Search Results for: cap and trade

Carbon taxes led the editorial page at two national papers this week, and both stressed the central imperative of raising fossil fuel prices to fight global warming.

"Putting a crimp on global warming can’t be done solely by promoting new energy technologies and voluntary conservation," said the Christian Science Monitor. "Consumers of oil and coal need a direct tax shock."

In the same vein, The New York Times asked that readers keep "one fundamental point in mind: we are now using the atmosphere as a free dumping ground for carbon emissions. Unless we — industry and consumers — are made to pay a significant price for doing so, we will never get anywhere."

We agree, and we applaud. Yet both papers stopped far short of full-throated endorsements of a national carbon tax. The Times editorial gave a clear nod to a carbon cap-and-trade system. The Monitor mostly bemoaned the hurdles to a carbon tax rather than push for overcoming them.

What gives?

How about faulty analysis (Monitor) and timidity plus wishful thinking (The Times)?

The Monitor’s editorial conflates a carbon tax with a gasoline tax:

A carbon tax would, of course, raise the price of gasoline and home heating/cooling.

No wonder that no presidential candidate endorses [a carbon tax], especially with gas prices hovering around $3 a gallon.

Hillary Clinton says a gas tax is "hardly politically palatable at this moment."

The last time Congress raised the gasoline tax was in 1993. In the Senate, Gore cast the deciding vote. At the next election in 1994, the GOP won big on Capitol Hill. Politicians took note.

Whew! That’s no small confusion. A carbon tax is not, repeat, not, a gasoline tax. Only a little more than one-fifth of U.S. carbon emissions come from gasoline (two-fifths are from making electricity). For every dollar raised from gasoline, a carbon tax would bring in four dollars from other petroleum products, natural gas and coal. (See CTC Slideshow, slide #23.)

This makes not just the impacts but also the politics of a carbon tax very different from those of a gasoline tax. A carbon tax can do a lot of good on  CO2 and climate without coming down on like a ton of bricks on the family car(s). Moreover, households that burn lots of gasoline — and feel they have little scope to cut back soon — don’t necessarily also guzzle coal-fired electricity. 

Unlike a gas tax, a carbon tax is multi-dimensional. CTC will try to help the Monitor internalize the difference. We’ll also work to correct their oversight of Sen. Chris Dodd, who has made a "corporate carbon tax" a centerpiece of his presidential campaign.

The Times’ bow to cap-and-trade, meanwhile, genuflects to the 1993 Clinton btu tax debacle:

Over a decade ago, the Clinton administration floated the sound idea of a tax on the carbon content of various fuels, like coal and oil. A tax on carbon, the main greenhouse gas, would cause energy prices to rise, thereby curbing consumption and providing a powerful incentive to invest in alternatives. The revenue from the tax could be used, in part, to subsidize the higher energy costs for low-income Americans. But the idea went nowhere, and new taxes remain a political nonstarter, at least for now.

Goodness, that was fourteen years ago! Must we remind The Times of the sea changes in climate science and politics (not to mention post-9/11 awareness of the costs of oil)?

Coincidentally, or not, the early 1990s was also the era in which the U.S. cap-and-trade system for sulfur emissions kicked in, establishing the precedent cited by The Times as well as the U.S. Climate Action Partnership. But as we’ve noted elsewhere, the market for cutting acid rain pollutants bears as much resemblance to a carbon market as did a French mud hut to the Palace of Versailles, seeing as how a carbon market will be two orders of magnitude larger than the market in sulfur emissions.

We at the Carbon Tax Center would love to be able to endorse a cap-and-trade for carbon, even as a respectable second-best approach. For that to happen, however, cap-and-trade would have to be a lot less opaque, regressive, long-lead-time, subject to manipulation, and volatile than we, and many others, expect.

The closer one looks at both, the clearer the choice of a carbon tax over cap-and-trade becomes. We invite both the Monitor and The Times to look closely at AEI’s cogent new paper and the LA Times’ magnificent Memorial Day editorial.

Courage, friends.

Photo: Big Daddy 72 / Flickr 

Dodd brings pollution tax proposal to NH

By JOHN DISTASO

Senior Political Reporter, (New Hampshire) Union Leader

Friday, Apr. 20, 2007

NASHUA – Connecticut Sen. Chris Dodd brought his call for a $50 billion tax on polluters from a Washington think tank to a New Hampshire kitchen table today.

Over coffee, juice, fruit and cake, he told 10 local political and clean energy activists his plan contains “tough but important steps” toward reducing greenhouse gas emissions.

The Democratic presidential candidate continued his “kitchen table” discussion series at the home of Paul and Wendy Johnson a day after unveiling an ambitious plan to cut 80 percent of all greenhouse gas emissions in the country by 2050.

His centerpiece is a “Corporate Carbon Tax,” which would produce revenues to fund research, development and production of renewable energy technologies and make them more affordable.

Several greenhouse gas-related bills and plans propose some form of a cap-and-trade system, aimed at reducing carbon dioxide emissions by allowing more efficient polluters to sell emission credits to less efficient polluters. Dodd supports that system, but said it only works if it is combined with a tax.

“I don’t know how we can possibly talk about honestly getting to the number we need to get to if you’re going to just dance around that issue,” Dodd said. “Price is the last real barrier.”

He said believes many heavy polluters want to transfer to cleaner technologies, “and this will be the incentive to do it.” Dodd said the carbon tax would provide the “additional resources to” help industries make the transition.

Speaking with reporters after the hour-long discussion, Dodd acknowledged his plan is controversial.

“But it’s an honest answer,” he said. “As long as the oil industries, the polluting industries, can make a lot of money at a lot less cost a barrel, they’re going to drive these other technologies out of the market. If I can make these alternative
energy sources financially competitive with sources that leaves us more dependent on the Middle East, endangers our environment, endangers our health, endangers our economy, then I think people, if they understand that, will accept it as a smart move.”

Dodd said, “It’s not going to happen miraculously. It’s going to happen because political leadership makes intelligent decisions about how to move us in that direction.”

Dodd, accompanied by his wife, Jackie, said he hosts kitchen table talks because, “while people want to hear what I have to say, it’s also very important that as a candidate, I see what the people I seek to represent have to say.” Dodd, a 26-year
senator, said the format has worked well for him during his Connecticut campaigns.

CTC addendum: Follow link for Sen. Dodd’s April 27 op-ed, A Corporate Carbon Tax, in the Boston Globe.

Michael Riordan invited us to publish the following Opinion Piece, which was originally published in the San Francisco Chronicle on March 23, 2007. Michael is the co-author of The Solar Home Book. He teaches the history of science and technology at Stanford University and University of California, Santa Cruz. Thanks, Michael!

Time for a Carbon Tax?

By Michael Riordan

It balms my bleeding liberal heart to witness a conservative president from Texas and a Republican governor of California promoting renewable energy. Also known as alternative energy, it was widely advocated by environmentalists after the 1970s energy crisis and heartily embraced by President Jimmy Carter and Gov. Jerry Brown. But President Bush’s oil-patch friends ridiculed renewable energy as impractical, and it faded from the national agenda during the Reagan years — to be resurrected only recently. Perhaps the time has finally come to revive yet another radical idea: a carbon tax, which charges anyone who burns fossil fuels for the problems that ensue.

Of course, the word "tax" sends shudders across the political spectrum, but it shouldn’t, especially when the only good alternative is another hot-button word, "subsidy."

During the late 1970s, tax credits and other subsidies encouraged ill-considered technologies, such as solar-heating panels on roofs, that didn’t make much economic sense. Some renewable-energy advocates argued that governments should not subsidize any sources of energy — whether fossil fuel, solar, wind, biofuels or nuclear. Just get out of the economic way and let market forces determine the outcome — and penalize detrimental energy sources by taxing them accordingly.

Today, a different dynamic is operating. Global warming, then regarded as a distant possibility, is widely accepted in scientific — and, increasingly, business — circles as a looming threat that we must confront. In the wake of Hurricane Katrina, a majority of the U.S. population regards global warming as fact, caused by human introduction of carbon dioxide into the atmosphere. All of us are contributing by burning fossil fuels, and we are just beginning to witness the terrible consequences.

Thus, a rational course of action is to penalize those who burn fossil fuels — all of us — and use the revenues to implement solutions. This tactic would discourage actions detrimental to the environment and encourage energy alternatives, which could range from energy-efficiency measures to carbon-removal methods to renewable-energy sources.

A carbon tax on our gasoline purchases, for example, would automatically penalize owners of gas-guzzlers while promoting hybrid and flex-fuel automobiles. The average miles-per-gallon of U.S. cars would steadily rise in response to such a measure, as individuals take this added cost into account when making purchases.

The real key to widespread acceptance of a carbon tax, is to put the money directly to use on solving our energy problems — not just pour it into the general fund, where it can be diverted. Carbon taxes could pay for loans or even grants for insulation and double-glazing of windows in older homes, especially in cases where owners cannot afford to make such improvements. They can fund much-needed research and development on ways to capture and remove carbon dioxide or subsidize power companies that begin to take such measures with their emissions. They can support tax credits to homeowners who install solar cells, as California is doing through its Million Solar Roofs program. They can fund much-needed research on converting agricultural waste, wood chips and switchgrass to biofuels, or to solve the knotty problems of fuel-cell automobile engines and compact hydrogen-storage systems.

As Americans consume about 9 million barrels of oil daily for transportation, a dime-per-gallon gas tax thus would yield nearly $14 billion annually for such purposes. This amount does not include taxing coal, oil and natural gas burned in electrical power plants or for heating our homes and office buildings, which would probably add twice that amount.

A small carbon tax applied across the board, wherever fossil fuels are burned, thus would yield more than $50 billion a year to help address global warming. We already do something like this with the gasoline taxes that go directly into highway construction and repair. It is not all that new of an idea.

Spending these funds wisely, of course, will require some kind of responsible governmental decision-making body. Given the politics and corruption that often swirl around large pools of money, this will not be easy. But with openness, vigilance and leadership, it can succeed.

Meanwhile, renewable energy sources would begin to flourish. It would finally become economical to tap the vast supplies of renewable energy that course through our communities daily. Just imagine solar-cell panels on millions of homes converting the sunlight shining on them into thousands of megawatts of electricity fed back into the power grid. And the local construction jobs thus created will be awfully difficult to export to China or India.

Achieving this worthwhile goal cannot happen without courageous political leadership, for few can stomach a new tax. That is why so many politicians, including Sen. Dianne Feinstein, D-Calif., favor a "cap-and-trade" emissions-trading scheme, whereby companies are allowed to emit limited amounts of carbon dioxide, but can trade these allowances like stocks and bonds.

Fortunately, we are beginning to get the needed leadership in California, thanks to an inspired governor working across the aisle with Democrats on energy issues. What better legacy could President Bush leave when he departs from office in two years?