Charles Komanoff

Carbon Tax Center

Pricing carbon efficiently and equitably

Why the Carbon Tax Center Questions the Latest Carbon Tax Talk

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Our post last Friday about Build Back Better was already pushing the boundaries by contending that the Biden infra plan won’t actually cut CO2 50% by 2030, when we added this at the end:

We suspect that even a starter, “proof of concept” carbon tax at this time will prove to be a poor idea. Passing a carbon tax in lieu of aggressively raising taxes on high income and instituting taxes on great wealth, as several Senate Democratic climate hawks floated today, amounts to budget-balancing on the backs of both the working poor and the beleaguered middle class. It’s inequitable and a terrible template for the really large carbon taxes that progressive Democrats must eventually enact, in the event they ever reach centrist-proof majorities.

But wait: CTC is supposed to be supporting efforts to pass a U.S. carbon tax. Why, then, were we throwing darts at the Senate Democrats’ trial balloon that was aimed at doing just that?

We have four reasons:

  1. We don’t think Congress can pass a carbon tax in 2021 anyway.
  2. We believe the carbon tax under discussion won’t offer sufficient protection to ordinary Americans.
  3. We doubt that any carbon tax under discussion can generate big enough emission cuts.
  4. We fear that Democratic backing for a carbon tax at this time will make it harder to defeat the climate-denying G.O.P. in the 2022 midterms.

Things were moving fast last Friday afternoon and we weren’t able to polish our remarks. Now, with a bit more time, let’s unpack these points.

1. Congress can’t pass a carbon tax in 2021 anyway.

The make-or-break Senate votes aren’t there. Manchin of West Virginia won’t vote for a carbon tax, Sinema of Arizona can’t be counted on, and it wouldn’t be surprising if a few Senate or House Democrats facing tough re-elections defected as well. And no Republicans will come on board. Carbon-tax proponents and other climate hawks have waited in vain for over a decade for a single sitting Republican member of the Senate to stand up for strong climate action just once. There’s no reason to think our prayers are about to be answered.

2. The carbon tax under discussion won’t protect enough ordinary Americans.

President Biden has pledged not to raise taxes on Americans earning less than $400,000 a year. A straight-up fee-and-dividend, which is the type of carbon tax CTC most strongly favors, would violate that en masse, despite being strongly income-progressive.. The reason: most six-figure households are high-carbon consumers and thus would be carbon-taxed more than they would be dividended.

If you’re unsure about that, consider the main finding of Anders Fremsted and Mark Paul’s superb 2017 paper for U-Mass’s Political Economy Research Institute, A Short-Run Distributional Analysis of a Carbon Tax in the United States: While 84 percent of households in the bottom income half would be made better off with carbon dividends, only 55 percent of all households would be beneficiaries. Simple arithmetic on those two propositions indicates that only 26 percent of the more affluent households would benefit. (The calculation: 84% of the bottom half equals 42% of all households. The remaining 13 percentage points of beneficiaries constitute just 13%/50%, or 26%, of the top half.) The optics of squaring such a carbon tax or fee with the pledge aren’t promising.

(If Fremsted and Paul’s finding seems too pessimistic, consider this alternative scenario: if 90 percent of bottom-half households were posited as better off, and same for 65 percent of all households, then the share of upper-half households being made better off would come to 40 percent — higher than the 26 percent above, but still a minority of that group.)

To be clear, CTC has no qualms about raising taxes on the very-affluent as well as the super-rich to make a better society. But raising taxes on the working poor and the beleaguered middle class is another matter entirely. And to the extent that the carbon tax under discussion is meant as a pay-for — literally, to pay for improving America’s physical and social infrastructure — less money will be available for dividends. It’s one thing to set aside a few percent of carbon fee revenues to pay for worker and community transitions, as outspoken climate hawk Sen. Sheldon Whitehouse (D-RI) proposed this summer; but it’s another thing altogether to set aside, say, 25 percent for pay-for’s. Having only 75 percent of carbon revenues available for dividends will consign millions of non-affluent households to paying more for energy and energy-intensive goods than they receive as dividends.

3. The carbon tax under discussion won’t generate big emission cuts.

This objection is somewhat speculative because, perhaps understandably, no Senate Democrat has yet attached a level to their carbon tax trial-balloon. But there’s a tendency to overstate what a modestly-sized carbon tax can accomplish.

For example, Resources for the Future, the influential environmental think-tank cited in last Friday’s New York Times story that touched off the latest carbon tax discussion, projects that a carbon tax that starts in 2023 at $15 per metric ton, rises slowly to $30 in 2028 and then jumps to $50 in 2030, will cut CO2 emissions in that year by 44 percent from 2005 levels. That would represent an 1,850 megatonne drop in emissions from 2019. But plugged into our carbon tax model, those inputs yield only a 775 megatonne drop, or much less than half as much. To be sure, RFF’s modeling also includes a clean electricity standard (a close cousin of the Clean Electricity Performance Program in the Biden package that we discussed in our earlier post), but the CEPP would be partly duplicated by the carbon tax and thus wouldn’t account for the bulk of the difference between our respective model results.

Would we support the more modest RFF carbon tax nonetheless if it could be guaranteed to be economically progressive in the aggregate? You bet we would. Our concern on this score is what we telegraphed in our Sept 27 post: the need to neutralize undeserved hype being vested in any climate policies, including carbon taxes.

4. Democratic backing for a carbon tax now will make it harder to defeat the climate-denying G.O.P. in the 2022 midterms.

We won’t belabor this point. Too much depends on the Democrats’ retaining full control of Congress in next year’s midterms and having a good shot at holding on to the White House in 2024. We believe a lot more organizing, educating and communicating about the power, fairness and benefits of carbon taxes remains to be done before the party is somewhat safely inoculated against the inevitable blowback against even an economically progressive carbon tax. Much of that effort will need to go into bringing environmental justice and other progressive activists into the fold.

What kind of carbon tax does the Carbon Tax Center want?

CTC wants a carbon tax that can pass, that’s certifiably progressive (economically), that is robust enough in its per-ton rate to be able to help eliminate game-changing amounts of CO2 and fossil fuels, and that won’t cause gross damage to the Democratic Party’s brand and thus make it easier for the Trumpian right to regain power.

Translated: We want a fee-and-dividend carbon tax, i.e., a carbon fee whose revenues are returned to U.S. households as equal, pro rata dividends and not used as pay-for’s. The enormous sums needed for climate and a broad array of other infrastructure — amounts that will rise over time as institutions and industries are mobilized to deliver the goods — can and should come from rising taxes on undertaxed forms of wealth: very high incomes, ultra-large fortunes, great inheritances, corporate earnings, and offshored and other avoided taxes.

This structure will let the carbon tax rise steadily over time and perform the function it does best: instill the price incentives and social signals to steer U.S. households, businesses, habits and norms away from fossil fuels and into the broad array of alternatives — everything from bicycles and denser living patterns to wind turbines and solar roofs — that won’t heat our climate beyond repair.

Without a Carbon Tax, Don’t Count on a 50% Emissions Cut

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Since April, when President Biden committed the United States to sweeping cuts in greenhouse gas emissions, climate advocates have tried to figure out how he could fulfill his goal of a 50 percent reduction from 2005 levels by 2030.

Their talk is not of a government-led Green New Deal — too hot for a skittish Congress — but of a tapestry of GND-ish policies, many of them wonky. Heading the list are schemes to shovel government cash to utilities that shut down coal- and gas-fired power plants, and to motorists who go electric.

The 37% reduction we estimate for Biden’s Build Back Better package would be a major achievement. 50% will require a robust carbon tax.

There’s sense in these and the other policy pieces, just as there’s logic in refraining from the one overarching policy that could lead the way to the deep cuts Biden is seeking: an economy-wide carbon tax. Giving businesses and households money to go green is more palatable, though less potent, than charging them for burning carbon.

But it’s fair —imperative, actually — to ask if the numerical cuts being attached to those programs actually add up to 50 percent. We don’t think they do; the hill is too steep. Compared to pre-pandemic (2019) carbon emissions, Biden’s goal entails a massive cut, 42 percent, in under a dozen years.

Decarbonizing on that kind of scale falls outside the bounds of the possible without a stiff carbon emissions price. Our purpose here is to show why, and also point a way around.

1.

To kick off this discussion, consider Robinson Meyer’s June 2021 Atlantic article, A “green vortex” is saving America’s climate future. Its big idea was that “decarbonization by doing” — deploying more electric cars and more grid storage systems and more solar panels — is driving down these low-carbon technologies’ costs, naturally leading to more deployment and increasingly kicking fossil-fueled cars and power plants to the curb.

It’s an attractive if familiar notion, this “green vortex.” Sit back, let green energy grow cheaper and bigger, and watch carbon emitters fade to black. But Meyer overhypes it. After outlining the high points of U.S. carbon reductions over the past decade, he states:

Under America’s new Paris Agreement pledge, the country will need to double the pace of its emissions decline over the next decade. Whatever we’re doing right, we’re soon going to have to do it twice as fast. So we’d better figure out what it is. (emphasis added)

We posed these questions to Meyer, after running calculations on U.S. CO2 emissions from fossil fuel burning. By our count, which is fully detailed in our carbon-tax spreadsheet (see link, three paragraphs below), those emissions totaled 6,070 megatonnes (million metric tons) in 2005 and 5,250 megatonnes in 2019. That computes to 60 fewer megatonnes each year. The task ahead — dropping another 2,215 megatonnes to slim down to 3,035 (half of the 6,070 benchmark) — requires that from 2019 to 2030 we purge 200 megatonnes each year —3.4 times the annual rate of shrinkage from 2005 to 2019.

Extrapolating from 2020 emissions makes the 2030 target look achievable. We don’t recommend it.

In Meyer’s telling, thanks to the green vortex we’ll manage to double our established pace of decarbonization. He might be right. But what if doubling our average annual decline in emissions from 2005-2019 won’t fulfill Biden’s pledged 50 percent cut by 2030? What if it only yields a 35 percent reduction from 2005 emissions, the standard benchmark? What if cutting emissions 50 percent requires that from now to 2030 future U.S. emissions must come down three to four times faster than they did in 2005-2019?

(Perhaps Meyer, who didn’t reply to our email, used 2020 rather than 2019 as his goalpost. That would give him his “doubling,” but meaninglessly. A year that completely upended energy commerce — in which U.S. air travel fell by a third, for example — might be defensible as a new goal post, but not as a basis for computing a new downward trend.)

2.

To grasp how hard it will be for the Biden administration to bend the emissions curve sharply downward without a carbon tax, let’s look at key sectors. A good tool for that is the national carbon-calculator spreadsheet maintained by the Carbon Tax Center (downloadable 3 MB xls).

The Biden plan’s centerpiece is an idea that has become a darling of climate hawks, the Clean Electricity Performance Program. It’s a $150 billion scheme to decarbonize U.S. electricity generation by paying utility companies to replace coal- and gas-fired plants with carbon-free power from wind, solar, biomass or nuclear sources.

Just over 30 percent of U.S. carbon emissions came from the power sector in 2019, down from 40 percent in 2005, a noteworthy drop that accounted for most of the reductions that Meyer touted in The Atlantic. Let’s assume, as do the White House and its climate allies, that the CEPP’s cash incentives leverage falling prices of solar and wind electricity to achieve the canonical goal of eliminating 80 percent of 2019 power sector carbon emissions by 2030.

The complementary, longer-standing climate policy cornerstone, to “electrify everything,” rests on the eminently reasonable premise that decarbonizing electricity is simpler than mass-producing low-carbon versions of gasoline, natural gas and other carbon fuels. Our calculations optimistically accelerate the uptake of electrified transportation by five years by having the electric shares of cars, trucks and planes in use in 2030 reach levels that in our opinion otherwise aren’t likely until 2035: 20-25 percent for autos, 11-12 percent for trucks and 4 percent for airliners. Those shares are pretty aggressive for 2030, considering that vehicle fleets turn over relatively slowly.

The carbon reductions from this scenario are creditable. With electricity 80% decarbonized and electric vehicles advanced by five years, U.S. CO2 emissions from burning fossil fuels would be 35 to 40 percent less in 2030 than they were in 2005. The reduction, more than two million metric tons of CO2 a year, would qualify as by far the greatest extinction of carbon pollution in history.

But why isn’t the reduction 50 percent? Reason #1 is ever-burgeoning travel. Unless policy interventions like road pricing, public transit and density-friendly upzoning can take root on a grand scale — unlikely in just a decade — the emission reductions from hastening electric transportation will largely be offset by more travel, especially as vehicles on our roads grow ever bigger and more power-demanding.[1]

To be sure, our calculations omit other wonky but potentially potent forms of decarbonization such as widespread replacement of gas furnaces by electric heat pumps. Nor do they incorporate low-hanging fruit from reducing the number two greenhouse gas, methane, both via process capture and as a concomitant to phasing out this fossil fuel altogether.

But we should also be mindful that our most crucial assumption — that we’ll double electricity generation’s carbon-free share from 40 percent today to 80 percent by 2030 — is far from assured. Assume that our aspirational 80 percent carbon-free 2030 electricity comes as 24 percent solar photovoltaics, 32 percent wind, and 24 percent combined from nuclear, hydro-electricity and biomass.[2] Getting to 24 percent solar demands that between now and 2030 we install solar cells three-and-a-half times as fast as we have in any three-month period to date,[3] a task that could easily be sidelined by any number of issues involving supply bottlenecks, permits and certifications.

And if that’s not daunting enough, consider that for wind power to contribute its assigned 32 percent, we’ll need to add the equivalent of 75,000 giant wind turbines rated at 5 MW each[4] to America’s landscapes. Numerically, that equates to 25 turbines per county in the U.S. — a formidable task even if America’s NIMBY culture could somehow be conquered. And all of these targets will be even larger if, as seems likely, the CEPP holds down electricity prices, neutralizing what would otherwise be a helpful brake on demand for power.

3.

Since April, we’ve combed policy papers and journalism about fossil fuel emissions for an accounting of cuts that together might meet the Biden 50% target, or at least come close.

The best compilation we found is a policy brief signed by 20 mainstream and environmental justice organizations and released earlier this month by the Center for American Progress.[5] It’s crisp and precise, as is the Sept. 17 write-up, In the Democrats’ Budget Package, a Billion Tons of Carbon Cuts at Stake, by Inside Climate News journalist Marianne Lavelle, that linked to it.

Graphic, courtesy of Center for American Progress. Link in text.

The above graphic from the CAP brief (downloadable pdf) gives a good overview. Since it’s a lot to take in, we’ve broken it into three pieces.

  • Fourteen policies included in Biden’s Build Back Better Act, summing to reductions of 22%. We’ve already covered the three largest, pertaining to clean electricity and electric vehicles. They sum to a 22% reduction from 2005 emissions. We haven’t checked the individual numbers, but the overall figure appears solid.
  • “Additional Regulatory and State Action,” assigned a reduction range of 5%-7%.
  • Two ongoing trends summing to reductions of 23%. The item at far left, 19%: Progress from 2005 to 2021, is supposed to denote the fall in U.S. greenhouse gas emissions from the 2005 baseline. The companion entry at the top, 4%: Current Trends Through 2030, applies forward from 2021. Together, these items purport to deliver large emission reductions without any new policies — along the lines of Rob Meyer’s “green vortex.”

The percentages credited to the three pieces would indeed carry the Biden plan across the 50 percent reduction threshold. But item #2, unspecified regulatory and state action, is vague and squishy. Worse, #3, “ongoing trends,” is numerically questionable. The CAP policy brief projects that 2030 emissions will be 23 percent below 2005 levels with no further policy actions (known as “business as usual”). Yet our modeling says that 2030 business-as-usual emissions will be just 13 percent under 2005 — a 10 point difference from CAP.

That’s no petty discrepancy. It’s also hard to parse in a blog setting. In addition, we don’t know how CAP and its partners derived their figures (ours are shown in the carbon-calculator spreadsheet we linked to earlier). All the same, here are our hunches as to why CAP’s forecasted emissions trajectory is much lower than ours:

  1. Like Meyer in The Atlantic, CAP could be projecting future emissions from pandemic-depressed 2020 emission levels. In contrast, we think this year and next will bring big rebounds.
  2. CAP may not be accounting for “natural” emissions growth accompanying increased economic activity. Our modeling of business-as-usual emissions has 2030 matching 2019, as decarbonization of electricity is offset by emissions caused by increased travel and industrial activity.
  3. CAP’s figures cover all greenhouse gases, including methane, forest sequestration of carbon, and other activities, whereas ours only cover carbon emissions from burning fossil fuels, which tend to be less amenable to change.

Our takeaway is that CAP and its partners are straining to be able to validate the ambition in Biden’s Build Back Better Act to cut emissions by 50 percent.

As noted earlier, a 35-40 percent cut from 2005 to 2030 would still be praiseworthy, even monumental. We would take it in a heartbeat, given the parlous state of American politics and governance. Nevertheless, we ought to be candid about what our policy tools can, and can’t, accomplish.

4.

From @carbontaxcenter, Sept 24.

The point of this post isn’t to weaken support for the Biden package. Monumental cuts are absolutely worth legislating. Nor are we seeking to beat the drum for a carbon tax at this juncture. As CTC has stated repeatedly this year, as early as in this April 2 post, the kind of carbon tax needed to embellish those cuts can’t possibly pass Congress in 2021.

We also suspect that even a starter, “proof of concept” carbon tax at this time will prove to be a poor idea. Passing a carbon tax in lieu of aggressively raising taxes on high income and instituting taxes on great wealth, as several Senate Democratic climate hawks floated today, amounts to budget-balancing on the backs of both the working poor and the beleaguered middle class. It’s inequitable and a terrible template for the really large carbon taxes that progressive Democrats must eventually enact, in the event they ever reach centrist-proof majorities.

Rather, our intent is to try to neutralize the unattainable hype around Build Back Better or other laudable efforts that can’t or don’t include robust carbon pricing.

In case you’re curious, however — we certainly were — we ran our model numbers to see how big a carbon tax would be needed to meet the Biden goal and cut 2005 U.S. CO2 emissions by 50 percent in 2030. Here’s our answer: combined with the CEPP or other measures to ensure 80% decarbonization of electricity (vis-a-vis 2019), along with the same 5-year acceleration of electric cars, trucks and planes we assumed earlier, an economy-wide carbon tax taking effect on Jan. 1, 2022 at a level of $20 per ton (short, not metric) of CO2 and rising each year at $15/ton to reach $140/ton in 2030, would do the trick.

Addendum, Sept 27: Our brand-new follow-on post, Why the Carbon Tax Center Questions the Latest Carbon Tax Talk, elaborates on our critique of the current carbon-tax trial balloon discussed directly above.

[1] Compared to 2005, CO2 emissions in 2030 in this scenario will have fallen by only 23 percent for cars and 9 percent for trucks while increasing by 18 percent for planes, even with accelerated electrification. Another factor holding back emissions progress is increased use of natural gas, as cheap fracked gas finds abundant uses in industry and heating.
[2] The 24 percent combined electricity share for nuclear, hydro and biomass assumes that 2030 generation from those sources remains at current levels. (Their share shrinks slightly because total electricity production rises somewhat; see next footnote.)
[3] Our modeling projects that without a carbon tax, U.S. electricity generation will rise from 4,160 terawatt-hours (TWh) in 2019 to 4,800 TWh in 2030, with around a fourth of the increase attributable to electrified transport. Solar’s 24% share of that, 1,153 GWh, requires nearly 900 GW of installed solar capacity, assuming that a GW of solar produces around 1.3 TWh of electricity in a year, for an average capacity factor of 15%. From several sources, including this recent report by the Solar Energy Industries Association, U.S. installed solar at the end of 2020 was around 100 GW. To grow to 900 GW by the end of 2030, the U.S. solar sector would have to add 800 GW over 10 years, or 80 GW a year. From this report by Wood-McKenzie, the U.S. installed 5.7 GW in 1Q 2021 — a 1Q record — which implies an annual rate of 23 GW.
[4] Assuming an average capacity factor of 35%, wind power’s assumed 32% share of U.S. 2030 generation, 1,537 TWh, requires 500 GW of installed capacity, for a roughly 380 GW increment over end-of-2020 capacity of 122 GW, per U.S. DOE. We optimistically assume an average new-turbine size of 5 MW, although an Internet check on Sept 16, 2021 suggests that the U.S. has no operating wind turbine as large as 5 megawatts (see Windpower Monthly’s Ten of the Biggest Turbines). The U.S. has 3,006 counties.
[5] “The Climate Test: The Build Back Better Act Must Put Us on a clear path to cutting climate pollution 50% by 2030.” Statement, “20 Groups Call on Congress To Pass the ‘Climate Test.’” 4-page policy brief (pdf).

“The penalty on pollution is really important. All the analyses show that you get big reductions in carbon emissions if you have a penalty on polluting. Take that away, and all you have is another government subsidy for renewable energy.”

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Harvard prof. and former Obama advisor Joseph Aldy, on Sen. Joe Manchin’s bid to remove penalties for utilities that fail to rapidly phase out carbon electricity from Pres. Biden’s proposed Clean Electricity Performance Program, in NY Times, This Powerful Democrat Linked to Fossil Fuels Will Craft the U.S. Climate Plan, Sept. 19.

“Rich people cannot have the right to combust others to death.”

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What drew me to pick up Andreas Malm’s book “How to Blow Up a Pipeline” and read it straight through over the July 4th weekend? Sure, the title was intriguing, but why exactly this book now?

Verso Books, Brooklyn, NY (2021).

It wasn’t July’s climate chaos outbreaks — Oregon’s Bootleg fire, New York’s submerged subways, floods sweeping away picturesque German villages. Those came after July 4th.

Believe it or not, helicopters may have been a factor. The incessant thwack-thwack of tourist and “commuter” heli flights pervades every lower Manhattan sanctum — Governors Island, the Hudson River piers, even my apartment rooftop. The noise is universally loathed, yet, unsurprisingly, earnest entreaties by local anti-heli advocates haven’t moved the needle. With luxury helicopter pollution impervious to public outcry, might it be time to move to direct action? Malm’s book, I thought, might be instructive.

Meanwhile, policies for turning back the climate crisis are stalling out.

June, after all, was when milquetoast moderates Manchin and Synema gave Senate Republicans carte blanche to filibuster away President Biden’s climate infrastructure bill, thus blocking what might have been a path to carbon-pricing legislation after the 2022 midterms — an idea we spelled out in April.

Closer to home, evidence was mounting that New York Gov. Andrew Cuomo was turning skittish on the plan I had helped design to dial back automobile gridlock in Manhattan by charging drivers for causing traffic congestion — a scheme he shepherded through the state legislature in 2019.

Not even “Ruining Shakespeare in the Park” (as the NY Post’s headline put it) stops tourist helicopter flights over NYC. Heli flight map by Melissa Elstein, who is pictured at left in NY Post photo by Helayne Seidman.

Bright hopes, dwindling. So why not see what Malm had to say? Though I was ambivalent about the title — not just the “blow up” part, but “pipeline.”

Here’s why. The Carbon Tax Center largely leaves disrupting the fossil fuels supply chain to others. We fight for demand destruction: crushing the “need” for carbon energy with carbon taxes. Outside of CTC I work for urban transit and practice culture change like redefining my travel wants so I can get to most places I need to reach by bicycle.

The surest way to starve and slay the carbon beast is demand destruction. If you stop a gas well or oil pipeline, another will come into being somewhere else to meet the demand. So go after the demand instead.

Malm’s book really catches fire when he addresses carbon consumption:

Why go after private consumption? Hasn’t the [climate] movement worked hard to shift attention away from consumers — the favored subjects of liberal discourse — to the production of fossil fuels? Wouldn’t pointing to the former represent a slide backwards? But consumption is part of the problem, and most particularly the consumption of the rich. [emphasis added]

At last: a voice on the left not just willing but eager to address the demand for fuels!

Taking a long-haul flight generates more carbon emissions than the average person in dozens of countries around the world produces in a whole year. Graphic + analysis by Niko Kommenda for The Guardian, 2019 (see link in text).

In his post here last week, Let’s Blow Up Luxury Carbon, journalist Christopher Ketcham offered up a few of Malm’s striking stats on luxury consumption. The visual at left, taken from a 2019 report in the Guardian, underlies another from Malm: “There are 56 countries in the world with annual per capita emissions lower than the emissions from one individual flying once between London and New York.”

To be sure, repugnant statistics such as these are by now deadeningly familiar. What I found novel in Pipeline is Malm’s way of articulating the “wanton criminality” of luxury consumption:

When the atmosphere is already glutted with CO2, extravagant excesses have directly injurious effects, which means, to skip the euphemisms, that they send projectiles flying towards randomly chosen poor people. The rich could claim ignorance in 1913. Not so now…  The main source of luxury emissions — the hypermobility of the rich, their inordinate flying and yachting and driving — is what frees them from having to bother with the consequences, as they can always shift to safer locations.

Malm goes on to contrast luxury carbon with the “subsistence emissions” of the poor:

Subsistence emissions must be overcome just as much as any other, but they have none of these features of luxury in a CO2-saturated world: wanton criminality, insulation from the fallout, waste promotion, withholding of resources for adaptation, persisting in the most odious variants and ostentatiously negating the very notion of cuts… It follows that states should attack luxury emissions with axes — not because they necessarily make up the bulk of the total, but because of the position they hold. [emphasis added]

No such state attacks are happening, of course. If anything, the opposite is true, as Malm observes. France cut back taxes on aviation at the same time that president Emmanuel Macron, “king of climate diplomacy and private luxury … targeted the cars of the popular classes,” triggering the Gilets Jaunes uprising — a point Ketcham made as well in 2019 in Harper’s magazine.

Even the New York Times’ redoubtable Ezra Klein admits he doesn’t know “how to force the political system to do enough, fast enough, to avert mass [climate] suffering.”

“Luxury emissions,” Malm writes, “are left dangling, heavy and rotten, without any state daring to touch them. Time to pick up some sticks and knock the fruit down.”

It might take attacks on luxury-emitting devices to break the spell cast in the sphere of consumption. Much like divestment has strived to remove the license from fossil fuel dividends and replace it with a stigma, the purpose here would be to hammer home another ethics: rich people cannot have the right to combust others to death. [emphasis added]

But how exactly to break the spell? We at CTC aren’t prepared to participate in or urge others to destroy property. The risks are too great, as Ketcham pointed out.

Today marks two years since Ketcham and I gathered on my Manhattan roof and, amid the din of the helicopters, understood that “the power to lord and the power to pollute are one and the same.”

Out of that came CTC’s three-pronged plan to Tax Carbon and Economic Inequality for a Green New Deal — all three elements of which the minority, Republican-controlled Senate now blocks. (Within a day of posting this, we learned that the price of G.O.P. votes for an infrastructure bill that is more highway than climate was to strike funding for new IRS capability to go after billionaire tax cheats.)

Something has to give. We don’t know what. Neither, for that matter, does New York Times columnist Ezra Klein, who, like me, this month devoted a weekend to reading Malm’s book:

To the immediate question — how to force the political system to do enough, fast enough, to avert mass [climate] suffering — I don’t know the answer, or even if there is an answer. Legislative politics is unlikely to suffice under any near-term alignment of power I can foresee.

Carbon Tax Obituary, Meet Subsidies Nonsense

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Patience, reader, we’ll get to Atlantic climate columnist Robinson Meyer’s carbon tax obituary soon enough. First, let’s take a look at how the Guardian botched its coverage of a big new report on fossil fuel subsidies from Bloomberg New Energy Finance.

The Guardian and Atlantic pieces are connected, and not just because both of them ran today. There’s also a through-line from the first to the second, as we show here.

From the Guardian’s July 20 story castigating fossil fuel subsidies. Don’t be fooled by the top two bars — the scary-looking increases are tiny, in dollar terms. Meanwhile, France, shown with a nearly 24% increase, actually dropped its FF subsidies by 22%, from $29.6 bn/year to $23.2 bn!

The Guardian piece, by environment editor Damien Carrington, carried the aggro headline, “‘Reckless’: G20 states subsidised fossil fuels by $3tn since 2015, says report.” And it led with the dramatic graphic at left.

The two bars of shame at the top belong to Australia, which increased its fossil fuel subsidies by 48 percent in 2019 over 2015, and the U.S., with a nearly 37 percent boost. Cue the breast-beating that the world might make real headway on solving the climate crisis if rich nations would simply pull their bloody fossil-fuel subsidies.

But what if we told you that in the terms that really count — dollars — those whopping percentage increases in FF subsidies amounted to a mere several billion: $2.4 billion for Australia (from $5.0 bn in 2015 to $7.4 bn in 2019 — that’s the 48 percent bump), and $4.0 billion for the U.S. (from $11.0 bn to $15.0 bn), according to the country-by-country subsidy figures in the new Bloomberg-NEF Climate Policy Factbook that prompted the Guardian story?

Graphs from the Bloomberg-NEF report show that the combined increase in Australia’s and the U.S.’s FF subsidies was a paltry $6.4 billion.

Here’s the context: the real fossil fuel subsidy — the failure to price carbon emissions to capture even a small portion of their climate and health damages — amounts to around $40 billion a year for Australia and $500 billion for the U.S. Those figures, computed on a conservative carbon price of $100 per metric ton, dwarf the respective governments’ “fossil fuel support” by factors of more than 5 (Australia) and more than 30 (U.S.).

What FF subsidies actually look like, per the Bloomberg-NEF report: Damaging and indefensible, but far from a key driver of the climate crisis. Note also the tiny height of the U.S. bar and the absence of Australia, whose $7.4 bn subsidy would be a mere speck.

To be sure, government supports for fossil fuel development, in the form of grants, targeted tax abatements, loan guarantees and the like, are destructive to both economic fairness and climate protection and should be zeroed out at once. The 10 percent drop since 2015 in such subsidies by the G-20 countries, which together account for nearly three-fourths of global carbon emissions, according to the Guardian, isn’t remotely steep enough.

But to act as if these supports are the root cause of the world’s emissions profligacy is to badly misread the facts. The G-20 nations pump out around 24 billion metric tons of CO2 annually while pricing this pollution at an aggregate average carbon price of just a few dollars a ton. The absence of a $100 per metric ton carbon price thus constitutes a “subsidy” of $2.4 trillion a year, nearly quadruple the $636 billion in G-20 governmental support for fossil fuels in 2019 shown in the graph directly above.

“Carbon Tax, Beloved Policy to Fix Climate Change, Is Dead at 47”

The heading above is what led Robinson Meyer’s Atlantic column today, pegged, as Morrissey might have sung, to nothing in particular, except, perhaps Meyer’s interest in clicks. (I can confirm receiving a bunch of notices from CTC supporters.)

“The [carbon tax] death,” Meyer intoned with mock gravitas, “was confirmed by President Joe Biden’s utter lack of interest in passing it.” Leave aside that the Biden White House would have to be certified insane to pursue a carbon tax in 2021, with paper-thin House and Senate majorities and an overriding need to cultivate popular support to ward off the usual midterm attrition.

Indeed, we said as much in our post Playing the Long Game for Carbon Fee-and-Dividend back on April 2, in which we applauded Biden and Co. for steering clear of a carbon tax in order to build legislative accomplishments that could grow the Democrats’ congressional majorities and possibly enable a carbon tax in 2023. We were followed a week later by Ezra Klein in the New York Times (“Biden and his team view the idea that a carbon tax is the essential answer to the problem of climate change as being so divorced from political reality as to be actively dangerous.”)

Meyer is right, however, that carbon taxing “won few friends on the right or left” — for reasons we’ve lamented and detailed in separate, comprehensive write-ups in the “Politics” section of our website, having to do with Conservatives, Progressives, and pursuit of Environmental Justice.

Meyer was gracious, at least, to refer in his headline to carbon taxing as a “beloved policy.” Though what should make it beloved to climate advocates of all stripes isn’t its vaunted economic efficiency but its unique capacity to make huge dents in fossil fuel use in a short period of time. The efficiency of carbon pricing, though an aspect of that, isn’t the point.

And more helpful would have been for Meyer and other climate pundits to do what we’ve attempted here: to put the lie to the idea that removing fossil-fuel subsidies would go a long way to reducing carbon emissions and slowing the climate crisis. That could have — and might still — help climate campaigners focus on the true subsidies solution: to directly, massively and equitably tax carbon and other greenhouse gas emissions.

Humanity has spent thousands of years building the social organizations and technological mastery to insulate itself from the whims of nature. We are spending down that inheritance, turning back the clock. I don’t believe this reveals our true preference for the world our descendants will inhabit. I believe it reveals our deeply human inability to take the future as seriously as we take the present.”

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New York Times columnist Ezra Klein, in It Seems Odd That We Would Just Let the World Burn, July 15.

New Senate bill would price CO2 at $54/metric ton and tax some particulates, SO2, NOx

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This post was updated, and its headline slightly altered, on July 13, 2021.

A bill introduced in June by Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) envisions a hefty price on U.S. carbon dioxide emissions from all sources along with pollution charges on the three primary “criteria” air pollutants — particulates, sulfur dioxide and nitrogen oxides — from large stationary sources near environmental justice communities.

The Save Our Future Act (101-page downloadable pdf) prices CO2 emissions at $54 per metric ton, equivalent to $49 per U.S. (short) ton, starting in 2023, with the price rising each year by a percent equal to 6 percentage points on top of the rate of general inflation.

The bill also proposes to charge emissions of fine particulates, nitrogen oxides and sulfur dioxide from qualified “major sources” (a legal term defined at 42 U.S.C. 7661) located within a mile of any environmental justice community (see definition  and discussion further below). In addition, a border adjustment mechanism would prevent carbon leakage and ensure fairness for U.S. manufacturers, according to a press release from Sen. Whitehouse’s office, while an “environmental integrity mechanism” would raise the charges on CO2 and other greenhouse gases if needed to keep shrinking emissions fast enough to meet a 2050 net zero target.

Pushing the Envelope

The Whitehouse-Schatz bill pushes the envelope of carbon tax legislation. The starting price of $49/ton — pegged to OMB’s conservative estimate of the social cost of carbon — represents a new high. So does the annual increase rate of general inflation plus 6%. Both figures surpass the Climate Leadership Council’s long-standing proposal to start pricing CO2 at $40/ton and raise that price 5% faster than annual inflation (to be fair, the council’s 2017 price base translates to $45/ton or more in 2023, the Whitehouse-Schatz bill’s start year).

Modeling by CTC suggests the Save Our Future Act will cut CO2 34% below 2005 levels in 10 years (without counting ancillary charges on PM-2.5, SO2 and NOx).

The Save Our Future Act is co-sponsored by Senators Martin Heinrich (D-NM), Kirsten Gillibrand (D-NY), Jack Reed (D-RI), Chris Murphy (D-CT), and Dianne Feinstein (D-CA). The Whitehouse press release says the bill is supported by the Utility Workers Union of America, the New York City Environmental Justice Alliance, New York Lawyers for the Public Interest, The Nature Conservancy, Environmental Defense Fund, National Wildlife Federation, American Sustainable Business Council, Citizens Climate Lobby, Clean Air Task Force, and the World Resources Institute, although sources have reported that neither of the New York groups have formally endorsed it.

We ran the CO2 price in the Save Our Future Act through CTC’s carbon tax model (which you may download via this link). The results, shown above, indicate that the bill won’t fulfill its stated objective to cut carbon emissions in half within a decade, though, to be fair, our modeling doesn’t reflect additional impacts from the prices on the three localized pollutants. Nor does our model capture the likely low-hanging fruit of curbing emissions of methane and other greenhouse gases.

Still, the price-compounding built into the bill limits its efficacy somewhat; even the unprecedented proposal to raise the rate 6% faster than inflation doesn’t boost the price nearly as fast as a straight-up $10/ton annual increment. (Simple math suggests that, with 2% annual inflation, the price won’t spin off annual increments of $10/ton or more until it has reached $125/ton.)

Revenue Treatment

How carbon revenues are used has become central to carbon taxing’s equity and politics. The following four bullet points, taken from the Whitehouse press release, summarize the Save Our Future Act’s proposed treatment:

  1. Environmental justice communities: The bill would invest roughly $255 billion over 10 years in existing energy affordability, pollution reduction, business development, career training, and tribal assistance programs.
  2. Fossil fuel workers and communities: The bill would invest roughly $120 billion over 10 years in economic development, infrastructure, environmental remediation, assistance to local and tribal governments, and wage replacement, health, retirement, and educational benefits for coal industry workers who lose their jobs.
  3. Assistance to states: The bill would fund $10 billion in annual block grants to states and tribes to defray expenses associated with climate change.
  4. Checks to low- and middle-income families: Consistent with the means testing thresholds established for pandemic relief checks in the American Rescue Plan, every eligible adult would receive $800/year and every eligible dependent $300/year, distributed in biennial installments.

Provisions #1 through #3 together would absorb around $500 billion over the law’s first decade, out of the total $4 trillion in revenue that CTC’s model indicates the Save Our Future Act will generate during that time. The difference between those figures — some $3.5 trillion total — pays for the dividend checks noted in provision #4.

The proposed allocation of the vast majority of revenues to the dividends presumably is what delivered support from Citizens Climate Lobby, the national grassroots organization that for the past decade has relentlessly pursued the idea of returning carbon-tax revenues as dividends to U.S. households. Provisions 1 through 3 clearly are designed to win backing for the bill from justice-oriented climate advocates.

Local Air Pollutants

Environmental justice is also evident in the bill’s novel proposal to charge for emissions of fine particulates ($38.90/lb), NOx ($6.30/lb) and SO2 ($18/lb), with those prices rising at the rate of inflation, from qualified “major sources” (a legal term defined at 42 U.S.C. 7661) located in or no more than a mile from an environmental justice community. Our preliminary calculations suggest that all fossil-fuel power stations 25 megawatts or larger, even those with modern combined-cycle technology burning methane gas, would meet the statutory criteria, provided they are sited directly proximate to a community of color.

Other large stationary polluters such as oil refineries, chemical plants and perhaps oil and gas extraction and processing facilities might also qualify. (We are awaiting details from Sen. Whitehouse’s office.) We estimate that coal-fired power plants would be charged for their “local” pollutants at a rate averaging around 5 cents per kWh generated, a fee that would effectively duplicate (i.e., double) the direct impact of the initial $49/ton carbon tax. Gas-fired power generators, in contrast, would pay only around 2/10 of a cent per kWh, on account of their sharply lower emission rates for conventional pollutants, relative to coal. (You can see our assumptions and calculations in the Local Pollutants tab of our carbon-tax model.)

Prospects

Prospects aren’t bright for the Save Our Future Act in the current Congress. The persistence of the Senate filibuster means that 60 out of 100 senators must approve the bill; yet opposition is virtually guaranteed from almost all 50 Republican senators along with Sen. Joe Manchin (D-WV) and perhaps a few other Democratic senators. Not only that, the Biden White House is unlikely to put its muscle behind the bill, for reasons we laid out earlier this year in our post, Playing the Long Game for Carbon Fee-and-Dividend:

Razor-thin House and Senate margins simply don’t allow for hot-button measures like carbon pricing that might jeopardize other elements of the package in addition to failing on their own. Biden’s task, as he knows full well, is to pass bold, progressive, popular legislation to help Democrats expand their Congressional majorities in 2022 and 2024 and give him a thumping second-term mandate to boot. Then, and only then, can he risk a carbon tax.

Still, let’s credit the Save Our Future Act for pushing the envelope on carbon taxing on the twin key fronts of tax design and revenue treatment. Kudos to Senators Whitehouse and Schatz for seeking support from a diverse set of environmental and justice campaigners. The bill underscores the importance of solidifying a pro-climate Congress to enable such forward-thinking bills to be seriously considered during the second half of the Biden term.