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It's time for a carbon tax
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mac



Joined: 07 Mar 1999
Posts: 5351

PostPosted: Thu Nov 25, 2010 2:00 pm    Post subject: It's time for a carbon tax Reply with quote

The recent release of “Preparing for the Effects of Climate Change—A strategy for California” prompts me to venture my opinion on why it is not only time, but only fair, to establish a tax on carbon emissions. This report was part of the efforts under AB 32, California’s Climate Change law, and looks at what the changing climate means to California’s economy and infrastructure. Republicans and oil companies tried to suspend that law, a proposal roundly rejected by the California voters.

The effects of climate change are already apparent in California, and will cost untold billions—most likely trillions, over the next 50 years. Assumptions about climate are interwoven into almost every one of our institutions—water supply, real estate, flood control, and agriculture. The signs of climate change are unmistakable—California has the oldest tide gauge in the country, which shows 150 years of sea level rise and an acceleration of that rise during the last twenty years. The engineers among us realize that even slight increases in sea level rise impair the ability of rivers and streams to drain, and the impacts are certain to propagate upstream, affecting millions of acres of development in the Golden State. California depends on a water supply system that combines local supplies, reservoirs, and a snow pack that provides low cost storage of drinking water. Warming has already reduced the storage capacity in the Sierra by 10% since 1950, and with the apparent acceleration, California will lose about ¼ of its water storage capacity. The report notes that over a trillion dollars of infrastructure is located along the coast, vulnerable to even the lowest estimates of sea level rise. Nearly 70% of California’s economy is generated by coastal counties, and California’s economy represents 12% of the US Economy. (California’s GDP for 2009 was $1.74 trillion, down slightly from 2007. If it were a nation, California would rank 8th in economic strength, slightly behind Italy and Great Britain. In contrast, Alaska’s economy, overseen so ably by Queen Sarah, is ranked 46th, with a value of $41 billion. You betcha that oil accounts for much of that. Total mining is 32% of the GSP, with oil development most of mining.)

I will give one example of how vulnerable California and its citizens are to warming—the current water supply and flood control system for vast areas of the State depends on a system of flood control levees in the Delta , 1,100 miles in length, that were built during the gold rush. Upgrading those levees to meet current standards and reflect sea level rise will cost between $3 million and $10 million a mile, or roughly $6 billion. This scenario is repeated in nearly every coastal stream, many of their bridges, and many of the developed areas of the State. While climate change is certainly an issue well beyond California, it is clear that ignoring the role of carbon dioxide emissions in climate change amounts to a wholesale transfer of risk and responsibility from those who generate, use, and profit from carbon-based energy to the general public. I find it ironic that those “conservatives” who extol the virtues of the market system are so eager to transfer risk and costs to the public, while they retain the ability to profit without mitigating the impacts of their products. On this issue mrgybe is wrong and Jimmy Carter was right. It is long since past the time to start doing something about it.

What other costs are there that we should worry about? Security for our energy supplies should perhaps be our largest concern. If oil companies had to pay for the security of middle east oil, either in direct security costs or in payments to unfriendly regimes, that would be reflected in the cost of oil. Instead, that security cost is absorbed by the United States Government—and passed on to you and me. Those costs have been ongoing since 1945, and others have made estimates of the security costs. Estimates done by the National Defense Council Foundation in 2006 put the US tab at defending overseas oil supplies at $137.8 billion. Total US consumption in 2005 was 20.8 million barrels. If I did the math correctly, that is a cost of $6,625 per barrel!

This is hardly a new concept. The following quote comes from Mark Engler of Foreign Policy in Focus:

Quote:
In August 1987, the New York Times published an editorial with the bold title, "The Real Cost of Gas: $5 a Gallon." Given that, at the time, you could commonly fill up for 99 cents per gallon, and that even the energy crises of the 1970s did not push gas prices above $1.50 per gallon, $5-a-gallon gas was pretty much unimaginable. Yet the Times editorial stated that, "in light of the administration's willingness to risk lives and dollars in the defense of oil from the Persian Gulf… the real cost of oil should include the cost of the military forces protecting supplies." It argued for an energy policy that accounted for Pentagon expenditures.
So I would argue that Jimmy Carter was right, we needed to begin using economic measures to reduce our reliance on foreign oil.

Some of the more interesting critiques of our energy policy come from true conservatives (not faux conservatives like Sarah Palin and Rand Paul who rely on energy company funding.) Also from Mark Engler:

Quote:
The late Milton Copulos was a veteran of the Heritage Foundation, an advisor to both President Ronald Reagan’s White House and the CIA, as well as the head of the right-wing National Defense Council Foundation. He was particularly concerned with dependence on foreign oil, and he highlighted how oil imports were both an economic boon to unsavory governments abroad and a missed opportunity for domestic investment. In 2006, Copulos argued that, if you add to oil-related defense spending such factors as the economic impact of periodic oil supply disruptions and the opportunity costs of money spent on oil imports that might have been used elsewhere in the economy, the "hidden" costs of the U.S. dependence on petroleum would total up to $825 billion per year.

"To put the figure in further perspective," he wrote, "it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil." At today's rates, that would hike the price at the pump to approximately $11 per gallon, or more than $250 to fill the tank of a typical SUV.
Why didn’t we listen to Jimmy? Might the political might of the oil industry have something to do with it? Mrgybe is not the only one who flacks for the oil industry, and money is, as they say, the mother’s milk of politics. Here’s a recent editorial observation:\
.... In early July, The New York Times reported: "With federal officials now
Quote:
considering a new tax on petroleum production to pay for [the BP oil spill] cleanup, the industry is fighting the measure… But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process."
Let’s look at the numbers—and the profit motives of the oil companies. According to the MTC, using Department of Labor Statistics data, gasoline prices in late 1986 were just under a dollar a gallon, in 1990 dollars. For June 2008, before the full effects of the recession were apparent, gasoline prices were up to $2.56 in 1990 dollars. So the income structure of the gasoline industry generated more than 2 ½ times as much money. The oil industry and “conservatives” fought any increases in gasoline taxes, either to capture some of the hidden costs or to fund alternatives then. Mrgybe has argued that I am astonishingly naïve to believe that the market defines the price of gasoline, and further argues that modest increases in fuel taxes would ruin the US economy. I would posit that a modest fuel tax of 50 cents per gallon of gasoline would not have appreciably affected the net price, consumption or the economy, and would have left big oil free to rake in more than 2/3 of the increase in revenue.

A number of fairly conservative researchers have written about the decarbonization of the US and world economy in response to the price signals of increasing energy prices. Most of note is probably Roger Pielke Jr., who has been embraced by climate change deniers. Pielke is not, however, a denier. Rather he is a relentless critic of simplistic thinking on climate change, and should be read (but not uncritically) by anyone who is serious about solutions. Pielke describes his recent book thusly:
Quote:
I argue that if we are going to make progress in accelerating the decarbonization of the global economy then, rather than futile efforts to establish a grand global agreement on targets and timetables, it is far more important to emphasize a more direct approach to innovation in energy technologies with a focus on expanding energy access and lowering costs. To finance these investments, I propose a low but rising price on carbon (or fossil fuels) that is set at the highest level politically possible (which is necessarily low). Instead of seeking to make carbon-intensive energy supplies appreciably more expensive, policy should focus on bringing down the cost of alternatives. Hence my focus is on policies that will accelerate innovation in energy technologies.
Pielke has also tracked the actual decarbonization of different economies over the past 30 years. While I disagree with his hostility to cap and trade,, which has worked in California as a more efficient system to reduce air pollution in the Los Angeles Basin, he is one of the better thinkers out there. Relentlessly conservative, hostile to Obama, and supportive of a carbon tax that would stimulate innovation.

Lest you think I am alone in thinking this way, Terry Tamminen, former head of the Resources Agency in California under Arnold, has written a book titled “Lives Per Gallon: The True Cost of Our Oil Addiction.”

Finally, I would be remiss to not comment on the difference between true conservatives like Pielke, who are trying to get a more rationalization of energy policy and pricing, and Rand Paul, the self-certified dentist. His drilling gives me a pain. Not merely an apologist for BP, but generally hostile to all regulation of energy. Tell it to the 29 people who died in the Upper Big Bend mine in West Virginia, victims of a mining company whose executive was appointed to the mine safety board by Bush, and whose mines had thousand, that's right thousands, of violations.
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coboardhead



Joined: 26 Oct 2009
Posts: 1960

PostPosted: Thu Nov 25, 2010 9:26 pm    Post subject: Reply with quote

The House Energy Bill did not do an adequate job of protecting the steel industry, for one, from foreign competitors off shoring production to non treaty countries.

It did also not adequately promote nuclear energy. We are three decades behind in nuclear facility construction and waste disposal. We should really get plants on line or at least permitted before penalizing utility customers.

Using cap and trade as a deficit reduction tool is bad policy. Reinvest in alternative energy instead with this lease revenue.

A carbon tax may make sense to promote alternative energy and reduce dependence on foreign energy. But, we have to be careful how it is applied and what the revenue is used for. Any new taxes should be gradually introduced to avoid shock on any parts of the fragile economy. Taxes that reflect true costs of a product are good policy.

This approach could also have merit in other areas such as taxing alcohol, sigs, and unhealthy foods.

Reducing the portion of tax generated by income tax and shifting some taxes to consumption based taxes makes sense.
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isobars



Joined: 12 Dec 1999
Posts: 14313

PostPosted: Fri Nov 26, 2010 9:29 am    Post subject: Reply with quote

coboardhead wrote:
Using cap and trade as a deficit reduction tool is bad policy.


Fortunately, unless every talking head from Merckel to Harvard to Buffet is wrong, C&T is a dead horse now that its true purpose and impacts have hit the light of day.
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mrgybe



Joined: 01 Jul 2008
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PostPosted: Fri Nov 26, 2010 11:06 am    Post subject: Reply with quote

Just a suggestion..........before proposing taxes on an industry, or if one is apparently involved in regulating an industry for many years, it's not a bad idea to have some very basic understanding of that industry. The US consumes 20 million barrels of oil A DAY.......not annually. Sadly, it seems that many in the current administration are also sublimely ignorant of the industries they so pompously decry and demand to regulate further.
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mac



Joined: 07 Mar 1999
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PostPosted: Fri Nov 26, 2010 11:47 am    Post subject: Reply with quote

OK snarky mrgybe. Making the correction from barrels per day to barrels per year gives a security cost of $20/barrel--or about $.50. Which was pretty much exactly the point I was making. Remember, that captures only one of the externalities. Why are you conservatives so afraid of market forces and the market?
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mac



Joined: 07 Mar 1999
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PostPosted: Fri Nov 26, 2010 12:19 pm    Post subject: Reply with quote

coboardhead--I've not read the fine details of the House Bill; my supposition here is Einstein's--doing the same thing over and over again and expecting a different result is insanity. I would absolutely agree that a direct carbon fee is a much more efficient system to reduce carbon emissions than a cap and trade system. But my objective is to counter the fundamental claims of the denials in the existing energy industry, which run along a few lines of reasoning:

1. It is a tax that is fundamentally unfair because we built this country. You can find that in almost everything Sarah says.

2. Global Warming is not happening, and it is a conspiracy among bearded scientists to weaken this country.

3. Cap and trade won't work.

The environmental literature is replete with criticisms of command and control structures. I studied under economists who fed me lots of literature on economic incentives and dis-incentives as an alternative to regulation, and citing early success in the clean-up of the Rhine from pollution fees. I think the intervening years have taught us that pollution problems, and our understanding of those problems, evolve as new chemicals are introduced and our understanding of the underlying science improves. I think both methods are useful tools, and we should keep efficiency not merely in mind but in the forefront.

The point I'm making on cap and trade is that it was pretty effective in acid-rain regulation and ozone regulation in Southern California. You can see a dated discussion here: http://ncseonline.org/nle/crsreports/air/air-27.cfm?&CFID=1255395&CFTOKEN=96369856
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mat-ty



Joined: 07 Jul 2007
Posts: 1072

PostPosted: Fri Nov 26, 2010 4:25 pm    Post subject: Reply with quote

Are they going to tax my carbon mast?
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isobars



Joined: 12 Dec 1999
Posts: 14313

PostPosted: Fri Nov 26, 2010 4:30 pm    Post subject: Reply with quote

mrgybe wrote:
many in the current administration are also sublimely ignorant of the industries they so pompously decry and demand to regulate further.


Palin has very publicly and repeatedly begged Obama to visit Alaska's oil fields, ANWR, etc., but noooooooo .... he'd rather hang with Hollywood and sports glitterati. An awful lot of the energy pundits on various business and economics shows and channels say the biggest single factor driving our dependence on foreign, especially middle-eastern, oil is Obama administration policies.
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coboardhead



Joined: 26 Oct 2009
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PostPosted: Fri Nov 26, 2010 6:07 pm    Post subject: Reply with quote

Cap and Trade on acid rain was a success. This was, imo, because it was developed and administered to reduce, primarily, emissions from dirty coal plants. A very specific, and domestic, scope.

Expanding to the entire energy domain and the industries that use it, is another issue. NAFTA was developed to deal with trade in a limited arae and look at the complex international issues with that.

Cap and trade may have a place. But, my view is that the complexity is too high. A siplified approach makes sense to me. Start with a gasoline tax to fund mass transit, nuclear development and efficient highways. But, keep it low and offset with other tax breaks or credits. In other words shift taxes; but not using methods that might destroy a particular industry.

World wide global warming policy will require every nation to be involved. If we hobble our industry with carbon trading, another country may just burn that cheap carbon and the atmospheric load stays the same but we loose the jobs.

The direct approach may not work either with energy producing states and corporations fighting it. But, a consumption tax IS similar to a sales tax and shoul represent a shift in the direction of the fair tax.
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isobars



Joined: 12 Dec 1999
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PostPosted: Sat Nov 27, 2010 12:12 pm    Post subject: Reply with quote

Google something like UN IPCC Official Admits Redistribute Wealth By Climate Policy and pick your source.

One example:
UN IPCC Official Admits 'We Redistribute World's Wealth By Climate Policy'

By Noel Sheppard | November 18, 2010 | 11:27
Noel Sheppard's picture

If you needed any more evidence that the entire theory of manmade global warming was a scheme to redistribute wealth you got it Sunday when a leading member of the United Nations Intergovernmental Panel on Climate Change told a German news outlet, "[W]e redistribute de facto the world's wealth by climate policy."

Such was originally published by Germany's NZZ Online Sunday, and reprinted in English by the Global Warming Policy Foundation moments ago:

(NZZ AM SONNTAG): The new thing about your proposal for a Global Deal is the stress on the importance of development policy for climate policy. Until now, many think of aid when they hear development policies.

(OTTMAR EDENHOFER, UN IPCC OFFICIAL): That will change immediately if global emission rights are distributed. If this happens, on a per capita basis, then Africa will be the big winner, and huge amounts of money will flow there. This will have enormous implications for development policy. And it will raise the question if these countries can deal responsibly with so much money at all.

(NZZ): That does not sound anymore like the climate policy that we know.

(EDENHOFER): Basically it's a big mistake to discuss climate policy separately from the major themes of globalization. The climate summit in Cancun at the end of the month is not a climate conference, but one of the largest economic conferences since the Second World War. Why? Because we have 11,000 gigatons of carbon in the coal reserves in the soil under our feet - and we must emit only 400 gigatons in the atmosphere if we want to keep the 2-degree target. 11 000 to 400 - there is no getting around the fact that most of the fossil reserves must remain in the soil.

(NZZ): De facto, this means an expropriation of the countries with natural resources. This leads to a very different development from that which has been triggered by development policy.

(EDENHOFER): First of all, developed countries have basically expropriated the atmosphere of the world community. But one must say clearly that we redistribute de facto the world's wealth by climate policy. Obviously, the owners of coal and oil will not be enthusiastic about this. One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore, with problems such as deforestation or the ozone hole.

For the record, Edenhofer was co-chair of the IPCC's Working Group III, and was a lead author of the IPCC's Fourth Assessment Report released in 2007 which controversially concluded, "Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations."

As such, this man is a huge player in advancing this theory, and he has now made it quite clear - as folks on the realist side of this debate have been saying for years - that this is actually an international economic scheme designed to redistribute wealth.

Readers are encouraged to review the entire interview at
http://tinyurl.com/2cluuyt or Google's slightly different translation.
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