Dodd brings pollution tax proposal to NH

By JOHN DISTASO

Senior Political Reporter, (New Hampshire) Union Leader

Friday, Apr. 20, 2007

NASHUA – Connecticut Sen. Chris Dodd brought his call for a $50 billion tax on polluters from a Washington think tank to a New Hampshire kitchen table today.

Over coffee, juice, fruit and cake, he told 10 local political and clean energy activists his plan contains “tough but important steps” toward reducing greenhouse gas emissions.

The Democratic presidential candidate continued his “kitchen table” discussion series at the home of Paul and Wendy Johnson a day after unveiling an ambitious plan to cut 80 percent of all greenhouse gas emissions in the country by 2050.

His centerpiece is a “Corporate Carbon Tax,” which would produce revenues to fund research, development and production of renewable energy technologies and make them more affordable.

Several greenhouse gas-related bills and plans propose some form of a cap-and-trade system, aimed at reducing carbon dioxide emissions by allowing more efficient polluters to sell emission credits to less efficient polluters. Dodd supports that system, but said it only works if it is combined with a tax.

“I don’t know how we can possibly talk about honestly getting to the number we need to get to if you’re going to just dance around that issue,” Dodd said. “Price is the last real barrier.”

He said believes many heavy polluters want to transfer to cleaner technologies, “and this will be the incentive to do it.” Dodd said the carbon tax would provide the “additional resources to” help industries make the transition.

Speaking with reporters after the hour-long discussion, Dodd acknowledged his plan is controversial.

“But it’s an honest answer,” he said. “As long as the oil industries, the polluting industries, can make a lot of money at a lot less cost a barrel, they’re going to drive these other technologies out of the market. If I can make these alternative
energy sources financially competitive with sources that leaves us more dependent on the Middle East, endangers our environment, endangers our health, endangers our economy, then I think people, if they understand that, will accept it as a smart move.”

Dodd said, “It’s not going to happen miraculously. It’s going to happen because political leadership makes intelligent decisions about how to move us in that direction.”

Dodd, accompanied by his wife, Jackie, said he hosts kitchen table talks because, “while people want to hear what I have to say, it’s also very important that as a candidate, I see what the people I seek to represent have to say.” Dodd, a 26-year
senator, said the format has worked well for him during his Connecticut campaigns.

CTC addendum: Follow link for Sen. Dodd’s April 27 op-ed, A Corporate Carbon Tax, in the Boston Globe.

Here’s the full text of this fascinating and timely story from the Financial Times. — C.K.

Industry Caught in Carbon ‘Smokescreen’ (Financial Times)

By Fiona Harvey and Stephen Fidler in London

Published: April 25 2007 22:07

Companies and individuals rushing to go green have been spending millions on ‘carbon credit’ projects that yield few if any environmental benefits.

A Financial Times investigation has uncovered widespread failings in the new markets for greenhouse gases, suggesting some organisations are paying for emissions reductions that do not take place.

Others are meanwhile making big profits from carbon trading for very small expenditure and in some cases for clean-ups that they would have made anyway.

The growing political salience of environmental politics has sparked a ‘green gold rush’, which has seen a dramatic expansion in the number of businesses offering both companies and individuals the chance to go ‘carbon neutral’, offsetting their own energy use by buying carbon credits that cancel out their contribution to global warming.

The burgeoning regulated market for carbon credits is expected to more than double in size to about $68.2bn by 2010, with the unregulated voluntary sector rising to $4bn in the same period.

The FT investigation found:

? Widespread instances of people and organisations buying worthless credits that do not yield any reductions in carbon emissions.

? Industrial companies profiting from doing very little – or from gaining carbon credits on the basis of efficiency gains from which they have already benefited substantially.

? Brokers providing services of questionable or no value.

? A shortage of verification, making it difficult for buyers to assess the true value of carbon credits.

? Companies and individuals being charged over the odds for the private purchase of European Union carbon permits that have plummeted in value because they do not result in emissions cuts.

Francis Sullivan, environment adviser at HSBC, the UK’s biggest bank that went carbon-neutral in 2005, said he found ‘serious credibility concerns’ in the offsetting market after evaluating it for several months.

‘The police, the fraud squad and trading standards need to be looking into this. Otherwise people will lose faith in it,’ he said.

These concerns led the bank to ignore the market and fund its own carbon reduction projects directly.

Some companies are benefiting by asking ‘green’ consumers to pay them for cleaning up their own pollution. For instance, DuPont, the chemicals company, invites consumers to pay $4 to eliminate a tonne of carbon dioxide from its plant in Kentucky that produces a potent greenhouse gas called HFC-23. But the equipment required to reduce such gases is relatively cheap. DuPont refused to comment and declined to specify its earnings from the project, saying it was at too early a stage to discuss.

The FT has also found examples of companies setting up as carbon offsetters without appearing to have a clear idea of how the markets operate. In response to FT inquiries about its sourcing of carbon credits, one company, carbonvoucher.com, said it had not taken payments for offsets.

Blue Source, a US offsetting company, invites consumers to offset carbon emissions by investing in enhanced oil recovery, which pumps carbon dioxide into depleted oil wells to bring up the remaining oil. However, Blue Source said that because of the high price of oil, this process was often profitable in itself, meaning operators were making extra revenues from selling ‘carbon credits’ for burying the carbon.

There is nothing illegal in these practices. However, some companies that are offsetting their emissions have avoided such projects because customers may find them controversial.

BP said it would not buy credits resulting from
improvements in industrial efficiency or from most renewable energy projects in developed countries.

Additional reporting by Rebecca Bream

Copyright The Financial Times Limited 2007

Michael Riordan invited us to publish the following Opinion Piece, which was originally published in the San Francisco Chronicle on March 23, 2007. Michael is the co-author of The Solar Home Book. He teaches the history of science and technology at Stanford University and University of California, Santa Cruz. Thanks, Michael!

Time for a Carbon Tax?

By Michael Riordan

It balms my bleeding liberal heart to witness a conservative president from Texas and a Republican governor of California promoting renewable energy. Also known as alternative energy, it was widely advocated by environmentalists after the 1970s energy crisis and heartily embraced by President Jimmy Carter and Gov. Jerry Brown. But President Bush’s oil-patch friends ridiculed renewable energy as impractical, and it faded from the national agenda during the Reagan years — to be resurrected only recently. Perhaps the time has finally come to revive yet another radical idea: a carbon tax, which charges anyone who burns fossil fuels for the problems that ensue.

Of course, the word "tax" sends shudders across the political spectrum, but it shouldn’t, especially when the only good alternative is another hot-button word, "subsidy."

During the late 1970s, tax credits and other subsidies encouraged ill-considered technologies, such as solar-heating panels on roofs, that didn’t make much economic sense. Some renewable-energy advocates argued that governments should not subsidize any sources of energy — whether fossil fuel, solar, wind, biofuels or nuclear. Just get out of the economic way and let market forces determine the outcome — and penalize detrimental energy sources by taxing them accordingly.

Today, a different dynamic is operating. Global warming, then regarded as a distant possibility, is widely accepted in scientific — and, increasingly, business — circles as a looming threat that we must confront. In the wake of Hurricane Katrina, a majority of the U.S. population regards global warming as fact, caused by human introduction of carbon dioxide into the atmosphere. All of us are contributing by burning fossil fuels, and we are just beginning to witness the terrible consequences.

Thus, a rational course of action is to penalize those who burn fossil fuels — all of us — and use the revenues to implement solutions. This tactic would discourage actions detrimental to the environment and encourage energy alternatives, which could range from energy-efficiency measures to carbon-removal methods to renewable-energy sources.

A carbon tax on our gasoline purchases, for example, would automatically penalize owners of gas-guzzlers while promoting hybrid and flex-fuel automobiles. The average miles-per-gallon of U.S. cars would steadily rise in response to such a measure, as individuals take this added cost into account when making purchases.

The real key to widespread acceptance of a carbon tax, is to put the money directly to use on solving our energy problems — not just pour it into the general fund, where it can be diverted. Carbon taxes could pay for loans or even grants for insulation and double-glazing of windows in older homes, especially in cases where owners cannot afford to make such improvements. They can fund much-needed research and development on ways to capture and remove carbon dioxide or subsidize power companies that begin to take such measures with their emissions. They can support tax credits to homeowners who install solar cells, as California is doing through its Million Solar Roofs program. They can fund much-needed research on converting agricultural waste, wood chips and switchgrass to biofuels, or to solve the knotty problems of fuel-cell automobile engines and compact hydrogen-storage systems.

As Americans consume about 9 million barrels of oil daily for transportation, a dime-per-gallon gas tax thus would yield nearly $14 billion annually for such purposes. This amount does not include taxing coal, oil and natural gas burned in electrical power plants or for heating our homes and office buildings, which would probably add twice that amount.

A small carbon tax applied across the board, wherever fossil fuels are burned, thus would yield more than $50 billion a year to help address global warming. We already do something like this with the gasoline taxes that go directly into highway construction and repair. It is not all that new of an idea.

Spending these funds wisely, of course, will require some kind of responsible governmental decision-making body. Given the politics and corruption that often swirl around large pools of money, this will not be easy. But with openness, vigilance and leadership, it can succeed.

Meanwhile, renewable energy sources would begin to flourish. It would finally become economical to tap the vast supplies of renewable energy that course through our communities daily. Just imagine solar-cell panels on millions of homes converting the sunlight shining on them into thousands of megawatts of electricity fed back into the power grid. And the local construction jobs thus created will be awfully difficult to export to China or India.

Achieving this worthwhile goal cannot happen without courageous political leadership, for few can stomach a new tax. That is why so many politicians, including Sen. Dianne Feinstein, D-Calif., favor a "cap-and-trade" emissions-trading scheme, whereby companies are allowed to emit limited amounts of carbon dioxide, but can trade these allowances like stocks and bonds.

Fortunately, we are beginning to get the needed leadership in California, thanks to an inspired governor working across the aisle with Democrats on energy issues. What better legacy could President Bush leave when he departs from office in two years?

Here’s how Greenwire led its story on former Vice-President Al Gore’s appearance this morning before the House Committee on Energy and Commerce:

In a historic hearing appearance today before two House subcommittees, former Vice President Al Gore urged Congress to immediately freeze U.S. greenhouse gas emissions and reduce them 90 percent by mid-century.

Gore also called on lawmakers to tax the carbon content of fuels as a way to put the global warming issue before Americans.

"I fully understand that this is considered politically impossible, but part of our challenge is to expand the limits of what is possible,"
Gore said.

Gore also suggested that the United States push for the next global warming treaty to begin in 2010, two years before the expiration of the Kyoto Protocol.

By using 2010 as a start point for the next treaty, the next U.S. president could "use his political chits" to get the country in an "all-out sprint" to reduce its own emissions.

Congress should also set up a "carbon neutral" federal mortgage company to support "green" homes, ban sales of incandescent light bulbs and impose a moratorium on new coal-fired power plants built without the technology to capture and sequester carbon dioxide.

Gore’s appearance before the House Energy and Commerce and Science and Technology subcommittees drew standing-room-only crowds. It also filled several overflow rooms to
watch the testimony of the Tennessee Democrat.

In a 40-minute opening statement, Gore described what he said is a budding political movement for new climate change policies. He presented 516,000 online signatures he had gathered on his Web site and touted 100 new contacts per second in the last few days since soliciting comments in anticipation of his House testimony.

"This is building, and it’s building in both parties," Gore said.

Gristmill’s David Roberts has a handy summary of Gore’s 10-point legislative proposal here. Gore’s #2: Start a long-term tax shift to reduce payroll taxes and increase taxes on CO2 emissions. His #3: Put aside a portion of carbon tax revenues to help low-income people make the transition. (#1: An immediate "carbon freeze" that would cap U.S. CO2 emissions at current levels, followed by a program to generate 90% reductions by 2050.)

Small world dept: Not so many years ago, geophysicist grad student Kevin Vranes and I were part of an intrepid band of New Yorkers marking sites where pedestrians and cyclists were run over by car drivers, as part of a campaign against vehicular dominance of the streets. Now we’re both in the thick (?) of the climate debate. Kevin has published a terrific account of reactions to Gore’s testimony today before the Senate Environment & Public Works Committee, in the Colorado University Science blog Prometheus. Note particularly his recitation of the keen interest in carbon pricing and taxing shown by Montana Democrat Max Baucus and New York Democrat Hillary Clinton.

My one correction to Kevin’s valuable report: Keivn, this may have been the first time you heard Gore urge a tax on carbon emissions, but the former V-P has been calling for a carbon tax (with a tax-shift out of payroll taxes) for some time. See details here.

Photo: flickr / Oscar H Mataquin

Yesterday Gristmill ran a curious article by Bill Chameides of Environmental Defense, attacking a carbon tax strawman that no one is advocating, least of all the Carbon Tax Center.

Chameides stated that the "government would use additional tax dollars to subsidize the development of selected low-carbon technologies." We invite him to look at CTC’s proposed carbon tax, which is revenue-neutral. Revenues will go to reduce regressive taxes or to finance progressive, equal rebates to all U.S. residents. Contrary to Chameides’ charge, we have never advocated targeting tax revenues to any technology, privileged or otherwise. Nor, to our knowledge, have the Washington Post‘s Anne Applebaum, whom he also took to task, or the dozens of columnists, economists, scientists, and other public figures who support taxing carbon.

Chameides and ED are throwing their weight behind a carbon cap-and-trade system, on the premise that the successful sulfur cap-and-trade model can be extrapolated to carbon. We believe this is flirting with disaster. A model that worked when the parties were limited to a few dozen electric utility companies is ill-suited when the stakeholders — essentially every business and household in the country — number 100 million or more. Moreover, electric generators seeking to reduce sulfur emissions had a variety of technological alternatives available. There are no comparable methods available to reduce carbon emissions other than fuel-switching and, perhaps sometime in the future, sequestration.

Chameides claims that the "marketplace does a better job of developing new technologies, and a tax takes money out of the marketplace." That argument was pertinent when the alternative to cap-and-trade was "command and control" regulation of NOx and SO2 emissions, but it’s irrelevant to a comparison with a carbon tax. Both a cap-and-trade and a carbon tax provide price signals that encourage polluters to look for ways to avoid the cost of emitting CO2.

A carbon tax actually provides more precise price signals, provides them sooner, and provides them in a more understandable and transparent fashion. To attack global warming, every energy-critical decision needs to be predicated on a trajectory of rising energy prices. A phased-in carbon tax allows this, whereas cap-and-trade will do little to mitigate the price roller-coaster that discourages emissions-minimizing investment.

Not only would a carbon cap-and-trade system provide less effective price signals, it would do so only after considerable delay consumed by protracted negotiations, making a mockery of Chameides’ claim that a cap will guarantee climate-stabilizing cuts. Compounding the problem, once a cap-and-trade system is finally implemented, we’re likely to be locked into the approach for years, with industry insisting, "Don’t change it until we see how it works." Carbon taxes will require no new administrative structures, can be implemented now, and can be adjusted as necessary.

Another serious drawback to cap-and-trade is that its inherent complexity leaves it open to exploitation by special interests, not to mention perverse incentives to "bank" pollution now against future credits. Carbon taxes are relatively immune to manipulation.

Ironically, Chameides’ hesitancy about trusting the government with tax dollars applies more aptly to his cap-and-trade proposal. Since the tax proposed by CTC and most other carbon tax proponents is revenue-neutral, there are no tax dollars to spend and potentially misuse. In contrast, even an optimal cap-and-trade system such as the Northeast’s Regional Greenhouse Gas Initiative, in which emissions allowances are auctioned, would saddle end-users with the functional equivalent of a tax, along with the same conundrum Chameides raised about how to spend the money. Except worse, because the cap-and-trade model necessarily requires that a chunk of the "tax revenues" be used to provide market participants with a profit paid by consumers.

And that’s under a relatively benign cap-and-trade, in which the allowances are auctioned. The alternative, giving polluters the
allowances outright, combines the worst of both worlds: a hidden tax on energy users, with all the increased energy costs given to the polluters or other market participants. An explicit tax that offsets other taxes is preferable to a covert tax that goes into someone else’s pocket.

Finally, we reject Chameides’ defeatism over the chances of Congress passing a carbon tax. On the contrary, the stars are aligned as never before to actually do something about carbon emissions. There is now a general acceptance of the need for action (even Exxon concedes there’s a problem), and no less than Wall Street demigod Paul Volcker
called last week for taxing CO2. The question is what will work best. For reasons discussed in more detail on our website, we believe that a carbon tax coupled with progressive tax-shifting can be a winner politically.

The last thing we want to do is lock in a suboptimal solution and then have to wait years before the stars are again aligned. Now is the time to work for a real solution that maximizes environmental gains and minimizes hardships.

This article was written with CTC co-director Dan Rosenblum. It appeared first on Gristmill. Dan and I invite commenters to post there as well as here.

The New York Times reported today that French President Jacques Chirac has demanded that the United States sign both the Kyoto climate protocol and a future agreement that will take effect when the Kyoto accord runs out in 2012.

According to The Times, Chirac warned that if the United States did not sign the agreements, a carbon tax across Europe on imports from nations that have not signed the Kyoto treaty could be imposed to try to force compliance. The European Union is the largest export market for American goods.

“A carbon tax is inevitable,” Mr. Chirac said.  “If it is European, and I believe it will be European, then it will all the same have a certain influence because it means that all the countries that do not accept the minimum obligations will be obliged to pay.”

French officials have recently floated the idea of imposing carbon-equivalent tariffs on imports from countries that do not tax or otherwise regulate carbon emissions. These tariffs would help level the playing field for early adopters of carbon controls.

"Humankind’s failure to pay for damaging the environment is the "biggest market failure ever seen," declared Sir Nicholas Stern, the author of last year’s groundbreaking report on climate change and former adviser to Tony Blair.

Sir Nicholas called for higher taxes on fuel to combat environmental damage yesterday at a summit of business and political leaders in Davos, Switzerland.

As reported by The Guardian (U.K.), the issue of global climate change dominated the agenda of the first day of the
World Economic Forum’s annual meeting.

Making the environment pay is one of 17 sessions focusing on climate
change this week. According to The Guardian, a majority of attendees at a standing room-only
session yesterday backed Sir Nicholas’s contention that carbon taxes
were a force for good and twice as many of the high-level attendees
said environmental protection should be a priority for world leaders as
did a year ago.

Charles and I created the Carbon Tax Center because prompt and effective action to reduce carbon emissions is imperative to slow and then stop the world from hurtling towards a climate disaster. We are convinced that a carbon tax is essential to reduce U.S. emissions quickly and steeply enough to prevent atmospheric concentrations of CO2 from reaching an irreversible tipping point. Unfortunately, the Bush Administration is doing practically nothing and most of the proposals for action do not go far enough. We want CTC to serve the climate advocacy community. Please tell us what you think about our web site, what you like, what you want to change, etc. We’ll listen and respond.

Here’s a sampling of e-mails to info@carbontax.org since our launch yesterday.

Keep those cards and letters coming. Even better, comment here, on this blog. Please also add a link to CTC on your Web site. Tell your friends and neighbors.

And feel free to donate. Already received: 6 contributions totaling $500. We’re thrilled and grateful.

— Dan and Charles

Great idea. I like your FAQs addressing the various issues. It’s about time someone did this! — (veteran energy policy analyst)

You can count on me to promote the idea whenever and wherever I get the chance because it’s the right way to go on this important issue. (economist, author, educator)

Nice work! Better late than…. But it may be too…. (longtime sustainability writer-activist)

This new clearinghouse for information on Carbon Tax is great. I’ll pass this on to the authors I am working with in environmental studies. (editor)

Site looks great! I think it will make a big impact. (a friend)

Dear global warming activists: great news below! Please forward this to your friends and lists, and spread the word. (climate activist)

Sounds intriguing. Please keep us in the loop. (CEO of an international environmental policy org.)

Good luck! I posted this on The Oil Drum. (eco-activist, Peak Oil-er)

My instinct has always been that imposing a tax on carbon is a better way to go than the cap-and-trade approach simply because it would force all actors to reduce their emissions no matter how efficient or inefficient they presently are and we need all the reductions we can get if we hope to arrest the worst case scenarios. (CEO of a grassroots enviro org)

The site looks good. Like the name of the newsletter vis a vis Al G. Signed up. Good luck! (family member)

Congratulations on your new carbon-tax group! I signed up for your email. I think the time is right for a c-tax. (author)

Good for you. The debate is needed. (founder of a major sustainability org.)

Your proposal, it seems to me, is the very sort of thing we need more of — and the very sort of thing that any number of well-heeled, self-styled “greens” would like to avoid (e.g., let’s stick a wind tower in Podunk and let’s drive our SUV out to take photos of it). (writer)

This is really a great contribution to the dialog. I especially like your assertion of how a CT is better than cap and trade. That really deserves its own slide show.  (Solar-photovoltaic and energy-efficiency entrepreneur)

Congratulations. This is a noble effort. (cycling and livable cities advocate)

Interesting, and even elegant site…I am freezing on behalf of the cause, etc. (writer)