Yesterday's L.A. Times ran an odd op-ed calling carbon taxes an ineffectual antidote to global warming. Unlike other critiques that brand carbon taxes politically unpalatable, this one argued that they're simply not up to the job of cutting carbon emissions:
Carbon taxes -- taxes on energy sources that emit carbon dioxide (CO2) -- aren't a bad idea. But they only work in some situations. Specifically, they do not work in the transportation sector, the source of a whopping 40% of California's greenhouse gas emissions (and a third of U.S. emissions).
I've known Daniel Sperling, the author of the op-ed, for decades. As the long-time director of the Institute of Transportation Studies at UC Davis, Dan probably knows as much about automotive engineering as anyone in the world. What's more, he's conscientious, tireless, and concerned.
So why do I think he's wrong about carbon taxes? Actually, Dan is part right, but his message is wrong. Let me explain.
It's been clear for awhile that carbon taxes won't make a huge dent in carbon emissions from gasoline -- relative to their impact on the biggest source of U.S. carbon dioxide: coal-fired electricity generation. There are three reasons:
- Gasoline has less carbon per BTU than coal.
- Engines make better use of their BTUs than do power plants.
- Americans are less behaviorally sensitive to higher prices for gas than for electricity.
When we ran the numbers here at the Carbon Tax Center, we found out just how much gasoline would underperform while electricity overachieved under a level carbon tax. Using Colorado as a test case, we estimate that a statewide carbon tax would draw 60 percent of all of its carbon reductions from the electricity sector (which is responsible for 42-43 percent of that state's CO2), but only 10 percent from gasoline (which accounts for 20 percent of emissions).
So we agree with Dan on some key facts. But we think he's let his natural pessimism about price incentives (he's an engineer, after all) run a bit amok.
For one thing, the low (10 percent or less) price-sensitivity for gasoline Dan cites (from his own UC Davis study) is short-run only. The long-run price-elasticity of gasoline demand is invariably much higher, since it can reflect long-term investment decisions -- by households in buying more efficient vehicles, by automakers in designing and producing them, and by everyone in making location decisions that reduce driving.
Two widely respected transportation economists at UC Irvine, Ken Small and Kurt Van Dender, looked at pretty much the same gasoline data as Dan and observed the same low (under 10 percent) short-run price elasticity. Unsurprisingly, but importantly, Small and Van Dender found gasoline's long-run price elasticity to be much higher, approximately 40 percent.
Using that figure, and making assumptions similar to Sperling's about the potential for substituting lower-carbon fuels, we find that a ramped-up carbon tax that increased the price of gas 10 cents a gallon every year for a decade would reduce CO2 emissions from motor vehicles further and faster than the Low-Carbon Fuels Standard Sperling touts in his op-ed.
Again using Colorado as a test case, the same carbon tax would eliminate more than five times as much CO2 in the electricity sector and almost three times as much in "other" sectors (trucking, space heating, aviation, etc.). Indeed, that tax, which in carbon terms tacks on a charge of $37 per ton (or $10 per ton of CO2) each year for 10 years, would lop off almost 40 percent from that state's carbon emissions by 2020. And the revenue stream would be enormous -- enough to permit the legislature to zero out the widely disliked state sales tax and business personal property tax by the fifth year, even while providing generous per-resident and per-employee rebates, supplementing the federal Earned Income Tax Credit to assist low-income families, and financing targeted investment in energy efficiency and renewable energy.
We'll grant the point made by Dan (or the Times' editors) at the top of his piece: Taxes on CO2 emissions alone won't get us where we need to go. We'll need judicious and creative incentives and regulations in addition to a carbon tax, and the Low-Carbon Fuel Standard that Dan is helping advance in California fits that bill. But let's stop the naysaying over carbon taxes. They're the powerful tailwind America needs to get our carbon emissions down equitably, efficiently, and immediately.
New nukes? A fair shot, not a free ride
To unlock wind power, put a price on carbon
Comments
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Jawfish Posted 5:42 am
22 Jun 2007
here's some anecdotal evidence:
More folks showing up on the Electric Vehicles list.
Slumping SUV sales
Increased buzz around alternative vehicles
Lots of follow-me buzz in the media about so-called high gas prices.
It's possible too, that there may be some moral authority inherent in the carbon tax, where the high-status good-guy position is to drive small, instead of big. I worry about the redneck backlash though. I have a lot of racer friends who drive trucks and pull RVs and think their God-given rights are already being assaulted by so-called "eco-nazis." These folks have got to get on board somehow.
Somehow the tax reduction has got to be prominent so folks don't feel that their travel is unfairly targeted, or it's just another government hand in their pocket. For instance, a direct income tax credit for gasoline carbon tax, printed on the receipt at the pump. People will still choose to buy less gas to lower their out of pocket, but might support the tax more readily.
John
http://www.jawfish.net
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GRLCowan Posted 6:29 am
22 Jun 2007
Don't try to sell the carbon tax by appending the proposal to return it all as equal share as an (obviously extremely forgettable) afterthought. Lead with it.
The idea of extra carbon tax is very palatable indeed, to all the wrong people. Let it be, or appear to be, the afterthought, let the return of C tax in equal shares be the main event, and the obvious wrongness goes away.
--- G. R. L. Cowan, former hydrogen-energy fan
http://www.eagle.ca/~gcowan/boron_blast.html --
oxygen expands around boron fire, car goes
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Jawfish Posted 7:36 am
22 Jun 2007
http://www.jawfish.net
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GRLCowan Posted 8:33 am
22 Jun 2007
--- G. R. L. Cowan, former hydrogen-energy fan
http://www.eagle.ca/~gcowan/boron_blast.html --
oxygen expands around boron fire, car goes
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GRLCowan Posted 9:11 am
22 Jun 2007
(Speed limits would suddenly be considered enforceable. Public funding to alternate-energy R&D would no longer be deliberately given to initiatives expected to fail. Help for persons wishing to insulate their houses would actually be given, and given to people who otherwise wouldn't do it. Public-transit operators would come to realize that unpleasantness and lack of performance sufficient to lose customers is not how one pays the bills. Antinuclearism would suddenly have to be its own reward.)
--- G. R. L. Cowan, former hydrogen-energy fan
http://www.eagle.ca/~gcowan/boron_blast.html --
oxygen expands around boron fire, car goes
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ffletcher Posted 9:45 am
22 Jun 2007
At 20 million barrels of oil per day and 33 cent a gallon, that looks like it would generate a $100 billion a year for new renewables. Do the same with a coal tax, and that would generate on the order of $80 billion a year.
At $4000 a kilowatt, we could build 45,000MW of solar trough per year for 180,000,000,000.
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sunflower Posted 11:40 am
22 Jun 2007
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amazingdrx Posted 11:46 am
22 Jun 2007
Subsidies should be shifted instead.
http://amazngdrx.blogharbor.com/blog
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sunflower Posted 11:55 am
22 Jun 2007
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ffletcher Posted 4:06 pm
22 Jun 2007
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GRLCowan Posted 2:27 am
23 Jun 2007
Oh, not subsidy but funding.
...to build real live power plants that will replace coal. Fund the program from carbon tax. In the end the carbon will be reduced.
And with it the carbon tax. Excellent.
What's your favorite historical example of personnel in a funding bureau intentionally funding activities that were expected to, and did, reduce their bureau's income? Anyone?
Limit it to bureaus that defunded themselves of more than ten billion a year, if too many examples come to mind. Don't spend your whole Saturday.
--- G. R. L. Cowan, former hydrogen-energy fan
http://www.eagle.ca/~gcowan/boron_blast.html --
oxygen expands around boron fire, car goes
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Nucbuddy Posted 3:17 am
23 Jun 2007
My favorite examples of the opposite:
American Heart Association
American Lung Association
American Cancer Society
American Diabetes Association
American Medical Association
Nuclear Energy Institute
Nuclear Regulatory Commission
National Association of Insurance Commissioners
National Association of Realtors
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ffletcher Posted 6:02 am
23 Jun 2007
For example, take the San Juan plant in New Mexico and the municipal utilities in California that take such power. Those utilities include Redding, Santa Clara, Modesto, Los Angeles, Glendale, Riverside, and Anaheim. Build a similar sized renewable project in California Mohave Desert to replace that energy. They then back off, or shut down, their take from San Juan and instead take the energy from California renewable project, paying the renewable project their marginal savings.
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sunflower Posted 6:37 am
23 Jun 2007
Saving fuel consumed for industrial process heat has the same value as fuel consumed for power generation.
It is a solar seller's market. I would deploy solar hardware for IPH, then explore the possibilities of generating some power off the top of the cycle. The economics are very progressive, possibly less than $1/Watt(e) for the addition of solar power generating equipment on solar IPH.
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ffletcher Posted 7:39 am
23 Jun 2007
I tend to like the Mohave better than Kern as Kern does not get the sun the Mohave gets In addition, Kern lacks the transmission to get power out as well. Can't do much about the sun or the fog and unfortunately the Kern transmission issues have no viable opton yet. In the Mohave it may be possible to get a site near Adelanto, Lugo, or Deavers stations and there is the proposed Green Path Project to the Salton Sea. I think something can be worked out, it is question of time and willingness to work through the details.
As an alternative to the IPH, perhaps a steam cycle turbine with an organic cycle turbine for the bottom.
Sunflower do you know of an engineering firm that can deliver on the less than a $1 a watt for a plant. Washington, CH2M Hill, RW Beck, and Black Veatch all talk much higher than a $1 a watt, more like $4. Even as high aa $2 would be good too for solar, especially if it could be done in conjunction with a geothermal plant. Geothermal is estimated to be $3 a watt by several sources.
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sunflower Posted 8:48 am
23 Jun 2007
The system I prefer is one that is entirely IPH. Cogenerating power may only use the top 20% of available energy (the cold side). In such a system I could use 40% efficient type III-V pv from Spectrolab at something like $0.30/W(e) (@ 1000 sun) plus plumbing and inverter.
Solar thermal numbers are easy. The value is the fuel displaced. --
5.5 kWh/m2/day Colorado direct sunlight average
times 365 days 2007 kWh/m2/year sunshine.
Dirty glass mirror 0.85
Black receiver 0.95
Overhead 0.8 solar dish pipe to plant or solar/heliostat cosine loss
-------
System 0.65 * 2007 kWh/m2/year = 1305 kWh(t)/m2/year
Oil 1610/bbl * 0.8 burner efficiency = 1288 kWh(t)/bbl
One square meter of solar dish or of heliostat is worth about one barrel of oil.
The scale of what is required from solar is creating a huge vacuum. The LUZ people are starting over with LUZ II, BrightSource, and have moved on from troughs and into heliostats with central towers for thermal engine power. They think heliostats will cost $150/m2. Solar Systems of the Australian big dish have moved on into heliostats with central towers and high-intensity pv. I know dish systems will cost between $100/m2 and $200.
Heliostats are less complicated and worth a close examination for industrial process heat. The towers need to be simple like the grid towers that hold high-voltage lines. The receivers for 125 C IPH wet steam are panels of 3/4 inch copper tubing. Besides looking cool, heliostat systems can scale up very fast over rough terrain.
(I have been asked about a temperature boost for geothermal. Solar concentrators can melt holes through plate steel)
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sunflower Posted 9:07 am
23 Jun 2007
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ffletcher Posted 9:08 am
23 Jun 2007
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Charles Komanoff Posted 7:13 am
24 Jun 2007
I like what you said (first comment here, back on 6/22) "that there may be some moral authority inherent in the carbon tax, where the high-status good-guy position is to drive small, instead of big." We don't shout this point from CTC's rooftop, but moral authority -- the change in our relationship to energy that would come with a carbon tax -- is a big thing with me and Carbon Tax Center co-founder Dan Rosenblum. You put it very nicely.
I didn't follow your point about a "direct income tax credit for gasoline carbon tax, printed on the receipt at the pump." CTC is pretty insistent that rebates or credits for consumer carbon tax expenditures must be completely independent of those expenditures -- else the incentive to reduce carbon emissions is compromised. We don't see a way around that, and so we think we'll just have to keep pounding the point that carbon taxes should be revenue-neutral with essentially all of the revenues returned to taxpayers and/or individuals, but through a formula that doesn't connect to individuals' actual carbon consumption.
Too bad the thread got diverted into the important but separate issue of tech stuff on solar ...
-- Charles
Charles
http://www.komanoff.net
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ffletcher Posted 8:58 am
24 Jun 2007
In the end I think that the carbon tax will not be revenue neutral. It will collect money, the money will be part of the revenue of the state or federal government collecting it and there will be budget outlay that will spend the money in the form of payment or tax credits to people, agencies, or companies.
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Jawfish Posted 1:46 am
25 Jun 2007
I was suggesting exactly the opposite of what you are- that is I was suggesting that in order to get voters on board with a carbon tax on motor fuels, you have to emphasize the tax credit. So I was floating the notion that the amount of the credit could be printed right on the gas-pump receipt to drive the point home.
The important point for me is overcoming business and voter resistance to the carbon tax. The way my state, CA, grabs money out of the DMV and fuel taxes for the state general fund is already a sore point with drivers. I fear a new tax is likely to play into the ideologues on the Right, so steps should be taken to make it more palatable.
Jawfish
http://www.jawfish.net
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GRLCowan Posted 2:47 am
25 Jun 2007
--- G. R. L. Cowan, former hydrogen fan
Boron: internal combustion, nuclear cachet --
http://www.eagle.ca/~gcowan/Paper_for_11th_CHC.html
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