Let’s Support the “Carbon Fee and Dividend”
There are a great number of different ways to address the long-term environmental damage, climate disruption in particular, posed by our civilization’s consumption of fossil fuels. The problem, obviously, is an economic one. Fossil fuels are artificially cheap, in part because we have no mechanism to force those who generate and consume energy from these sources to pay the full cost of those activities; in essence, we are using our atmosphere and oceans as dumping grounds for the waste, free of charge. Similarly, we are using our enormous military to defend Big Oil’s access to crude around the world.
The fact that this inequity remains in place is making the migration to renewables a long slog. As I’m fond of pointing out, we are indeed moving in the right direction, but it sure would be nice to have a bit of help in the form of a level playing field.
To that end, here is the solution I favor: Carbon Fee and Dividend. In essence, this is a carbon tax that is fully and immediately rebated back to American families. The fact that this approach is supported by Dr. James Hansen (pictured in his younger days) is all I need to know about it.
Craig,
The problem is U.S. manufacturing. This would give more money for U.S. citizens to put in their pockets (presumably at least some of which would go to lessen or offset their emissions)… but most of what we buy is manufactured in China – so we’re just outsourcing our manufacturing burden. Placing further costs on energy would only further serve to incentivise the outsourcing of our manufacturing.
That’s why I abandoned my support for the carbon tax and dividend well over a decade ago (At the time I didn’t call it that, I had not heard of it until I had already been arguing its merits for years).
But the manufacturing is a big deal. By worsening the playing field, we encourage and ensure that more manufacturing is outsourced to places with less environmental controls. A widget manufactured in the American Midwest has far less embodied CO2, SO2, NOx, PAH’s, Pb, Hg, Cd, As, soot, carbon black, and radioactive particles than that same widget manufactured in China or India.
Goal-based emissions offset subsidies work better, because they serve to make energy cheaper, giving a greater manufacturing advantage for businesses operating in regions that have rapidly expanding renewable infrastructure. But the subsidies MUST be goal-based in order to have an impact… The goals are emissions reductions, not support for any given industry.
🙂
Isn’t there a way to work around this? Obviously, it would work if we had international agreements that all would impose the same kind of approach. But I presume you’re saying that we obviously do not have any kind of international agreements, nor are they forthcoming. In fact, if we were able to product international agreement on this or anything remotely like it, we wouldn’t have the problem in the first place. Correct?
Craig,
I think that the entire world would change overnight if we could get China, SE Asia, India, the ME, and Africa to the table on an international emissions control agreement… but I have no idea how to do that. I’ve not heard a single proposal that I believe has a snowball’s chance in hell.
I just don’t see how to get there from here.
I have put forward a structured embodied emissions tariff based on the average emissions in the country of origin, but we’d have to drop out of the WTO and risk a severe trade backlash if we were to do something like that… and I don’t think we’d ever get majority support due to the risk inherent in the backlash…
I just don’t see how to make it work.
Well, this IS the aim of the IPCC. I guess what you’re saying is that they haven’t been even remotely successful, which is true.
Re: goal-based emissions offset subsidies, aren’t certain industries inherently more able to achieve emissions reductions than others?
Craig,
Absolutely… Some industries:will benefit greatly, while others will see far less benefit. But that’s why we have to keep our eye on the goal: reducing harmful emissions (including CO2).
What I would like to see structured is this: First, scrap all current subsidies. then say the following: “For any project, we will give a subsidy equal to the calculated emissions mitigation over the first 5 years of the project’s life: For every ton-CO2e mitigated we’ll give $20 in subsidies; for every ton-SO2 and NOx mitigated we’ll give $300; for every ton of soot mitigated, we’ll give $500; for every ton of Pb, Cd, and As, mitigated, we’ll give $5000; for every ton of PAH’s mitigated we’ll give $20,000; for every ton of Hg mitigated we’ll give $100,000, etc…” (note that these numbers have been pulled from my nether regions, it would be preferable by far to have climate researchers, health professionals, agricultural analysts, civil engineers, and insurance actuaries determine the actual cost to society for each of these emissions and offer a subsidy of exactly that amount).
If such a thing were to pass, then the biggest beneficiary by far would be insulation and independent contractors. Every home and business would get an insulation upgrade, many homes would get their ducts rewrapped or replaced, many would get new windows… everyone who doesn’t already have good lighting would get efficient lighting… and every single coal plant in America would put in much tighter smokestack emission controls (in an attempt to reduce the competitiveness of rival product installations). Wind in the Midwest would probably pay back nearly as much as it costed, and solar in the Southwest would certainly cost much less – net – than it does now… But solar in Seattle would cost easily far more than it does now, as would wind in relatively poor wind zones, etc… A geothermal heat pump would cost far less in Wyoming than it would in Vermont, etc… But in every case, the money being spent in subsidies would be exactly equal to what society would gain from that project being built over the first 5 years, and society would continue to enjoy the benefits over the remainder of the lifespan of the project. In cases where renewables are built out or existing fossil plants are upgraded to have their emissions scrubbed, or cases where residential and commercial properties significantly lowered their demand… the result for electricity prices would be to LOWER the prices on American manufacturing, even as you are making it more clean…
Under the current subsidy package, we value carbon abated by solar power in the Northeast or Northwest at ~200 times what we value the carbon abated if a person insulates their house a little better… and if someone buys an EV, then that carbon abatement is worth tens of thousands of times as much as the carbon abatement achieved by someone wrapping their ductwork. It’s beyond insane… it’s criminal. Having the subsidies be based on the goals makes them defensible and much easier to garner support for them, and it will result in the low-hanging fruit being targetted first, achieving far more bang for our buck.
Thanks. I see what you’re saying. But the influx of people into the insulation business with have its own ripple of consequences, I would think.
Craig,
The thing is, it wouldn’t be instantaneous. There would have to be some kind of paperwork filed for each type of project… and contractors would have to be trained to fill out that paperwork. Since we never really saw construction recover from the housing collapse, there’s likely several thousands of qualified contractors that would be chomping at the bit here… But even with ten thousand contractors receiving training and sallying forth – doing four houses a week apiece, they’d still only get to ~2 million homes in a year.
It would likely take a full decade, following a shallow bell curve, before the bulk of the low-hanging fruit is picked in the insulation world… but during that time the renewable power industries would be ramping up… so as the insulation business is winding down there would also be a huge surge in demand for construction workers to raise wind towers, install smokestack scrubbers, plant millions of heliostats, dig hundreds of thousands of geothermal heat pump wells… etc…
At the height of the housing boom, we had ~8 million people working in construction… now we have 6.3 million… so there are a lot of hands that are accustomed to the work that are now idle.
The actual STUFF of the insulation is just plastic, that can easily be scaled up by dozensfold in a single year at very little additional cost. There’s excess supply capacity now, and there can easily be more excess supply capacity. Much of the work would involve people DOING things – like running caulk seals around windows and doors… or blowing stuff in the attic, or unrolling batts in the crawlspace of the house and pinning them to the joists under the floor… etc..