Charles Komanoff – Page 2

Carbon Tax Center

Pricing carbon efficiently and equitably

Will Energy Efficiency Ever Get Its Due?

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After all these years and despite so many accomplishments, measures that save energy remain U.S. climate policy’s bastard child.

Even defenders of energy efficiency sell it short. The latest instance was last Friday’s NY Times column, Give Me Laundry Liberty or Give Me Death!, by the paper’s resident polemicist, the economist Paul Krugman.

Electricity Savings’ top role in reducing electric-sector emissions is especially critical because no other sector (transport, industry, etc.) cut emissions more than marginally.

Krugman rightly savaged Congressional Republicans for contesting U.S. Energy Department efficiency standards for washing machines and other major energy-consuming appliances. His column reminds us that today’s G.O.P. never passes up an opportunity to force fossil fuels on the American public.

As Krugman noted, Republicans’ depiction of Democrats as enemies of freedom is exactly backwards: “Regulations ensuring that the appliances on offer are reasonably efficient reduce people’s cognitive burden — you might even say they increase our freedom,” by unshackling consumers from the task of weeding out inefficient (and expensive-to-run) appliances from efficient ones.

But consider what Nobel economics laureate Krugman left out: The only U.S. sector that has cut carbon emissions by more than token amounts since 2005 is electricity, furnishing a whopping 92 percent of the overall drop in emissions in 2023 since 2005. (See bar graph further below.) And energy savings, measured as kilowatt-hours that didn’t need to be generated because electricity savings curbed demand, accounted for 40 percent of electricity-sector carbon reductions — besting the 36 percent from power generators’ shift from coal to less-carbon-intensive fossil gas, and far surpassing the combined 24% share from growth in wind and solar electricity. (See pie-chart above. Details follow at end of post.)

Why are electricity savings undervalued?

Since 2005, the U.S. economy has grown by 40 percent in real (inflation-adjusted) terms. Yet over the same 18 years, U.S. electricity generation barely budged, rising just 5 percent. That is an immense change from mid-(20th)-century, when electricity usage typically grew each year by 6 or 7 percent, practically doubling every decade. This wrenching apart of electricity growth from economic growth has enabled the increased penetration of fossil gas-fired electricity and the rapid increase in wind and solar electricity to bite deeply into coal-fired power generation rather than simply add to it.

Yet energy savings are downgraded in energy and climate discourse. It’s not hard to see why.

First, energy saving is invisible. There are no ribbon-cuttings for energy-efficient buildings or appliances, no medals for low-energy lifestyles. Super-efficient houses or office buildings occasionally are singled out for praise, but what’s the visual — a low-electricity or gas bill? Or, worse, Jimmy Carter’s White House cardigan, which 1970s media held up for ridicule?

Second, saving energy lacks powerful lobbies. There’s no energy-saving counterpart to the American Gas Association, the American Wind Energy Association, the Solar Energy Industry Association, the National Coal Association, and certainly not the American Petroleum Institute, which was represented at the Mar-a-Lago dinner last week at which ex-president Trump pressed the fossil fuel industry for a billion dollars in campaign contributions. Only the American Council for an Energy-Efficient Economy and the Natural Resources Defense Council persistently advocate for energy effiicency, and they do so as tech experts and champions of the greater good rather than as arm-twisting lobbyists, and certainly not as bundlers of campaign cash.

Lime-green bars show CO2 emissions from electricity generation. The sole other sector with substantially lower 2023 emissions, “Other” Petroleum, shown in yellow, shrank due to natural gas’s increasing industrial-market share.

Energy efficiency and savings also suffer from a measurement problem. Implicit in measuring their climate contribution is a counterfactual: what would energy requirements and emissions have been without the energy savings?

For this post as well as predecessor posts in 2016 and 2020 I used as a baseline U.S. electricity generation if the 1975-2005 ratio between electricity growth and GDP growth had persisted. I think that was reasonable, but who’s to say? The  avoided kWh’s I computed for the pie chart depend on a measuring convention that is subject to argument.

(Note that “offshoring” — the compositional shift of the U.S. economy toward services and away from manufacturing, with imports from China and other Asian countries furnishing the lost production — has also contributed to reducing the link between electricity and domestic economic activity; however, its numerical impact only accounts for a fraction of the flattening of U.S. electricity consumption over the paste two decades.)

Energy Efficiency’s Respect Deficit Is Consequential

Undervaluing energy efficiency means that energy-saving policy measures get short-changed. Efficiency standards for appliances, vehicles and buildings are insufficiently supported, enacted and enforced, leaving them vulnerable to being watered down or blocked altogether.

That’s the obvious part. More consequential is the cultural and political fallout. The short shrift accorded energy savings contributes to downplaying the demand side of energy and climate. This in turn has contributed to the unfortunate narrowcasting of climate campaigns to campaigns to block supply expansions. Measures that would curb consumption get disregarded, even though they are arguably more enduring and effective in curbing climate-damaging emissions than campaigns to halt drilling or pipelines, which largely relocate supply expansions elsewhere.

A major casualty of this narrowcasting is sidelining of carbon pricing as a serious policy contender. That’s not to say that the U.S. would necessarily have robust carbon pricing if energy savings were given their due. Rather, the marginalizing of energy savings and of carbon pricing are mutually reinforcing.

Part of the power of carbon taxing is that it operates on both the demand and supply sides of the fossil-fuel and emissions equation. (Another part is that carbon pricing complements virtually every other emissions-reducing policy or program.) Downgrading the demand aspect of our energy and climate miasma does a disservice to carbon pricing — and our climate.

Calculation Details

Calculations for this post were made in CTC’s carbon-tax model spreadsheet (2.2 MB downloadable Excel file). See Clean Electricity tab and Graphs tab. Pie-chart shares are derived by comparing 2023 and 2005 generation for solar (including distributed solar), wind and fossil gas and applying industry-average CO2 emission factors for coal and gas. Electricity-savings slice was computed by subtracting actual 2023 U.S. electricity generation from hypothetical 2023 generation if the average 1975-2005 ratio between electricity growth and GDP growth had continued through 2023, and then ascribing a per-kWh CO2 emission factor calculated as the mean of gas and coal CO2/kWh.

In crediting electricity with 92% of all 2005-2023 U.S. CO2 reductions (from fossil-fuel burning), I divided electricity-sector reductions of 983 million metric tons (“tonnes”) of CO2 by the total reduction of 1,064 million tonnes. However, the denominator is deflated by including “negative reductions” from passenger vehicles (14 million tonnes) and gas for industry (206). Even removing those sectors from the denominator, electricity accounted for 77% of total gross reductions (983 divided by 1,284). Note that these figures are shown in the Outcomes tab of CTC’s carbon-tax model.

Only a National Carbon Tax Can Halve U.S. Carbon Emissions

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The first major update of CTC’s carbon-tax model since 2021 is now in the books, calibrated to 2023 emissions and the putative emissions-reducing provisions of the Inflation Reduction Act. One result stands out: Without federal legislation mandating a robust national carbon tax, the U.S. won’t come close to achieving the hoped-for 50% decline in carbon emissions (from 2005 levels) in the reasonably foreseeable future.

A $20/$15 carbon tax could halve carbon emissions by 2035

A national carbon tax starting next year at $20/ton and rising annually by $15/ton will cut U.S. CO2 emissions in half from 2005 levels in 2035. To halve emissions by 2030 requires $25/ton for both the starting price and the annual rises.

A national carbon price that took effect in 2025 at $20 per (short) ton and rose by $15 per ton each year would, by 2035, halve U.S. emissions of carbon dioxide from fossil fuel combustion: from 6,120 million metric tons (“tonnes”) in 2005, the standard baseline year, to an estimated 3,068 million tonnes in 2035, according to CTC’s model (Excel spreadsheet, 2 MB). That computes to a 50% reduction (rounded from 49.9%).

[NB: The site hosting the Excel file is temporarily down, please check back soon.]

But without a national carbon price, our model projects U.S. emissions in 2035 of 4,606 million tonnes. That would be just 25% below 2005 emissions, putting the country only halfway to the 50%-reduction goal in 2035. And even that piddling progress entails pushing back the customary 2030 target for halving U.S. emissions to 2035, a 5-year delay.

To be fair, the “halving by 2030” goal is generally construed to encompass not just carbon dioxide but also methane, which is regarded as lower-hanging greenhouse-gas fruit on account of its relative concentration in more easily regulatable oil and gas extraction and transport. This January methane began to be subjected to emissions pricing, through a provision of the Inflation Reduction Act mandating that emissions above a certain threshold be taxed at a rate of $900 per tonne.

But even assuming an optimistic three-fourths reduction in methane and other non-carbon GHG’s, CO2 emissions from fossil fuel-burning would have to fall by 44% from 2005 to achieve an overall 50% reduction in U.S. greenhouse gas emissions. Without a national carbon price, the projected CO2 reduction from 2005 is just 17% in 2030 and, as noted, only 25% in 2035, according to CTC’s model.

Halving carbon emissions by 2030 requires a more heroic carbon tax, one starting at $25/ton in 2025 and rising annually by that amount

We also ran the CTC model to determine the carbon price level and trajectory required to halve U.S. 2005 carbon emissions by 2030 rather than 2035. Talk about a tall order! Here’s what the requisite carbon tax would look like:

  • The carbon tax would take effect in 2025 (same as in the 2035 scenario).
  • The initial price would be $25 per ton of CO2 rather than $20.
  • The annual price rise would be the same $25/ton, rather than just $15/ton in the 2035 scenario. That means reaching triple digits in the tax’s fourth year.
  • And — this is a bit technical — we’re relaxed the model assumption of the maximum annual tax rise to which the U.S. economy can fully react, from $20/ton previously to $25/ton.

It goes without saying that the present-day American political system isn’t equipped to enact and implement such an “heroic” (an adjective we prefer to “draconian”) carbon tax.

The still-lonely radical center

Prominent voices calling for carbon taxes beyond token amounts (e.g., $10 or $20 per ton with little or no increases) are precious few, not just in absolute terms but relative to the pre-2010 period in which climate concern was widespread and neither the left nor the right had been consumed by their respective demonizations: carbon pricing (on the left) or climate concern of any sort (on the right).

Indeed, here at Carbon Tax Center, we’ve traded in our web pages that previously celebrated carbon tax supporters for pages like Carbon Pricing and Environmental Justice, Progressives and Carbon Pricing, and Conservatives, all of them grouped under a heading of “Politics.” Each is essentially a litany of grievances and rejections of carbon pricing and/or climate action, period.

This chart, from CTC’s newly updated carbon tax model, shows the futility of looking for a single invention or regulation or subsidy to slash U.S. emissions. Fossil fuels suffuse our economy, making robust carbon pricing essential to achieving big across-the-board cuts.

This isn’t polarization, it’s a simultaneous disavowal by both ends of the political spectrum of the lone plausible transformational climate-preserving policy measure. (Rather than “ends” I should say “sides” of the spectrum, given that anti-pricing has spilled over from the confines of the respective extremes and now appears to occupy most of the two sides.)

Omens

Consider these two minor but telling signposts from the past week.

One was a NY Times “Sunday Review” guest essay last weekend, I’m a Young Conservative, and I Want My Party to Lead the Fight Against Climate Change, by one Benji Backer, founder-director of the American Conservation Coalition.

Alas, the essay was cut from the same generic cloth as other conservative calls to climate action. Here’s an excerpt:

We cannot address climate change or solve any other environmental issue without the buy-in and leadership of conservative America. And there are clear opportunities for climate action that conservatives can champion without sacrificing core values, from sustainable agriculture to nuclear energy and the onshoring of clean energy production.

Ho-hum. But, most strikingly, zero mention of carbon pricing — not even a nod to the revenue-neutral type such as fee-and-dividend that circumvents right-wing canards about government overreach by “dividending” the carbon revenues to households, thus correcting the market failure driving carbon emissions without “growing the government.”

So much for the right wing. On the left, I had the frustrating experience of meeting a director of an iconic American environmental organization at a public event and bonding with him over our shared dismay at the organization’s post-2016 submission to anti-carbon-pricing rhetoric . . . only to be ghosted when I tried to arrange a meet-up to possibly grow our newfound patch of common ground.

So much for dialogue in service of effective climate policy.

Can’t we bring U.S. emissions down sharply without carbon pricing?

Alas, no. U.S. emission progress perennially falls short of even modest hopes. Almost from the moment the 2022 Inflation Reduction Act — which CTC supported from the git-go — was enacted into law, it has bumped up against a calamity of transmission bottlenecks, supply-chain woes and high interest rates. Even worse, perhaps, is the legal-regulatory “default” against building almost anything, even essential elements of the clean-energy infrastructure the IRA was intended to unlock

(Just after this post went up, I came across NY Times columnist Ezra Klein and Atlantic staff writer Jerusalem Demsas’s trenchant dive into the permitting-resistance phenomenon. Their analysis traces much of today’s disabling red tape and NIMBYism to Democratic Party empathy that prioritizes concerns about marginalized constituencies over the common good. Audio version here, transcript here.)

And let’s not overlook the emergent hellspawns of energy demand like AI processing, cyber-currency computing and ever-larger SUV’s and pickup trucks driven ever more miles, all of which threaten to pile on new carbon emissions almost as fast as incumbent emissions are removed.

As we’ve argued in post after post — just scroll through our monthly archives — these and other decarbonization derailments would be greatly alleviated by the robust carbon taxes we scoped above. Pricing the climate benefits of reduced fossil fuel use into the vast array of alternatives — from clean energy to all the ways of using less — will raise their profitability and, before long, bend society’s defaults toward replacing fossil fuels.

Our updated carbon-tax model shows that U.S. carbon emissions fell by 2.3% from 2022 to 2023. If there weren’t a climate emergency, that might qualify as a decent win. But in our real, overheating world, that rate doesn’t come close to the 4.1% compound annual decline needed to halve 2005 emissions by 2035, much less the 6.9% annual emissions shrinkage required to meet the same goal in 2030.

The insufficiency of even the best-intentioned policies and programs to meet necessary carbon targets without robust carbon taxing can’t be hidden indefinitely. The carbon tax reckoning awaits.

Diary of a Transit Miracle

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Over the weekend the Washington Spectator published my essay, Diary of a Transit Miracle, recounting the arduous march of NYC congestion pricing from a gleam in a trio of prominent New Yorkers’ eyes at the end of the 1960s, to the verge of startup at the upcoming stroke of midnight June 30, the startup time announced by the MTA last Friday.

Landing page for this post’s original version.

I’m cross-posting it here — the third post on the subject in this space in the past 12 months (following this in December and this post last June) — because the advent of congestion pricing in the U.S. is “a really big deal,” as a number of friends and colleagues have told me in recent weeks. As my new essay makes clear, charging motorists to drive into the heart of Manhattan isn’t just a rejection of unconstrained motordom, it’s a new beachhead in “externality pricing” — social-cost surcharging — of which carbon taxes are the ultimate form.

The essay features two governors, two mayors — one of whom I served a half-century ago as a lowly but admiring data cruncher — a civic “Walter Cronkite,” a Nobel economist, raucous transit activists, a gridlock guru and yours truly, plus a cameo appearance by Robert Moses. It includes footage of the historic 1969 press conference in which Mayor John Lindsay and two distinguished associates enunciated the core idea of using externality pricing to better balance automobiles and mass transit that animated the arduous but ultimately triumphant congestion pricing campaign.

  — C.K., April 29, 2024

Diary of a Transit Miracle

A miracle is coming to New York City. Beginning on July 1, and barring a last-minute hitch, motorists will soon pay a hefty $15 to enter the southern half of Manhattan — the area bounded by the Hudson River, the East River and 60th Street.

An anticipated 15 percent or so of drivers will switch to transit, unsnarling roads within the “congestion zone” and routes leading to it. The other 80 or 90 percent will grumble but continue driving. That is by design. The toll bounty, a billion dollars a year, will finance subway enhancements like station elevators and digital signals that will increase train throughput and lure more car trips onto trains.

The result will be faster, smoother commutes, especially for car drivers and taxicab and Uber passengers, who will pay a modest surcharge of $1.25 to $2.50 per trip. Drivers of for-hire vehicles will benefit as well, as lesser gridlock leads to more fares.1

The miracle is three-fold: Winners will vastly outnumber losers; New York will be made healthier, calmer and more prosperous; and that this salutary measure is happening at all, after a half-century of setbacks.

Obstacles to congestion pricing

Congestion pricing, as the policy is known, faced formidable obstacles even beyond the difficulty inherent in asking a group of people to start forking over a billion dollars a year for something that’s always been free.

Congestion pricing also had to contend with: an ingrained pro-motoring ideology that casts any restraint on driving as a betrayal of the American Dream; a general aversion to social-cost surcharges (what economists call “externality pricing”); exasperation over the region’s balkanized and convoluted toll and transit regimes; and, of late, a decline in social solidarity and appeals to the common good.

The advent of congestion pricing in New York is, thus, cause not just for celebration but wonderment. How did this wonky yet radical idea advance to the verge of enactment?

Origins

The trail begins in the waning days of 1969, when newly re-elected mayor John Lindsay recruited two well-regarded New Yorkers to devise a plan to fend off a 50 percent rise in subway and bus fares.

William Vickrey, a Canadian transplant teaching at Columbia and a future Nobel economics laureate, was a protean theorist of externality pricing. New York-bred mediator Theodore Kheel was admired as a civic Walter Cronkite for his plain-spoken common sense.

Lindsay, too often dismissed as a lightweight, understood mass transit as key to loosening automobiles’ spreading chokehold over the city. He had made combating air pollution a pillar of his first term and was fast becoming an exemplar of urban environmentalism. From his municipal engineers, Lindsay knew that technology to clean up tailpipes still lay in the future. A transit fare hike that would add yet more vehicles to city streets imperiled his clean-air agenda.

The triumvirate proposed a suite of motorist fees to preserve the fare. Their program ― higher registration fees and gasoline taxes, a parking garage tax, doubled tolls ― though mild in today’s terms, threatened powerful bureaucracies and their auto allies. Newly dethroned “master-builder” Robert Moses opined that Kheel, in his zeal to save the fare, had “gone berserk over bridge and tunnel tolls.”2 The program went nowhere.

L to R: Kheel, Lindsay, Vickrey. Click arrow to view (please excuse two brief garbled passages toward end).

Moses was right to be alarmed. From a City Hall podium on Dec. 16, 1969, Mayor Lindsay showcased Kheel’s and Vickrey’s respective reports, “A Balanced System of Transportation is a Must” and “A Transit Fare Increase is Costly Revenue.” (Click link in still photo above to view 27-minute video.) The trio propounded a new urban doctrine rebalancing automobiles and public transportation: “Automobiles are strangling our cities… Starving mass transit imposes costs that are difficult to measure, yet real… Correcting the fiscal imbalance between transit and the automobile is key to enhancing our environment and quality of life…”

Their remarks set generations of urbanists on course toward congestion pricing.

Setbacks

Quantifying those precepts became my research agenda 40 years later. In the interim, two creditable attempts to enact congestion pricing crashed and burned.

The central element of Lindsay’s 1973 “transportation control plan” was tolls on the city’s East River bridges, a measure designed to eliminate enough traffic to satisfy federal clean-air standards. Though the plan’s formal demise didn’t come until 1977, in legislation written by liberal lawmakers from Brooklyn and Queens, the toll idea never stood a chance. Electronic tolling was 20 years away, and adding stop-and-go toll booths seemed more likely to compound vehicular exhaust than to cut it.

Three decades later, in 2007, Mayor Michael Bloomberg asked Albany to toll not just the same East River bridges but also the more-trafficked 60th Street “portal” to mid-Manhattan. Predictably, faux-populist legislators saw Bloomberg’s billionaire wealth as an invitation to denounce the congestion fee as an affront to the little guy.

The mayor may have hurt his cause by presenting congestion pricing primarily as a climate and pollution measure. The pollution rationale was no longer compelling in the way it had been in Lindsay’s day, as automotive engineers had slashed rates of toxic vehicle exhaust ten-fold. Appeals tied to global warming also fell flat; remember, congestion pricing contemplated that most drivers would stay in their fossil-fuel burning cars.

This isn’t to say that congestion pricing confers no climate benefits. Rather, the benefits are subtler ones that can be hard to convey to voters, such as making climate-friendly urban living more attractive. A further benefit may come as congestion pricing demonstrates the unique power of externality pricing, as explained below.

From the Rubble

Even as Bloomberg’s toll plan was faltering in Albany, new loci of support were germinating in the city.

Changing times demanded not just the intellectual leadership of think-tanks like the Regional Plan Association and the good-government Straphangers Campaign, but gritty, grassroots transit organizing. Enter the newly-minted Riders Alliance.

2017 subway handbill exemplified new militancy targeting Gov. Andrew Cuomo for failing transit.

As subway service began cratering in 2015, the inevitable result of budget-raiding by a skein of governors, the Alliance posted crowd-sourced photos of stalled trains and jammed platforms alongside demands for improved service from “#CuomosMTA.” Before long, the papers were pointing the finger at the governor not just in “Why Your Commute Is Bad” explainers but in tear-jerkers like the Times’ May 2017 classic, “Money Out of Your Pocket”: New Yorkers Tell of Subway Delay Woes.

The drumbeat was deafening. Cuomo finally blinked. On a Sunday in August 2017, he phoned the Times’ Albany bureau chief and handed him a scoop for the next day’s front page: Cuomo Calls Manhattan Traffic Plan an Idea ‘Whose Time Has Come’.

The “traffic plan” was congestion pricing.

Data Cruncher

Two months later, Cuomo’s staff summoned me to the midtown office of the consulting firm they had retained to “scope” congestion pricing ― essentially, to compute how much revenue tolls could generate. They wanted to see if an Excel spreadsheet model I had constructed and refined over the prior decade could aid their scoping process.

The model was called the Balanced Transportation Analyzer, a name bestowed in 2007 by Ted Kheel.

Ted, in his nineties, had recruited me to determine whether a large enough congestion toll could pay to make city transit free. The idea worked on paper but foundered politically. Nevertheless, Ted saw in my Excel modeling a way to capture phenomena like “rebound effects” (motorists driving more as road space frees up) and “mode switching” between cars, trains, buses and taxicabs, that he and Prof. Vickrey had identified in their 1969 work but lacked the computing ability to quantify.

Ted’s philanthropy enabled me over the next decade to expand, test and update my transportation modeling. With a hundred “tabs” and 160,000 equations, the “BTA” can instantly answer almost any conceivable question about New York congestion pricing, as well as these two central ones: how much revenue it will yield, and how much time will travelers save in lightened traffic and better transit.3

The BTA model aced its 2017 audition and became the computational engine for the congestion pricing legislation the governor’s team enacted into law in 2019. Its impact has been even broader.4 “Having the model helped make the case with the public, journalists, elected officials and others,” Eric McClure, director of the livable-streets advocacy group StreetsPAC, wrote recently, in part by helping congestion pricing proponents push back on opponents’ exaggerated claims of disastrous outcomes and their incessant demands for special treatment. The model may also have influenced the detailed toll design adopted by the MTA board earlier this year, which hewed close to the toll design I had recommended last summer.5

The BTA also provided sustenance during congestion pricing’s seven lean years ― the 2009-2016 period in which the torch was kept lit by a new triumvirate known as “Move NY” ― traffic guru “Gridlock” Sam Schwartz, the very able campaign strategist Alex Matthiessen, and myself. The model helped our team evangelize congestion pricing’s transformative benefits to elected officials and the public. This, I believe, was a key element in mustering the critical mass of support that ultimately swayed not one but two governors.

The Hochul Factor

New York Lieutenant Governor Kathy Hochul’s ascension to governor in August 2021 could have been congestion pricing’s death knell. The toll plan was adrift in the federal bureaucracy, and its latter-day champion Andrew Cuomo had exited in “me-too” disgrace. His successor, from distant Buffalo, wasn’t beholden to New York or congestion pricing.

Hochul, who as governor controls city and regional transit, could have disowned congestion pricing as convoluted, bureaucratic and tainted. Instead, she became a resolute and enthusiastic backer. Her spirited support, both in public and behind the scenes, became the decisive ingredient in shepherding congestion pricing to safety.

Why the new governor went all-in on congestion pricing awaits a future journalist or historian. Had she spurned it, the opprobrium from downstate transit advocates would have been intense; but there doubtless would have been cries of “good riddance” as well. Vickrey, Kheel and Riders Alliance notwithstanding, it’s not clear how closely New Yorkers — including transit users — connect congestion tolls to improved travel and a better city.

What makes Hochul’s embrace especially impressive is that congestion pricing is, in a real sense, an attack on a jealously guarded entitlement: the right to inconvenience others by usurping public space for one’s vehicle. The classic lament about entitlements’ iron grip is that “losers cry louder than winners sing.”6 Yet in this case, it seems, potential losers — actual and aspiring zone-bound drivers — are being out-sung by transit interests seeking, in Kheel’s 1969 words, a better balance between public transportation and automobiles.

Credits and Prospects

Let us now praise Andrew Cuomo’s crafting of the legislation that teed up congestion pricing’s successful run.

Rather than specifying a dollar price for the tolls, or a precise traffic reduction, his 2019 bill established a revenue target: sufficient earnings to bond $15 billion in transit investment — which equates to $1 billion a year to cover debt service. This device trained the public’s focus on the gain from congestion pricing (better transit) instead of the pain (the toll). Equally important, with this deft stroke, any toll exemption that a vocal minority might seek would mathematically trigger higher tolls for everyone else. The effect was vastly heightened scrutiny of requests for carve-outs.

Which cities will follow on New York’s heels? No U.S. urban area comes close to our trifecta of gridlock, transit and wealth. Sprawling Los Angeles or Houston, or even Chicago for that matter, might be better served by more granulated traffic tolls than New York’s all-or-none model.

Perhaps Asia’s megalopolises will be swept up in our wake. In the meantime, my focus will be on the holy grail of externality pricing: taxing carbon emissions. Every economist knows that the surest and fastest way to cut down on a “bad” is by taxing it rather than subsidizing possible alternatives. Yet that approach remains counter-intuitive and even anathema to nearly everyone else.

A huge and important legacy that New York congestion pricing could provide is to prove that intelligently taxing societal harms need not be electoral suicide. This proof could help unlock a treasure-trove of prosperity-enhancing pricing reforms including, most prominently, robust carbon taxing.

The author, a policy analyst based in New York City, worked in Mayor Lindsay’s Environmental Protection Administration in 1972-1974. He met Bill Vickrey in 1991 and worked closely with Ted Kheel from 2007 to 2010.

Endnotes

  1. The new passenger surcharges of $1.25 for taxicabs and $2.50 for “ride-hails” (principally Ubers) apply to trips touching the congestion zone. These will be partially offset by lower fares owing to shorter wait-time charges due to faster travel speeds.
  2. Quote is from Moses’ August 23, 1969 guest essay in Newsday, “Is Rubber to Pay for Rails?” (not digitally available).
  3. The current version of the BTA is publicly available at this link: (18 MB Excel file).
  4. See Fix NYC Advisory Panel Report, Appendix B, 2019.
  5. A Congestion Toll New York Can Live With, July 2023, by Charles Komanoff, co-authored with Columbia Business School economist Gernot Wagner.
  6. As pronounced by University of Michigan economist Joel Slemrod, in Goodbye, My Sweet Deduction, New York Times, by Eduardo Porter and David Leonhardt, Nov. 3, 2005.

A Tantalizing New Front in Externality Pricing: Taxing Helicopter Noise

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The New York City Council today held a hearing on a suite of bills to limit noise from helicopter flights over New York City. The bill most pertinent to carbon taxing is a resolution supporting a proposed NY State $400 “noise tax” on flights taking off or landing at the city’s heliports.

My testimony, presented below, situates the proposed noise tax in the context of social-damage costing, also known as externality pricing. Previous CTC posts in this vein have covered NYC’s forthcoming congestion pricing plan, a California growers’ program that taxes excess withdrawals of groundwater for farming, and Berkeley, CA’s soda tax.

Educator from the NYC harbor ecology group Billion Oyster Project, at the April 16 City Hall Park rally organized by Stop The Chop NY/NJ. To speaker’s left are Councilmembers Lincoln Restler and Amanda Farias, lead sponsors of Intro 70 and Intro 26. Author photo.

As can be seen from photographs of the rally prior to the council hearing, the anti-heli-noise outfit Stop The Chop NY/NJ takes a reformist position on helicopter flights. I’m more militant in both deed, having helped organize a human blockade of the West 30th Street (Hudson River) heliport last September and language, preferring the term “luxury fights” to Stop The Chop’s “nonessential flights.” 

That said, I tip my hat to Stop The Chop for their scrappy advocacy that has raised the profile of helicopters’ aural and other assaults on New Yorkers’ quality of life. The bills in question would not have been written and advanced without their years of organizing.

Testimony of Charles Komanoff[1] supporting Council Bills banning nonessential helicopter flights using municipal properties, and Council Resolution 0085-2024 endorsing state legislation imposing a noise-annoyance surcharge on nonessential helicopter flights in New York City[2]. Submitted on April 16, 2024. (My statement has been lightly edited for clarity. Bracketed numbers denote endnotes.)

I emphatically support Council bills Intro 26 and Intro 70 banning nonessential helicopter flights from the two City-run heliports. In addition, as an economist specializing in environmental costing,[3] I’d like to single out for praise Council Resolution 0085-2024 endorsing state legislators Kirsten Gonzalez’s and Bobby Carroll’s bills S7216B and A7638B imposing a noise fee on nonessential helicopter flights.[4]

The Gonzalez-Carroll noise fee is $100 per occupied seat or $400 per flight, whichever amount is larger. Although these levies are less than the average helicopter flight’s apparent societal cost, they are a commendable starting point. The levies can be raised later on, as methodologies for quantifying helicopter noise costs mature — a process that will be aided by passing a related bill in the Council, Intro 27. The fees can also be lowered if quieter helicopters emerge — which the Gonzalez-Carroll bills will incentivize.

“Cost internalization,” as this kind of social-damage pricing is termed, is long overdue for helicopter noise. The luxury helicopter flights targeted by the Gonzalez and Carroll bills are completely discretionary. Anyone taking such a flight — whether to the Hamptons or JFK or for sightseeing — has money to spare, as revealed by their pricey transportation choice. Taxing helicopter noise is entirely consistent with economic justice. Moreover, these flights impose other costs beyond noise, such as carbon pollution and particulate-exhaust pollution, on everyone around or below.

Consider Blade’s JFK helicopter service from its Manhattan West 30th Street heliport — a flight covering about 15 miles. I’ve made a preliminary but serviceable calculation suggesting that one such flight lasting just seven minutes steals around $2,500 worth of peace and quiet from city residents.[5]

A more militant protest: Extinction Rebellion’s Sept 2023 human heliport blockade. See our post from that month, “Grounding Helicopter Luxury.” Photo: Christopher Ketcham.

The Gonzalez-Carroll noise fee amounts to a roughly 40 percent surcharge to Blade’s $250 standard ticket price to JFK, making it a worthy start. Assemblymember Carroll has been a legislative leader on externalities taxing, and it’s great to see Sen. Gonzalez also taking up the cause.

A noise fee raising the price of a commuter helicopter trip by 40 percent will cut usage, hence, the number of flights, by 30 to 50 percent,[6] as some would-be passengers opt out. (Yes, just like congestion pricing, except more draconian, and deservedly so, given luxury helicopters’ societal uselessness). That will not only bring a healthy measure of peace and quiet, it will generate $10 to $15 million per year[7] — revenue that New York City can use to expand and enforce noise-abatement rules citywide.

Noise isn’t the sole harm that commuter and tourist helicopters inflict on the millions of residents below. But it is the most egregious and insulting. Every member should vote Yes on the bills to ban nonessential helicopter flights from the two City-owned heliports. And please also vote for Council Resolution 0085-2024 to make clear to your Albany counterparts that New York City’s local elected officials support the Gonzalez-Carroll helicopter noise fee.

Endnotes.[8]

[1] Policy analyst and consulting economist at KEA, 11 Hanover Square, 21st floor, New York, NY 10005. Website www.komanoff.net.

[2] This document is available on line as https://www.komanoff.net/jet_skis/Komanoff_Testimony_City_Council_Helicopter_Noise_Costs.pdf.

[3] My work quantifying and supporting NYC congestion pricing is widely known; much of it is collected here. My body of research also includes Drowning in Noise: Noise Costs of Jet Skis in the United States, a monograph co-authored with Dr. Howard Shaw and published in 2000 by the Noise Pollution Clearinghouse.

[4] Assemblymember Bobby Carroll represents part of Brooklyn. State Senator Kristen Gonzalez represents parts of Brooklyn, Queens and Manhattan.

[5] Key assumptions in my calculation of a $2,500 collective noise cost per flight from W 30 St to JFK Blade include: 625,000 households in Manhattan, Brooklyn and Queens households lie within the helicopter noise field; excess noise of 20 dBA during the average 44 seconds of noise exposure for each flight; a “Noise Depreciation Index” — reduced property value per additional decibel during exposure — of 1%. Some parameters in the calculation are placeholder values, making the resulting $2,500 estimated per-flight collective noise cost preliminary and subject to change. See Excel spreadsheet referenced in final endnote.

[6] The 30 percent reduction is associated with a price-elasticity of helicopter flights of negative 1, while the 50 percent reduction comes from a price-elasticity of negative 2. The respective calculations are: 1.4^(-1) ~ 0.7, and 1.4^(-2) ~ 0.5. (My high price-elasticity figures reflect the discretionary and luxury nature of helicopter travel.) See Excel spreadsheet referenced in final endnote.

[7] The number of helicopter flights per year that would be subject to the Gonzalez-Carroll noise tax appears to be between 50,000 and 60,000 per year. I have used the lower figure (50,000) in my calculations. Taking into account that the incorporation of the proposed tax into the price of helicopter flights would be expected to reduce the number of flights by 30 to 50 percent, and applying a per-flight noise fee of $400, the annual tax revenues, rounded, calculate to between $10 and $15 million per year (50k x $400 x 50% or 70%).

[8] An Excel spreadsheet (NYC_Helicopter_Flights_Externality_Costs.xls) with assumptions, calculations and citations supporting my preliminary $2,500 per-flight noise cost estimate, my tax revenue estimate of $10 to $15 million, and other figures in my testimony may be downloaded via this link: https://www.komanoff.net/jet_skis/NYC_Helicopter_Flights_Externality_Costs.xlsx.

 

 

The 2 Big Things Missing from Coverage of Nuke Plant Shutdowns

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Next month will mark four years since the Indian Point nuclear power plant north of New York City began to be shut down.

Indian Point 2 was closed on April 30, 2020. Indian Point 3’s closure followed a year later. The two units, rated at roughly 1,000 megawatts each, started operating in the mid-1970s. A half-century later, their reactor cores lie dismembered. Both units are irretrievably gone, for better or worse.

I believe the closures are for the worse — and not by a little. The loss of Indian Point’s 2,000 MW of virtually carbon-free power has set back New York’s decarbonization efforts by at least a decade. And that’s almost certainly an understatement.

I hinted at this in Drones With Hacksaws: Climate Consequences of Shutting Indian Point Can’t Be Brushed Aside, a May 2020 post in the NY-area outlet Gotham Gazette. Over time I grew more outspoken. In two posts for The Nation in April 2022 (here and here) I invoked Indian Point to urge Californians to revoke a parallel plan to close Pacific Gas & Electric’s two-unit Diablo Canyon nuclear plant, which I followed up with a plea to Gov. Gavin Newsom to scuttle the shutdown deal, co-signed by clean-air advocate Armond Cohen and whole-earth avatar Stewart Brand. Which the governor did, last year.

Once I had regarded nuclear plant closures as no big deal. Now I was telling all who would listen that junking high-performing thousand-megawatt reactors on either coast was a monstrous climate crime, the carbon equivalent to decapitating many hundreds of giant wind turbines — a metaphor I employed in my Gotham Gazette post. My turnaround rested on two clear but overlooked points.

One was that nearly all extant U.S. nukes had long ago morphed from chronic inconsistency into rock-solid generators of massive volumes of carbon-free kilowatt-hours, with “capacity factors” reliably hitting 90% or even higher. This positive change should have put to rest the antinuclear movement’s shopworn “aging and unsafe” narrative about our 90-odd operating reactors. It also elevated the plants’ economic and climate value, making politically forced closures far more costly than most of us had imagined.

The other new point is connected to carbon and climate: The effort to have “renewables” (wind, solar and occasionally hydro) fill the hole left from closing Indian Point or other nuclear plants isn’t just tendentious and difficult. Rather, the very construct that one set of zero-carbon generators (renewables) can “replace” another (nuclear) with no climate cost is simplistic if not downright false, as I explain further below.

These new ideas came to mind as I read a major story this week on the consequences of Indian Point’s closure in The Guardian by Oliver Milman, the paper’s longtime chief environment correspondent. To his credit, Milman delved pretty deeply into the impacts of reactor closures — more so than any prominent journalist has done to date. Nonetheless, it’s time for coverage of nuclear closures to go further. To assist, I’ve posted Milman’s story verbatim, with my responses alongside.

A nuclear plant’s closure was hailed as a green win. Then emissions went up.

By Oliver Milman, The Guardian, March 20, 2024

When New York’s deteriorating and unloved Indian Point nuclear plant finally shuttered in 2021, its demise was met with delight from environmentalists who had long demanded it be scrapped.

But there has been a sting in the tail – since the closure, New York’s greenhouse gas emissions have gone up.

Castigated for its impact upon the surrounding environment and feared for its potential to unleash disaster close to the heart of New York City, Indian Point nevertheless supplied a large chunk of the state’s carbon-free electricity.

Guardian graphic using eGRID data for NYCW subregion. The chart’s other half was excised to fit the available space.

Since the plant’s closure, it has been gas, rather then clean energy such as solar and wind, that has filled the void, leaving New York City in the embarrassing situation of seeing its planet-heating emissions jump in recent years to the point its power grid is now dirtier than Texas’s, as well as the US average.

“From a climate change point of view it’s been a real step backwards and made it harder for New York City to decarbonize its electricity supply than it could’ve been,” said Ben Furnas, a climate and energy policy expert at Cornell University. “This has been a cautionary tale that has left New York in a really challenging spot.”

The closure of Indian Point raises sticky questions for the green movement and states such as New York that are looking to slash carbon pollution. Should long-held concerns about nuclear be shelved due to the overriding challenge of the climate crisis? If so, what should be done about the US’s fleet of ageing nuclear plants?

For those who spent decades fighting Indian Point, the power plant had few redeeming qualities even in an era of escalating global heating. Perched on the banks of the Hudson River about 25 miles north of Manhattan, the hulking facility started operation in the 1960s and its three reactors at one point contributed about a quarter of New York City’s power.

(Guardian/Milman continued)

It faced a constant barrage of criticism over safety concerns, however, particularly around the leaking of radioactive material into groundwater and for harm caused to fish when the river’s water was used for cooling. Pressure from Andrew Cuomo, New York’s then governor, and Bernie Sanders – the senator called Indian Point a “catastrophe waiting to happen” – led to a phased closure announced in 2017, with the two remaining reactors shutting in 2020 and 2021.

The closure was cause for jubilation in green circles, with Mark Ruffalo, the actor and environmentalist, calling the plant’s end “a BIG deal”. He added in a video: “Let’s get beyond Indian Point.” New York has two other nuclear stations, which have also faced opposition, that have licenses set to expire this decade.

But rather than immediately usher in a new dawn of clean energy, Indian Point’s departure spurred a jump in planet-heating emissions. New York upped its consumption of readily available gas to make up its shortfall in 2020 and again in 2021, as nuclear dropped to just a fifth of the state’s electricity generation, down from about a third before Indian Point’s closure.

This reversal will not itself wreck New York’s goal of making its grid emissions-free by 2040. Two major projects bringing Canadian hydropower and upstate solar and wind electricity will come online by 2027, while the state is pushing ahead with new offshore wind projects – New York’s first offshore turbines started whirring last week. Kathy Hochul, New York’s governor, has vowed the state will “build a cleaner, greener future for all New Yorkers.”

Even as renewable energy blossoms at a gathering pace in the US, though, it is gas that remains the most common fallback for utilities once they take nuclear offline, according to Furnas. This mirrors a situation faced by Germany after it looked to move away from nuclear in the wake of the Fukushima disaster in 2011, only to fall back on coal, the dirtiest of all fossil fuels, as a temporary replacement.

“As renewables are being built we still need energy for when the wind isn’t blowing and the sun isn’t shining and most often it’s gas that is doing that,” said Furnas. “It’s a harrowing dynamic. Taking away a big slice of clean energy coming from nuclear can be a self-inflicted wound from a climate change point of view.”

With the world barreling towards disastrous climate change impacts due to the dawdling pace of emissions cuts, some environmentalists have set aside reservations and accepted nuclear as an expedient power source. The US currently derives about a fifth of its electricity from nuclear power.

Bill McKibben, author, activist and founder of 350.org, said that the position “of the people I know and trust” is that “if you have an existing nuke, keep it open if you can. I think most people are agnostic on new nuclear, hoping that the next generation of reactors might pan out but fearing that they’ll be too expensive.

“The hard part for nuclear, aside from all the traditional and still applicable safety caveats, is that sun and wind and batteries just keep getting cheaper and cheaper, which means the nuclear industry increasingly depends on political gamesmanship to get public funding,” McKibben added.

(Guardian/Milman continued)

Wariness over nuclear has long been a central tenet of the environmental movement, though, and opponents point to concerns over nuclear waste, localized pollution and the chance, albeit unlikely, of a major disaster. In California, a coalition of green groups recently filed a lawsuit to try to force the closure of the Diablo Canyon facility, which provides about 8% of the state’s electricity.

“Diablo Canyon has not received the safety upgrades and maintenance it needs and we are dubious that nuclear is safe in any regard, let alone without these upgrades – it’s a huge problem,” said Hallie Templeton, legal director of Friends of the Earth, which was founded in 1969 to, among other things, oppose Diablo Canyon.

Templeton said the groups were alarmed over Diablo Canyon’s discharge of waste water into the environment and the possibility an earthquake could trigger a disastrous leak of nuclear waste. A previous Friends of the Earth deal with the plant’s operator, PG&E, to shutter Diablo Canyon was clouded by state legislation allowing the facility to remain open for another five years, and potentially longer, which Templeton said was a “twist of the knife” to opponents.

“We are not stuck in the past – we are embracing renewable energy technology like solar and wind,” she said. “There was ample notice for everyone to get their houses in order and switch over to solar and wind and they didn’t do anything. The main beneficiary of all this is the corporation making money out of this plant remaining active for longer.”

Meanwhile, supporters of nuclear – some online fans have been called “nuclear bros” – claim the energy source has moved past the specter of Chernobyl and into a new era of small modular nuclear reactors. Amazon recently purchased a nuclear-powered data center, while Bill Gates has also plowed investment into the technology. Rising electricity bills, as well as the climate crisis, are causing people to reassess nuclear, advocates say.

“Things have changed drastically – five years ago I would get a very hostile response when talking about nuclear, now people are just so much more open about it,” said Grace Stanke, a nuclear fuels engineer and former Miss America who regularly gives talks on the benefits of nuclear.

“I find that young people really want to have a discussion about nuclear because of climate change, but people of all ages want reliable, accessible energy,” she said. “Nuclear can provide that.”

The forces that won Indian Point’s closure were blind to the climate cost. 

By Charles Komanoff, Carbon Tax Center, March 23, 2024

New Reality #1: Indian Point wasn’t “deteriorating” when it was closed.

“Deteriorating and unloved” is how Milman characterized Indian Point in his lede. “Unloved?” Sure, though probably no U.S. generating station has been fondly embraced since Woody Guthrie rhapsodized about the Grand Coulee Dam in the 1940s.

But “deteriorating”? How could a power plant on the verge of collapse run for two decades at greater than 90% of its maximum capacity?

Calculations by author from International Atomic Energy Agency data. Diablo Canyon has also averaged over 90% CF since 2000.

Had Indian Point been less productive, the jump in the metropolitan area’s carbon emission rate would have been far less than the apparent 60 percent increase in the Guardian graph at left. Though the “electrify everything” community is loath to discuss it, the emissions surge from closing Indian Point significantly diminishes the purported climate benefit from shifting vehicles, heating, cooking and industry from combustion to electricity .

The impetus for shutting Indian Point largely came through, not from then-Gov. Cuomo.

Milman pins the decision to close Indian Point on NY Gov. Andrew Cuomo and Vermont’s U.S. Senator Bernie Sanders. While Cuomo backed and brokered the deal (which Sanders had nothing to do with), the real push came from a coalition of NY-area environmental activists led by Riverkeeper, who, as he notes, “spent decades fighting Indian Point.” And it was relentless.

The wellsprings of their fight were many, from Cold War fears of anything nuclear to a fierce devotion to the Hudson River ecosystem, which Indian Point threatened not through occasional minor radioactive leaks but via larval striped bass entrainment on the plant’s intake screens. Their fight was of course supercharged by the 1979 Three Mile Island reactor meltdown in Pennsylvania and, later, by the 9/11 hijackers’ Hudson River flight path. But as I pointed out in Gotham Gazette, few shutdown proponents had carbon reduction in their organizational DNA. None had ever built anything, leaving many with a fantasyland conception of the work required to substitute green capacity for Indian Point.

(CTC/Komanoff continued)

And while the shutdown forces proclaimed their love for wind and solar, their understanding of electric grids and nukes was stuck in the past. To them, Indian Point was Three Mile Island (or Chernobyl) on the Hudson — never mind that by the mid-2010s U.S. nuclear power plants had multiplied their pre-TMI operating experience twenty-fold with nary a mishap.

No, in most anti-nukers’ minds, Indian Point would forever be a bumbling menace incapable of rising above its previous-century average 50% capacity factor (see graph above). Most either ignored the plant’s born-again 90% online mark or viewed it as proof of lax oversight by a co-opted Nuclear Regulatory Commission.

Note too that the “hulking facility,” as Milman termed Indian Point, lay a very considerable 35 air miles from Columbus Circle, rather than “25 miles north of Manhattan,” a figure that references the borough’s uninhabited northern tip. NYC residents had more immediate concerns, leaving fear and loathing over the nukes to be concentrated among the plant’s Westchester neighbors (Cuomo’s backyard). Which raises the question of why in-city environmental justice groups failed to question the shutdown, which is now impeding closure of polluting “peaker” plants in their own Brooklyn, Queens and Bronx backyards.

Still, the shutdown campaigners’ most grievous lapse was their failure to grasp that the new climate imperative requires a radically different conceptual framework for gauging nuclear power.

New Reality #2: Wind and solar that are replacing Indian Point can’t also reduce fossil fuels.

It’s dispiriting to contemplate the effort required to create enough new carbon-free electricity to generate Indian Point’s lost carbon-free output. Think 500 giant offshore wind turbines, each rated at 8 megawatts. (Wind farms need twice the capacity of Indian Point, i.e., 4,000 MW vs. 2,000, to offset their lesser capacity factor.)

What about solar PV? Its capacity disadvantage vis-a-vis Indian Point’s 90% is five- or even six-fold, meaning 10,000 or more megawatts of new solar to replace Indian Point. I won’t even try to calculate how many solar buildings that would require. But this is where Indian Point’s 90% capacity factor is so daunting; had the plant stayed mired at 60%, the capacity ratios to replace it would be a third less steep.

But wait . . . it’s even worse. These massive infusions of wind or solar are supposed to be reducing fossil fuel use by helping the grid phase out gas (methane) fired electricity. Which they cannot do, if they first need to stand in for the carbon-free generation that Indian Point was providing before it was shut.

So when Riverkeeper pledged in 2015-2017, or Friends of the Earth’s legal director told the Guardian‘s Milman that “we are embracing renewable energy technology like solar and wind,” they’re misrepresenting renewables’ capacity to help nuclear-depleted grids cut down on carbon. Shutting a functioning nuclear power plant puts the grid into a deep carbon-reduction hole — one that new solar and wind must first fill, at great expense, before further barrages of turbines and panels can actually be said to be keeping fossil fuels in the ground.

(CTC/Komanoff continued)

I suspect that not one in a hundred shut-nukes-now campaigners grasps this frame of reference. I certainly didn’t, until one day in April 2020, mere weeks before Indian Point 2 would be turned off, when an activist with Nuclear NY phoned me out of the blue and hurled this new paradigm at me. Before then, I was stuck in the “grid sufficiency” framework that was limited to having enough megawatts to keep everyone’s A/C’s running on peak summer days. The idea that the next giant batch or two of renewables will only keep CO2 emissions running in place rather than reduce them was new and startling. And irrefutably true.

To be clear, I don’t criticize Milman for missing this new paradigm. He’s a journalist, not an analyst or activist. It’s on us climate advocates to propagate it till it reaches reportorial critical mass.

I credit Milman for giving FoE’s legal director free rein about Diablo. “There was ample notice for everyone to get their houses in order and switch over to solar and wind and they didn’t do anything,” she told him.

Goodness. Everyone [who? California government? PG&E? green entrepreneurs?] didn’t do anything to switch over to solar and wind. Welcome to reality, Friends of the Earth!

I knew FoE’s legendary founder David Brower personally. I and legions of others were inspired in the 1960s and 1970s by his implacable refusal to accede to the world as it was and his monumental determination to build a better one. But reality has its own implacability. The difficulty of bringing actual wind and solar projects (and more energy-efficiency) to fruition has the sad corollary that shutting viable nuclear plants consigns long-sought big blocks of renewables to being mere restorers of the untenable climate status quo.

In closing: Contrary to Milman (and NY Gov. Kathy Hochul), Indian Point’s closure will wreck NY’s goal of an emissions-free grid by 2040.

“Two major projects bringing Canadian hydropower and upstate solar and wind electricity will come online by 2027,” Milman wrote, referencing the Champlain-Hudson Power Express transmission line and Clean Path NY. But their combined annual output will only match Indian Point’s lost carbon-free production. Considering that loss, the two ventures can’t be credited with actually pushing fossil fuels out of the grid. That will require massive new clean power ventures, few of which are on the horizon.

I’ve written about the travails of getting big, difference-making offshore wind farms up and running in New York. I’ve argued that robust carbon pricing could help neutralize the inflationary pressures, supply bottlenecks, higher interest rates and pervasive NIMBY-ism that have led some wind developers to deep-six big projects.

Though I’ve yet to fully “do the math,” my decades adjacent to the electricity industry (1970-1995) and indeed my long career in policy analysis tell me that New York’s grid won’t even reach 80% carbon-free by 2040 unless the state or, better, Washington legislates a palpable carbon price that incentivizes large-scale demand reductions along with faster uptake of new wind, solar and, perhaps, nuclear.

Let Carbon Pricing Resolve Jevons Paradox

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Nearly 15 years after journalist David Owen and I tangled — and then united — over Jevons Paradox, the New York Times today published a guest essay on that subject by a Murdoch-employed London journalist. David and I went deeper and did better, as you’ll see.

Jevons Paradox denotes the tendency of economies to increase, not decrease, their use of something as they learn how to use that thing more efficiently. Its archetype, observed by Britisher William Stanley Jevons in the 1860s, was that “as steam engines became ever more efficient, Britain’s appetite for coal [to power them] increased rather than decreased,” as Sky News editor Ed Conway put it just now, in The Paradox Holding Back the Clean Energy Revolution. Why? Because the “rebound” in use of steam as its manufacture grew cheaper more than offset the direct contraction in use from the increased efficiency.

Illustration by Joost Swarte for “The Efficiency Dilemma,” in the New Yorker magazine’s Dec. 20, 2010 print edition (Dec. 12 on line).

Where does David Owen come in? In 2009 he published an op-ed in the Wall Street Journal claiming that congestion pricing would never cure traffic congestion, on account of the bounce-back in traffic volumes due to lesser congestion. (Funnily enough, the Journal never runs opinion pieces maintaining that induced demand prevents highway expansions from “solving” road congestion.) My subsequent rebuttal in Streetsblog — Paradox, Schmaradox, Congestion Pricing Works — changed David’s mind. The disincentive of the congestion toll, he told me, could probably stave off enough of the rebound in driving to allow congestion pricing to fulfill its promise of curbing gridlock.

A year later, when David revisited Jevons Paradox in a scintillating New Yorker magazine narrative, The Efficiency Dilemma, he made sure to point to “capping emissions or putting a price on carbon or increasing energy taxes” as potential exit ramps from the Jevons treadmill. I was thrilled, and I published a post in Grist riffing on “The Efficiency Dilemma.” I’ve pasted it below. I hope to comment on Conway’s NY Times essay in a future post soon.

If efficiency hasn’t cut energy use, then what?

By Charles Komanoff, reprinted from Grist, Dec. 16, 2010.

One of the most penetrating critiques of energy-efficiency dogma you’ll ever read is in this week’s New Yorker (yes, the New Yorker). “The efficiency dilemma,” by David Owen, has this provocative subtitle: “If our machines use less energy, will we just use them more?” Owen’s answer is a resounding, iconoclastic, and probably correct Yes.

Owen’s thesis is that as a society becomes more energy efficient, it becomes downright inefficient not to use more. The pursuit of efficiency is smart for individuals and businesses but a dead end for energy and climate policy.

This idea isn’t wholly original. It’s known as the Jevons paradox, and it has a 150-year history of provoking bursts of discussion before being repressed from social consciousness. What Owen adds to the thread is considerable, however: a fine narrative arc; the conceptual feat of elevating the paradox from the micro level, where it is rebuttable, to the macro, where it is more robust; a compelling case study; and the courage to take on energy-efficiency guru Amory Lovins. Best of all, Owen offers a way out: raising fuel prices via energy taxes.

Thirty-five years ago, when the energy industry first ridiculed efficiency as a return ticket to the Dark Ages, it was met with a torrent of smart ripostes like the Ford Foundation’s landmark “A Time to Choose” report — a well-thumbed copy of which adorns my bookshelf. Since then, the cause of energy efficiency has rung up one triumph after another: refrigerators have tripled in thermodynamic efficiency, energy-guzzling incandescent bulbs have been booted out of commercial buildings, and developers of trophy properties compete to rack up LEED points denoting low-energy design and operation.

Yet it’s difficult to see that these achievements have had any effect on slowing the growth in energy use. U.S. electricity consumption in 2008 was double that of 1975, and overall energy consumption was up by 38 percent. True, during this time U.S. population grew by 40 percent, but we also outsourced much of our manufacturing to Asia. In any case, efficiency, the assertedly immense resource that lay untapped in U.S. basements, garages, and offices, was supposed to slash per capita energy use, not just keep it from rising. Why hasn’t it? And what does that say for energy and climate policy?

A short form of the Jevons paradox, and a good entry point for discussing it, is the “rebound effect” — the tendency to employ more of something when efficiency has effectively cut its cost. The rebound effect is a staple of transportation analysis, in two separate forms. One is the rebound in gallons of gas consumed when fuel-efficiency standards have reduced the fuel cost to drive a mile. The other is the rebound from the reduction in car trips after imposition of a road toll, now that the drop in traffic has made it possible to cover the same ground in less time.

Rebound effect one turns out to be small. As UC-Irvine economics professor Ken Small has shown, no more than 20 percent of the gasoline savings from improved engine efficiency have been lost to the tendency to drive more miles — and much less in the short term. Rebound effect two is more significant and becoming more so, as time increasingly trumps money in the decision-making of drivers, at least better-off ones.

Rebound effects, then, vary in magnitude from one sector to another. They can be tricky to analyze, as Owen unwittingly demonstrated in an ill-considered 2009 Wall Street Journal op-ed criticizing congestion pricing, “How traffic jams help the environment.” He wrote:

If reducing [congestion via a toll] merely makes life easier for those who drive, then the improved traffic flow can actually increase the environmental damage done by cars, by raising overall traffic volume, encouraging sprawl and long car commutes.

Not so, as I wrote in “Paradox, schmaradox. Congestion pricing works”:

When the reduction in traffic is caused by a congestion charge, life is not just easier for those who continue driving but more costly as well. Yes, there’s a seesaw between price effects and time effects, but setting the congestion price at the right point will rebalance the system toward less driving, without harming the city’s economy.

Rebound effects from more fuel-efficient vehicles, as depicted in “Energy sufficiency and rebound effects,” a 2018 concept paper by Steve Sorrell, Univ. of Sussex, and Birgitta Gabersleben & Angela Druckman, Univ. of Surrey, UK.

More importantly, as Owen points out in his New Yorker piece, a narrow “bottom up” view — one that considers people’s decision-making in isolated realms of activity one-by-one — tends to miss broader rebound effects. On the face of it, doubling the efficiency of clothes washers and dryers shouldn’t cause the amount of laundering to rise more than slightly. But consider: 30 years ago, an urban family of four would have used the washer-dryer in the basement or at the laundromat, forcing it to “conserve” drying to save not just quarters but time traipsing back and forth. Since then, however, efficiency gains have enabled manufacturers to make washer-dryers in apartment sizes. We own one, and find ourselves using it for “spot” situations — emergencies that aren’t really emergencies, small loads for the item we “need” for tomorrow — that add more than a little to our total usage. And who’s to say that the advent of cheap and rapid laundering hasn’t contributed to the long-term rise in fashion-consumption, with all it implies for increased energy use through more manufacturing, freight hauling, retailing, and advertising?

Owen offers his own big example. Interestingly, it’s not computers or other electronic devices. It’s cooling. In an entertaining and all-too-brief romp through a half-century of changing mores, he traces the evolution of refrigeration and its “fraternal twin,” air conditioning, from rare, seldom-used luxuries then, to ubiquitous, always-on devices today:

My parents’ [first fridge] had a tiny, uninsulated freezer compartment, which seldom contained much more than a few aluminum ice trays and a burrow-like mantle of frost … The recently remodeled kitchen of a friend of mine contains an enormous side-by-side refrigerator, an enormous side-by-side freezer, and a drawer-like under-counter mini-fridge for beverages. And the trend has not been confined to households. As the ability to efficiently and inexpensively chill things has grown, so have opportunities to buy chilled things — a potent positive-feedback loop. Gas stations now often have almost as much refrigerated shelf space as the grocery stores of my early childhood; even mediocre hotel rooms usually come with their own small fridge (which, typically, either is empty or — if it’s a minibar — contains mainly things that don’t need to be kept cold), in addition to an icemaker and a refrigerated vending machine down the hall.

Air conditioning has a similar arc, ending with Owen’s observation that “access to cooled air is self-reinforcing: to someone who works in an air-conditioned office, an un-air-conditioned house quickly becomes intolerable, and vice versa.”

If Owen has a summation, it’s this:

All such increases in energy-consuming activity [driven by increased efficiency] can be considered manifestations of the Jevons paradox. Teasing out the precise contribution of a particular efficiency improvement isn’t just difficult, however; it may be impossible, because the endlessly ramifying network of interconnections is too complex to yield readily to empirical, mathematics-based analysis. [Emphasis mine.]

Defenders of efficiency will call “endlessly ramifying network” a cop-out. I’d say the burden is on them to prove otherwise. Based on the aggregate energy data mentioned earlier, efficiency advocates have been winning the micro battles but losing the macro war. Through engineering brilliance and concerted political and regulatory advocacy, we have increased energy-efficiency in the small while the society around us has grown monstrously energy-inefficient and cancelled out those gains. Two steps forward, two steps back.

I wrote something roughly similar five years ago in a broadside against my old colleague, Amory Lovins:

[T]hough Amory has been evangelizing “the soft path” for thirty years, his handful of glittering successes have only evoked limited emulation. Why? Because after the price shocks of the 1970s, energy became, and is still, too darn cheap. It’s a law of nature, I’d say, or at least of Economics 101: inexpensive anything will never be conserved. So long as energy is cheap, Amory’s magnificent exceptions will remain just that. Thousands of highly-focused advocacy groups will break their hearts trying to fix the thousands of ingrained practices that add up to energy over-consumption, from tax-deductible mortgages and always-on electronics to anti-solar zoning codes and un-bikeable streets. And all the while, new ways to use energy will arise, overwhelming whatever hard-won reductions these Sisyphean efforts achieve.

Total U.S. energy consumption (yellow chart line) has fallen only 3.4% since 2005 (a standard climate base year), despite tech progress and periods of concerted regulation. Worse, consumption of fossil fuels (not broken out above) has fallen only 4.0%.

I wrote that a day or two after inviting Lovins to endorse putting carbon or other fuel taxes front-and-center in energy advocacy. He declined, insisting that “technical efficiency” could be increased many-fold without taxing energy to raise its price. Of course it has, can, and will. But is technical efficiency enough? Owen asks us to consider whether a strategy centered on technical and regulatory measures to boost energy efficiency may be inherently unsuited for the herculean task of keeping coal and other fossil fuels safely locked in the ground.

I said earlier that Owen offers an escape from the Jevons paradox, and he does: “capping emissions or putting a price on carbon or increasing energy taxes.” It’s hardly a clarion call, and it’s not the straight carbon taxers’ line. But it’s a lifeline.

The veteran English economist Len Brookes told Owen:

When we talk about increasing energy efficiency, what we’re really talking about is increasing the productivity of energy. And, if you increase the productivity of anything, you have the effect of reducing its implicit price, because you get more return for the same money — which means the demand goes up.

The antidote to the Jevon paradox, then, is energy taxes. We can thank Owen not only for raising a critical, central question about energy efficiency, with potential ramifications for energy and climate policy, but for giving us a brief — an eloquent and powerful one — for a carbon tax.

Author’s present-day (Feb. 22, 2024) note: I overdid it somewhat in belittling energy efficiency’s impacts on U.S. energy use in that 2010 Grist post. Indeed, in posts here in 2016 and again in 2020 I quantified and enthused over improved EE’s role in stabilizing electricity demand and slashing that sector’s carbon emissions.

Car Bloat and Carbon Pollution: It’s Both Better and Worse Than You Think

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Streetsblog USA today published my essay, Get the Facts About ‘Car Bloat’ and Pollution. I’ve cross-posted it here to allow comments.

 — C.K., Feb. 1, 2024

The increasing size of passenger vehicles has been catastrophic for road safety, traffic congestion, climate viability, and household budgets. Compared to sedans, brawnier sport utility vehicles and pickup trucks are far more likely to kill other road users, to clog urban streets and suburban roads, to guzzle fuel and emit particulates and carbon, and to keep their owners on a treadmill of car payments and pain at the pump.

Not only that, SUVs and pickups — collectively designated “light trucks” by regulators (“deregulators” is more apt) — may even engender more driving by owners seduced by their roominess, faux road-worthiness and illusion of indomitability. All 12 of the dozen models most preferred by gasoline “superusers” — drivers in the top decile of U.S. gasoline consumption — are SUVs or pickups, with the Chevy Silverado and Ford F150 topping the list.

As I wrote earlier this week, superusers manage the bizarre feat of averaging 40,000 miles a year* — a quantity of driving that consumes 13 percent of their owners’ waking hours — while burning 22 percent more fuel per mile than other U.S. drivers’ rides. Ivan Illich was right.

Just after Thanksgiving, The Guardian added its two cents with a story headlined, “Motor emissions could have fallen over 30 percent without SUV trends, report says.” Translated: Global CO2 emissions from passenger vehicles would have shrunk by nearly one-third if not for vehicle upsizing to SUVs and pickups.

Startling and damning, right? But it’s a vast overstatement: The true 2010-2022 “lost reduction” in passenger vehicles’ carbon emissions due to the growing share of big trucks worldwide was just 6 percent — five times less than the reported 30 percent.

Wait, am I cutting SUVs a break on their carbon spewing? Not at all. To deal effectively with climate we need to be clear about what’s destroying it.

The false 30-percent figure — which you’ll soon see wasn’t the fault of the Guardian — has begun worming its way into energy and climate discourse. This is unfortunate, since it serves to reinforce emphasis on the types of vehicles being made, sold and driven, when American motorists’ carbon profligacy is the inevitable result of our oversupply of pavement and our bias against full-cost pricing of driving.

Whence the error?

The Global Fuel Economy Initiative is a think tank funded by the European Commission, the Global Environment Facility, the UN Environment Programme and the FIA Foundation. Notwithstanding the fact that FIA is the “philanthropic arm” of the Fédération Internationale de l’Automobile (aka Formula One auto racing), GFEI produces high-caliber analysis and research.

GFEI’s November 2023 report, “Trends in the Global Vehicle Fleet 2023: Managing the SUV Shift and the EV Transition,” meticulously examined passenger-vehicle fuel consumption over the 12-year period, 2010 to 2022, and found that average fuel use (and, hence, per-mile carbon emissions) dropped by an average rate of 1.5 percent per year.

If not for more and heavier SUVs, the average annual decrease in emissions, according to the report, would have been around 1.95 percent, a rate that is 30 percent greater than the actual decline rate.

A 1.5-percent annual decrease in fuel intake per mile calculates to a total 16.6-percent total drop during the period. (See math box at the bottom of this post for the arithmetic.) Had the annual decrease been 1.95 percent, its 12-year drop would have been 21.5 percent. The gap between those two drops means that bigger car size worsened fuel economy 6 percent more than if car size had remained the same.

The Guardian, before (left) and after I got out my calculator. There’s a difference, but it’s not sharp enough.

Accordingly, the headline in the story should have been, “Motor Emissions Could Have Fallen 6 Percent More Without SUVs, Report Says,” but that’s not exactly eyeball-grabbing. Don’t blame Guardian reporter Helena Horton, however. She wrote her story off of GFEI’s press release, which (incorrectly) trumpeted a lost 30-percent gain in fuel economy due to “the SUV trend.”

After being contacted by me, GFEI’s study director immediately acknowledged his comms team’s error and labored mightily to get The Guardian to run a full correction. As you can tell from the side-by-side story headlines above, he was only partly successful.

The image on the left shows the original Nov. 24 Guardian headline and lede, retrieved via the Web’s Wayback Machine. The image on the right shows the corrected headline and lede since Dec. 18. The alterations are subtle nearly to the point of invisibility. The new “30 percent more” is confusing (30 percent more than what?), and the subhead is unaltered and thus plain wrong to say that the fall in emissions “would have been far more” than it was, had vehicle sizes stayed the same. No, the fall in emissions would have been 6 percent more — not exactly “far more.”

Why it’s important to correct the error

The Guardian’s erroneous “30-percent-less” headline, though not its fault, has the makings of a honey trap. New York Times climate columnist David Wallace-Wells fell for it on Twitter, along with esteemed climate pundit David Roberts. The Colorado-based climate think tank RMI got ensnared as well, as did our own Kea Wilson at Streetsblog USA. (RMI and Streetsblog quickly corrected their flubs after I emailed.) Consider this post an antidote to future repetitions, or, at least, a means to correct them.

It’s also worth touching on the innumeracy required to imagine that auto upsizing — “car bloat” in the evocative phrase popularized by journalist David Zipper — as loathsome as it is, stood in the way of a 30-percent gain in world-average auto fuel economy. The typical difference between sedan and “light truck” mpg is only around 20 percent (though greater in the U.S., with our supersized SUVs and pickups), so even a complete global switchover from sedans to light trucks would have put only a 20-percent dent in fuel economy.

Of course, the actual carbon damage due to vehicle SUV-ification over the 12 years studied has been far less — just 6 percent as we saw above — on account of longer vehicle turnover times. This should have been readily apparent to The Guardian reporter as well as the journalists and advocates who repeated the error on social media or websites. Errant quantification is hardly journalism’s number one albatross — free-falling revenues and shrinking newsrooms are orders of magnitude more consequential — but it lurks under the surface.

With greater numeracy, it might be easier for journalists, advocates and policymakers to grasp that vehicle electrification and shrinkage alone aren’t going to cut auto emissions at the rate needed.

Driving too must shrink. Collectively, road pricing, congestion pricing, curb pricing, carbon pricing, better transit and livable streets are almost certainly at least as important for climate as improved miles per gallon.

Don’t Subsidize Super-Drivers, Soak Them

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Streetsblog USA this morning published my essay, Instead of Subsidizing the ‘Super-Drivers,’ We Should Soak Them: Piling subsidies on subsidies, even if well-meaning, fails to rein in the full cost of driving. I’ve cross-posted it here to allow comments and add tables and graphics.

 — C.K., Jan. 29, 2024

One-tenth of American motorists, we’ve just learned, consume more than a third of U.S. gasoline.

This lead-footed cohort, dubbed “superusers” in a recent analysis, burn almost as much fuel — and, thus, spew nearly as much carbon dioxide — as all auto drivers in China. Or, reformulated, the most motor-dependent one-tenth of U.S. drivers burn the same amount of gasoline and thus generate the same carbon emissions as all motorists in the European Union and Brazil combined.

The analysis, by Seattle-based Coltura, casts a harsh light on America’s transportation culture. Unfortunately the firm’s policy prescription — new subsidies to entice superusers into buying climate-friendlier electric vehicles — is a mere Band Aid, and an ineffectual one to boot.

What Coltura’s Analysis Shows

The most startling revelation from the Coltura analysis is the rank inefficiency of the superusers’ rides. You would think that anyone driving 110 miles a day — the purported average for the 21 million superusers identified in the report — would rush to the nearest used-car lot and drive off in a high-mileage vehicle. But you would be wrong. Coltura’s traveling tenth eke out a measly 19.5 miles a gallon, on average. That’s a whopping 18 percent worse than ordinary drivers’ average.

The toll on superusers’ household budgets is staggering: an average $530 monthly tab at the pump, according to Coltura. Upping their mpg to merely the same 24 mph average as other motorists would save them $97 a month. Those savings would hit $175 if the superusers clambered further up the mpg ladder and outdid the norm by the same percentage (18 percent) they now lag it. Annualized, that’s a cool two thou per vehicle.

Summing Agriculture and Blue Collar, and apportioning Other among the eight prior categories, only 24% of superusers are doing physical work that might require a large vehicle.

What’s that, you say, superusers are lugging drywall and cement mix and portable generators all over the county and can’t do with a more modest ride? Nonsense. According to Coltura, only 19.1 percent of superusers are blue-collar workers. Throw in another 0.7 percent who work in agriculture, and at most 20 percent routinely haul mountains of stuff requiring a pickup or SUV. The rest are professional/legal (16 percent), business/finance (15 percent), office/administration (10 percent) and other non-physical workers. Even if we prorate the 17 percent of superusers classified as “other,” at most 24 percent of Coltura’s traveling tenth qualify as Grainger’s “the ones who get it done” who might need a kick-ass vehicle with which to do it.

If you really want your head to explode, check out Coltura’s list of superusers’ 20 most popular vehicles, shown below. The Chevy Silverado is the choice of 7.4 percent of superusers, followed closely by Ford’s F-150 (6.4 percent). Both are EPA-ranked at 20 mpg. You have to drop down to #12 on the list to find the first vehicle that’s not an SUV or pickup: a 27-mpg Honda Accord. All told, no more than a handful of the top 20 are sedans.

Their Solution … And Ours

What to do? Ordinarily, one wouldn’t need to care that close to 20 million Americans are too Foxed-up or broke to dump their vampiric, oversized vehicles or off-ramp their road-warrior routines. After all, superusers have chosen to bust their budgets and warp their daily lives, right? Except, duh, the climate we all inhabit is breaking under their emissions — not to mention the myriad other damages from driving 110 miles a day: crashes, traffic, “local” air pollution. As I said up front, society has an interest in enticing them, somehow, into less-inefficient vehicles.

By crunching these figures from Coltura, we calculated that superusers’ average gas mileage is just 19.5 mpg. The U.S. 2021 light-duty fleet average of 22.4 mpg (per FHWA “Highway Statistics,” Table vm1) computes to 23.9 without superusers.

Coltura’s solution is to tie electric-vehicle incentives, messaging and perhaps even provision of charging infrastructure, to drivers’ current gasoline consumption. Validated superusers, based on sworn statements of odometer readings and vehicle make and model (hence, mpg) would qualify for extra rebates, financing and other inducements beyond those offered in the Biden Inflation Reduction Act. These would weaken the glue — economic, ideological or otherwise — that binds superusers to their gas-guzzlers even though it’s worth asking: Why do we need to subsidize someone into buying an EV when switching to a battery-powered car or truck would at once zero out the $6,000 that the average superuser shells out annually on gasoline?

At first blush, Coltura’s approach has a ring of reasonableness. But vagueness suffuses it, not just in the Coltura report, but in its lead authors’ 2022 podcast interview with climate-energy pundit David Roberts. In fact, on closer examination the whole idea comes off as a pig in a poke, with its administrative apparatus, the gaming, the appeals, the interminable wrangling to fashion the “right” incentives and eligibility. Not to mention the inevitable special pleading of “disadvantaged” motorists who almost qualify as superusers but not quite. And the jockeying in states or Congress to pay for the incentives and the bureaucracy.

What makes this prospect especially dispiriting is the existence of an alternative policy instrument that, compared to Coltura’s “targeted” but cumbersome intervention, could do far more to cut gasoline consumption — not just by superusers but by all U.S. motorists: concerted increases in U.S. motor fuel taxes.

Gasoline taxes can be raised in two ways: by boosting the U.S. excise tax, which has been stuck at 18.4 cents a gallon since Oct. 1, 1993 (losing half its heft to inflation since then); or by instituting a carbon tax, which would raise the prices of all fossil fuels including petroleum products.

Resistance to auto dependence was more radical three decades ago, as in this 1993 Village Voice broadside by journalist Daniel Lazare.

The impact on usage would be small in the short run, but it would rise over time, as households switched to higher-mpg vehicles, cities and suburbs up-zoned, and cultural norms adapted to costlier driving. EV’s would be elevated, of course, but vehicle electrification would be only one of many means of getting off gasoline.

My regression analyses of U.S. gasoline demand — a subject I’ve studied for decades — suggest that a $1 increase in the price at the pump would trigger only a 3- to 4-percent drop in usage overnight, but triple that impact within a decade — roughly the same decrease as eliminating one-third of U.S. superusers’ consumption. But that’s just a start. My 1960-2015 data don’t reflect changing societal currents, nor do they capture digital tech’s potential to match people with nearby jobs or connect similarly-directed travelers to enable work and play with fewer miles driven.

“Making other arrangements” in the face of climate chaos is how the social critic James Howard Kunstler once referred to this social reconfiguration. Sadly, as the caterwauling against New York’s congestion pricing program by entrenched interests from New Jersey politicians to teachers’ union bosses attests, the American ethos today is to cling to dysfunction rather than attempt change.

This isn’t to make light of either the jarring changes that superuser motorists will face from robust fuel taxes, or the political difficulty of enacting them. (The website of my Carbon Tax Center is replete with potential antidotes to both, even as it acknowledges the difficulties.)

Nevertheless, these hurdles shouldn’t deter carbon-tax advocates from advocating much higher fuel taxation. Piling subsidies on subsidies, even if well-meaning, only makes our system more complex and opaque. If we don’t advocate for full-cost pricing that tells the truth about motorization, who will?

What the Green Transition’s “Missing Profits” Really Mean

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For a moment last week it looked like the New York Times was heeding CTC’s summons to tax carbon emissions as a way to make faltering clean-energy projects profitable.

NY Times op-ed by David Wallace-Wells, Jan. 10, 2024. His “missing profits” aren’t the same as ours.

The come-on appeared in the headline for an opinion piece, Missing Profits May Be a Problem for the Green Transition, by the Times’ climate columnist David Wallace-Wells. MISSING PROFITS! Was Wallace-Wells pursuing the idea I floated two months ago in a CTC blog, that a U.S. carbon tax could lift the prevailing price of grid power by enough to offset the cost creep that is killing off off East Coast wind and solar projects along with an innovative nuclear power venture in Idaho?

Not quite. The “missing profits” in the Times column did not refer to the revenue boost that carbon-free power projects should but don’t get for the climate benefit they create by keeping fossil fuels in the ground. Rather, it referred to collapsing returns inflicted on renewable energy projects by higher interest rates, stretched-out schedules and cost escalation endemic to first-of-a-kind projects like enormous offshore wind turbines (East Coast) and small modular reactors (Idaho).

Nevertheless, “missing profits” is a keeper phrase. Though it’s less poetic than “gainsharing,” the neologism we deployed in that Nov. 10 post (Gainsharing: Carbon Taxes Can Put Clean Energy Back in the Black), the phrase is more to the point: The lack of robust carbon pricing manifests as missing profits that beset every project, policy and gesture that promises to reduce use of fossil fuels and, thus, to avert and reduce carbon emissions.

Leave the idea, take the expression, “Godfather” movie character Pete Clemenza might have said.

What was the idea, then, in Wallace-Wells’ Times column? Mostly that the prospective profits from wind and solar projects are downright meager compared to returns on oil and gas supply investments.

True enough, and unsettling. But the antidote advanced in the column is almost diametrically opposite ours. We want a robust U.S. carbon price “to put clean energy projects back in the black.” In contrast, Uppsala University (Sweden) geographer Brett Christophers, the avatar of Wallace-Wells’ column, wants “public ownership of the power sector.”

Yes, but which price is wrong? Christophers writes in his forthcoming book that renewables cost too much and need public investment. We say *fossil fuels* are priced *too low* and require carbon pricing.

I haven’t read Christophers’ new book, The Price Is Wrong — its publication is set for March. But its contours seem clear from Wallace-Wells’ column and from Christophers’ own NYT guest essay last May, Why Are We Allowing the Private Sector to Take Over Our Public Works?

In that essay, Christophers took dead aim at the Biden administration’s signature climate achievement, the Inflation Reducation Act. “The I.R.A. will help accelerate the growing private ownership of U.S. infrastructure and, in particular, its concentration among a handful of global asset managers,” he warned.

“It is wrong,” Christophers continued, to cast the I.R.A. and other Biden legislation as “a renewal of President Franklin Roosevelt’s New Deal infrastructure programs of the 1930s.”

The signature feature of the New Deal was public ownership: Even as private firms carried out many of the tens of thousands of construction projects, almost all of the new infrastructure was funded and owned publicly. These were public works. Public ownership of major infrastructure has been an American mainstay ever since. [I]n political-economic terms, Mr. Biden, far from assuming Roosevelt’s mantle, has actually been dismantling the Rooseveltian legacy. (emphasis added)

That may be, though claiming Biden is dismantling FDR’s legacy is quite a stretch. For his part, Wallace-Wells summarized the conundrum of green power’s newly spiking capital and interest costs as follows:

For Christophers, this is a challenge that implies its own solution: public ownership of the power sector. If all that stands between our bumpy “mid-transition” status quo and an abundant clean-energy future for all is an initial hurdle of investment, why strain to extract that investment from private investors who’d prefer to invest elsewhere?

Again, perhaps. But treating renewables’ upfront-cost hurdle as a minor matter to be tweaked, as Wallace-Wells suggests, has an air of whistling past the graveyard. What if the findings from the International Energy Agency and Bloomberg New Energy Finance, touted by Wallace-Wells and countless others, that new wind and solar arrays pencil out cheaper than equivalent electricity generated with coal or methane, are simplistic or plain wrong?

To his credit, Wallace-Wells allowed in his column that U.S. public power agencies traditionally have been “obstacles to a rapid transition [from fossil fuels]” rather than “models of hyperdecarbonization.” But it’s also true that some entities of government, including New York State, have strong public works traditions. Indeed, some historians view Franklin D. Roosevelt’s tenure as governor as a testing ground for ideas such as unemployment insurance and old-age pensions that his presidency made foundational to the New Deal.

Chart, reprinted from our Nov. 2023 “Gainsharing” post (link in text), has back-of-the-envelope estimates of the “missing profits” clean-energy projects could capture under carbon pricing.

In this light, CTC sees potential in New York’s new (2023) Build Public Renewables Act, which authorizes the NY Power Authority to build and own renewable power projects. At the same time, we’re mindful that public financing of clean power constitutes a subsidy, albeit an indirect one, and that the U.S. tax code already provides considerable subsidies to wind and solar power — subsidies that the I.R.A. extended to the entire electrification effort (EV’s, batteries, transmission, manufacture) of which wind and solar are key components.

Still, the virtues and pitfalls of public investment in clean power are worthy of public conversation, not just in the U.S. but “in the poorer parts of the world,” as Wallace-Wells notes, where hundreds of millions lack access to electricity of any stripe, in part because “capital costs of new infrastructure can be prohibitively high even in the absence of supply shocks and global inflation conditions.”

Our focus at CTC, however, is the United States, home of the world’s most inventive entrepreneurs and its most efficient capital markets. Without shutting the door against public investment, we are tantalized by the possibility that clean power’s cost hiccups could be overcome through robust carbon pricing. Unlike subsidies, carbon pricing won’t “accelerate the growing private ownership of U.S. infrastructure and, in particular, its concentration among a handful of global asset managers” — the specter raised against the I.R.A. by Brett Christophers in his May 2023 Times guest essay.

Carbon pricing doesn’t play favorites and is resistant to gaming. It’s ecumenical, technology-neutral and pervasive. It raises all low-carbon boats — energy efficiency and conservation as well as renewables. Whether it can actually make clean-power projects profitable on a vast scale is a question we at CTC intend to explore.