carbon tax – RI Future

October 5, 2016

In message to Rhode Island, Bill McKibben praises and undercuts Sheldon Whitehouse on climate change

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“Five to ten years ago we thought the transition was going to be from coal, to natural gas as some sort of bridge fuel, onto renewables,” said 350.org’s Bill McKibben in a message to Rhode Island, “and now, sadly, we realize we can’t do that in good faith, because natural gas turns out not to work that way, as a bridge fuel.”

McKibben, a leading voice on the dangers of climate change, was speaking in a video message to Senator Sheldon Whitehouse’s annual Rhode Island Energy & Environmental Leaders Day” conference at the Rhode Island Convention Center last Friday.

McKibben started his eight minute message with praise for Whitehouse, calling him an “indefatigable leader,” along with Senator Bernie Sanders, around climate change issues. McKibben called Whitehouse’s Friday dialogues on the Senate floor against climate change and ExxonMobile “relentless” and “remarkable.”

“There are moments when I hope that his last name turns out to be a key to his and our future, but that’s for another day,” said McKibben.

But McKibben was also relentless in his condemnation of natural gas.

Natural gas, said McKibben, “turns out to be a dead end, not a bridge to the future but a kind of rickety pier built out into the lake of hydrocarbons. So we’ve got to make the transition to renewables now, and fast.

“We have to forget about bridges and make that leap.”

Earlier that day, during a question and answer session, Senator Whitehouse once again declined to speak out against the natural gas infrastructure projects currently threatening Rhode Island’s ability to meet carbon and greenhouse gas reduction goals. Greg Gerritt, of ProsperityforRI.com, confronted Whitehouse, saying that the “resistance,” those engaged in front line battles against fossil fuel infrastructure, was ultimately going to have a greater effect than the carbon tax that Whitehouse champions.

“People are saying no more fossil fuel pipelines, no more power plants, no more compressor stations, and they’re putting their bodies out there,” said Gerritt, “I want us to think about how the dark money plays out in a place like Rhode Island where you can talk about climate change, but you can’t actually stop anything.

“The politicians are all saying, ‘even though we know that if we build this we can’t ever meet our carbon goal, we still want to build a power plant.’ And I want to know what are we going to do so that on the ground, here in our own communities, that this power of the fossil fuel industry gets stopped.”

Whitehouse countered that his job in the Senate “is to try to solve this in a place where it will have the most powerful effect that it can, across the board. I will never win this fight, from where I sit, plant by plant. I just won’t, can’t. Too many of them, too much going on, and frankly there are hundreds of others that are being built while some are being protested, there are hundreds of other pipelines being used while one is being protested.

“It’s not effective, to, in my view, uh, it makes a difference, it sends a message, I don’t undercut what people are doing. I think what we did with Keystone helped send a big message, but my job, I think, is two things:

“One, fix that problem of the huge subsidy [for fossil fuel companies] because $700 billion a year or $200 billion a year sends such a powerful message through the entire economy,

“The second is, I see Meg Curran here, the chairman (sic) of the Public Utilities Commission, and we’re working with them, we’re working with FERC, we’re working with the ISO, we’re working with NEPOOL group, to try to make sure that the rules for these siting things, get adjusted. because the rules for these siting plans leave out the enormous cost of carbon.

“So for me, it’s these federal ground rules, to make them responsive to clean energy, to get them to reward the cleanness of clean energy, and to make fossil fuel pay its cost… that’s where I’m focused.”

However, if we are to heed McKibben’s video message, then Whitehouse’s focus seems like a small step, not the leap that McKibben says we need.

“The good news,” said McKibben, “is the distance we have to leap is shorter than we thought because the engineers have done such a good job with renewable technology. During the last ten years the price of solar panels dropped eighty percent. There’s not an economic statistic on our planet more important than that.

“What it means is that we now have a chance, an outside chance, of getting ahead of the physics of climate change. It would require a serious mobilization and a huge effort.”

McKibben has written about what such a mobilization would look like in the New Republic that is worth a read.

“I think we’re going to need real, powerful leadership in order to help us, as FDR helped us once upon a time to take those steps in the right direction.

“The question is not, ‘Are we going to do this?’ Everyone knows that 75 years from now we’ll power our planet with sun and wind,” said McKibben, “The question is ‘Are we going to do it in time to be able to slow down climate change?’ … It may be the most important question that humans have ever faced.

“I wrote the first book about it all back in 1989. The cheerful title of that book was The End of Nature. I fear that not much has happened since to make me want to change the title.

“We’re in a very deep hole,” said McKibben, “and the first rule of holes is to stop digging for coal, for oil or gas and start instead to take advantage of all that green power coming from above from the sun and the wind that we’ve been wasting for so long.”

March 8, 2016March 9, 2016

The carbon tax bill at the Rise of the House this Thursday

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Annual Vehicle Border Crossings, U.S. vs. Select Canadian Regions, Index 100 = 2007

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After its untimely death last year, carbon tax is back in the Rhode Island legislature. On March 7, the Energize RI sent out an email:

The Energize RI Act is about to take a big step forward: the hearing in front of the House Environment and Natural Resources Committee is planned for March 10th at the Rise of the House (details below). We need you to support the bill alongside over fifteen expert witnesses who will be demonstrating why carbon pricing is a win-win solution. Read on to learn more about the hearing, or shoot us an email, and we’ll help you draft your own testimony for the bill.

The goals of the bill are admirable:

(4) Reduce public health, public safety, economic, and natural resource impairment risks associated with climate change; and
(5) Meet the state emissions goals for 2035 as set by the “Resilient Rhode Island Act” in 2014.

Fortunately, the bill has various provisions that will address the problem that Camus summed up as: “It is no more immoral to directly rob citizens than to slip indirect taxes into the price of goods that they cannot do without.” To put it differently: we should be taxing the upper income brackets at the 1950s level of more than 90%.

The carbon tax collected under the Energize RI Act will be used as follows:

25% will be used for climate resilience, energy efficiency and conservation, and renewable energy programs that benefit low-income residential and small business properties.
30% is to be used to provide direct dividends to employers.
40% shall be used to provide direct dividends to residents.
There will be 5% for administrative overhead.

Item #1 is an attempt to deal with the well-known criticism of a revenue neutral carbon tax:

If you want to maximize the economic benefit of those carbon tax revenues, it is widely known that public spending/investment is a better approach. Multipliers for public investment are much higher than for tax cuts.

One may wonder whether, as is the case in Connecticut, installing more natural gas will be counted as part of item #1: “Switching to natural gas couldn’t be easier,” Evensource advises its customers and then refers them to the Green Bank for financing. Would you put something like that past Governor Raimondo’s step-on-the-natural-gas Office of Energy Resources?

It’s wonderful to see that we are having this discussion and that our legislators continue to think seriously about how to deal with climate change. I certainly appreciate the efforts of the sponsors of the Energize RI Act, Representatives Regunberg, Handy, Carson, Tobon, and Bennett.

Undoubtedly, experts will testify about the success of British Columbia’s carbon neutral tax bill. Before we get too excited about an attempt to duplicate the BC success story in RI, it might help to look at the following graph, which is from a post with the ominous title “British Columbia’s Carbon Tax and ‘Leakage’ Into the U.S.”

As the post states:

The chart makes it clear that there was a giant surge in Canadian vehicles crossing from British Columbia into the United States (solid red line) starting shortly after introduction of the BC carbon tax (in mid-2008).

If this kind of leakage occurs in British Columbia, what do you expect for a small state like Rhode Island? The only feature of the bill that might avoid this problem is the tax itself: $15 per ton of CO₂e. That boils down to ¢13 per gallon of gas. No sane person would believe that such a minimal tax will even remotely phase out fossil fuels. The bill may start a trend that might be followed by neighboring states, which indeed is the only way to avoid the “leakage” problem.

But, if setting a trend is the idea, it better be the right trend and this is the major problem with this bill. It contains a tax for methane that escapes unburned even out of state. That the bill recognizes this problem is a majors step forward, but the details matter. Getting so-called fugitive methane completely wrong is precisely why the national Clean Power Plan is a disaster.

According to the latest estimates, 12% of natural gas escapes and this is what is responsible for the fact that natural gas is worse for climate change than coal and oil for the next 50-100 years. Read more about this in Methane Leaks Erase Climate Benefit Of Fracked Gas, Countless Studies Find.)

To tax fugitive methane, the Energize RI Act will rely on numbers provided by the Energy Information Administration (EIA). The RI Office of Energy Resources, which will be responsible for the implementation of this part of the Energize RI Act, will rely on bad EIA numbers.

Even this February’s EPA publication (see page E13, line 13) still uses outdated numbers for the global warming potential of methane and amortizes its effect over next century. We only have about a decade, if even, to avoid a climate catastrophe. For more about time scales and the fugitive methane problem see Precaution the new aggression.

The EPA has a long history of underestimating fugitive methane. The upshot of these errors is that the Energize RI Act might set a trend of under-taxing fugitive methane by roughly a factor ten. Exxon Mobil —#ExxonKnew, our nation’s biggest fracker— undoubtedly loves this trend! None of this should come as a surprise: the head of EPA has been a political appointee since its inception in 1970. The good news is that I’ve been told that, if the Act is passed this year, its sponsors will try to amend it to fix the flaw in the present act.

Here are a couple of thoughts to end with. Ponder Wendell Berry observation:

Whether we and our politicians know it or not, Nature is party to all our deals and decisions, and she has more votes, a longer memory, and a sterner sense of justice than we do.

Let’s put in the context of climate science. As Hansen and Sato reiterate in their latest publication, Regional climate change and national responsibilities:

Humanity must reduce its emissions by 5-7% per year as of today to stop the wild dash off the climate cliff.
We, the industrialized carbon-debtor nations, have already outspent our greenhouse gas budget.

Finally, to add to your sense of reality, watch Hansen’s latest video, but don’t share it with the kids!

April 14, 2015April 14, 2015

Study shows carbon tax would bring 2,000-4,000 jobs to RI

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A new study says a carbon tax in the state would create between 2,000 and 4,000 jobs, as well as create up to $900 million in state revenue by 2040. Scott Nystrom, a senior economic associate and project manager for Regional Economic Models, Inc. presented the study’s findings at Brown University.

Sponsored by the Energize Rhode Island Coalition, REMI’s study examined the possible benefits and consequences of instituting such a tax in the state.

Introduced this year, the Carbon Pricing Act has been tabled for the session but will be resubmitted next year. The bill, if passed, would be the first of its kind in the United States, setting an environmental standard for the rest of the country. More information can be found here.

Energize Rhode Island is currently promoting the Clean Energy Investment and Carbon Pricing Act, which would impose a carbon price (or tax) on all fossil fuels at the first point of sale within the state. The price would be $15 per ton of carbon dioxide for the first year the act is in effect, and raise at a rate of $5 per year.

The Carbon Pricing Act has two main goals – to provide a disincentive for using fossil fuel revenue to compensate for the cost of moving toward green energy. The price would be returned to Rhode Island’s economy in four different ways: a dividend check to households, a dividend to employers based on their share of state employment, a fund for energy efficiency costs, and administrative overhead.

According to REMI’s analysis, Rhode Island would receive positive benefits from implementing a carbon price.

“You actually have more jobs in Rhode Island that you would have otherwise with this policy,” Nystrom said during his presentation. Although the impact is relatively small, only around 1 percent of the jobs in the state, that’s still 2,000 to 4,000 jobs that were not there before. The Coalition says 1,000 of these jobs would be created within the first two years of the price’s introduction.

Total gross state product would rise as well, with the construction industry gaining roughly $86 million. The only industry that takes a serious hit due to the price is chemical manufacturing, which would lose $16 million. Real personal income would also increase between $80 and $100 million dollars during that time.

Nystrom also explained that instituting a carbon price could result in a population increase.

“Because the labor market is stronger, it draws more people to the state to an extent,” he said. “They move into the state as a consequence of the labor market, they buy a house, they settle down, and they increase the state’s population.”

With all of the new jobs and people living in Rhode Island, state revenues would be on the rise as well, earning between $200 and $900 million through the 2030s.

For all these benefits, cost of living would only increase minimally.

“Even though this does increase the cost of energy for states, It’s about a half a percent,” Nystrom said. “This means you have three months of extra inflection between now and 2040 than you would have otherwise.”

Carbon emissions were not the main focus of the study, but Nystrom did add that they would decrease over the course of a few years, and then stabilize.

“Emissions are purely a byproduct,” he said. “This is a result of the model.”

December 11, 2014December 12, 2014

A study of pricing carbon pollution: reality or fiction?

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Last year's news: "Concern about the scale of energy company earnings and high fuel bills could surface again with National Grid unveiling first half operating profits of over £1.5bn." This year, National Grid obviously needs more money so their CEOs and stockholders can refine the well-deserved lavish lifestyles to which they are entitled.

Scott Nystrom, a senior economic associate Regional Economic Models (REMI), gave a talk at Brown University about Fee-and-Dividend Carbon Tax, a plan proposed by the Citizens’ Climate Lobby (CCL). The talk presented the effect on the economy and power generation of a steadily rising fee imposed on the CO₂ content of fossil fuels. The presentation was a condensed version of a report prepared for the CC by REMI and Synapse Energy Economics.

Here are my impressions, based both on the talk and the report. Nystrom started with an overview of the plan, which can be found on CCL’s beautifully-organized web page:

Place a steadily rising fee on carbon-based fuels
Give all of the revenue from the carbon fee back to households
Make border adjustments to ensure fairness and competition
This will be good for the economy AND even better for the climate

Border adjustments is short for fees on products imported from countries without a carbon tax, along with rebates to US industries exporting to such countries. Such adjustments serve to level the playing field for international trade.

Based on model calculations, REMI*Synapse makes the following predictions about what implementation of this plan would look like nationally by 2025 by comparing projections with and without the Fee-and-Dividend carbon tax:

2.1 million more jobs
33% reduction in CO₂ emissions
13,000 premature deaths saved from improvements in air quality

The fundamentals of the CCL model legislation are perfectly solid, namely that burning of fossil fuels is causing rising global temperatures and poses an imminent threat to the natural environment and an unacceptable risk of catastrophic impacts to human civilization. Also the principle of letting the polluters pay is sensible. The problem, as I see it, is the unsatisfactory implementation of these principles resulting from incomplete understanding of climate science.

The proposal is to put a fee on carbon pollution, but it fails to account for fugitive fracked gas leaking into the atmosphere at the well, from the pipelines or anyplace else down stream. Clearly, the study predates our current understanding of the effects of fracked gas. The unburnt gas that escapes in copious amounts is a much more powerful greenhouse gas than CO₂. The net result over the next couple of decades is that conversion to natural gas, as called for in the President’s Climate Action Plan, is very likely to be more dangerous for the global climate than coal and oil.

The Fee-and-Dividend puts a price on CO₂ while pollution by fugitive fracked gas continues merrily free of charge. Summing up the climate impact exclusively in terms of a reduction CO₂ emissions, as the REMI*Synapse study does, is simply wrong.

Similar criticism applies to the reduction by 13,000 of premature deaths that will result from near-absence of pollution caused by coal fired power plants. The effect of the poisoning of air and water due to fracking are very difficult to quantify with our current understanding.

What we do know does not look good; we are waist deep in the big muddy of an uncontrolled fracking experiment with public health. Notice that we’re not even talking about the effects of the nuclear power generation featured prominently in the study. I guess that the study also manages to suspend the possible health impacts of climate change.

If you can temporarily suspend your disbelief, follow me on to the prediction about power generation. Let’s look at the following figure lifted from the REMI*Synapse study. The figure compares power generation with and without Fee-and-Dividend Carbon tax. The impact on total power generation even as far into the future as 2040 is small. By that time, according to the study, roughly half of the power will be green. The other half will be a a toxic mix of fossil fuel and nuclear energy. The plan will be essentially phase out coal, and the share of nuclear energy will double nationally. Renewable energy increases by about a third relative to the no-fee baseline.

**From page 9 of the REMI*Synapse study**

The talk left some of us wondering why the South is projected to have only a minuscule fraction of power generated by wind and solar, while there is a big chunk of nuclear power. Compared this to a proposal by the Solutions Project, a plan for how the world can transition to 100% renewable energy based exclusively on wind, water and sun, with no nuclear power whatsoever.

Time to wrap up. As mentioned, the REMI*Synapse study of pricing carbon emissions fails to price fugitive methane. The results might be interesting for some, but they have no relevance for the world we live in. Computational science has a phrase for such studies: garbage in, garbage out. Of course, this particular problem could be addressed by redoing the study and incorporating our current insights, but there is a more fundamental problem. The study seeks exclusively for market driven solutions. Those proposed by the Solutions Project are simply not in the realm of possible outcomes of any study that take the rules of predator capitalism for granted.

The good people of CCL may think that they have to speak the language of the ruling class to get its attention and they may have a point. It’s not my style, but as long as they do not really hope to get what they seem to wish for, they have my blessing. After all, we’re in this together, and to change everything, we need everyone.

November 19, 2014November 20, 2014

Sheldon Whitehouse introduces a carbon tax

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And in his 80th Senate floor speech on climate change, Sheldon Whitehouse introduced a carbon tax.

“For years now, Rhode Island has been on the losing end of the fossil-fuel economy,” said Whitehouse, according to a press release announcing the legislation. “We suffer the effects of climate change caused by carbon pollution – from rising seas that damage property to warming waters that affect our fishing industry. Meanwhile, the big polluters get to offload the cost of that harm without having to pay a dime. Today I’m introducing legislation to put the costs of carbon pollution back on the shoulders of the polluters where it belongs, while also creating an even playing field for Rhode Island clean energy businesses to compete and generating much-needed revenue to benefit families in Rhode Island and across the nation.”

Coal, oil, and natural gas, no matter where it comes from, will pay $42 per ton of carbon pollution it creates. The fee is expected to raise $2 trillion in 10 years, according to the press release.

The American Opportunity Carbon Fee Act is co-sponsored by Sen. Brian Schatz of Hawaii.

Here’s more from the New york Times.