Energize RI – RI Future

March 11, 2016

Energize RI carbon pricing bill under-taxes fugitive methane emissions

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[The following is the testimony presented by Professor Peter Nightingale at the hearings for Energize RI’s carbon tax bill (H 7325) introduced by Representative Aaron Regunberg.]

I would like to thank the sponsors of the Energize RI Act for putting carbon tax on the table. This is important legislation, but I cannot support the bill in its current form.

My main objection is that the bill under-taxes natural gas by a factor of 5 to 10, precisely when a perfect fracked-gas storm is about to hit RI:

The Raimondo administration is pushing for a one GW fracked-gas fired power plant in Burrillville.
National Grid is asking the Federal Energy Regulatory Commission for a permit to build an LNG liquefaction facility at Fields Point.

The Office of Energy Resources will be in charge of large parts of the implementation of this bill. I know from conversations with people in that office that they do not understand that fracked gas is worse for the climate than coal and oil on the time scale that matters.

The Office of Energy Resources bases itself on federal numbers, but:

EPA has systematically underestimated the amount of natural gas that escapes unburned.
EPA fails to account properly for the fact that methane is a much more powerful greenhouse gas than carbon dioxide.
Undoubtedly, these numbers also pollute the REMI study which, as a consequence is likely to overstate the greenhouse gas reduction that this bill will produce. [See also:
A study of pricing carbon pollution: reality or fiction?]

Indeed, “Methane Leaks Erase Climate Benefit Of Fracked Gas, Countless Studies Find,” was the tittle of a recent publication. This was sparked by a recent Harvard study that found an increase in U.S. methane emissions from 2002–2014. The increase was more than 30% from 2002-2014.

By under-taxing fugitive methane by roughly a factor ten, this bill unintentionally favors natural gas infrastructure development relative to fossil fuels with a smaller greenhouse gas potential. That is precisely the disaster that the Raimondo administration is planning in Burrillville.

Rhode Island cannot solve the emission problem by itself, but we should have a carbon tax bill that can be copied by other states. The Energize Rhode Island Act fails this test.

Please see my lack of support for the Energize RI Act as constructive criticism, and thanks again for your much appreciated efforts.

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!

January 26, 2016February 29, 2016

Energize RI brings carbon pricing bill to the House

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New carbon pricing legislation, backed by the Energize RI coalition, was introduced by Representative Aaron Regunberg (D District 4 Providence) in the House chamber on Tuesday. The legislation “is designed to provide incentives for renewable energy use, encourage the development of cleaner renewable energy projects, and create local jobs.”

“The legislation would establish a new Clean Energy and Jobs Fund that will invest in renewables and efficiency and help Rhode Islanders lower their energy costs,” said Energize RI in a press release, “The Fund will be financed by a fee on carbon pollution, beginning at $15 per ton of greenhouse gas emissions, paid by the companies that sell fossil fuels in the state.”

Traditionally, user fees hit members of low income communities hardest, but Douglas Hall, Director of Economic and Fiscal Policy at the Economic Progress Institute, said that this bill addresses that problem head on and to good effect. “This bill does a few things that we at the Economic Progress Institute think are important. A portion of the carbon tax will be passed onto consumers, including lower-income families, in the form of higher prices. The Energize Rhode Island Act addresses this concern, by providing rebates to Rhode Island families and businesses, ensuring they come out ahead. We have seen the incidence analysis of this bill and are confident that lower income Rhode Islanders will be more than protected from additional costs.”

Introducing the bill, Regunberg spoke about the economic, legal and moral responsibility Rhode Island has to take on such an “ambitious legislative proposal.”

“Economically, this is where the world is moving… Rhode Island can either be a follower, and get the least economic benefit from these trends, or we can be a leader for this country.

“Legally, in 2014 we passed the Resilient Rhode Island Act, which obligated our state to reach certain emission reduction goals. Right now we are not on track to reach those goals…

“And morally, we have a responsibility to Rhode Island’s young people, to my generation and to the generations that come after mine… by failing to enact significant climate legislation, we are condemning the babies who are born today at Women and Infants to a dangerous future.”

Small business owner Joseph Fernandes saw the issue from an economic point of view. “If you were to attempt to open a business today in many parts of our state, you would find yourself facing a whole new set of barriers that didn’t exist for my parents. You would be faced with the burden of having to pay for costly flood insurance premiums that will only grow higher. Climate change means your business is always vulnerable to an extreme weather event that could permanently close you down.”

The Energize RI Coalition sees their efforts as complementary to other state programs dealing with climate and energy. Ken Filarski of Filarski Architecture said the the clean energy sector of our economy is one of the fastest growing in the state. “This sector is already growing at a rate that is stronger than the rest of Rhode Island’s economy, supporting over 10,000 jobs and adding 1,600 more by the end of the year. Passing this legislation means more funds to install solar panels, insulate houses, and implement other energy efficiency measures. It means more Rhode Islanders working in a field that has proven itself to be both profitable and sustainable.”

More details from the press release:

2016-01-26 Energize RI 01 — Douglas Hall

“An economic impact study by Regional Economic Models, Inc. (REMI) estimated that the legislation would create a net growth of 1,000 to 2,000 new jobs in just the first two years of the program. It also noted that Rhode Island spends more than $3.1 billion annually on fossil fuels, nearly all of which flows out of the state, since Rhode Island does not produce these fuels itself. Incentivizing Rhode Islanders to switch from out-of-state fossil fuel sources to local renewables and efficiency will help keep more of that money in Rhode Island and protect the state from the volatile market swings that often affect these fuel prices.

“The legislation establishes that 25 percent of the fees collected for the Clean Energy and Jobs Fund would be used for climate resilience, energy efficiency, energy conservation, and renewable energy programs, to be administered by the state infrastructure bank created through legislation last year. Thirty percent would be used to provide direct dividends to employers in the state per full-time employee, and 40 percent would be used to provide direct dividends for every single state resident. Employees and residents would receive their funds via tax credits, or direct checks for those not required to file taxes.

“According to the coalition’s research based on average energy use data, the program will not increase energy costs for the average Rhode Island family and businesses In fact, by paving the way for a transition to an energy independent economy, the policy will reduce costs for all Rhode Islanders in the long term. In the short term, the average Rhode Island household receives a net gain from the rebate. Even higher-income households will have an average net cost of only $25 per year toward the Clean Energy and Jobs Fund.”

Energize RI is a coalition of advocates from business, environmental and faith communities. Speaking from a faith perspective was Beth Miham, a member of Channing Memorial Church in Newport and a former board member of Interfaith Power and Light for a number of years.