Richmond Times Dispatch: Tax it

June 1, 2014


Richmond Times Dispatch:

Two recent reports warning about the perils of global warming missed one major heat center: Northern Virginia, where the race for the 8th Congressional District is growing hotter every day. A crowded field of contenders hoping to replace retiring Rep. Jim Moran is turning into the Democratic version of a tea party beauty pageant as candidates compete for the title of Most Progressive.

Don Beyer, a former lieutenant governor of Virginia, has a problem: He’s white, male, straight, and (comparatively) older and richer. In the modern Democratic Party those are all liabilities. But Beyer might redeem himself among the party faithful with a new ad in which he calls for taxing carbon to help address climate change.

This isn’t meant to suggest Beyer’s position is a cynical ploy. To the contrary, it strikes us as a political hat trick: the happy — and all too rare — amalgam of conviction, smart campaign strategy and meritorious policy.

In a few days the Obama administration will propose new carbon-dioxide emissions regulations. Policy experts anticipate some combination of aggregate targets for carbon emissions and caps on emissions for each power plant in the country, with much of the implementation details handed off to the states. At this point no one can say for certain precisely what the rules will look like, but there’s no doubt they will be onerous, costly, filled with red tape, and difficult to comply with.

They also might be the only currently feasible approach to reducing carbon-dioxide emissions in the U.S. — a valid goal for anyone who accepts, as we do, the scientific consensus about humanity’s role in climate change.

“Feasible,” however, is not synonymous with “optimal.” From an economic perspective, command-and-control regulations are hugely inefficient ways to reduce the negative externalities associated with power generation. Beyer’s proposal — a carbon tax — makes far more sense.

How pricey that tax should be is open to considerable debate. But those who are indisposed to the Chicken Little alarmism embraced by many in the environmental movement think the social cost of CO2 pollution could reasonably be pegged at around $25 per ton. Congress could hold consumers harmless by offsetting the pass-through cost of such a tax with an income-tax reduction. The net result would be to encourage both carbon conservation and wealth creation.

Granted, a carbon tax would do little to reduce greenhouse gas emissions from major polluters such as China and India. But it would help level the energy playing field by requiring users of fossil fuels to internalize more of the costs such fuels impose.

In a less liberal district — such as Virginia’s 7th or 9th — proposing a carbon tax would be writing a political suicide note. Beyer, who is a man of principle, might do it anyway. It will enjoy a friendlier welcome in the 8th District, where we hope it inspires discussion — one that should continue long after the votes have been counted.

23 Responses to “Richmond Times Dispatch: Tax it”

  1. Copied from the Don Beyer campaign web site:

    While serving as President Obama’s Ambassador to Switzerland, I saw firsthand the glacial melt caused by global warming. Despite the urgency of this situation, there has been no successful congressional legislation to address the crisis of climate change.

    Frankly, it angers me that some Tea Party Republicans ignore science and the harm that climate change, and pollution in general, is causing to our planet and our health.

    The most effective way of reducing carbon emissions is to put a tax on carbon pollution. Such a tax must include investments in clean energy and in energy efficiency, as well as protections for low-income households, who will otherwise bear a disproportionate burden of a carbon tax. This is the single most important issue of our time, and we need to act now. We owe it to future generations.

    • petersjazz Says:

      The effect of tax on co2 emission can be seen in Sweden. Solar panels is cost effective because the cost of buying electricity is about 1,20 SEK / kWh and big part of that is tax. Putting up solar panels on roof top will give electricity at a cost of about 0,8 SEK / kWh.

  2. I’ve given some thought to this idea of a carbon tax, and quite frankly I think it’s a poor approach. In theory, it sounds good – if energy is expensive, people will use less. Especially poor people, who maybe won’t be able to heat their homes in winter, or watch TV, use the washing machine, or even drive their cars to work (assuming they have a job to drive to). Meanwhile, rich people will continue to air-condition their mansions and fly their Lear Jets even if fuel cost is doubled. A carbon tax would really hit the poor hard, while the rich would shrug it off and continue to leave their energy-hogging lifestyles.

    Saying you can offset it with an income tax reduction is awkward at best. Some people don’t pay income tax (because they don’t earn anything). It’s going to be tricky calculating how much income tax rebate will suffice – those living in a very cold place in a McMansion (and thus having big heating bills) may not receive adequate compensation, while those in milder climates and owning a small house might earn a profit from the rebates.

    Overall, I think a carbon tax will prove to be very unpopular with the public. Politically, this is going to be a hard sell.

    So what to do about CO2 pollution? Well, we are simply going to have to cut back on coal and natural gas production – that takes political will that is seriously lacking. I’ve pushed the notion of encouraging 4th generation nuclear power, but I know that isn’t a popular point of view on this blog. OK, push for your windmills and solar panels – I don’t care which technology wins, just as long as it actually works (rather than merely giving the appearance of working for a few hours a day). I’ve very unimpressed when I read “in Germany last year, wind supplied 50% of the nation’s energy from 3 to 4 am for one whole day.” I’ll be very impressed if it’s “50% of the nation’s energy for one whole year.” I await with bated breath.

    • lesliegraham1 Says:

      In the first quarter of 2014, renewable energy sources on average met a record 27% of Germany’s electricity demand.

      OK – there’s still a long way to go, but 27% of demand from the world’s 4th largest economy, and a major industrial manufacturing economy at that, is a good start and shows what is possible. It’s twice the US rate for a start.

      And your 50% figure is already out of date. The record is now at 74% of total demand for short periods.

    • Gingerbaker Says:

      50% of [Germany’s] energy? Man, – I wish.

      They were only talking about Germany’s electricity! There is a lot of fossil fuels being burned in Germany that is not making electricity – home heating and cooking; nearly all transportation; industrial processes.

      Germany’s CO2 output is not falling at all – it is rising. That’s why all these ‘cheerleading’ articles about great strides being made in renewables uptake are, I think, counterproductive. We are not making any real progress so long as CO2 output levels are not dropping to zero.

      • dumboldguy Says:

        Can’t say it any better than——“That’s why all these ‘cheerleading’ articles about great strides being made in renewables uptake are, I think, counterproductive. We are not making any real progress so long as CO2 output levels are not dropping to zero”.

        I keep suggesting that folks look at the many graphs out there, particularly the ones that stack different energy sources as proportional wedges. Although the renewables wedge IS widening at a faster rate, it is still just the icing on a tall “cake”, and the fossil fuel portions are showing growth as well. It is irrelevant to talk about per capita reductions in CO2 in this country or that when population growth and industrialization in the emerging economies has the net result of giving us ever-increasing planetary CO2 levels.

      • Only if you look short term.
        This temporary coal-burning uptick is often used to claim that German CO2 emissions are rising, even though emissions have trended down since 1990. In fact, despite economic growth, German renewables helped make CO2 emissions fall in 2011, hold steady for power plants and industry in 2012, and probably fall in total in 2012 after adjustment for more oil-fired heating in the exceptionally cold winter. The reason is simple: Germany’s renewable growth has more than offset nuclear shutdowns while efficiency has flattened or decreased electricity demand.
        The German uptick bears little meaning in the face of gigantic Chinese increases. The best hope is a globally agreed initiative that transcends laissez faire economic approaches that wait until resources are depleted and environmental impacts cause crises. That development is more imminent now that the EPA has ruled and the US has started to see its clean coal delusion for what it is. Meanwhile, China is starting a national carbon market in 2018. The rest of the world outside of Australia is on the right page to agree with an international climate agreement. That needs to happen yesterday.

        • dumboldguy Says:

          “That needs to happen yesterday”.

          Yep, but the real question is how many “tomorrows” will pass before we start to make real progress?

          • Yes. Its frustrating how long its taking. These changes could have been made forty years ago.

            The compound interest economic system distorts the value of long lasting items. Its one reason we live in a disposable society. If you are lucky enough to have installed a 0.25%/year output reduction solar system, its still good long after 20 years. If you install a solar system in 20 years, it will cost you. A roman aqueduct that still works today has value, regardless of what the compound economics says.

            Its not a matter of mere policy, its a defect in our economic system. Its also why we pursue short term gains, have myopic future planning, and exploit natural resources that causes the dilemma we face.

            A carbon tax is a response to the distortions the economic system creates. As such, it is a stepping stone to progress. Somehow, we have to figure out how to value conservation instead of growth. No future scenario will work without a sustainable, steady state future.

            “Feasible,” however, is not synonymous with “optimal.”

            As for how many tomorrows, thats up to us. IMO, we now and have means. Those means are increasingly rapidly. What we lack is will. We need nothing less than an all out national and international effort. Climate change is already here and its serious. Time will tell how bad it gets after the El Nino coming in the next six months.

        • andrewfez Says:

          =The best hope is a globally agreed initiative that transcends laissez faire economic approaches that wait until resources are depleted and environmental impacts cause crises.=

          It occurs to me that it was more oligarchal central planning that got us into this mess to begin with: working through municipalities to dismantle public transport, plan car-centric cities/burbs, and design car-only roads and jay-walking laws, &c.; whilst on the federal level they built a highway system, electrified even the most rural parts of America (Lyndon Johnson pushing to electrify TX countryside), put into place the Fed Flood Insurance scam, and currently police the Middle East to keep oil prices steady, &c.

          Laissez Faire would have been more in line with efficient use of energy to satisfy least-cost outcomes, and the pulling away from oil dependency in the 1970’s in favor of less volatile, more stable forms of energy.

    • jimbills Says:

      I think you have some good analysis here. I’ve gone back and forth on a carbon tax. I don’t think there’s any doubt it will unduly affect the poor. Some have proposed to offset it with a tax reduction, but most of the ones doing this (like Bob Inglis) are talking about tax reductions that would favor corporations and the wealthy far more than the poor. In that case, both the carbon tax and the tax reduction to offset it would increase the wealthy-poor gap, making that situation worse.

      The ‘fee and dividend’ approach, pitched by people like James Hansen, is also problematic. It would vastly increase bureaucracy, causing a rise in all taxes, and I’m doubtful that with this government it would ever truly benefit the poor more than the wealthy.

      Where should the funds from a carbon tax go? Instead of disbursement directly back to the public or a tax reduction, I think it’d be wiser to do something along the lines of what Roger wants – national, state, or locally-owned utilities and infrastructure. This isn’t on the table right now, though.

      Currently, however, I’m in favor of anything that decreases consumption and encourages other less-destructive alternatives – and a carbon tax, if nothing else, would do that.

      “Overall, I think a carbon tax will prove to be very unpopular with the public. Politically, this is going to be a hard sell.”

      No doubt. I’d be shocked if it ever passed here.

  3. petersjazz Says:

    Chinas CO2 emissions is about 1/4 of that of USA in per capita rate. And then you dont count the effect of import and export, USA imports a lot of things from China that has been created with CO2 emissions.

    The good thing is that China is doing a great deal to tackle this problems, solar, wind etc. The UN conference in Paris next year will be important.

  4. Gingerbaker Says:

    They also might be the only currently feasible approach to reducing carbon-dioxide emissions in the U.S.

    Once again demonstrating the complete paucity of our national conversation about renewable energy.

    Regulations are what we need, no, no a carbon tax – THAT’s what we need! Yeah, that’s the ticket!

    Sorry, but what we need is (what the supposed direct effect of regulations or carbon taxes is intended to produce) – new installations of renewable energy infrastructure.

    We need to build solar farms, wind farms, tidal farms. Hundreds of thousands, millions of them – billions, yes billions of solar panels. Tens of thousands of tidal farms.

    Who is going to build them? Are we going to wait for corporations to build them so they can charge us high prices for electricity forever, or are we going to build them as public projects, so we can pay the least amount of money for our electricity?

    Do you not see? All this talk of carbon taxes, regulation, etc – it is all we hear about because our corporate media does not want us to even discuss public projects using public monies.

    A billion words devoted to carbon taxes. How many articles have you read that discuss WHY public projects are preferable to corporate solutions?

    • dumboldguy Says:

      WHAT “public money”? Have you forgotten that GROVER and the Tea Party have taken over the government and are busily trying to shrink it to a size where it can be “drowned in a bathtub”?

      The “public money” is being bled out of the system and being handed over to the 1% and the corporations. It’s just not there, and won’t be until the country finds the will to enact tax reform and deal with wealth and income inequality.

      Yes, we need to build all those things right now if we hope to avoid climate change disaster, but the front door appears to be locked. The carbon tax may be the back door in some folk’s minds, but it’s a start.

      • Gingerbaker Says:

        The Federal government doesn’t need money to spend money. It prints money when it needs it. It sells T-bills and notes when it needs money.

        And wasn’t it Grover and his buddies like Cheney who just said “The debt doesn’t matter”?

        The fact is we consumers spend $1.2+ trillion for fossil fuels every year. Seven years of that spending, redirected to building a new 100% renewable system, would pay for it, I believe. We pay that off, and we should be able to supply all our power for next to no cost to the consumer.

        I think maybe framing it as a choice between paying corporations through the nose forever or buying our own system in order to harvest the free energy for virtually no cost is the way to put it?

        • jimbills Says:

          Actually, no. When the Federal government needs money, it takes out a loan from a conglomeration of private banks, the Fed. The Fed (again, private) then parcels the debt load in forms like T-notes – not the U.S. government. This loan gets added to the national debt, the interest of which forms an ever-rising amount of taxpayer dollars:

          The public pays so that private owners can make money off government spending.

          The percentage of the total load of interest payments has gone down since the 1990s – due to plummeting interest rates and exploding expenses (not just Obama, but Bush, too):

          The fiscal conservatives (not the neo-conservatives like Cheney, who only care about power) have at least this right – we’re headed towards a train wreck in the next few decades if we don’t get our finances in order.

          While I don’t disagree with your proposal for public renewable utilities, it can’t happen in this environment. The private interests have assured private ownership at all levels within the system itself (and they back it up by influencing public opinion and by financing our politicians).

          • And it plays its game by tax incentives and write offs. Its silly to add a carbon tax while giving subsidies to FF interests. Just drop their subsidies. And keep subsidies for low carbon sources. Doing either of those would free a huge amount of money for investment in renewables and low carbon sources. We are seeing the dying efforts of the FF interests to stymie that development. They are a huge, decaying dinosaur. As they lose profitability, their power will wane. Waiting for the economics and lobbying is too slow. Rex Tillerson is not going to help. The amount of money in FF subsidies is gargantuan. These measures are only a stepping stone on the path to real sustainability which cannot be achieved with an exponential based (the private) economic system. Its already breaking down, with utilities facing conservations demand drops causing reduced earnings. In oil and gas, its reduced returns due to high capex costs.
            “At the same time, exploration and production costs have been rising at an 11% pace. Thus, costs have been rising faster than revenues, and this in turn has been putting pressure on upstream margins, which are 1-3% of revenues lower than a year ago.”

          • Gingerbaker Says:

            “While I don’t disagree with your proposal for public renewable utilities, it can’t happen in this environment. The private interests have assured private ownership at all levels within the system itself (and they back it up by influencing public opinion and by financing our politicians).”

            The right wing can influence public opinion, but we can’t? Seriously?

            If the right wing has taught us anything over the past 50 years, is that public opinion can be changed drastically through the use of framing and repetition.

            Which is why I keep asking for help to change the national conversation – framing and repetition. Instead, I get well-meaning naysayers who say it is hopeless.

            I say – please talk about public utilities, public ownership of our energy future, not paying through the nose to corporations forever for something which comes to us for free. Talk about nationalizing the energy companies since they are fighting against renewable energy.

            If we had 1/10 the message discipline and 1/20 the framing ingenuity of the right wing, we could win this issue. Most people already favor solving GW. Just giving up without a fight – evidently your position? – makes no sense to me.

          • jimbills Says:

            Roger, I keep trying to explain why it’s hopeless, and it slips past you every time. I have to assume you don’t understand what/who controls our government and media. The left doesn’t have a shot because of fundamentals within the system itself. A Wall Street lackey like President Obama gets labeled a communist in this effed-up society, and the label sticks.

            However, please read my comment above (to Cy) for an idea that ties in with yours.

    • They also don’t want us to discuss people making choices. They want to to control demand and monetize it, a la Edward Bernays. And their model is based on consumption and growth, not conservation and sustainability. We built the interstate highway system, rural electric, and vaccinated millions. Why can’t we do that now with GW?

  5. If a gallon of gasoline burns to create 20 pounds of CO2 (0.01 short tons), a $25/ton carbon tax is 25¢/gallon.  That will get people to sit up and take notice.

    The proper way to rebate the carbon tax is by putting a deductible on employment taxes and taxes on pensions.  Employment taxes start on the first dollar earned, and the deductible obviously has a cap.  The rich will still pay the same marginal rate, and the tax will hit under-the-table employees with the full amount.

  6. The Pentagon spends over $200 Billion USD per year on new weapons and weapons development. Never mind the roughly $4 Trillion it has spent on two completely unnecessary wars (Iraq and Afghanistan). That money could have been spent developing a renewables infrastructure, giving coal and petro power producers 10 years to get out of business (by placing an ever increasing CO2 cap to 0% on electricity generated by coal, oil, gas) and subsidizing power to those who could not afford any increase in price.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: