% (Africa) and 15% (most of Asia; also Latin America). The worldwide average — again, this is speculative calculating — is 21%.

We again stress that these are guesses and are skewed to the high side; as dire as things are, it still seems unlikely that fossil-fuel burning and consequent carbon emissions will fall this steeply. Moreover, deep contractions probably won’t be sustained for a full year.

Translating CO2 emissions to CO2 levels 
The numbers are largely illustrative and we’ve pushed them hard. Summing the reductions shown in the graph, they imply that 2020 emissions conceivably could fall short of the 2017 baseline or “default” value by 7 to 8 billion metric tons (gigatonnes).

Tabular version of bar graph above.

The redoubtable “Skeptical Science” brief, Comparing CO2 emissions to CO2 levels, tells us that each 7.8 gigatonnes of emitted carbon dioxide adds 1 part per million to atmospheric concentrations of CO2. Equivalently, reducing emissions by 7-8 gigatonnes — whether absolutely or relative to a baseline trajectory — averts a 1 ppm rise in atmospheric CO2.

Keep in mind that this would constitute a permanent drop. Atmospheric concentrations of CO2 would be 1 part per million less than otherwise not only at the end of 2020 but at the end of 2021, 2022 and every year going forward. The boon to climate and humanity, though slight (considering that the world has overshot the postulated 350 ppm maximum safe level by more than 50 ppm), would be indelible.

We hope in future posts to explore how much of the current reduction in CO2 might be negated by economic “bounceback” (short answer: not much); and, more importantly, how the economic and social upheavals from the coronavirus crisis might open up political pathways leading to decisive, longer-term action to bring down carbon emissions without widespread suffering.

Addendum, April 11: See our new post today, CO2 emissions will shrink this year. How much?, for a discussion of parallel but different projections of worldwide 2020 CO2 contractions from Carbon Brief.

Carbon tax ‘consequential’ as UK emissions fall to 1894 levels

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This post was researched and written by CTC intern Michael Kendall. More recent info, including 2016 carbon emissions data, are in the U.K. section of our Where Carbon Is Taxed page.

The United Kingdom, the birthplace of the Industrial Revolution and a kingdom built on coal, has cut emissions of carbon dioxide to levels not seen since the late 19th Century, according to a report from the UK consultancy, Carbon Brief.

CO2 emissions from fossil fuel burning in the UK (England, Scotland, Wales and Northern Ireland) totaled just 381 million metric tons (“tonnes”) last year, a 6 percent decrease from 2015 and 36 percent less than levels in 1990 (or 44 percent less than levels in 1970 when CO2 emissions peaked at 685 tonnes).

As Carbon Brief noted, total UK emissions hadn’t been that low since 1894, save for 1921 and 1926, when miner strikes paralyzed the coal industry.

No more carrying coals to Newcastle, as the historic but filthy fuel disappears from the UK.

Coal burning is disappearing from the former perennial bastion of coal, while use of oil and gas is down considerably from 2005, despite upticks since 2014 for both fuels. At the same time renewables are thriving, with a Carbon Brief analysis showing that wind generated more electricity throughout the UK than coal in 2016.

Data from British Petroleum’s comprehensive annual Statistical Review of World Energy show coal consumption in 2015 down 38 percent from 2005. That steep drop has driven down total CO2 emissions from UK fossil fuel combustion nearly 25 percent over the same period. (The UK Department for Business, Energy and Industrial Strategy will release official figures later this month.)

These reductions stem from a coordinated effort to cut emissions, reliant upon setting a national price on carbon in 2013. “Perhaps the most consequential factor,” says Carbon Brief editor Simon Evans, “is the UK’s top-up carbon tax, which doubled in 2015 to £18 per tonne of CO2.” (Brits sometimes refer to their carbon tax as a “top up” tax since it was intended to top up the carbon price determined via the auctioning of emission permits under the EU’s Emissions Trading Scheme.)

The UK carbon tax equated to $24-$25 per short ton in 2016, at last year’s average 1.5-to-1 sterling to dollar exchange rate (the exchange rate is a good deal lower at this writing in 2017, however), and converting metric to short tons. A carbon tax targets coal above all, on account of coal’s higher carbon content per Btu compared to oil or gas, which enhances the profitability and deployment of zero-carbon substitutes for coal-fired electricity, such as wind. And in fact Evans has charted the month-by-month collapse in coal use.

UK wind turbines generated more electricity than coal-fired plants in 2016, reports Carbon Brief.

Last week Drax, an energy generation company specializing in biomass, presented commissioned research taking carbon pricing a step further. The researchers modeled the likely impact on use of coal and natural gas and CO2 emissions from alternatively removing or doubling the UK carbon tax. Their models show that without the carbon tax, coal generation would have doubled and emissions would have risen 21 percent, significantly undercutting past emission gains; whereas doubling the tax would have cut coal generation by an extra 47 percent and shaved another 10 percent off overall CO2 emissions.

Continuing the good news: belying the standard notion that pricing carbon emissions must increase household energy bills, UK households paid less in energy bills (gas plus electricity) in 2016 than they did in 2008. We’ll look to Simon Evans for a summary:

Since 2008, household consumption of gas is down by 23% and electricity by 17%, cutting the average bill by £290 and more than offsetting the increase in policy costs over the same period… These energy savings are largely the result of energy efficiency policies and regulations, from UK rules mandating more efficient condensing boilers to EU product policy on more efficient fridges and ovens.

In short, while the price per kWh of electricity has risen for UK households, improvements in efficiency have cut household usage even more, enabling total household costs to fall. This stands as a model instance of regulation working in tandem with carbon pricing, as more-efficient appliances became more available due to regulation and more attractive due to the higher unit cost of electricity.

An unprecedented 15 percent drop since 2005 in electricity generation has helped drive down emissions as the UK economy has grown.

A further dividend of electricity savings, of course, is that the nationwide increase in electricity from wind turbines and gas-fired generation has been at the expense of coal rather than in addition to it — mirroring the U.S. experience since 2005 that we distilled and quantified in our December report, The Good News.

Where does the carbon tax stand now, with last year’s Brexit vote set to remove the UK from the European Union? The government’s March 2011 Budget set a 2020 target of a £30 per tonne tax on CO2, but in 2014 that figure was reduced to £18 via a price cap until 2020. In 2016 this cap was extended to 2021 “to limit the competitive disadvantage faced by business and reduce energy bills for consumers.” (See “The Carbon Price Floor” House of Commons briefing paper, p.3.)

Last week’s Spring Budget 2017 is vague about the future of the carbon price floor, stating that the “government remains committed to carbon pricing” but reserving details until the Autumn Budget 2017. The most promising statement in the budget is this, at page 34: “Starting in 2021-22, the government will target a total carbon price.” It suggests that the UK intends to continue to price carbon despite the country’s imminent exit from the EU. Carbon Brief provides a fuller analysis of the Budget’s potential impact on climate policy.

Shoot Out The Lights?

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Years ago, my friend Vince built a house on a hillside in Vermont, a mile or so from the town where he grew up. The deck looked out on the valley and, at night, to a dark sky filled with stars. Then a couple from Montreal, weekenders, put up an A-frame in the valley, with an outdoor light that obliterated the darkness. When they drove back to the city on Sundays, the light stayed lit.

Vince had a choice: try to reason with the couple, or direct action. It was either-or, since talking with them would blow his cover. He chose direct action: One Monday evening he drove over with a ladder and unscrewed the bulb. Evidently the couple didn’t take the hint, since the light went back on the next weekend. The following Monday, Vince returned with a friend, who brought his shotgun. The light went off and stayed off.

From Feb. 5 Sunday NY Times, under heading "Waste of Energy" (see text for link)

From Feb 5 NY Times etiquette column, under heading ‘Waste of Energy.’

What brought this episode to mind was the letter in the Sunday NY Times’ etiquette column, Social Q’s, shown at left, about a glaring light in a homeowners’ association. The letter-writer bemoaned the waste of energy rather than the loss of dark sky. But chalk one up for Vince from Vermont; reasoning didn’t avail, leaving the letter-writer to suck it up and “buy drapes.”

A small, sad story. Of greater interest is what the columnist said — and neglected to say — in response, about energy, climate and the social compact.

The columnist rationalized the hedge fund manager’s waste of electricity by citing the advance of energy efficiency. New homes, indeed new everything, from appliances and computers to automobiles and aircraft, are required to be more energy-efficient — the result of a hard-won societal decision to build efficiencies into product design rather than leave them to an energy marketplace whose prices don’t fully reflect environmental costs. The point of energy standards is to bridge those marketplace gaps, not provide an excuse for unfettered waste.

And think about how much energy usage has to be eliminated to meet even the most basic climate targets. Running in place doesn’t pass muster when carbon emissions need to shrink 80 percent by 2050 if not much sooner. We’ve run out of room for backsliding.

Milky Way. Photo by Hans Braxmeier, via Pixabay.

Milky Way. Photo by Hans Braxmeier, via Pixabay.

I’ll bet the letter-writer gets that. To her, the waste of electricity probably goes beyond the btu’s and CO2. It’s a signifier of the neighbor’s heedlessness. Though he’s not legally required to have climate-consciousness, it’s frustrating that he apparently doesn’t. Making things worse, there’s no carbon tax. While a stiff carbon emissions charge might not change the neighbor’s behavior, our letter-writer might gain a measure of satisfaction from knowing that the neighbor’s heedlessness is adding to tax revenues.

The columnist’s reply also ratifies our asymmetrical social compact: it’s the neighbor’s prerogative to light up the night, and the letter-writer’s responsibility to deal with the damage. The same social compact lets helicopter users and jet-skiers destroy quiet enjoyment of the world for the rest of us. Go ahead and spew unwanted light, unwanted sound, unwanted greenhouse gases; we’ll put up with the damage.

The columnist didn’t suggest collective action. Shouldn’t the letter-writer talk to other neighbors and try to organize them? Okay, maybe that’s futile, or maybe she risks being labeled a crank or squandering social capital she might need for some bigger concern. And there are only so many hours in the day.

The moral: in energy and climate, as in anything, there are norms at play. As I pointed out years ago, in my post, No Magic Price Point for Kicking Carbon, so much energy use that we think is necessary or natural is actually socially determined. Cheap energy has engendered a culture of conspicuous usage and waste. A carbon tax could help dismantle that, and undo much of the ingrained consumption that gets under our skin.

Tillerson Carbon Tax Would Cost the Trump SoHo $250K a Year

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Trump is bling, and bling is fossil fuels: The Boeing 757-200. The limo’s. The helicopters.

And also, evidently, the buildings. Not just the marble, but the lights, the escalators, and the machinery: motors, fans, compressors to (over) cool and heat.

The spa in Trump SoHo, a hotel ranked in the top 1% in carbon emissions in its class. Photo from Luxury Travelers Guide.

The spa in Trump SoHo, a hotel ranked in the highest 1% in carbon emissions in its class. Photo from Luxury Travelers Guide.

We awoke this morning to find the Trump brand’s conspicuous energy consumption confirmed in spades, in EnergyWire. Thanks to their lead story, At blinged-out Trump hotels, ‘green’ isn’t part of the brand, we now know that out of nine Trump-branded properties in Manhattan that submitted energy use data under New York City’s energy benchmarking law, six were in the bottom 20 percent for energy efficiency, based on consumption per square foot.

Since those buildings are, ahem, huge, their outsize per-area energy usage puts their total fuel use and carbon emissions off the charts. To grasp how much, we zeroed in on one building, the Trump SoHo. According to the EnergyWire story, the combined hotel-condominium was in “the bottom [worst] 1 percent of properties of its type and size for energy intensity.”

We logged into NYC’s excellent Energy and Water Benchmarking Web site, navigated to Hotels and typed in the Trump SoHo address, 246 Spring Street. A bunch of graphs popped up, including the one at right, below, denoting CO2 emissions per square feet. From it, we were able to calculate that in 2014, the most recent year with available data, the fossil fuels burned to run the Trump SoHo emitted around 10,000 metric tons of CO2. (Calculations are at bottom.)

That’s a tough figure to put in perspective (okay, it’s within hailing distance of total carbon emissions for the entire country of Liechtenstein, which clocked in at 14,000 metric tons in 2013). So we converted it to dollars, using the carbon tax level that Trump’s Secretary of State-designate, Rex Tillerson, appeared to endorse on a handful of occasions during his tenure as ExxonMobil CEO: $25 per metric ton of CO2.

Histogram from City of New York energy benchmarking. We read the carbon figure from the x-axis.

Histogram from City of New York energy benchmarking for hotels. We used x-axis reading for Trump SoHo.

Ten thousand times 25 is 250,000, so at the (admittedly hypothetical) Tillerson rate, the Trump SoHo would be dunned around a quarter of a million dollars a year for its carbon emissions. (More precisely, the hotel’s electricity and energy providers would pay the tax and attempt to pass it through in higher charges.)

At the higher carbon tax levels that would make truly monumental dents in emissions, say, $100/ton, the annual charge would be a million bucks a year. That might get someone’s attention (and provoke an intervention by the energy managers from the Trump-branded 40 Wall Street skyscraper in Lower Manhattan, which improbably had an excellent (91) Energy Star score, according to EnergyWire).

But beyond poking fun — and it’s important to keep poking the new administration — the Trump properties’ energy profligacy matters a great deal for our planet. That’s because energy efficiency is critically important for reducing climate-damaging emissions.

For four decades and counting, visionaries like Amory Lovins and practitioners like the American Council for an Energy-Efficient Economy have documented (and fought to win supportive policies for) the capacity to provide more energy services (warmth, light) with fewer energy inputs. Last month, we published a Carbon Tax Center report identifying electric­ity savings that have caused electricity usage to flatten even as economic output increased, as the unheralded but key factor in the 25 percent cut in CO2 emissions from the U.S. electricity sector since 2005. (Shorter blog version here.)

There’s been a lot of debate about whether our 45th president can bring back coal. One way to stop that — and avert more fracking too — is to maintain and accelerate progress in U.S. energy efficiency, especially in buildings. In that endeavor, as in virtually every other, the right direction is full speed away from anything spelled T-R-U-M-P.

Note: As we were posting this article, we saw a post by the Energy and Policy Institute presenting strong evidence that ExxonMobil lobbied the Massachusetts state legislature to oppose two carbon tax bills, one of them revenue-neutral, during the 2016 session, i.e., when Tillerson was still CEO.

How we did our calculations: First, we ignored the label in the Greenhouse Gas Intensity graphic asserting that the “GHG intensity for this property (Trump SoHo) is 3,877.16.” If that figure is supposed to refer to kilograms of CO2 per square foot of floor space per year, as the x-axis suggests, it’s inflated by a factor of 150-200. Instead, we estimated a figure of 23 kgCO2/ft^2 from the last bar in the chart, which clearly refers to Trump SoHo, and multiplied it by the hotel’s square footage (reported in another graph on the same Web page; click the Go To Visualization button), which is 395,075, to obtain approximately 9,100 metric tons. As a check, we read an annual figure of 535,000 Btu per square foot from another chart, Weather-Normalized Energy Use Intensity, obtaining roughly 211,000 million Btu per year, to which we applied the CO2 emission factor for natural gas (most NYC on-site energy and much of its electricity is from natural gas) of 117 pounds per million Btu. The result, 24.7 million pounds, is approximately 11,000 metric tons.