Comments Charles Komanoff has made

Dear Kate and other Gristers --

The good Senator has only dug his hole deeper.

He wants carbon cap-and-trade only for utilities. What about the 60% of U.S. CO2 emissions that aren't from electricity generation?

He disavows auctioning permits because "an auction can be used by opponents to caricature any and all cap-and-trade programs as 'cap-and-tax.'" That's exactly backwards. It's the cap that creates the scracity that hikes the prices and allows the 'tax' caricature. And it's the auction piece that could have created the revenue stream to cushion the price hikes, but which the Waxman-Markey bill largely eviscerated.

As for the senator's desire to "avoid anything that gives climate legislation opponents a chance to label it as 'cap and tax.'" On that score, he's a little late -- several months and thousands of opponents' blog posts late.

Indeed, wasn't it Sen. Wirth himself who, just three days ago, called Waxman-Markey "a cap-and-tax bill”?

Right on, Raamster, re your tandem suggestion and your dissent from Protection-mania Americana. You have to wonder, if the U.K. opposition leader can cycle-commute (and have his bike swiped!), why can't a U.S. cabinet minister do the same? (Thanks to my cousin, BW, for the Tory leader tip.)

As for adjusting the Danish mortality figure for cycle fatalities, it's too little to bother, at least for this discourse. Plus, I like to keep a bit of numerical margin in my hip pocket, so to speak. but thanks for the suggestion.

Perhaps I missed it, but I didn't see a comparison to prior data, at least not for the New York City metro area, where I live. Based on both my sensory perception and some familiarity with the data, I'm under the impression that NYC's air quality has improved steadily -- and markedly -- during the 40 years I've lived here and been air-aware. And there have been any number of policy and other changes that, combined, would have brought about this result. It's disappointing to not see such a time-series comparison in the report.

Eric --

I re-read the Platt's article (albeit quickly) and saw nothing that speaks to your allegation that wind generation displaces little or no fossil fuels. Unless you can point me to a passage I've missed, I'm afraid the leg you wished to stand on to prop up your position doesn't exist.

The starting point must be that wind-generated electrons displace electrons that otherwise would have had to come from FF's. We can't construct a parallel universe in which we run Wind Farm "A" runs while shutting down Wind Farm "A-prime" and then measuring the system difference, so we do the next-best thing which is to poll those in a position to know -- the grid operators. (If you know anything about the formulation of grid rules, you'll understand that they reflect painstaking consideration of actual experience.) They've lived with wind's intermittency for some time and have concluded that its offsetting cost is on the order of 5-10% of the fuel savings -- not the 50% or 100% or whatever it is you choose to believe.

Why don't you review the minutes of the PJM deliberations that led them to their (modest) charge for intermittency. Or simply talk to the PJM CEO I cited in my paper. If you can't refute their reasoning (and parallel reasoning and rules by other grid operators), I don't see why anyone should take your opinion seriously.

  -- Charles

Kyoto + Cap-Trade Arguments = Smoke and Mirrors

Goodness grief, if arguments like this (and Clark William-Derry's over the weekend) are the best that cap-and-trade supporters can muster, then carbon trading is in even weaker shape than we thought.

I already rebutted the "report from a prominent research group suggesting that a large part of the European Union's drop in carbon emissions last year are attributable to the cap." I pointed out that the EU's drop was scarcely more than ours, which was done without any cap-and-trade, and that any difference was probably due to unrelated factors such as a bigger percentage gain in wind power generation. I also noted that the "prominent research group" sponsoring the key finding has an interest in carbon markets and is thus hardly impartial.

The other notion here, re more intense innovation in Kyoto signatories, suffers from classic conflation of correlation into causation. A host of other causes could be at work, most likely the possibility that nations which signed the treaty already had a greater cultural and economic bent toward climate sustainability that has manifested in greater green innovation during the past decade in which climate has become a pressing concern.

Sorry to be the proverbial you-know-what at the garden party, but can we all join hands and raise our analytical standards just a little bit?

Charles www.komanoff.net

Sen. Corker also said, in closing:

"A simple, transparent cap-and-trade proposal, or another mechanism putting a price on carbon, such as a carbon tax, can be a useful tool for reducing our dependence on foreign oil and other carbon-based fuels." (emphasis added)

Charles www.komanoff.net

Heat Rate (asked again)

Sean --

I knew everything in your reply (I've been doing power plant economics about as long as your dad) and am a bit disappointed that you don't have the answer to my first question, about heat rate. And I'm surprised that you wouldn't have checked it yourself. After all, as we both know, a heat rate improvement due to the coal gasification feature equates to some capital cost savings.

It seems to me that to to flog the project's high capital cost w/o netting the fuel savings puts one in apples-and-oranges territory.

  -- Charles

Charles www.komanoff.net

Smell the carbon-tax coffee already!

David --

I see a milestone here, David. Not in Rex Tillerson's pro-carbon tax remarks, but in the fact that the first five comments to your, uh, leading question all gave perfectly solid, cogent, excellent reasons why Exxon's CEO -- and the rest of us -- should want a carbon tax.

Just six months ago, your sarcastic question would probably have elicited the equally sarcastic replies you seemed to be fishing for. The fact that the replies were the essence of sweet reason should, I think, make you reconsider your severe skepticism of late toward carbon taxing. Cap-and-trade is a dead end, and the sooner we move its carcass to the side of the road and unite behind a carbon tax, the sooner we can aggressively get the U.S. and rhe rest of the World off fossil fuels.

I'm writing from DC, by the way, where six of us carbon tax advocates -- with a combined two centuries of eco-activism ("Gawd, they should all be in wheelchairs!") -- just wrapped up a round of terrific meetings with pro-carbon tax Congressmembers from both sides of the aisle. We are not a stalking horse. We, and a carbon tax in the 111th Congress, are for real.

Love and kisses,
Charles
Carbon Tax Center

Charles www.komanoff.net

Thanks, Gar ...

... for your thoughtful defense of "refundable," which I'll mull over. I didn't get your first-paragraph point, though. Could be my fault (reading too hastily, and no time to go back to original sources), but energy will get very expensive under Hansen's (and my) carbon tax, which is the point, and I fail to see how a "safety valve" (?) undercuts that. Thanks again though.

Charles www.komanoff.net

Low Auction Price is NOT a Good Sign

Though I don't follow RGGI's intricacies, I'll go out on a short limb and assert that the measly ($3/ton CO2) auction price results from the combination of

• (i) the fact that the emissions "cap" is constant rather than declining, and

• (ii) the tanking economy, which is busting electricity demand largely through belt-tightening, rather than permanent energy efficiency.

(Note to Max Epstein: You claim that RGGI's 2009 emissions target is 10% less than "current" levels, but last week's RGGI press release states clearly that the cap is constant through 2014.)

The "naturally" falling CO2 emissions are a pretty thin silver lining of the recession. An economic downturn is when emissions should be dropping substantially, if only to bank against resumed economic growth later on.

A ramped-up carbon tax would lay the groundwork for that. Meanwhile, there is nothing positive about the $3 RGGI auction price -- nothing.

Charles www.komanoff.net

Straw-Man Alert

David --

If you weren't a brilliant writer-editor and a huge force for good, I wouldn't be taking up your "challenge to carbon tax advocates." It's so muddled that I'm befuddled on how to respond.

You start by proclaiming that sticks are not enough. No one in the carbon tax camp disagrees. I learned this in the wake of the first (1973-74) oil price shock, and I and others of us have been battling institutional barriers to EE and RE (ranging from "split incentives" to NIMBY anti-wind forces) ever since. OTOH, a big price stick is essential. We all know that (except, perhaps, Amory Lovins), so let's proceed.

You then state, "a price on carbon alone could work, but only if it were so stratospherically high as to make it politically untenable. Dave, I'll make your argument easier for you. The price on carbon has to be really high and we need to dismantle the institutional barriers. But since a carbon price (whether delivered by a tax or a cap-and-trade regime) is going to be high, the pricing regime must be revenue-neutral, with revenues dividended or tax-shifted back to the American people. That's both an ethical imperative and a political reality.

The rest of your post, as I grasp it, sets up a distinction between sticks and carrots. I'm not sure what you're getting at. If you're talking about framing and behavioral economics -- the nitty-gritty of what really motivates people -- I'm all ears. Avoiding a dollar cost vs. pocketing a dollar gain may be the same to me, Mr. Homo Economicus, but I'm not so naive as to assume everyone else acts the same way.

But if you're talking about incentivizing people or businesses to make the lower-carbon choice, rather than simply dis-incentivizing them from continuing on their higher-carbon path, then I think you have a problem: subsidizing the (presumed) good choice is never nearly as efficient in resource terms as de-subsidizing (internalizing the costs of) the bad choice. That's back in my Econ 101 somewhere, and so far as I know nothing has come along in the intervening 43 years to undermine that.

As for the tax vs. the cap, can't we finally dispense with your red herring that, under a cap but not a tax, "Not only do you have to pay if you pollute, but you can make money if you avoid polluting, by selling your permits. Dave, under a tax you can make the exact same money by avoiding the exact same pollution, in the sense that the avoided tax is made money.

How could it be otherwise, and still have virtually every economist who has spoken on the matter favoring a carbon tax over a carbon cap-and-trade system?

I hope I've addressed your "challenge." I think it'll be both a sign of and a spur to progress if your next one on the subject will be to green-group cap-and-trade advocates, along these lines:

When will you join the likes of Rep. John Larson, chair of the House Democratic Caucus, crusading climatologist Jim Hansen, and others who presented at the carbon tax briefing on Capitol Hill this past week, and add your political weight to the growing movement for a revenue-neutral and economically-just federal carbon tax?

Charles www.komanoff.net

Against a Gas Tax? You must be joking?

Whoa, David, did someone hack your Grist ID? That couldn't have been you arguing "against a gas tax" yesterday, could it?

Arthur Pigou (progenitor of cost-internalizing Pigovian taxes must be turning over in his grave). Ditto his buddy John Maynard Keynes, who famously (and correctly) urged, "Don't let the perfect be the enemy of the good."

Did you really say, in effect, that because a healthy (note my double entendre) gas tax can't wipe out practically all GHG's from ground transportation by itself, it shouldn't be part of the toolkit?

And on that crucial point you're way more wrong than right, David. The National Hybrid Carbon Tax Model I developed for the Carbon Tax Center suggests that a combined $10/ton-of-CO2 carbon tax and 10-cent-a-gallon petrol tax incremented annually (that's around 20 cents a gallon a year) for a few decades would, by 2028, knock CO2 from motor vehicles down by 20% from current levels and 40% from business-as-usual levels. And that's without directly counting the high-speed rail, light rail, biking and walking, livable communities, etc. that would get a huge push from the rising (and less confoundingly volatile) gas price. (It's also with a long-run gasoline price-elasticity of only 0.4, the lowest for any major energy form.)

I wish I had time to take on the rest of your post, David, or write my own in rebuttal. Even Koufax got shelled off the mound from time to time, so I guess you're entitled, but next time you're having an off-day, please don't pick on something as essential as fuel taxes.

Charles www.komanoff.net

Don't confuse energy policy with transport policy

Dave, maybe Obama doesn't yet have a transportation advisor, but from the looks of his remarks above, energy advisor Grumet does a poor imitation of one.

Transportation policy isn't about infrastructure for plug-in hybrids and alt fuels. It's about providing and facilitating a variety of modes (rail, bus, bike, walk, car-share), land-use incentives to enable communities to take advantage of them, and road-pricing policies to fund them while desubsidizing car use.

Judging from Obama's statements to the cycling advocates in Chicago last month (captured in Streetsblog, with a photo of the candidate riding a bike), on transportation policy he's way ahead of his energy advisor.

Charles www.komanoff.net

Invitation Accepted

Jon, you asked what steps I and the Carbon Tax Center think are required to supplement revenue-neutral carbon pricing. Here's 10 for starters, off the top of my head:

• A Traffic Justice Project to banish danger from walking and cycling.
  
• Renewal of the Production Tax Credit for wind and solar, for more than just two years.
  
• Road pricing, both cordon and area-wide.
  
• Cashing-out parking, per-mile insurance and other revenue-neutral market-correcting pricing reforms.
  
• Continuation of ACEEE/NRDC/LBL's heroic appliance-efficiency work, moved even further upstream in the design process if possible.
  
• Shunning of motorized recreation.
  
• Phase-out of the tax-deductibility of mortgage interest on large homes (as Rep. Dingell proposed but no Big Green groups endorsed).
  
• Makeover of public transport, extending from reduced-fare or free local bus service to national high-speed rail.
  
• Nationwide biophilia and love of wild nature, per E.O. Wilson, David R. Brower, Rachel Carson.
  
• Return to the high top-bracket income tax rates of the forties and fifties.

Charles www.komanoff.net

Coal prices are up only barely

Anazingdrx --

This has gotten really tedious.

The average delivered price of coal to U.S. power plants in 2007 was $1.78 per million Btu. The same eight years earlier (1999) was $1.22. That's a 46% increase. For a base from which the 2007 price was up three-fold (200%), you've got to go back to 1974.

(Monthly Energy Review, Table 9.10)

Coal prices will be rising, as I said at the outset. But for a price path that will let EE and RE displace coal massively and quickly, there has to be a socially decided and delivered carbon emissions price.

Charles www.komanoff.net

Speechless

This article is appalling. Wait, I didn't mean that. I'll start over. This article is fraudulent.

"Coal is no longer cheap" is its subtitle and premise. Backed up by this lede: "When it comes to power generation, coal isn't cheap. Both power plant and fuel costs are up by nearly 300%, and projected to rise farther."

How about that, folks. The cost of the fuel that provides nearly half of U.S. electricity is up almost four-fold ... before carbon pricing. Who knew?

Turns out only the author of the article knew. In the world the rest of us inhabit, the average price of coal delivered to U.S. electric power plants in 2007, all 1,045,000,000 tons of it, was a mere 5% higher than in the previous year (on a per-btu basis). Which in turn was up just 10% over the price from the year before that. Which 2005 price was less than the average price two decades earlier -- in nominal dollars (before adjusting for inflation). Like I say to clueless drivers looking to cut in front of my bicycle in Manhattan traffic, HELLO???

The author's footnote for this assertion (thanks for that) reads: "On March 7, 2008, Merrill Lynch announced that they expect thermal coal prices to rise 200% by the end of the year (Greenwire, 3/7/08)." Could happen, I guess. But "nearly 300%" ain't "200%," costs "are up" ain't "costs are expected to go up," an anonymous Merrill Lynch announcement ain't, okay, you get the point.

Why am I so offended? Two reasons. One, I know something about the coal industry. I studied it intensively throughout the 1970s and into the 1980s. I watched the price of utility coal rise four-fold from 1973 to 1984 -- in 11 years, not 11 weeks -- and I have a feel for what it took for that to happen (which I'll be happy to post about).

Second, if I recall correctly, the author, like me, a Gristmill contributor, has been unimpressed by arguments from people like me that without an urgent, broad-based campaign to put a "climate price" on coal and other fossil fuels, we're not going to come close to getting the levels of energy efficiency and renewable energy we need to avert climate disaster. If the price of coal had indeed quadrupled -- implying a nickel rise in the average price of a coal-fired kWh -- we wouldn't need carbon pricing (and I could fold the Carbon Tax Center and go back to working full-time on other, more fun stuff like free transit in NYC).

Could it be, then, that the author's indifference to carbon pricing rests on his grotesquely mistaken conviction that coal prices have already reached market-clearing levels for EE and RE, without carbon pricing?

Sorry for the vitriol, but this stuff is too important to mess up in public by one to two orders of magnitude.

Charles www.komanoff.net

Author Replies

Picoallen --

Sure, uranium mining requires energy inputs, but for currently mined grades of uranium those inputs are very small, per kWh of electric output.

David Bradish --

Your assertion that "photovoltaics have received the most subsidies of any technology" isn't backed up by the table in your linked blogpost, which shows cumulative subsidies for "Solar" only half those for nuclear.

In your same table, the nuclear R&D subsidy figure looks to be only around half of mine (adjusted for different time periods and slightly different base year). Your accounting also omits tax savings that flowed to reactors from accelerated depreciation, artifically short lifetimes assumed for tax purposes, and the ITC. Perhaps you should give my "98-page report" a closer look.

Sean Casten --

Thanks for your comments. Not a Deadhead, I invoked Jerry because my revulsion over the WSJ's spitting on his grave made me bring down the curtain on 20 years as a subscriber.

Charles www.komanoff.net

"Regressive"? What's That?

NY State Assemblymember Richard Brodsky -- the diabolically effective public face of the forces that this week killed traffic relief for NYC -- informs us (through a staff member): "Of course congestion pricing is regressive."

Hello? Here's what the City's premier transportation statistician, Bruce Schaller, found  in his comprehensive 2007 report on NYC travel data, City in Flux:

"Auto commuters have higher incomes than transit riders.

• "Among Bronx, Brooklyn, Queens and Staten Island residents who work in Manhattan, auto commuters earn 32% more than subway commuters and 15% more than bus commuters. [2000 Census data]
  
• "Auto commuters living in Manhattan earn 20% more than bus commuters and 18% more than subway commuters.
  
• "Similar earnings gaps are seen among residents of outlying areas of the outer boroughs.
  
• "Among commuters from outlying parts of the city that lack direct subway access, auto commuters earn 35% more than do subway commuters."

Friends, I'm trying to treat Brodsky relationally -- he's a political force in NY State, and clearly any future initiative to fund transit and reclaim city streets from cars will have to bring him on board. But there needs to be some regard for the facts, no?

As for Brodsky's aide's other canard, "Congestion pricing approved prior to an environmental analysis is a terrible precedent." Folks, the 17-member Traffic Congestion Mitigation Commission (on which Brodsky served) did an extraordinary amount of careful environmental review in the past six months. Commission staff fully vetted the "official" plan and exhaustively analyzed alternatives. It's hard to imagine what additional review might have been necessary, and what further facts it could have provided (let alone whether Mr. Brodsky would have considered them).

No, the "environmental review" argument is just another fig leaf with which opponents of congestion pricing can cloak their decision to continue giving away the most precious resource in NYC -- our streetscape -- to drivers, and to condemn another generation of New Yorkers to incessant, damaging, spirit-destroying traffic.

Charles www.komanoff.net

Komanoff Reply to Brodsky

I thank all of the commenters. I reply here to Assemblymember Brodsky and hope to address other comments later.

• The congestion pricing bill specified a 3-year pilot project and thus would not have undermined SEQRA (the State Environmental Quality Review Act).

• I and other bill proponents agree w/ Mr. Brodsky that ability to pay should never determine access to public spaces. Motor vehicle access to hyper-congested areas is an altogether different matter. Where each additional vehicle creates an estimated $40 in delay costs (my calculation), an $8 per-vehicle charge will expand, not constrict, public access by improving bus speeds, enhancing cycling and walking, and funding transit.

• I have held Mr. Brodsky in high regard during his entire career (we are contemporaries). While he is entitled to his objections to congestion pricing on asserted grounds of principle, he must expect pointed rebuttal when his claims are patently false, e.g., his repeated insistence that congestion pricing in NYC would be regressive. Mr. Brodsky's Manhattan-bound drive-to-work constituents earn on average $176,231 annually -- the highest of any New York county in the metropolitan area, according to Transportation Alternatives. A more comprehensive rebuttal on this point is here.

• No one is attacking Mr. Brodsky's motives. As for name-calling, I advertised up front that my post was shoot-from-the-hip. Having prevailed over congestion pricing advocates, Brodsky could absorb a few barbs from the vanquished, no?

Charles www.komanoff.net

Making Carbon Taxes Work

I want to thank Monica Prasad for her extremely collegial reply to my (and DR's) critiques of her NYT op-ed, especially insofar as my initial comment was a bit on the dyspeptic side.

I'm glad Monica is training her talents on carbon taxes. This field needs more creative thinkers, particularly people versed in sociology.

But I'm unconvinced on her main point about vesting carbon tax revenues in decarbonizing alternatives. Partly it's because, in the US at least, that path has traditionally been more of a black hole than a green one. Partly it's because the carbon tax itself will provide big (though not always fully sufficient, I agree) incentives to reduce carbon. But mostly it's because the poor and middle class have to be protected directly and massively, which can only be done by explicit and near-total return of carbon tax revenues.

I disagree as well on the need for substitutes, largely because I view substitutes for carbon as a matter of degree rather than binary -- substitutes exist along a spectrum. And of course instituting carbon taxes will expand that spectrum.

I look forward to continuing this conversation.

Charles www.komanoff.net

Shrinking Gasoline Demand

Good post. The drop in U.S. gasoline consumption is terrific news, obviously. We ran a similar story yesterday on our Carbon Tax Center blog:
http://www.carbontax.org/blogarchives/2008/03/03/us-gasol ...

Let's get the numbers straight. You wrote that gas prices haven't fallen below $2.70/gal since Katrina. But EIA data show a lower national-average price in 12 of the 30 months since then. Overstating the extent of the rise in gasoline prices is a common error, and can lead to underestimating the price-elasticity of gasoline demand. That's a no-no to us carbon-tax/gas-tax advocates.

Charles www.komanoff.net

Author Replies

To Wiscidea:

I wholeheartedly concur that the greatest tragedy of 9/11 has been the Bush Administration's use of it to mount the Iraq atrocity. But that's not the issue here. I chose to resurrect the tired expression "The terrorists have won" and apply it to the killing of 9/11 survivor Florence Cioffi by a driver to draw attention to the reign of terror that is, for walkers and bicycle riders, the American street regime.

You say, "It is likely that numerous people who escaped from the World Trade Center were killed by other events." This formulation is curiously passive (as is your account of how Bush & Co. used 9/11 to make war on Iraq). "Events" didn't kill Ms. Cioffi. George Anderson, the driver, did.

You also imply that conditions for walker and bicyclists might have been made better by resources that have been squandered in Iraq. I have participated in and even led efforts to improve those conditions for over two decades, and I can tell you that a lack of resources is the least of the obstacles.

To Richard Grossman:

I'm sorry my piece didn't go nearly deep enough for you. (Which is probably true as well for my comment above that the driver, rather than the sovereignty of corporations, caused the death of Ms. Cioffi.) Let's take another bicycle trip and hash this out!

Charles www.komanoff.net

Better than slender

Dave --

The report in question was commissioned by the government of China (ditto, Brazil). True, that's not the same as if President Hu Jintao had personally translated "An Inconvenient Truth" into Mandarin. But it's more of an imprimatur than you've granted.

I think we can, and should, bootstrap this development as a very significant one.

Charles www.komanoff.net

Swiftboating Dingell's carbon tax

"I don't know how Congressman John Dingell keeps up his pace of climate-legislating -- or how he puts up with the steady stream of disinformation launched against him. I am not trying to create a cult of personality around him, but I do feel under some obligation to give his carbon tax bill as much attention as possible -- as I think he has done more than any other member of Congress to raise awareness on the need to tax fossil fuels, and deserves our thanks, not slander."

Recognize that, Joe? That's what you posted about James Hansen barely an hour after you excoriated Dingell -- but with the names and a few words changed.

Really. A super-powerful legislator floats an innovative tax-shift proposal -- one that would save twice as much oil and ten times more CO2 in 2025 (assuming the tax ramp-up continues that far) as CAFE -- and you get busy gathering the nails and fashioning the cross. What gives?

You say gas is up two bucks a gallon, with little effect on usage? Umm, it's not even up $1.10 (2000 to 2006), and growth in usage has been cut in half -- no mean feat in the face of millions of new McMansions out there on the exurban fringe whose outrageous subsidization evidently is of no concern to you.

I urge you to read the first "Issues" page at www.carbontax.org for a primer on fuel price-elasticity. In the meantime, I'll ponder what it is about the environmental community that makes it so resistant to innovative thinking.

Charles www.komanoff.net

The Message, not the Messenger

Hey Dave --

Was I ever glad to see Commenters 1 thru 4 make the points I wanted to make. Don't blame Dingell for not being a salesman. He's a legislator and, okay, a warhorse. His hybrid carbon-petrol tax is the smartest climate/energy solution to come down the pike in a long while. Let's applaud it (as I did in my Gristmill post this week) and stop nitpicking!

Charles www.komanoff.net

Original author responds ...

I say "original" because I'm seeing my post and its points disappearing under a mountain of, well, mostly rhetoric.

Rune, your three posts, in toto, are triple the length of mine. But you seem to be responding largely to things I didn't say.

You write, "Throwing up economic roadblocks in the form of higher taxes and fees that don't fund the needs of those most in need, as opposed to investing as a society in the infrastructure and planning that is most appropriate to the current and foreseeable needs of the people ..." Yet the congestion fee revenues would have gone to improve and expand the mass transit system that is, in fact, "most appropriate to the ... needs of the people."

Rune, you also say, "The price elasticity of demand for motor fuel is about 0.2 ... I don't know what the price elasticity of demand for road use is, but based on the long lines at toll booths in my area that do not seem to drop off when the tolls are jacked every couple of years, I don't get the idea that it is much greater than the price elasticity of demand for fuel."

The total-price elasticity of demand to drive into  Manhattan (where total price = tolls + gas + incremental maintenance + parking etc.) appears to be 0.5 or greater, based on my current research, indicating that an $8 toll (which of course is an order of magnitude or more greater than toll increases in your area) would indeed thin out demand considerably.

You then say, "Regulatory restrictions or public investment in alternative transportation may be much more effective means of shifting behavior."

Really? On what basis? I alluded to the alt-investment fallacy in my post, pointing out that without pricing, the road space freed by switching to improved alt's is quickly filled by new trips currently discouraged by congestion. As for reg restrictions, I and many colleagues have combed the globe for decades and found no such successful model -- not in Athens, not anywhere -- except for auto-free streets, which we all have campaigned for (I brought the Auto-Free NY Committee within the orbit of Transportation Alternatives, as TA prez many years ago), but which is just not on the political horizon.

Rune, you decry "privatizing public infrastructure that was once equally available to all ..." You might more accurately have written, "... equally available to all with a motor vehicle," or even "... equally available to all with the financial wherewithal to own and keep a motor vehicle." As a lifelong daily bicyclist here (NYC), I find highly ironic the idea that the road network is equally available to all.

Last, Rune, you argue that "Traffic congestion is hardly the defining challenge of our time." What kind of straw man is that? Who said that only "defining issues" (or one defining issue) are worthy of social agitation. OTOH, the usurpation of the Earth's resources and humanity's lives, legs, lungs and souls by automobiles -- outrageously subsidized automobiles -- is a defining issue of our time. And road pricing is an indispensable lever for bringing automobiles under some modicum of social governance. Which made the Bloomberg plan -- a veritable nose under the camel's tent of "free" motoring -- well worth fighting for, even beyond its capacity to improve the livability of NYC.

David -- I'm running out of time (and space) so I'll just say that what appears to be a bedrock premise in your arguments -- that the Bloomberg congestion proposal was regressive -- is factually incorrect. Let me know if you'd like to see the evidence.

Charles www.komanoff.net

Author Comment

Thanks to JMG for a terrific explanation of the how/why of surge protectors (power strips).

Today's (4-May) Detroit Free-Press picked up on our thread in a nice interview piece, "Reduce carbon usage by degrees," that also mentions some of the Gristmill comments. It's here:
http://www.freep.com/apps/pbcs.dll/article?AID=/20070504/ ...

The piece is right about my (measly) 3-mile round-trip bike commute. I shoulda said I log around 3,000 bike miles a year, but whatever.

Only downer is the negativity in some of the Detroit paper comments, e.g., "I'll give up my XYZ when they pry my cold dead fingers ..." and "For every person who cuts their CO2 25%, I'll increase mine by 25%." Carbon taxes, everyone?

Charles www.komanoff.net

Carbon tax -- can we keep it simple?

Gar --

Good to see you again taking up the carbon tax cause. But this time it took you awhile to make your main point (that carbon tax revenues are best rebated equally to all), and I think you hit a few potholes en route.

You paint the spectre of big carbon taxes raising the price of consumer goods by 25-50%. I'm skeptical. Yes, fuels and energy need to rise that much and more. But "embodied" energy (in mfg'ing, shipping, etc.) rarely accounts for more than 10% of  goods prices. A doubling in energy prices should thus tack on no more than 10% to goods prices -- less, actually, since the gradual ramp-up will let suppliers move to lower-carbon fuels and processes.

Also, did you really mean to say that the point of carbon taxes is to discourage consumption? Perhaps what you meant is that the point is to discourage use of fuels and energy, particularly high-carbon forms. That's an important distinction!

Last, though I certainly agree that auctioned permits would be far better than given-away permits, I disagree that auctioned permits are about as good as a direct carbon tax. The tax can be in place much sooner, due to its simplicity and resistance to gaming and rent-seeking. The tax also comes with a known price trajectory, which is of utmost importance in ensuring that capital goods are specified and bought in climate-aware fashion.

For more on advantages of taxing carbon over capping it with auctioned permits, go here: http://www.carbontax.org/issues/carbon-taxes-vs-cap-and-t ....

Charles
Carbon Tax Center
www.carbontax.org

Charles www.komanoff.net

Author Responds

Terrific comments, folks, in the 24 hours since posting Dan's and my piece. I'll try to be concise in these reactions (chronological order, from bottom up).

Laurence -- (incomplete answer): Energy's long-term price elasticity is many times greater than short-term. That's a rationale for our ramped-up carbon tax. True, that won't eliminate all volatility, but it will help reduce the relative importance of "natural" price fluctuations in discouraging investments in EE and RE. Re cross-borders, we envision eventual harmonizing of C tax levels (we're optimists!), preceded by a more difficult period in which C-taxing nations may have to impose C-equivalent import duties. As for your info queries, we're searching for same knowledge as you, let us know what you find!

Gar articulates our stance beautifully. I'll add that the rising price trajectory doesn't just tilt the micro-economic calculations for optimizing EE and RE investment, it gets individuals' and institutions' attentions so that the calculations are done in the first place.

Ana -- CTC doesn't put as high a value as you do on the supposed certainty of emission reduction rates with a cap. We feel that knowing the precise response at this time isn't critical. What we need is to maximize reductions, and to fine-tune later. We believe each year's ramp of our proposed starter tax would cause CO2 emissions to be 2-3% less than otherwise (resulting in ~20% less than that moving target, after 10 years). Separate but synergistic EE and RE programs would add considerably to that, and if the politics worked out, the annual ramps could be steepened. But for now we're constrained politically from imposing a higher and more optimal tax (similar to the political constraints on imposing the optimal cap).

Sunflower -- CTC's proposed carbon tax of $37/ton of C, per year, equates to 10 cents per gallon of gasoline, per year (our math jibes with yours). After 10 years, it's $370/ton, equivalent to $1.00 a gallon. Nothing magic about our $370 vs. your $600 -- it's our sense of what today's politics will support. We welcome being shown too pessimistic!

Brendan -- Your Cap and Share Web site is great. I agree totally with your "check marks." I think you were wise not to tout C & S as "easily understandable," though, because I'm not sure it is. While that may now be a liability for a carbon tax, CTC hopes to turn that into an asset.

Lois -- Nothing to add, thanks for stating the case so powerfully.

Leigh -- (1) Thanks for the tip about R. Cohen's book. I'll still maintain that no more than two dozen, and perhaps as few as one dozen, utilities were responsible for >50% of U.S. SO2 emissions in 1990, making it easy to corral the key players and circumvent the nearly endless positioning and deal-cutting we envision for a CO2 cap system. (2) I hope I've addressed this above. (3) Thank you for acknowledging the importance of revenue-neutrality. As we noted on our Web site, we believe that returning virtually all C tax revenues to the people is essential not only for fundamental fairness but for building sufficient political support (and/or avoiding a crippling backlash later on). The revenue certainty that C taxing offers (as opposed to the emissions certainty of a cap) will be crucial to that.

Thank you all! -- CK

Charles www.komanoff.net

Fuel Tax Magic

Hi Clark --

Thanks for that thoughtful comment.

You're right that over the past 3-4 decades gasoline consumption has lagged income (thank goodness)! In the '70s and 80s the consensus among economists was that demand for gas had an income-elasticity of 0.6-0.7 (60-70%). But since the early '90s the advent of SUV's and exurbia has pushed that higher, in my view.

What's needed is more sophisticated modeling of gas and other energy use that can reflect not just prices and income but tech and cultural factors (though of course those are partly determined by price). I would love to work on that. Let me know if you're interested.

  -- Charles

Charles www.komanoff.net