This week, tens of thousands of citizens will gather in midtown Manhattan to demand action to protect Earth’s climate. Timed to coincide with the first UN summit on the climate crisis, the People’s Climate March is being billed as the largest-ever demonstration to combat global warming.
The organizers have refrained from attaching demands or even policy proposals so as to cast the widest possible net and present the assemblage as nonpartisan. This strategy has a certain logic, given the Republican stranglehold on the House and the clear possibility that the party will recapture the Senate in November ― although a strong streak of optimism is required to imagine that the GOP would permit meaningful climate legislation to come out of Congress any time soon.
Nevertheless, the organizers are inviting marchers to carry signs proclaiming their priorities for the twinned issues of climate and energy. There will be wind- and solar-power advocates urging that those sources’ shares of U.S. electricity production be raised far beyond their respective 5 percent and one-half of 1 percent; fracking opponents decrying the chemical mining of rural landscapes for natural gas, the least-polluting fossil fuel but one whose main molecular constituent, methane, is itself a potent greenhouse gas; anti-nukers who regard the carbon-free reactors that supply nearly one-fifth of U.S. electricity not as climate saviors but as subsidized relics impeding the transition to a renewables-based power grid; and “climate justice” advocates insisting that climate policy not disadvantage the poor ― a class that is growing more numerous even as American energy production reaches record heights.
Yet what needs to be the march’s largest contingent may be nearly invisible amid the throng: citizens insisting that a carbon tax be the centerpiece of American and, ultimately, global action on climate. My Carbon Tax Center will be present, under a banner urging a tax on dirty energy, but we’re a small research clearinghouse, and not widely known. The Citizens Climate Lobby will be out in force promoting its “fee and dividend” program to tax carbon emissions and distribute the proceeds pro rata to U.S. households ― an arrangement designed to protect lower- and middle-income Americans without directly involving government. But adherents of carbon taxing remain a niche within the climate movement. And while recent polls indicate rising support for climate action and even for carbon taxes, the same polls show the climate issue lacking the urgency that wins elections and drives legislation.
The Appeal of a Carbon Tax
The motivating logic for a carbon tax is as elegant as it is powerful: Making emitters pay for their carbon pollution is the only way to bring the climate damage caused by burning coal, oil and natural gas within the arc of the decision-making that determines how much of those fuels society uses. Without a tax on carbon emissions, alternatives won’t dislodge fossil fuels from their central position in world energy supply — or at least not fast enough to keep climate change from spiraling out of control.
Humanity is now in its third century of cheap fossil fuels driving industrialization and energizing human progress — a process that enriched Europeans and North Americans and has begun lifting Asians out of poverty as well. For most of this era, the “market failure” by which carbon pollution went unpriced was of little consequence. Only in recent decades has worldwide combustion of coal, oil and gas pushed the volume of carbon dioxide suspended in earth’s atmosphere high enough to elevate the greenhouse effect from a textbook truth to a veritable Cloud of Damocles.
Thus, the pronouncement by an economic advisor to the government of the United Kingdom, Sir Nicholas Stern, that “Climate change is a result of the greatest market failure the world has seen,” came not in 1807 or 1907, but in 2007, when the concentration of CO2 in Earth’s atmosphere had risen 100 parts per million above the pre-industrial level of 280 ppm. (The World Meteorological Organization reported last week that the level is now just under 400 ppm and rising at a record pace of nearly 3 ppm per year.)
In the plainer terms employed by the preeminent U.S. climate scientist James Hansen, an outspoken advocate for a carbon tax and an adviser to Citizens Climate Lobby: “What's certain is that as long as fossil fuels are the cheapest energy, we will just keep burning them.”
How a Carbon Tax Works
Administering a national carbon tax is simple, thanks in part to the unwavering relationship between fossil fuels’ carbon content and the carbon dioxide released when the fuels are burned. Wherever coal, oil or gas that has been extracted from the earth (or imported) is first sold, government collects a tax pegged to the fuel’s carbon content and, thus, to the carbon dioxide that combustion of the fuel will release. There are no downstream levies, only pass-throughs of the tax charged at the initial upstream point, of which the entire U.S. has just several thousand.
Consider home heating oil, one of a dozen or more “petroleum products” and a minor but illustrative source of CO2 emissions. The carbon tax imposed on the crude oil inputted to the refinery will be passed along to wholesale purchasers of the heating oil (and likewise of gasoline, jet fuel and other refinery output) and down the supply chain to the homeowner. Property owners will be spurred by the higher per-gallon price to undertake measures that have slipped under their decision radar: Modernize the oil burner, replace drafty windows, add insulation to walls and ceilings, digitize thermostatic controls, install supplemental solar-heating, and so forth. Entrepreneurs, seeing business opportunities, will develop products and processes that perform these tasks less expensively and more efficiently.
Any of these measures will shrink a household’s carbon footprint, and some can be taken virtually overnight. If they ring familiar, it’s because many of them have been taken since heating oil prices first surged in the 1970s. Empirical evidence is abundantly clear that households, businesses and innovators find ways to economize on energy when its price rises. Indeed, the response to higher real prices for gasoline, heating oil and jet fuel, in tandem with building code standards and efficiency mandates for appliances and vehicles, goes far to explain why U.S. economic activity per barrel of oil consumed has risen by 150 percent since 1973.
But unlike petroleum products, which today account for only around 40 percent of U.S. energy consumption and the same percentage of emitted carbon, electricity and natural gas have not been getting more expensive in real terms. Even the climb in petroleum price has been clouded by volatility, with gasoline prices falling month-to-month about as often as they’ve risen.
Absent clear upward price signals ― the kinds that a carbon tax could lock in with a legislated schedule of yearly increments ― investments in energy efficiency have mostly been of the micro variety discussed in the heating oil example. Macro shifts with greater reach remain scarce. By and large, purchasing agents for aircraft or freight trucks have not flocked to pay more upfront for ultra-light models that use less fuel; few firms have relocated near supply chains and labor pools to cut transport costs; even the millions of commercial buildings making energy retrofits have stopped halfway, constrained by payback calculations with no line-item for the saved carbon.
The one U.S. sector in which decarbonization has made headway with little price spur is electricity. Since 2005, carbon dioxide emitted per kilowatt-hour generated has fallen 15 percent, a rate of 2 percent per year, as coal has lost market share to wind turbines and, especially, lower-carbon fracked gas. Yet electricity is by far the easiest sector to wean off carbon. Unlike, say, aviation fuel, which has no ready low-carbon substitute, electricity can be made via a host of technologies ― wind, solar cells, nuclear reactors, water power ― that emit no carbon whatsoever.
Along with lower-carbon electricity have come other carbon-cutting shifts: belt-tightening forced by the prolonged economic slowdown, an uptick in urbanization, vehicle and appliance efficiencies, energy-saving digital technologies, and the relentless offshoring of manufacturing. Nevertheless, U.S. carbon dioxide emissions remain stubbornly high, just 9 percent below their 2005 peak. While any reversal of two centuries’ worth of rising fossil fuel use and carbon pollution is impressive, this single-digit decline ― which stalled out last year, by the way ― is barely a fraction of what is needed.
Meeting in Copenhagen in 2009, the United States, China and 40 other countries pledged to restrain production of greenhouse gases so as to limit Earth’s average temperature rise to 2°C (approximately 3.5°F) above pre-industrial levels. Any greater increase, it was agreed, would flirt too closely with “tipping points” that might detonate catastrophic “feedback loops.” (Liberation of methane hydrates frozen beneath Siberian permafrost ― a sort of cocaine injection to our planet’s climate brain ― is one of many postulated mechanisms.)
Achieving a 2°C limit, in turn, requires capping atmospheric CO2 concentrations at 450 parts per million, a level that will be reached in a decade-and-a-half, on recent trends. Moreover, some perpetuation of these trends is built into today’s global stock of power plants, vehicles and factories. Unsurprisingly, a deep sense of gloom pervades the latest report on climate impacts from the UN-based Intergovernmental Panel on Climate Change, with its litany of climate-disrupted agriculture, coastlines and other habitats and warnings of uncontrollable climate collapse.
We are facing hard facts with very short time frames. The obligation of Americans is particularly acute, due to our position as the leading cumulative carbon emitter and, thus, the primary instigator of climate change. There is literally no time to waste to banish carbon fuels from our energy system.
A Renewables Revolution?
What would a zero-carbon economy look like? How would one be fashioned from the incumbent fossil-based economy? Answers to these questions are taking shape in the fields and factories of Germany, and on blackboards and spreadsheets at Stanford University.
Largely unnoticed in the U.S., Germany, the world’s fourth largest economy, is transforming its electric infrastructure to low- or zero-carbon renewable sources. This energy makeover — Energiewende, the Germans call it — is nearing critical mass. Not counting hydroelectricity, Germany generated over 20 percent of its electricity from renewable sources last year. That share is more than triple the current U.S. percentage. Wind energy accounted for 8.4 percent of Germany’s electricity generation in 2013, biological-based fuels and municipal waste 7.5 percent, and photovoltaics 4.7 percent. Perhaps most notably, Germany, with cloudier skies, a more northerly location, and 1/27th as much land area, produces three times as much photovoltaic electricity as does the United States.
All the same, Germany’s carbon emissions have barely budged downward, as the upsurge in wind and solar generation has thus far served only to replace the carbon-free output of reactors forced toward retirement after the 2011 Fukushima disaster, while the national government has resisted pressure to frack the countryside for gas that could substitute for higher-carbon coal. But there is also a deeper issue at work: In Germany, as well as the United States and other economies, six of every 10 tons of emitted carbon emanate outside the electricity sector ― in combustion of fuels for transport, industry and heating. In eliminating use of carbon fuels, converting electricity to renewables turns out to be necessary but insufficient.
How many turbines and collectors would be required to convert not just electricity but nations’ entire economies to zero-carbon energy? And what would these wind, water and sunlight devices cost in dollars, materials and land area? Since 2009, a team of engineers and economists led by Stanford professor Mark Z. Jacobson have been publishing their “100%WWS” estimates in peer-reviewed journals as well as popular outlets such as Scientific American. Their figures for New York state ― a jurisdiction large enough to matter but small enough to comprehend ― are instructive.
Half of the energy needed to power, heat and drive all of New York state’s lighting, transport, buildings, factories and digital devices, they asserted in a peer-reviewed paper published last year in Energy Policy, could be provided by 17,000 giant wind turbines, mostly sited offshore, where winds are steadier and stronger. The rest of the energy would be produced by 400 “concentrated solar power” plants (10 percent of total requirements); 800 large solar photovoltaic arrays (another 10 percent); rooftop solar cells on several million residences (6 percent) and half-a-million commercial and government buildings (12 percent); 5-6 percent from existing hydroelectric dams upstate; and the final 5-6 percent from new geothermal, tidal and wave generators.
Jacobson deliberately oversizes this energy system to absorb the loads from all-electric heating and vehicles. Oversizing also enables surplus electricity to make hydrogen to run large vehicles and aircraft that can’t employ electric drive, while providing redundancy to manage variable wind and solar output. On this last point, Jacobson points to optimization models suggesting that an integrated grid-management measures ranging from dispatchable hydro to storage of electricity in vehicle batteries can enable his dispersed and diverse energy system to maintain reliable electric service.
The notion of running all of New York state, including the world’s most iconic city, entirely on renewable sources is tantalizing, and Jacobson’s calculations are a tour de force, particularly his estimate that no more than 1 percent of the state’s land area would have to be given to the new uses. Moreover, manufacturing, installing and maintaining the new equipment would create tens of thousands of new full-time jobs, many of them in chronically depressed upstate counties.
What has yet to materialize, however, is the means to actualize either Jacobson’s vision or a U.S. counterpart of Germany’s Energiewende. Notions of a new New Deal or Manhattan or Apollo Project miss the point. Three-and-a-half decades after the ascendancy of Ronald Reagan, distrust of government-directed enterprises is embedded in American political culture. Moreover, the single-point focus of building the atomic bomb or putting a man on the moon is almost antipodal to the task of blanketing New York or any state with Jacobson’s galaxy of clean-energy devices. Nor do analogies to Moore’s Law apply; erecting 15,000 or more 400-foot-tall turbines and solarizing millions of structures are not matters of miniaturizing but of scaling, integrating and financing.
Even the Energiewende is not an overnight phenomenon but the accumulation of a dozen synergistic laws and policy directives ranging from price guarantees for renewable energy (via so-called feed-in-tariffs) to rises in energy taxes under the larger rubric of “ecological tax reform.” During the decades in which these policies have been instituted in Germany, the United States has been paralyzed by denialism — both political and psychic. In the foreshortened time frame now available, the only policy tool capable of motivating the investments and actions needed to slash emissions without automatically succumbing to internecine strife is a robustly rising carbon tax.
Paths to a Carbon Tax
Of course, a U.S. carbon tax is off the table so long as the Republican Party controls Congress and the climate denialists maintain their death grip on the GOP. That is why carbon tax advocates are now turning to the states, much as marriage-equality proponents did half-a-dozen years ago with spectacular success. Their model is British Columbia, Canada’s third most populous province, which began taxing carbon emissions in 2008. The tax rate now stands at $25 per ton of carbon dioxide (Canadian currencies and weights have been converted to American). That is probably close to the limit of what a single state or province can charge on its own without driving carbon-taxed shoppers or businesses to neighboring states.
Six years on, the tax is a smashing success. On every indicator that matters ― emission reductions, economic output and jobs ― B.C. is outstripping the rest of Canada. Moreover, for seeing the tax through and making it revenue-neutral, transparent and fair to low-income households, British Columbia’s Liberal Party has been rewarded with continuing electoral majorities.
Alas, Canada’s national government is joined at the hip to tar sands petroleum, and no other provinces have followed suit (save for a token carbon tax in Quebec). Nevertheless, British Columbia’s “facts on the ground” have sparked campaigns to pass carbon taxes in Oregon, Washington and Massachusetts as possible stepping stones to consideration by Congress.
The False Allure of Clean-Energy Subsidies
Then again, why not pursue the politically easier path of subsidizing clean energy? Empirical evidence, for one thing. As I demonstrated in a report to the Senate Finance Committee earlier this year, even a perfectly tailored subsidies regime wouldn’t deliver half as much carbon reduction as an equivalently priced carbon tax. In addition, the subsidies require taxpayer dollars.
On a more fundamental level, it’s axiomatic that if the objective is reducing carbon emissions, raising the price to emit carbon will be more productive than lowering the prices of selected means of reducing it. The list of measures anointed for subsidizing will necessarily be small, not to mention politically determined. In contrast, there are as many ways to cut carbon burning as there are human decisions. Moreover ― and this point is central ― although the billions of daily behaviors and long-term decisions pertaining to energy vary greatly as to moment, all of them are affected by the relative prices of alternatives, including available or emerging energy sources and energy-using technologies. To make those decisions lean fully toward less carbon, the prices of carbon fuels must reflect at least some of the climate havoc they create.
The same applies to any regulatory push on carbon. Why not simply set mandates to cast carbon out of our energy system, much as we banished lead from gasoline decades ago? For the simple reason that energy is so central to human activity that rather than outright bans the regulations would have to take the form of efficiency standards ― thousands of them, each one bitterly contested. Moreover, by their nature the standards would be reactive, piecemeal and static, as well as binary — unable to reward innovations or actions that surpass the standards.
Compare the vaunted “CAFÉ” standards that require manufacturers to sell higher-mpg cars, versus a carbon tax or other policy to tax gasoline more heavily. The CAFÉ standards have indeed made more fuel-efficient autos available and steered consumers toward them. But a robust carbon tax would likely have done that as well by driving cost-conscious car buyers toward more-efficient vehicles. Moreover, by raising the cost to drive each mile, the tax would motivate drivers to take up a host of additional means to consume less fuel: use public transportation more; bike or walk more; ride-share more; seek out closer destinations for shopping, socializing and recreation; forgo the gas-guzzler when another vehicle is available; drive more conservatively; and so forth.
While some drivers wouldn’t be able or willing to make these adaptations, others would, and collectively their impacts would register, with the magnitude growing with the tax. In time, the many incremental changes in behavior would set in motion changes at the societal level: municipalities expanding transit systems, school districts siting new schools in town rather than on the outskirts, infill projects getting the nod from developers and easier financing from banks.
The guiding principle is that our energy system is so splintered, our economic system so decentralized, and human nature so varied and innovating that neither the best-intentioned system of rules and regulations nor the most enlightened subsidies regime can elicit the carbon-reducing decisions and behaviors that a robust carbon tax can bring forth. The intention is not that a carbon tax should change everything overnight and millions of soccer parents should ride bicycle trailers to the big box store; rather, that the arc of the consuming universe, to borrow a phrase, will begin to bend toward greater economy and efficiency ― while fossil fuels, carbon-priced at last above their “market” price, get progressively swapped out for energy from wind, water and sunlight.
Current Landscape and Next Steps
As noted, polls report rising percentages of Americans acknowledging that climate change is real, is man-made and warrants action. In response, three bills to price carbon emissions in revenue-neutral fashion have been introduced in the House since May ― two via a steadily rising carbon tax and one through a functionally similar carbon cap. Denialist House Republicans have backtracked to Nixonian “I am not a scientist” rhetoric that appears to fool no one.
The White House has chosen a regulatory route. President Obama unveiled in early June a plan using authority vested in the Environmental Protection Agency by the Clean Air Act to require a 30 percent cut in CO2 emissions from the nation’s electric power plants. Almost all of the mandated shrinkage would come from plants that burn coal. The New York Times called the proposed rule “one of the strongest actions ever taken by the United States government to fight climate change.”
Yet peeling back the cover reveals the plan to be depressingly weak. The cuts apply only to electricity, they’re measured against a high (2005) baseline, and the states have until 2030 to comply. Though the concessions are defensible on grounds of precedent or politics or both, they whittle down the goal to a mere 7 percent cut in total U.S. CO2 emissions vis-à-vis 2030 emissions absent the policy. And even this meek objective is conditional upon navigating a minefield of litigation.
The modesty of the Obama-EPA target stems from its nature. As noted, neither regulatory measures nor clean-energy subsidies can bring about deep, across-the-board reductions in carbon emissions. Only a carbon tax can do that, and of course that requires Congressional approval. Yet the potential payoff is staggering. One of the new carbon tax bills, the Managed Carbon Price Act written by veteran Congressmember Jim McDermott (D-WA), would, by my estimates, cut total U.S. carbon emissions by 30 percent by its tenth year ― a pace seven times faster than the White House’s regulatory plan.
McDermott’s bill is a carbon taxer’s dream. His tax starts modestly but rises stepwise to pass $100 per ton of carbon dioxide within a decade. It taxes the carbon content of imported goods at the same rate as domestic goods, protecting U.S. manufacturers from unfair competition from non-taxing countries while motivating those nations to tax their climate pollution. It taxes methane and other greenhouse gases at their CO2 climate-change equivalents. And it would return every dollar of tax revenues to individuals as pro rata dividends, thus placating conservatives and other fiscal hawks who profess to want to contain government spending, while buffering an estimated two-thirds of U.S. households, including most low-income families, from the energy price increases the tax would entail.
The text of McDermott’s Managed Carbon Price Act runs a mere 20 pages, making it a veritable Gettysburg Address of climate legislation next to the Edward Everett-like (1,600-page) Waxman-Markey cap-and-trade bill that passed the House in 2010 only to stall and fail in the Senate. The brevity of the McDermott bill is indicative of the simplicity and transparency of carbon taxation, as well as its singularity of purpose: making carbon polluters pay and guaranteeing every American an equal share of the proceeds.
Three realities — the inability of subsidies or regulations to make a big and fast enough dent in carbon emissions, the centrality of price in the myriad of energy-related decisions that collectively determine the magnitude of emissions, and the chronic “externalization” of climate damage from the price of energy — mandate making a carbon tax the central element of U.S. climate policy. In turn, humankind’s dependence on a stable climate mandates making climate preservation a central focus of politics.
The organizers of the Sept. 21 climate march may have been wise to steer clear of policy specifics. But henceforth the marchers and the movement they embody must make passage of a McDermott-like carbon tax the focal point of their organizing.