A contest to explain something that isn't true -- what a novelty. If I were running a contest, it would be, "What is a carbon cap and why should it not cover the transportation sector?" But I digress.
So I get an email from the Environmental Defense Fund asking me to direct my readers to this video/graphics competition:
Explain to America how a carbon cap will solve our oil addiction
Many scientists, economists, environmentalists and business leaders agree that a cap on carbon emissions is the best way to cure our addiction to oil. But, quickly and vividly explaining how a cap will solve our energy problems is a challenge.
We need your help conveying this concept to the American people in a clear, brief, convincing and memorable way to stick in the public's consciousness-like the well-known shot of an egg frying that depicted "your-brain-on-drugs."
Actually, I don't really know any scientists, economists, environmentalists, and business leaders who think a carbon cap is the best way to cure our addiction to oil. It is possible I hang out with the wrong crowd. But I think it is more likely that they all understand something I've written about on my blog many times -- a carbon price is a lousy way to drive oil savings.
In fact, it is all but inconceivable that a carbon cap will solve our oil addiction (see "Peter Barnes' Cap & Dividend plan is fatally incomplete"):
The key facts to remember are that: "$50 per tonne of carbon corresponds to 12.5 cents per gallon of gasoline (PDF) or 0.5 cents per kilowatthour for electricity produced from natural gas at 53% efficiency (or 1.3 cents per kilowatt-hour for coal at 34% efficiency)."
That means a price of $400 a metric ton of carbon (whether achieved through a tax or a cap & trade system) would increase the price of gasoline a mere $1 a gallon. How much efficiency would that drive? Not bloody much! How do we know? How much efficiency did going from $2 a gallon to $3 a gallon drive? [Hint: Not bloody much.] Second, I was just in England, and they're paying over $8 a gallon -- how much more efficient are their cars than ours? [Hint: As of 2002, the average fuel economy of European Union vehicles was 37 miles per gallon, just a tad more than what the new energy bill requires, and their taxes are typically some $2 a gallon above ours.]
This is so analytically obvious that the nonpartisan Congressional Budget Office just issued a report, "Climate-Change Policy and CO2 Emissions from Passenger Vehicles" to make this precise point:
Charging a price for CO2 emissions would raise the price of gasoline, but that increase–and the resulting decrease in vehicle emissions–would be relatively small. Most of the reduction in CO2 emissions would occur in other sectors.
The initial impact on vehicle emissions would be particularly small: People could drive less and at slower speeds, and some could switch to public transit, but in the short run they would have few other alternatives. Over time, consumers could respond to higher gasoline prices by buying more fuel-efficient vehicles and reducing their commuting distance when an opportunity arises. Substantial increases in gasoline prices in recent years have triggered measurable responses of both types. But a CO2 price high enough to induce sizable reductions from other sources of emissions would have only a small effect on vehicle emissions of CO2. Recent changes to the automobile fuel economy standards–greatly increasing their stringency–will result in a substantial decline in vehicle emissions whether gasoline prices increase or not.
Remember, the 2007 "Energy Independence and Security Act," requires new car fuel economy standards in 2020 to be at least 35 miles per gallon. As CBO notes,
… gasoline prices might have to rise above $6.50 per gallon–for example, from a CO2 price that added $2.00 or $2.50 per gallon to gasoline prices–for the average fuel economy of new vehicles in the United States to approach the 35 mpg that the new CAFE standards will require. But the CO2 prices contemplated in current U.S. climate legislation and in prominent international policy analyses would add much less than $2.00 to the price of gasoline. Thus, such pricing, by itself, would probably not increase average fuel economy beyond what the CAFE standards will require.
And, needless to say, 35 mpg does not bring us anywhere near curing our oil addiction. We're going to need at least triple that.
The bottom line is that a carbon cap is utterly irrelevant to curing our oil addiction. I'll repeat something I've said many times: No country has successfully introduced a mass-market alternative fuel vehicle without the help of major government incentives and mandates.
If you want to cure our oil addiction, while substantially reducing greenhouse gas emissions, you must replace the vast majority of the vehicle fleet with superefficient vehicles, plug-in hybrids, and pure electric cars while replacing essentially all of the grid with zero-carbon electricity. But the per-mile cost of driving on electricity is already one-fifth that of the per-mile cost of driving on gasoline.
So the key to ending our oil addiction in a climate-friendly way is not increasing the price of carbon through a cap. The key is much tougher fuel economy standards along with incentives and mandates for plug in hybrids and electric cars. [And, yes, pushing hard on cellulosic biofuels, especially for long-distance driving, trucking, and air travel, would also help (see "Are biofuels a core climate solution?").]
So my recommendation is that EDF cancel the contest and use the money to buy some tons on the European market and retire them.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
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Comments
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John Fish Kurmann Posted 11:36 am
10 Oct 2008
Consequently, I'd like to see a True Cost fee phased in on transportation fuels that does its best to internalize not only the climate impact but the air and water pollution that results from gasoline and diesel combustion, the geopolitical consequences, and the military spending that goes to ensure the global flow of oil. It seems to me that we'll never have a sustainable economy without such internalization, and I think we'd be wise to dedicate the funds raised to subsidies that will help us make the transition to a climate-safe, clean energy transportation system. Charge a fee on what we want to discourage and use the proceeds to invest in the alternatives.
"You can never get enough of what you do not really want." - Huston Smith
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Ken Johnson Posted 3:04 am
11 Oct 2008
($1/gal)/(0.00894 tonne/gal) = ($112/tonne)
In California, we are currently (10/6/08) paying $3.601/gal, so we already have a carbon price of $403/tonne on transportation. This is something that the simpletons at EDF do not understand. The problem is not lack of a carbon price, it is that consumers don't see the price when they buy vehicles or don't want to make an up-front investment that will pay large dividends in the future. We don't need a higher price; what we need to do is somehow internalize life-cycle fuel costs (or savings) in vehicle prices. For example, low-interest loans on fuel-efficient vehicles (which would be effectively paid back out of fuel savings) could be financed by fees on gas guzzlers (which would eventually be refunded through reduced registration fees, although the refund would not quite offset higher fuel costs). The effect would be to induce price differences in up-front vehicle prices equivalent to pre-paying the full life-cycle fuel costs.
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Miles Grant Posted 3:28 am
11 Oct 2008
http://www.nwf.org
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featherfish81 Posted 4:00 am
11 Oct 2008
And yes, the tax does need to be fairly large, but if it is phased in gradually that will allow consumers and energy producers time to plan and allocate capital expenditures accordingly.
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Ken Johnson Posted 5:22 am
11 Oct 2008
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Biodiversivist Posted 8:54 am
11 Oct 2008
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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naught101 Posted 12:56 pm
11 Oct 2008
You Americans just won't give up on you individual transport, will you? You need a decent public transport network, not more vehicles. Electrified streetcars, and light rail could reduce the vast majority of intra-city travel emissions. And electric heavy rail could replace your stupidly large highways.
check out http://www.envirowiki.info, the knowledge database for environmentalists and activists.
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aullman Posted 6:30 am
12 Oct 2008
For example, the gov't should provide incentives to employers who allow workers to telecommute or work from a remote office. Most office workers can work remotely as long as they have adequate facilities and support from management.
Many people don't have the adequate facilities at home, but these workers can work in a Remote Office Center near their home. Remote Office Centers lease individual offices, internet and phone systems to workers from different companies in share centers from locations around the city and suburbs.
Carbon taxes just add new costs, but don't do anything to actually solve the problem. Remote work programs and telecommuting actually save gas, time, roadway expenses and cut out carbon emissions. Telecommuting solves the problem and actually saves money as opposed to taxing carbon emissions.
Remote Office Centers are fairly new, but can be found in many cities by searching the internet for "Remote Office Centers" in quotes or going to a free web site that lists ROCs:
http://www.remoteofficecenters.com
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John Fish Kurmann Posted 11:42 am
12 Oct 2008
"You can never get enough of what you do not really want." - Huston Smith
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Ken Johnson Posted 1:44 am
13 Oct 2008
A more important point is that the carbon price would be much more effective if it is internalized in vehicle prices, so that consumers value the full life-cycle energy savings of fuel economy in their vehicle choices. Furthermore, the technology-forcing incentive does not require higher prices on all vehicles. Lower prices on fuel-efficient vehicles (subsidies or loans) would be just as effective as higher prices on gas guzzlers.
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John Fish Kurmann Posted 2:18 am
13 Oct 2008
Your idea to tax vehicles is interesting, and I do see some value in trying to frontload the full lifecycle energy costs of one's vehicle purchase decisions, I'm not convinced it's a better strategy than putting a CO2 price on energy sources. For one thing, I think it'd probably be even harder to get support for than a CO2 price because it would be seen as constricting individual consumer freedom. More importantly, as I've already written, I don't think you can have an honest market as long as companies are allowed to externalize a large portion of the true costs of the products and services they sell--people can't make wise choices about what to buy if they aren't given accurate information about what products and services really cost. Consequently, while choosing to try to internalize the true cost of CO2 emissions in vehicle purchase prices would likely coerce people to buy higher-MPG vehicles, it wouldn't influence them to drive fewer miles once they have a vehicle.
"You can never get enough of what you do not really want." - Huston Smith
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Ken Johnson Posted 4:15 am
13 Oct 2008
Before getting too wrapped up in regulatory "philosophy", you should look at some real numbers for how much marginal technology investment would be cost-effective based on current fuel prices (taking no account of externalities), and compare that to the incentive (e.g. trading price) of any current or proposed transportation policy for GHG regulation.
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Jason D Scorse Posted 3:30 am
07 Nov 2008
A cap and trade is by definition a limit on emissions and if enforced WILL lead to whatever reductions are built into the cap
If the cap raises the price of carbon only enough to minimally effect the price of gasoline, which in turn doesn't effect driving very much, by definition this means that the CO2 reductions will be coming from other parts of the economy.
It is likely that in the short run driving wouldn't be effected much but as the cap becomes more binding the price of gasoline would rise significantly and I'm sure driving gas vehicles would decrease a lot.
The first thing to take a major hit would be the coal and natural gas sector and the shift here would be pronounced and then the alternative energy for electricity would be used to power vehicles.
While I don't necessarily think a cap and trade is the best policy if it's done right it doesn't matter whether the price of gasoline goes up $1 or $10 right away, the entire economy will shift towards carbon-free sources as long as the cap is enforced.
We need to focus on the root causes of problems.
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