Sen. Elizabeth Warren, at the Democratic presidential candidates’ climate debate, Sept 4. [link TK]
The morning after he dropped out, Inslee announced he would seek a third term as governor of Washington. A number of journalists tweeted that he would do well as the next Democratic EPA administrator. I disagree. The EPA’s ambit is too narrow, and climate change too sprawling, for Inslee’s time and talents. If the 2020 Democratic nominee, whoever it is, really wants to tackle climate change as their own plan discusses it—as an issue afflicting the whole economy—then they’ll need to show that someone in their administration can tackle it at the whole-economy level. They’ll need to put their money, in other words, where their Medium post is. They could start by calling Jay Inslee. He would make an excellent vice president.”
Robinson Meyer, in For Democrats, When Does Climate Change … Actually Matter?, The Atlantic, August 22.
Germany’s Greens recently learned from a study of voter concerns in Europe that the second-most-popular statement among far-right voters, after one on limiting migration, was this: ‘We need to act on climate change because it’s hitting the poorest first and it’s caused by the rich.’
New York Times, Greens Aim to Make Climate a Bread-and-Butter Issue, July 14.
The Divestment Diversion
The Carbon Tax Center has had qualms since day one about campaigns to compel institutions to divest from their fossil fuel holdings. The morality is great, but impact is lacking.
“Divestment can’t loosen the fossil fuel stranglehold without a carbon tax,” we wrote in a photo caption in our first stand-alone post on divestment four years ago.
Today, with a broadened outlook, we would write that divestment can’t loosen the fossil fuel stranglehold without a Green New Deal-level massive investment in decarbonization, with a robust carbon tax playing a major contributory role — a position we outlined in a post earlier this year, Carbon Tax Advocates Should Embrace a Green New Deal.
Our 2015 post outlined why fossil fuel divestment is a dead end:
Divestment by socially responsible investors, universities and even governments won’t starve capital flows to fossil fuel corporations anytime soon. That’s because in a global market, every share of stock we activists dutifully unload will be snatched up in milliseconds by some trader who can bank on humanity’s continued dependence on fossil fuels to continue generating profits. (emphasis added)
Why bring this up now? Because we just stumbled across an illuminating 2018 interview with U-Mass economist Robert Pollin, a prominent climate academic-activist and co-author of a detailed financial analysis of fossil fuel divestment impacts. The interview, posted at Truth Out in May 2018, is entitled, Are Fossil Fuel Divestment Campaigns Working? A Conversation With Economist Robert Pollin. Sadly but unsurprisingly, Pollin concluded in his analysis, also from 2018, that they aren’t.
Here’s the key excerpt. The questioner is C.J. Polychroniou, a Truth Out contributor and political economist-scientist. We added boldfaced type, for emphasis.
Q: One approach that has become quite popular in recent years is the strategy of divestment. However, the recent study you coauthored with Tyler Hansen questions the effectiveness of the strategy of divestment in reducing carbon emissions. How did your study come to that conclusion?
A: In this new research paper, Tyler Hansen and I concluded that divestment campaigns have not been especially effective as a means of significantly reducing CO2 emissions, and they are not likely to become more effective over time. Our study includes both an analysis of the available data on global divestment patterns as well as a formal statistical modeling exercise that evaluates the impact of divestment events — such as when the New York City pension fund decided last January to sell off all of their fossil fuel company holdings — on the stock market prices of fossil fuel companies.
We found two basic things from this research. First, to date, we found the total level of divestment commitments to be at about 0.7 percent of total global private fossil fuel assets (assets committed to divestment are at about $36 billion while total global private fossil fuel assets are at $4.9 trillion). Second, we found no evidence that any divestment actions, including the recent New York City pension fund decision, has [sic] had any significant negative effect on the stock prices of fossil fuel companies.
The basic problem with the strategy is straightforward. Ethically motivated owners of fossil fuel stocks and bonds — such as the New York City Council — do certainly have the power to sell these assets as a statement of principle and act of protest. But this act of protest will have no direct impact on the operations of the fossil fuel companies as long as investors who are profit-seekers, as opposed to being motivated ethically, are willing to purchase the stocks and bonds that ethically motivated investors have put up for sale. Indeed, the core divestment strategy of selling fossil fuel assets is, at best, incomplete until one addresses this question: Is there somebody out there still willing to purchase these fossil fuel assets, and if so, and at what price? The answer is, yes, there are plenty of people ready to purchase shares of fossil fuel companies as long as they can profit by owning these shares.
In addition, the profit opportunities from owning oil, gas and coal company stocks are not diminished through the divestment-led sales per se. This is because divestment per se does not affect either how much it costs to produce fossil fuel energy or how much consumers are willing to buy. In theory, divestments might be capable of pushing down stock market prices of fossil fuel companies. But it is also likely that any such impact on stock prices is going to remain negligible as long as profit-seeking investors continue to make money. And they will continue to make money unless we succeed in either raising costs of producing fossil fuels or limiting how much fossil fuel energy consumers can buy.
Pollin hastens to add, as we did in 2015, that he and his co-author Tyler Hansen “greatly respect the accomplishments of the divestment movement”:
[Divestment campaigns] enable activists to fight for goals that can be clearly articulated and achieved within the institutions and communities in which they work and live, as opposed to attempting to influence public policies where the decision-making process is more remote. Divestment campaigns also have a demonstrated record of success in raising consciousness as to the urgency of dramatic action on climate change, and the need to confront the power of the fossil fuel industry as the single greatest barrier to advancing a viable climate stabilization project.
Despite these substantial accomplishments, we nevertheless conclude, based on the findings we present here, that most efforts now devoted to divestment campaigns would be better spent on more direct efforts to drive down fossil fuel consumption and CO2 emissions. We simply don’t have time to lose in pushing as effectively as possible on the fundamental goal which we cannot lose sight of — which is to drive CO2 and other greenhouse gas emissions down to zero as quickly as possible. We need to remember that, at best, divestment is a means to an end, with the end itself being eliminating emissions.
There’s a wealth of supporting analysis in the Pollin-Hansen paper (here’s link, again). But the takeaway remains that divestment is primarily a tool for movement-building rather than carbon-busting. Climate laggards like New York City Mayor Bill de Blasio who wrap themselves in the mantle of fossil-fuel divestment are just green-washing.
It’s not surprising that if you raise the price of something, people will buy less of it.”
Christina A. Roberto, health policy expert at the University of Pennsylvania’s medical school and lead author of a JAMA study of Philadelphia’s soda tax, quoted in Tuesday Could Be the Beginning of the End of Philadelphia’s Soda Tax, New York Times, May 21.
California Stars: Green Power from Enlightened Governance
Editor’s note: On May 31, energy-climate blogger David Roberts posted How California became far more energy-efficient than the rest of the country, a gorgeous distillation of our report, “California Stars.” Roberts’ post explains the policy dynamics underlying our report’s quantitative findings and shows how California has made energy efficiency and renewables the focal point of the state’s economy. His post also makes clear how far all 50 states still have to go while placing “California Stars” in the national political context.
Yesterday the Natural Resources Defense Council released California Stars, my report quantifying and documenting California’s relative success in decarbonizing its economy since the 1970s. I say “relative” because the report’s measure of success involves not one but two relational metrics: carbon reductions relative to economic activity, and California relative to the other 49 states.
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I was lead author of this NRDC report documenting how California has surpassed the rest of the U.S. in decoupling economic growth from fossil fuels.
California Stars: Lighting the Way to a Clean Energy Future establishes that from 1975 to 2016, the nation’s largest state reduced the fossil fuel inputs needed to support a constant amount of economic activity 18 percent faster than the rest of the country — a difference with enormous climate consequences. Had the other 49 states matched California’s rate of improvement, the report finds, annual emissions of carbon dioxide nationwide would be lower today by nearly 25 percent, or 1,200 million metric tons of CO2 — the equivalent of all carbon pollution from U.S. passenger vehicles.
There’s more about California Stars further below and in a graceful blog post by long-time NRDC attorney and energy strategist Ralph Cavanagh, who oversaw the report. I was principal author, which may come as a surprise to readers who have followed my career of late. For one thing, the report has nothing to do with carbon taxing. Moreover, a decade ago NRDC and I were on opposite sides of an internecine struggle over carbon pricing, with NRDC backing cap-and-trade and me, on behalf of the Carbon Tax Center, insisting on straight-up carbon taxes. More recently, in 2015, in a blog post, What an Energy-Efficiency Hero Gets Wrong about Carbon Taxes, I went to considerable lengths to counter criticisms from an NRDC energy-efficiency superstar that carbon taxing was too blunt an instrument to do much good in cutting down emissions.
All the same, for over 40 years it has been abundantly clear, even from my East Coast perch, that even without a carbon tax, California’s government has steered its economy more assertively toward energy efficiency and renewable energy than has any other U.S. state. (California does have a modest cap-and-trade program.)
Through the California Energy Commission, a first-of-a-kind agency legislated in the last year of Gov. Ronald Reagan’s administration and staffed in Gov. Jerry Brown’s first (1974 and 1975, respectively), California established not just the first efficiency standards for major appliances and buildings but a process for continually updating those standards to align with — and further incubate — technological advances by which cooling, heat and light may be furnished with progressively smaller energy inputs. These policies, along with innovations that enabled electric and gas utilities to bankroll customer “end-use” efficiency investments, later spread to most of the other 49 states, greatly amplifying their single-state impacts. But they took root first and, it appears, most deeply in California.
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Table 1 from “California Stars” shows that from 1975 to 2016 California reduced its use of fossil fuels per unit of economic output by 70%. For the other 49 states collectively, the reduction was only 60%. That percentage difference equates to 1,200 million excess metric tons of carbon pollution in 2016 alone—a huge missed opportunity for the rest of America.
Needless to say, these policies thrilled me, even from afar. And the policies themselves seemed firmly planted in a statewide culture of energy efficiency and innovation. To be sure, you couldn’t discern that culture in the state’s sprawling subdivisions and freeways, but you could sense it in the passionate conversations about energy that caromed among the policy beehives that were springing up around the state: at the California Energy Commission and the state Department of Natural Resources; at the University of California’s Lawrence Berkeley Laboratory and its Energy Resources Group and at Stanford; at NRDC, which was making efficiency standards sexy not only to other environmentalists but to appliance manufacturers and builders; and at the Environmental Defense Fund, whose pathbreaking analyses were suggesting that investing in efficiency and renewables could make utilities financially stronger.
The font of this activity was Gov. Brown. Whether or not he grasped all of the intricacies — and he probably did — Brown’s personal asceticism and hippie-ish disdain for standard modes of consumption (at least in his first go-round as governor) seemed to furnish the cultural DNA for California’s quiet but consequential energy-policy revolution. This was palpable during my three working trips to the state during Brown’s first term: in 1976 when I campaigned around the state for a ballot measure limiting new reactors; in 1977 when I testified for EDF and NRDC in nuclear power siting cases in San Diego and San Francisco; and in 1978 when I spent a month in Los Angeles with the PhD economist Vince Taylor, workshopping my analyses of cost escalation in nuclear power.
Within a year, that work would catapult me to national prominence, when the Three Mile Island reactor outside Harrisburg, PA melted down and I, providentially, had the computer printouts (regression analyses of the relentlessly rising costs to build nuclear plants throughout the 1970s) that answered the question on the lips of seemingly every energy-journalist in America: what would the TMI accident do to nuclear power economics? Almost overnight, my energy-policy work narrowed to a single-minded focus on nuclear power costs — which ended only when I took up urban-bicycling advocacy near the end of the 1980s.
By the early eighties, then, I had to give up my close watch on California’s energy efficiency progress. Last September, however, with Gov. Brown’s fourth and final term drawing to a close and with climate concern skyrocketing in the U.S., the time seemed right to determine how far California had actually gotten off fossil fuels since the start of that quiet revolution in energy governance in the seventies. CTC intern (and U-Chicago rising sophomore) Rohan Kremer Guha and I dug up California-specific fossil fuel and GDP data and placed it alongside data for the U.S. as a whole, which led to a preliminary version of the table above.
In a nutshell, we found that from 1975 (the approximate start date of that revolution) to 2016 (the most recent year with consistent data):
- California’s use of fossil fuels increased by 23 percent, a bit more than the rate for the rest of the U.S. (20 percent)
- During that same period, California’s economy more than quadrupled in size, far surpassing the other 49 states’ tripling
- Adjusting the first figures by the second, California reduced its use of fossil fuels per unit of GDP by 70 percent; for the rest of the U.S., the reduction rate was 60 percent
The last bullet point led directly to the startling finding reported at the top of this post: Had the other 49 states reduced fossil fuel use relative to economic activity at the same pace as California, nationwide carbon emissions would have been lower in 2016 by 1,200 million metric tons, or 24 percent.
Proof indeed, not just of California’s leadership but of the rest of the country’s sluggishness . . . and of the consequences of the gap between the two. Because of that sluggishness, the U.S. missed a chance to eliminate carbon pollution equivalent to CO2 emissions from all 200 million passenger cars and (light) trucks in the country. I pitched a report built on this analysis to our friends at NRDC, and our collaboration produced this report.
I’ll have more to say soon, not just on the report itself but on what it says about Jerry Brown’s climate record. You can download the report (pdf) directly from NRDC’s Web site and comment on it here via the link just below the headline near the top of this post.
Avoiding climate breakdown will require cathedral thinking. We must lay the foundation while we may not know exactly how to build the ceiling.”
Swedish climate campaigner Greta Thunberg, addressing Parliament (U.K.), quoted in The Uncanny Power of Greta Thunberg’s Climate-Change Rhetoric, The New Yorker magazine, April 24.
A decade ago, I thought the most efficient climate policy is making dirty energy more expensive. It is the most efficient, but if politically it can’t happen, well, then it’s not the most efficient.”
NY Times op-ed columnist David Leonhardt, discussing his Sunday Times Magazine article, The Problem With Putting a Price on the End of the World, April 13. (The quote appears on p. 6 in the magazine’s print edition and is not available digitally.)
An Historic Win in NYC Could Pay Huge Climate Dividends
“We have now disproved the idea that we’re never, in this country, going to tax or charge a significant environmental harm.” That quote, uttered by me this morning to a writer for Earther magazine, is as good a lead-in as any to tell you about an historic victory in New York that I view as a big shot in the arm for carbon taxing.
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See opening paragraph for link to the story in Earther magazine.
This past weekend, the state legislature approved a far-reaching, first-time-in-this-hemisphere plan to charge vehicles driven in the heart of a big city — mid and lower Manhattan in this instance — a congestion fee. While the bill punts key details to a new city-state panel, the contours are clear enough: driving a private car into the “congestion zone” south of 60th Street will cost as much as $12 during peak hours, with higher fees for trucks. When the plan starts up, in January 2021, traffic in the zone is expected to thin enough to raise travel speeds in the zone by 12-15%; that figure will rise as the estimated billion dollars a year in congestion revenues (paid by the remaining vehicles) are invested in modernizing the subways.
As most Carbon Tax Center followers and supporters know, I worked hard for this win. Over the past dozen years I spent 5,000 hours (!) creating and deploying a spreadsheet model that is kaleidoscopic enough to calculate the traffic and revenue and environmental benefits of any Manhattan pricing scheme, yet transparent and nimble enough to be used by other Excel jockeys — including the consultants that the governor’s office hired to scope out congestion pricing. I also wrote scores of posts for Streetsblog, the scrappy and admirable blog that is a nerve center for NYC’s “livable streets” community, each post aimed at steeling advocates on some aspect of congestion pricing math, policy and politics.
I say this not to tout my role. The forces that coalesced behind congestion pricing and made it unstoppable were immense, as they had to be to bring along the governor and legislature in the face of widespread cynicism, apathy, resentment and motor-worship. There were scores, then hundreds, then thousands of advocates pushing for this. That said, I believe that my years of calculations, both mathematical and political, lend some gravity to my thoughts on the meaning of this victory.
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The huge mutual regard among NYC “livable streets” advocates helped push congestion pricing through the legislature.
New York’s enactment of congestion pricing is a big win for climate. Not in the sense of immediately reducing carbon emissions. By itself, the charging scheme will eliminate only around a million tons of CO2 a year (half by reducing vehicle use, and half by diminishing stop-and-go traffic). That’s a mere 1/5,000 of U.S. emissions. But it will make New York — and other U.S. cities, if they follow suit — more fair, civilized and prosperous. That will help shrink the country’s carbon footprint by fostering growth in “inherently green” (smaller-footprint) cities rather than sprawled-out suburbs and exurbs, as Jeff Blum and I pointed out last month in The Nation (and on this blog).
But an even bigger payoff lies, I believe, in establishing the precedent of finally taxing an environmental harm. With congestion pricing, the harm being taxed isn’t emissions, it’s traffic congestion (more technically, each vehicle’s “congestion causation” from abetting the slowing of traffic). The same principle — the most direct way to effectuate less of something is to price it at its true cost — animates carbon taxing.
Society is concluding at last that carbon emissions must be shrunk, rapidly and radically. That requires (i) intelligently regulating sources of emissions (building codes, efficiency standards), (ii) judiciously subsidizing evolving alternatives (wind, solar), (iii) researching and developing promising new low-carbon demand and supply technologies, and (iv) taxing fossil fuels so that their climate damage figures in their price.
U.S. states and, at times, the national government haven’t done a bad job on the first three. But we’ve never done the last: taxing fossil fuels’ carbon content and emissions. Indeed, we’ve never explicitly taxed any large-scale environmental harm. And the double defeat of carbon tax initiatives in Washington state made it easy to lose hope that we ever would.
Now, the enactment in New York of a plan that frontally taxes a major societal harm — driving in a congested (and transit-rich) city center — has disproved the idea that substantially taxing an environmental harm is impossible in the U.S. We can put that particular bit of defeatism to rest.
To be sure, enacting a national carbon tax remains a far heavier lift than a single city or state passing congestion pricing. While regional factionalism — between Manhattan and the boroughs, between NYC and its suburbs — was a big hurdle, congestion pricing’s lesser scale allowed the transit benefits from the congestion revenues to take center stage in the advocacy campaign.
Indeed, subway relief paid for with congestion tolls emerged as a far more powerful organizing theme than congestion relief itself. So be it. The takeaway is to make a publicly guided, investment-based program — a Green New Deal — the rubric for tackling climate change and enacting a robust carbon tax as both a pay-for and a powerful change agent.
We’ll post more about that in the coming weeks. For now, it’s fair to say that carbon taxing for the U.S. has taken a major step forward. With enactment of congestion pricing for New York City, the road to a carbon tax and meaningful climate policy has definitely gotten clearer.
I’m looking at global warming — I don’t need to see the graphs. I’m living it and everybody else here is living it.”
Cathy Crain, mayor of Hamburg, IA, referring to the role of climate change in increasing the frequency of extreme weather events, following two record-setting floods that devastated Hamburg in a single decade. — An Iowa Town Fought and Failed to Save a Levee. Then Came the Flood., New York Times, March 20.
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