Carbon Tax – Page 3

For Long-Term NY Transit Funding, Look to a State Carbon Tax

May 4, 2023 By Charles Komanoff

The New York City public affairs site Gotham Gazette today published my essay, For Long-Term MTA Funding, Look to a State Carbon Tax. I’ve cross-posted it here to allow comments and to bring it directly to the Carbon Tax Center’s readership.

— C.K., May 4, 2023

That huge sigh of relief from New York City mass transit advocates last weekend was for the state budget handshake to tack more than a billion additional dollars a year onto a key MTA funding stream, the Payroll Mobility Tax. According to both my calculations and an announcement from Gov. Kathy Hochul, the agreed-to 75% rise in the tax rate on employee salaries paid by businesses in the five boroughs will add $1.1 billion to the PMT’s ongoing annual $1.8 billion take.

(The numbers prorate imperfectly because the rise in the tax rate, to 60/100 of one percent, applies only in the city; the rate in the seven suburban MTA counties remains 34/100 of one percent.)

The upward bump in the PMT is part of the package to avert a fare hike and service cuts that would have jolted the entire metro region. Raising the same $1.1 billion via the subway farebox, for example, would have required a whopping 35% jump in fares, a calamity that would have triggered enough new car, cab, and Uber trips to slow vehicles in Manhattan by 5% and boosted city and regional carbon emissions by nearly 400,000 tons of CO2 a year — enough to negate the climate benefit of 90 new large wind turbines, according to my modeling. And these figures don’t include lost jobs and commerce from worsened transportation. Reducing service to save the same amount would have produced similar bad outcomes.

Score a big win, then, for transit and New York. But the new revenue comes with a downside: taxes on payrolls discourage hiring and compound our area’s anti-business aura. Moreover, this revenue infusion will almost certainly be not the last but the first in a series the MTA will require throughout the decade to limit future fare hikes and improve service even as ridership continues to lag pre-pandemic volumes. Counting on raising the PMT next time, and the time after that, will be a fool’s errand. There has to be a better way.

I believe there is: enact a modest statewide carbon tax and dedicate a third to a half of the revenue to shoring up public transportation budgets around the state, though principally in New York City.

Reappraising Carbon Taxes

On January 1, Washington state launched its carbon-pricing program, the nation’s second all-sectors carbon charge, with a starting price around $20 per ton of CO2, though most of the emission allowances fetched even higher prices in the first carbon auction, in March. I estimate that the same $20 price applied to all fossil fuels burned in New York State could generate revenues of $3 billion a year (see table).

Dedicating a third of those proceeds to the MTA would add a billion dollars to the authority’s annual revenue. Other slices of the revenue could cure deficits at smaller transit systems around the state.

Even with these allocations, roughly half of the new $3 billion in annual carbon revenues would remain available for a range of purposes from home weatherization to rebates offsetting higher fuel costs for lower-income rural New Yorkers.

Of course, no new tax is ever welcomed with open arms. In recent years, moreover, carbon taxing has lost political standing with left and right alike. Right-wingers, in thrall to fossil fuels, denigrate the very idea of climate concern. Opinions on carbon pricing on the left, while far more nuanced, tend toward an “eat your peas” quality, seeing the promised revenues but not the powerful tides unleashed by the increased fuel prices.

Could a state carbon tax have a chance in New York this time around? I believe so, if only because MTA deficits are untenable and a statewide carbon tax looks like the least-bad long-term antidote.

Consider:

New York wouldn’t be the first state to price all carbon emissions. California has done so for a decade, and, as noted, Washington just followed suit.
Two-thirds of the $3 billion in carbon tax revenue could go to other, non-MTA uses across the state.
Nearly half of the revenues would come from charges on fossil (natural) gas, the very fuel that climate activists are targeting in order to electrify heating and cooking while also shrinking climate-damaging methane leaks from pipelines, wells, and buildings.
Carbon taxing’s regressive bias (it takes more dollars from the rich but more proportionally from the poor) would be blunted by its helping keep a lid on transit fares.
The affluent suburban counties that will be on the hook for the carbon tax caught a big break by their exemption from the increase in the Payroll Mobility Tax. Moreover, some pro-climate suburbanites might even support a climate-helping carbon tax.
Upstate households will be cushioned from the tax by the region’s preponderance of low-carbon electricity from nuclear, hydro, and wind power.
Aid to transit could be packaged as an urban corrective to suburban- and rural-facing Inflation Reduction Act federal subsidies for solar panels, electric vehicles, and heat pumps. (Notably, the IRA does not fund urban-friendly mass transit and e-bikes.)
Left-leaning climate-justice advocates who shy away from carbon pricing might warm to a policy that cuts emissions by attracting car trips to buses, trains, and subways.

This panoply of advantages points to diverse potential sources of support for a transit-benefitting state carbon tax:

NYC transit and “livable streets” advocates;
Economic-justice advocates who recognize affordable transit’s value in combating poverty;
Climate campaigners who see carbon pricing as a complement to other carbon-cutting policies;
Suburbanites concerned that future hikes in the Payroll Mobility Tax will come for them;
“Electrify-everything” proponents working to eliminate fossil gas from residences and other buildings;
Developers of low-carbon electricity — not just solar and wind providers but proponents of retaining the state’s four upstate reactors and building new ones;
Energy-efficiency engineers, contractors, and workforces;
Labor unions whose members fabricate, erect, and maintain the spectrum of green energy projects that a carbon tax will help make more abundant by making fossil sources costlier.

Competing Claimants?

Electricity producers in New York already pay a carbon fee under the multi-state Regional Greenhouse Gas Initiative (RGGI) cap-and-trade program. In addition, Governor Hochul and the statewide climate coalition New York Renews have advanced competing carbon pricing concepts, both of them, somewhat confusingly, dubbed cap-and-invest. Hence, an MTA-focused carbon tax, which would employ a carbon-based charge on fossil fuels extracted or imported into New York State rather than a carbon cap enforced through sales of emission permits, wouldn’t arrive on a blank slate.

RGGI currently charges electricity producers around $14 for each ton of CO2 their generators emit. This levy is generating $365 million of statewide revenues a year, paid as surcharges on power bills, which goes to support investments in energy-efficiency and renewable electricity. While in theory the RGGI charge could be netted against the new carbon tax, the relative ease and importance of decarbonizing electricity production make it preferable to retain it and add the carbon price on top.

Cap-and-invest presents a trickier set of issues, partly because neither the governor’s prospective program included in the new budget nor NY Renews’ more elaborate plan has been fully fleshed out. In addition, the latter is the fruit of years of deliberation and consensus-building among the coalition’s hundreds of participant grassroots groups, who now constitute a formidable host.

At this writing, NY Renews envisions applying $10 billion in carbon revenues over several years in no less than 73 individual spending buckets grouped in four uber-categories: Climate Jobs and Infrastructure includes elements like aiding electric bus manufacture ($100 million) and offshore wind power supply chains ($300 million). Energy Affordability earmarks $1 billion to wipe out utility customer debt and $2 billion to support building electrification. Community & Worker Transition Assistance devotes $600 million to the “just transition” from jobs in carbon fuels to positions in renewable energy. And Community Directed Climate Solutions sets aside $2 billion to unspecified projects in historically underserved and overburdened urban neighborhoods and rural areas.

The NY Renews plan should be seen, then, as a holistic roadmap to make over not just how energy is supplied in the state but how it is consumed and governed. Billion-dollar-a-year allocations to the MTA aren’t the kind of investment its members have envisioned. Nevertheless, exploratory calculations suggest that the carbon payoff from service improvements paid for by a state carbon tax would be impressive.

As an illustration, I have calculated that an average 20% speed-up in subway trips achieved by running more trains at higher speeds would save straphangers and drivers each around 100 million hours a year (the latter from car trips switching to trains) while reducing car and truck emissions by 900,000 tons a year. Even more CO2 would be eliminated because of New York City’s improved competitive advantages vis-a-vis less “inherently green” suburbs and exurbs.

To be sure, so striking a gain in subway performance would almost certainly carry a price tag well over a billion dollars a year. Still, the prospective benefits underscore both the carbon-cutting potential of infusing new funds into subway service and the need to score competing claims for their climate value.

Broader Considerations and Next Steps

Over time, the carbon tax’s revenue base will shrink as its price incentives kick in and other carbon-cutting policies also gather steam. The resulting loss in tax revenues could be counteracted by periodically raising the per-ton tax rate. New York City could supplement the tax through revenue-generating street-management measures such as curbside pricing and other forms of road pricing.

Earlier this year, Community Services Society CEO (and MTA board member) David R. Jones and Riders Alliance executive director Betsy Plum proposed expanding New York City’s Fair Fares program to allow an additional 772,000 lower-income New Yorkers to qualify for half-fare transit passes. The cost, which they put at $142 million a year, should be a candidate for the carbon spending package.

This discussion has centered on the carbon tax’s creation of a new funding pot to maintain and improve transit affordability and performance. But taxing carbon emissions stands to benefit society in two other major ways. It will diminish financial incentives propping up carbon fuels and also support societal paradigms promoting care over harm.

A carbon tax is more than just a pay-for, in other words. Simply making it more expensive to buy and burn carbon fuels discourages fossil fuel use in a multiplicity of ways. Moreover, the very act of pricing carbon emissions can spur “externality taxing” in other realms, from congestion pricing to taxing the sugar content of soft drinks. Making New York the third U.S. state with broad-based carbon pricing will also add momentum to long-sought federal carbon emissions pricing.

Shoring up MTA finances, while reason enough to enact a state carbon tax, isn’t the lone consideration. The crisis of transit funding should be seen as a catalyst to pricing fossil fuels more closely to their true societal costs — a vital goal in its own right.

The next MTA funding crisis-as-opportunity will be upon us soon. The Legislature should move swiftly to study the benefits of taxing carbon emissions as a way to hold the line — and more — on transit fares and service, well in time for next winter’s budget negotiations. Transit and climate advocates and their counterparts in the Hochul administration should consider integrating a transit-focused carbon tax into their agendas.

Taking $3 billion a year for any public purpose, no matter how noble, is no small matter. The time to start selling a transit-supporting state carbon tax is now.

A Bitcoin Mining Exposé Strengthens the Case for a Carbon Tax

April 20, 2023 By Charles Komanoff

The Nation magazine this morning published my essay, A Bitcoin Mining Exposé Strengthens the Case for a Carbon Tax. I’ve cross-posted it here to allow comments and add tables and graphics.

— C.K., April 20, 2023

Clean electricity, the backbone of the Biden administration’s strategy for slashing carbon emissions, is becoming daunting to expand.

US wind farms, which last year generated more electricity than all hydropower and solar panels in the 50 states combined, often face years of contention. The entire mid-Atlantic offshore region, an area brimming with wind potential, could be proscribed by Pentagon fretting over interferences with aircraft deployment, Bloomberg News disclosed this week.

But if red tape for green power is a bother, why not get the benefits with none of the fuss? Send commando teams to the 34 large-scale Bitcoin mining sites in the United States that were identified in a New York Times front-page exposé this month. In synchrony, have them sever the facilities’ power cables, which combined demand some 3,900 megawatts of electricity—nearly as much as 3 million households combined.

In a flash, legions of electricity-gulping, combination-seeking computers in Texas, New York, and 13 other states would cease whirring. Like a power surge but in reverse, the fossil-fuel generators energizing so-called cryptocurrency mining—literally, trillions of combination-seeking calculations every second—would dial down. The corresponding drop in carbon emissions would be the same as if thousands of new industrial-size wind turbines could be instantly erected and connected to grids, supplanting electricity now furnished by burning coal and methane gas.

Data adapted from NY Times April 9, 2023 story. Link in text above. FF% is estimated percent of *incremental* power demand supplied from coal or methane gas.

Fanciful? Consider the numbers. The Times helpfully enumerated each Bitcoin mine’s fossil-fueled draw on state and regional power grids along with the associated carbon emissions. It took only a few further steps for me to translate those emissions into generic megawatts of clean power that would defray them. Using today’s customary 300-foot-tall, 3.6-megawatt wind machines as my standard, I calculated a staggering 3,700 turbines.

There you have it: The US Bitcoin industry is single-handedly neutering the entire climate benefit from nearly 10 percent of US wind energy. That’s more electricity than is generated with wind in any single state, save Texas and Iowa.

This raises two uncomfortable questions for the climate movement: Why isn’t it rallying against Bitcoin mines and other parasitic users of carbon fuels? And why isn’t it taking the obvious step of calling for a tax on carbon emissions to reduce those usages while simultaneously extracting revenues from them?

Second question first. Generating the electricity consumed by those 34 Bitcoin mines causes 16.4 million tons of carbon dioxide emissions each year, according to the Times. If the United States had a $100 per ton carbon tax—the current price of carbon emission permits in the European Union’s cap-and-trade system—the carbon levies at the mine mouth and wellhead would be extracting $1.5 billion a year from the fossil fuel companies that power the Bitcoin operations, and depositing it into the Treasury.

To be sure, that money would only fund a mere 2.4 hours of federal spending a year—barely a single baseball game’s worth, under the new hurry-up-and-pitch rules. On the other hand, the tax moneys are twice what Fox News will pay Dominion Voting Systems under the settlement reached this week. And they’re recurring.

But it would not be extinguished. That’s where the climate movement comes in.

Had the tax been in place a decade ago, as I and others urged, the extra expense might have stopped some cyber-currency ventures from the git-go. But if it were put into place today, a robust carbon tax could at least impel Bitcoin miners to economize on electricity, charge more for transactions, or actually contract with greener power providers rather than merely pretending to, as the Times found.

Although no one can pinpoint precisely how a carbon tax would shrink Bitcoin mining’s carbon footprint, let alone any single sector’s, abundant empirical evidence suggests that total US carbon emissions would be around a third less with a triple-digit national carbon tax than without. Bitcoin would not be exempt.

The movement has targeted banks and pipelines for more than a decade, with not much to show in the way of lesser carbon emissions. Why isn’t it disrupting Bitcoin mining and other bloodsucking machines—helicopters, private jets, yachts, super-sized SUVs—that feed on fossil fuels and are predominantly playthings of plutocrats? Why isn’t it going all out to stop highway expansions and eliminate restrictive zoning that lock in energy waste for generations?

Yes, climate activists stopped Keystone XL. They won a ban on fracking in New York. They’re fighting to drive oil drilling out of Los Angeles. Valiant, heroic work. But these and other keep-it-in-the-ground victories are creating little climate benefit. Why? Because the same underlying demand, largely unaffected by those protests, is met by supplies from elsewhere.

The bank protests seem even less focused. Conoco doesn’t need financing from JPMorgan Chase or Wells Fargo to drill in the National Petroleum Reserve in Alaska. The only “bank” it requires is the collective fuel tanks of America’s 280 million motor vehicles, plus aircraft, off-road vehicles, and pleasure boats.

Marching on Citibank does send a message, and activating seniors who might otherwise sit at home posting about their grandkids is soul-stirring. But if divestment and bank-shaming were going to slow the assault on climate, we would have seen bigger results by now.

“If the world wants to limit warming,” Norwegian energy researcher Espen Erlingsen told the Times this month, “it will have to limit demand for oil and gas because [the] industry can deliver this kind of volume for many more decades.”

Amen. The climate movement’s strategy isn’t working. Trying to bottle up supply instead of throttling demand is whack-a-mole without end, chasing after but never stopping capitalism’s dynamism from erupting in crypto mining and 1,001 other climate-destroying products and technologies.

By itself, a carbon tax won’t cure that. But it would at least start to steer innovation and cultural norms away from endless new climate horrors.

As Philip Roth’s Mickey Sabbath might have said: Either tax carbon or bring on the commandos.

Addendum: My concluding sentence — perhaps too subtle a literary reference — is elucidated in Brian A. Oard’s delightful Mindful Pleasures website. Please note that the ultimatum was uttered not by Sabbath but by his lover, Drenka. — C.K.

Climate Sound and Fury, Signifying What, Exactly?

March 30, 2023 By Charles Komanoff

(This post was amended on March 31 to include rebuttals of our criticism of the Montana climate-change lawsuit from two distinguished participants.)

Climate agitation was much in the news last week. The Guardian reported on a forthcoming Harvard Environmental Law Review paper suggesting that fossil fuel companies could be held liable for homicide from deaths caused by climate change. A New York Times front-page story previewed a courtroom trial to determine if Montana policies promoting fossil fuels violate that state’s constitutional protections of a healthful environment. And in dozens of cities, activists assembled by noted climate author-organizer Bill McKibben tore up their Chase, Citi, Wells Fargo and Bank of America credit cards to spotlight the big banks’ financing of $1 trillion in fossil fuel projects over the past five years.

In other climate news, however, suburban legislators are contesting a bold initiative from New York Gov. Kathy Hochul to compel New York City and surrounding counties to expand housing supply. New York City’s public transit provider is scrounging for revenues to shore up declining subway and bus farebox receipts stemming from the triple-whammy of residual Covid worries, violent-crime fears, and working-from-home. Around the country, meanwhile, just about all of the gargantuan road-widening projects listed in U.S. PIRG’s most recent Highway Boondoggles report are proceeding apace.

“States’ rights” have become “local control.” L: Wallace for President rally, 1972, courtesy Google Images. R: Ryan Lowry for the NY Times, accompanying March 22, 2023 opinion essay, “NIMBYs Threaten a Plan to Build More Suburban Housing,” by Times editorial writer Mara Gay. Photo was captioned, “Legislators protested Gov. Kathy Hochul’s housing plan in Albany on Monday.” Faces and demographics in the two photos, taken more than half-a-century apart, are hard to distinguish.

Yes, we’re juxtaposing.

The three just-noted happenings threaten to lock in place profligate fossil fuel consumption and associated carbon emissions. Highway widenings engender more driving (“induced demand,” it’s called). Fare hikes and service cuts to transit in NYC and elsewhere will do the same. And bottling up housing supply, as New York’s suburbs and my own borough of Manhattan, along with affluent cities and towns all over the U.S. have been doing for decades, guarantees urban stasis and its evil twin of exurban sprawl, with its accoutrements of carbon-spewing SUV’s, manses and subdivisions — not to mention segregation.

Litigating for Climate

These carbon accelerants might be more bearable if the climate agitation mentioned at the top had genuine prospects for cutting emissions. Do they? Not likely.

Indicting, much less convicting, officers of fossil fuel companies for killing people via their emissions-induced climate change is the definition of quixotic — to my untutored eye, anyway. In court, Big Oil will simply point to the tens of billions of lives uplifted by the fruits of their fuels. And they won’t be spouting nonsense. The raising up of most of humankind out of subsistence, and the resulting cradle-to-grave lengthening of human lifespans, could not have happened without the carbon-fueled Industrial Revolution. Set against those numbers, the millions — if that — of lives provably lost because of climate change will appear as a mere rounding error.

To be sure, the still-rising use of fossil fuels globally has now burst past the point of positive net benefits, especially with the advent, at last, of scalable non-carbon ways to power civilization. But actually effectuating the transition seems a matter for politics, with or without judicial support.

And even if some clarion guilty verdict were rendered in some court, what would be the remedy? Would the fossil fuel industry be made to dismantle itself? What about the billions of motorists, manufacturers and other consumers and producers who would clamor for more. Sorry, there’s no bypassing the messy work of using pricing, regulation and innovation to get off fossil fuels.

I’m almost as skeptical re the Montana litigation — notwithstanding the earnestness of the young plaintiffs, including two brothers who not only are the sons of firearms-industry apostate Ryan Busse but who were motivated to join the lawsuit by the climatological deterioration of their beautiful corner of northwest Montana.

I identify with Lander and Badge Busse. Melting snow in nearby Glacier National Park helped trigger my ecological awakening, but in an opposite fashion from theirs. On a long-ago day in July, driving on the park’s Going-to-the-Sun Road with my grade-school pal, I parked our tiny Renault auto to fetch water dripping from roadside snowbanks. We filled our canteens and started walked uphill toward the source. An hour later, we were a thousand vertical feet above the roadway and following real-life mountain goats under an impossibly blue sky. Bookending our hike into the Grand Canyon a week earlier, that day became my gateway into love of wildness, defense of clean air, and a career in environmental policy analysis and activism.

Most of Glacier’s glaciers are now diminished if not gone, making the lawsuit, Held v. State of Montana, painful as well as valiant. Yet even if the brothers and their co-litigants win their case, what exactly is the remedy? The Montana Supreme Court possesses no magic button whose pressing can end the burning of fossil fuels. Stop drilling or mining in Montana, and producers will up their output from Wyoming. Stop it in all 50 states, and the same suppliers will boost production overseas. Sure, impeding fuel extraction will incrementally drive up fuel prices and take a bite out of demand, but that’s just a sideways blow at best. The solution, as CTC has argued since our founding in 2007, lies in throttling demand for carbon, not stoppering supply.

Montana litigation supporters weigh in

Shortly after this post went up, CTC received this brief rebuttal from a long-time supporter of the Montana suit and the larger Our Children’s Trust campaign to enshrine a legal right to a safe climate:

The Montana climate suit seeks to build case law affirming a right to a stable, livable climate. I liken it to the long-term legal struggle to secure equal treatment under the law for women and people of color. For example, the legal battle to desegregate schools was a long one built on case law. I agree that any individual state has limited ability to impose a price on emissions, but the Juliana vs. U.S. suit does. It seeks a science-based reduction in emissions sufficient to maintain a stable, livable climate, and proposes a carbon tax as the single most effective policy to achieve that goal. Likely the courts will only impose emission reductions. Politicians will then be tasked with submitting a plan that is affordable and effective. The Montana and other suits build case law affirming the damage caused by fossil fuel emissions and a right to a livable climate. Courts act more on evidence and less on short-term political pressure.

We also received this note from noted environmental attorney and climate-law expert Michael Gerrard, who directs the Sabin Center for Climate Change Law at Columbia Law School and was featured in the New York Times story noted at the top of this post:

I think we need to attack both the demand side and the supply side. No one action will affect the supply on a macro scale, but cumulatively many could. Montana is one of the nation’s largest fossil fuel suppliers, and if the courts shut down some of that, it would be a good thing. The judge, at least, is taking the case seriously. Whether or not the Montana Supreme Court upholds a decision for the plaintiffs, the case will cast a harsh light on the fossil fuel companies. Most of these campaigns are largely aimed at delegitimizing the fossil fuel companies and reducing their political clout. That is having some effect in blue states, where quite a few strong climate laws are being enacted over the opposition of the fossil companies. And keep in mind that each new coal mine, each new gas-fueled power plant, and so forth, creates a constituency for its long-term preservation; that needs to be resisted.

CTC collage from two separate photographs on Third Act website, snipped on March 30, 2023.

Banks and Climate

We come now to last week’s bank protest that Bill McKibben organized with his new “Community of Americans,” Third Act.

As much as I admire Bill’s unflagging zeal and his Third Act cohorts’ earnest willingness to put themselves out there, I strongly question targeting banks as a cause of fossil fuel exploitation and a locus for climate activism.

How will bank reformation impact the use of cars, trucks and planes in the U.S. or elsewhere — use that requires purchases of gasoline, diesel and jet fuel that in turn provide both the financial wherewithal and the political muscle to drill, extract, refine and transport petroleum products whose combustion releases the carbon dioxide that is wrecking our climate?

Should not Third Act and indeed the entire climate movement be organizing and demonstrating for demand-cutting policies and developments such as mixed-use and dense housing, functional-or-better public transportation, bikeable and walkable streets, fuel-economy standards without “light truck” loopholes, and the like? Wouldn’t their energies accomplish more, both short- and long-term, if they were to swarm Albany and other state capitals to demand upzoning, no more highway widenings, and permitting reform to circumvent anachronistic regulations hindering wind farms and solar homes?

In response, Bill would probably say “We need to remind people of the connection between cash and carbon. Literally, somebody who has $125,000 in those banks [Chase, Citi, Wells Fargo, Bank of America] is producing more [carbon] because it’s being lent out to pipelines and frack wells than all the cooking, flying, heating, driving, cooling that the average American does in a year. Five thousand dollars in [those banks] produces more carbon than flying back and forth across the country.”

How do I know? Because that’s exactly what he said on Democracy Now on the morning of the protests (quoted segment begins around 37:45). Try as I might, I can’t follow the logic.

Coda

Notice I haven’t mentioned carbon pricing, except tangentially. Here at CTC we’re laying low on carbon taxing for the time being. U.S. politics still aren’t ready, what with climate-averse Republicans occupying half of Congress, and Democrats wary of the difficult politics. We focus on what’s possible in the here-and-now.

Last year it was the praiseworthy (if imperfect) Biden-Schumer Inflation Reduction Act. This year we’re continuing to do what we can to bring congestion pricing for New York City into being. We’re also quietly nurturing a promising new avenue to advance a New York State carbon price. Please stay tuned!

Alaska oil push shows Biden lacking courage of his climate-policy convictions.

March 15, 2023 By Charles Komanoff

President Biden’s decision this week to greenlight ConocoPhillips’ $6 billion Willow oil-and-gas drilling venture on Alaska’s North Slope is being cast as a climate disaster first, an ecological disaster second.

That’s backwards, not to mention incomplete. As we explain below, climate damage may be the least consequential aspect of Biden’s decision. More dire is the ecological impact, which will be felt both in Alaska and on America’s roads. But first and foremost, the president’s action is a political debacle.

Biden’s naked, unnecessary expansion of U.S. petroleum extraction into the country’s largest tract of undisturbed public land cuts the legs out from his singular legislative accomplishment so far: the Inflation Reduction Act of 2022.

The IRA’s most public-facing part is its intricate array of consumer subsidies and manufacturing incentives to hasten replacement of America’s two hundred and eighty million petrol-burning cars and trucks with electric vehicles. The Carbon Tax Center came out swinging for this initiative, notwithstanding its tacit endorsement of EV giantism and cold-shoulder of small, urban-appropriate electrics such as bicycles, scooters and neighborhood electric vehicles.

With his Willow go-ahead, Biden has enshrouded the IRA’s proud optics behind a dark curtain. Why direct tens of billions of taxpayer dollars to ramp up electric vehicles, possibly turbocharging U.S. deficits and inflation, if EV’s aren’t going to bring down the curtain on U.S. oil consumption?

Our view is that the “climate bomb” isn’t any one oil project or even all of them, it’s the SUVs, pickups and oversized roads that make the oil business so profitable. Photo credits: L, Kendra Brock / @kendrarayee via Pinterest. R, Riley Rogerson accompanying her Jan. 10, 2023 Anchorage Daily News story, “Protesters rally at White House calling administration to block Willow oil project in Alaska.”

Yes, the combustion-to-electricity transition can’t happen overnight. But Willow makes the transition look depressingly distant. Indeed, by pumping up the supply of the fossil fuels the IRA professes to replace, Biden is casting shade on the underlying paradigm to electrify not only vehicles but “everything,” including heating, cooking and industry.

By our calculations, the drop in oil consumption from the IRA’s EV incentives will outweigh the oil supplied from Willow 6-fold. That finding highlights either how big a deal the IRA is or the relatively smallness of the oil venture. But the public is unlikely to see it that way. Rather than viewing Biden’s legislation as transformative, they’ll regard it as banal — helpful, but incomplete without a big assist from business-as-usual fossil fuels.

The “climate bomb” fallacy

CTC has long looked askance at climate campaigns targeting “fossil fuel infrastructure.” We view oil and other fossil supply as the tail, with the carbon dog being the demand that creates both the impetus and the financing to pull fossil fuels from the ground, process them and deliver them to vehicles, engines and furnaces. Stop this well or that pipeline, we contend, and another will be developed to supply the fuels that customers demand.

Yes, this view is oversimplified, but not by much. It is true that each new supply increment pushes down prices somewhat, which then pumps up demand; or, equivalently, bottling up particular supply projects raises industry costs, hence prices, which depresses demand. But these processes are largely indirect and not nearly “one-for-one.” The larger truth, we believe, is that demand finds a way to create supply.

Stop Willow, in other words, and the Permian Basin or the Persian Gulf or emerging oil frontiers like Uganda will serve up replacement supply.

In our telling, then, the only way to stop carbon combustion and climate chaos is to destroy demand. That points straight to carbon taxing, since it directly depresses consumer demand for energy, period, while also engendering conversion of energy supply to low- or zero-carbon sources, particularly in the more fungible electricity sector. Carbon taxes also “play well” with other policy instruments, reinforcing efficiency and regulatory standards.

Accordingly, the true “carbon bomb” isn’t Biden’s Willow signoff nearly as much as America’s 280 million combustion vehicles along with jetliners, helicopters, jet skis and so forth and — to go deeper — the development patterns and acculturation that valorize them. For its part, Willow won’t actually “bomb” Earth’s climate since without it, the same amount of extraction will be done elsewhere (if a tad less fuel-intensively in non-Arctic, non-wild environs).

Alaska’s wild ecosystems and heritage, including Indigenous livelihoods, will arguably be bigger losers than climate, then. Another loser will be our nation’s streets and roads and those who use them, since each opening of the petroleum spigot enables and normalizes the ongoing shift to ultra-large vehicles — both combustion and electric. As urban researcher-scholar David Zipper has shown, the supersizing of the U.S. vehicle fleet is the #1 reason that U.S. road deaths, especially but not exclusively of people riding bicycles and walking, have shot up in recent years even as virtually all other developed nations enjoy steady declines in per-capita traffic fatalities.

IRA vs. Willow: No Contest

The depressing irony about Biden’s approval of the Willow project is that the oil supply it will unlock, an estimated 180,000 barrels a day of crude, according to AP, isn’t particularly large, in oil terms. Notwithstanding the “massive” tag applied in much of the media, ConocoPhillips’ projected output amounts to only 1 percent of 2021 U.S. consumption of 19.8 million barrels of petroleum products per day.

What’s more, Willow’s increment to U.S. supplies will only be one-sixth as much as the need for petroleum that Biden’s Inflation Reduction Act will obviate by accelerating the uptake of electric passenger vehicles vis-a-vis the baseline pace, i.e., more gradually rising EV sales and use without the incentives in the IRA.

This finding is shown graphically at right. To derive it, we relied on projections in a January, 2023 white paper, Analyzing the Impact of the Inflation Reduction Act on Electric Vehicle Uptake in the United States, prepared jointly by two respected think tanks, International Council on Clean Transportation and Energy Innovation.

The calculation was straightforward. Table 3 of the report shows the ICCT/EI projections of future U.S. electric vehicle shares — not of sales but of registered vehicles in use — under baseline assumptions (no IRA) and four scenarios reflecting different extents of consumer uptake of EV’s. We used the “deltas” (differences) from the base case during the seven years of greatest policy impact, 2026-2032 — they average 19 percent — to compute the gasoline that would be burned nationwide if there were no IRA and the IRA-boosted electric vehicle-miles were instead driven in combustion vehicles.

We assumed 200 million passenger cars averaging 25 mpg and each traveling 12,000 miles per year in 2026, with the number of vehicles rising by 2 million a year and fuel economy inching upward by 0.5 mpg per year, but with no change in per-vehicle miles driven. The amounts of avoided gasoline are easily calculated.

Several simplifying assumptions were involved:

We assumed no offsetting petroleum consumed in generating electricity, due to oil’s minuscule share (less than one percent) of national electricity generation.
Though ICCT/EI’s deltas don’t apply to states that adhere to California’s more-aggressive zero-emission vehicle rules, we extrapolated them to the entire country.
We ignored the IRA’s accelerating effect on electric truck sales and use — almost certainly understating the legislation’s petroleum savings more than our overstatement in bullet #2.
We implicitly treated crude oil supply with gasoline demand, a minor simplification that we suspect doesn’t tilt our comparison much one way or the other.

Tongue-tied on the campaign trail?

From R. Crumb’s, “Despair” Comics, 1969.

We don’t mean to be cruel, but until this week we pictured President Biden campaigning for re-election and touting the Inflation Reduction Act’s manifold achievements: Without a single Republican vote, we passed a law freeing us from manipulated, volatile oil prices and corporate despoiling of our climate and our Earth. And the law is creating millions of good-paying jobs for Americans, especially in areas ravaged and ruined by fossil-fuel development.

That’s still true. But with Willow, the purity of the message is gone, taking much of the power with it.

U.S. auto fuel-economy is flatlining. Here’s why that’s not news.

December 28, 2022 By Charles Komanoff

It should have been big news: A report this month from the U.S. Environmental Protection Agency admitted that the fuel economy of new light-duty vehicles sold in the U.S. last year was no better than the year before. The mix of cars, SUV’s and pickups sold in 2021 averaged the same crummy 25.4 miles per gallon as in 2020.

Screenshot from ACEEE Dec. 12 press release. Link is in text.

Flatlining new-vehicle mpg is bad news. It portends more climate damage, worsened pollution and strained household budgets, along with geopolitical turmoil, fattened oil company earnings and brawnier petro-states. It’s also a betrayal of long-standing promises by Democratic presidents, EPA administrators and environmental groups that, together, they would make auto companies achieve ever higher mileages, like 54.5 mpg in 2025, as the Obama administration pledged a decade ago. (See White House 2012 press release, below.)

What happened?

Don’t just blame the Trump administration’s four-year mpg slow-walk and roll-back. The American Council for an Energy-Efficient Economy was forthright in its Dec. 12 press release: EPA Finds No Progress in Vehicle Efficiency as Automakers Sell More Big Models (emphasis added).

“The [auto] manufacturers are canceling out all the efficiency progress as they sell more large vehicles,” said ACEEE senior transportation researcher, Avi Mersky. “And it’s completely allowed under the federal rules.”

CBS News usefully chimed in:

The EPA said in a statement that all vehicle types are at record low carbon dioxide emissions, but “the market shift away from cars and toward sport utility vehicles and pickups has offset some of the fleetwide benefits.” (emphasis added)

In the 2021 model year, cars and station wagons, the most efficient vehicles, fell to 26% of U.S. new vehicle production, well below the 50% market share as recently as 2013, the EPA said. SUVs were a record 45% of new vehicle sales for the 2021 model year, while pickup trucks hit 16%.

2012 press release copied from National Archives. Poignantly, it promised that the nearly doubled auto efficiency would bring consumer savings as large as $1 per gallon cheaper gasoline.

Let that sink in: in just eight years, the U.S. market share of new sedans and station wagons fell practically in half, to 26 percent from 50 percent. (And no, CBS, that shift didn’t just offset some of the mpg benefits, it offset all of them, though credit the network for covering the story at all.)

The Hill did well, with EPA report: Vehicle fuel efficiency flat in 2021. Otherwise, there wasn’t much coverage. Sure, Christmas was coming, and there were year-end stories to report. Still, it’s striking that such a big failure in a sector that now produces nearly a quarter of U.S. carbon emissions merited so little attention. (See our CO2 pie chart, further below.)

The silence of the greens

Robustly rising automotive fuel economy was, for decades, a cornerstone of mainstream environmental advocacy. So-called CAFE standards (the acronym denotes Corporate Average Fuel Economy) would, before long, turn most of America’s 200 million passenger vehicles into fuel-sippers, relieving pressure to drill in the Alaska National Wildlife Refuge and other sacrosanct natural areas, enabling some oil refineries to close, and cutting air and carbon emissions. Just make sure EPA kept ratcheting up the mpg standards, and all would be well.

Things turned out differently, of course. Not only did U.S. miles driven resume rising after a relative caesura from the mid-aughts to the mid-teens, but the fleet mpg average barely budged, due to “the market shift away from cars and toward SUV’s and pickups” noted by CBS News. Compounding the shift, long-standing CAFE loopholes grant bigger vehicles looser mileage targets.

Autos now (2021) account for 24% of U.S. CO2. Note that other transportation emissions (trucks, planes) are recorded separately.

Most of the big U.S. green groups just watched the shift unfold, essentially throwing in the towel. Either they didn’t grasp its extent or they viewed it as unstoppable. Maybe they felt constrained by their members’ and donors’ preference for the roomier and supposedly outdoors-friendly sport utilities. Who knows? But they basically gave up on improving actual vehicle fuel-economy, and the impact has been stark.

Even as the U.S. electricity sector has seen a substantial decline in carbon emissions, an estimated 36 percent drop from 2005 to 2021, the drop for automobiles has been only one-seventh as much — a measly 5 percent. The vastly improved mpg performance that was going to swamp growth in driving simply didn’t materialize.

What did eventuate from the big bulk-up of U.S. passenger vehicles has been a far greater menace to pedestrians, cyclists and users of smaller vehicles. Due to their greater mass and taller profile, those super-sized sport ute’s and pickups are tougher to maneuver and control, are harder to see around, are often driven with a greater sense of entitlement, and cause more damage when they hit someone.

Automotive researcher-journalist David Zipper tied things up recently for Bloomberg News, in a post trenchantly titled, “US Traffic Safety Is Getting Worse, While Other Countries Improve,”:

Uniquely, the US has seen larger SUVs and pickup trucks dominate its domestic car market. While the profitability of this trend has delighted automakers, the weight and height of these vehicles places other road users in greater danger. Research has linked the ascent of SUVs to the surge in US pedestrian deaths.

Possible futures for U.S. passenger vehicles

In his Bloomberg post, Zipper also noted that in other countries, “higher gasoline taxes (as well as weight-based fees adopted by countries like France) have slowed adoption” of large vehicles. (Doubtless there’s also a reinforcing cultural factor, or “path dependence,” that frowns on supersized vehicles and demurs from designing infrastructure around them, which discourages their use and thus helps keep the higher taxes on bigger vehicles politically defensible.)

Higher gasoline taxes are a form of carbon tax, of course. Indeed, resistance to increasing taxes on gasoline has always been a central sticking point to enacting carbon taxes — ironically so, given that those who cry the loudest tend to be big-car owners whose choice of vehicle effectively has them taxing themselves by locking them into purchasing more gallons.

Nevertheless, another locus of opposition to taxing gasoline to reduce its use has been — surprise! — the same green groups that habitually put all their chips on CAFE standards and other regulatory mechanisms. Sometimes these groups have even badmouthed the idea that gasoline use is somewhat price-elastic, mistaking short-term inflexibility for long-term (a confusion I pointed to in my 2015 post, What an Energy-Efficiency Hero Gets Wrong about Carbon Taxes — scroll down to “Argument #3”).

The supposed impossibility of reducing the use of gasoline by raising its price has been part and parcel of Big Green’s attachment to mpg standards — despite the fact that mileage reg’s do nothing to reduce driving and its vast negative consequences: not just traffic congestion but also poor health (sedentary living, car crashes, noise) and general unaffordability (car loan costs, upkeep expenses, costlier housing due to cars’ consuming urban and suburban land).

This does not bode well for enacting weight or weight-distance charges on the increasingly electric fleet of U.S. passenger vehicles. Yet weight-based fees might be our best bet for reining in the size and weight of EV’s and, thus, serving four vital societal objectives: (i) ensuring that shortages of lithium or other minerals critical to electric-vehicle batteries don’t hold back electrification of transportation; (ii) curbing the amount of electricity that must be generated to drive the EV fleet; (iii) easing the stresses that larger vehicles impose on urban and suburban form; and (iv) reducing traffic carnage, especially to pedestrians, cyclists and users of small vehicles.

With the Inflation Reduction Act of 2022, which we at Carbon Tax Center strongly supported from the git-go (our extensive, ongoing write-up of the IRA is here), the Biden Administration has put in place an array of mutually reinforcing, intelligently crafted subsidies and incentives to electrify U.S. passenger travel. Climate and transportation advocates alike should now work to craft and enact incentives to steer vehicle electrification toward smaller, lighter, less-dangerous and city-friendlier forms of individual and family transportation. The choice between carbon taxes or weight-based charges or hybrids of the two is less important than getting strong incentives in place widely and soon.

The Manchin-Schumer Deal Could Pay Off—If Congress Acts

August 2, 2022 By Charles Komanoff

[Our new page, The Inflation Reduction Act of 2022, has much more on the legislation spawned by the Manchin-Schumer deal — what it will and won’t do to emissions, what it means for climate policy, and whether it closes or opens future paths for carbon pricing. — Sept. 1, 2022]

To access this post’s original version in “The Nation,” use link at top of text.

The Nation magazine this morning published my essay, The Manchin-Schumer Deal Could Pay Off—If Congress Acts. I’ve cross-posted it here to allow comments and add graphics for context.

While the deal assiduously, and regrettably, leaves intact the deep, intertwined roots of U.S. fossil fuel dependence, it’s imperative to support it — not just for its beneficial, albeit indirect, impacts on emissions, but because of its potential to materially improve both climate dynamics and political dynamics in the U.S.

Our Comments are open. Let us know what you think.

— C.K., August 2, 2022

The Inflation Reduction Act of 2022 will knock out less than 10 percent of U.S. climate pollution by 2030, leaving the nation short of even its whittled-down goal of getting emissions 40 percent below the 2005 level.

Why, then, are many climate activists popping champagne corks? And why should progressives of every stripe do likewise? It’s simple. If the deal between Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin survives more or less intact, it will upend two deeply debilitating narratives: U.S. climate helplessness and Biden-Democratic Party haplessness.

The haplessness first: The legislation should help dispel the aura of fractious Democrats incapable of doing what we elect them to do: deliver big structural change. This turnabout could boost the Dems’ chances of retaining or even expanding control of Congress in the midterms, making possible not just other climate wins but also gains on voting and reproductive rights, economic justice, and the rest of the progressive agenda we hold dear.

The Inflation Reduction Act likewise marks a turning point, at least for the time being, on long-running, world-damaging U.S. climate helplessness. True, modeling by the Rhodium Group found that the legislation will only deliver a 7 to 9 percent carbon reduction relative to ongoing trends—far short of the massive cuts required for the United States to credibly claim global climate leadership. But by letting millions more Americans experience wind, solar, and energy efficiency—not as abstractions but as palpable engines of economic advancement—the bill opens paths to expansive climate gains going forward.

The omnibus legislation also burnishes green energy investments by packaging them with other popular but less threatening reforms such as affordable prescription drugs and higher taxes on big corporations. Not to mention the chef’s kiss of the bill’s name, the Inflation Reduction Act, signaling Democrats’ attentiveness to this year’s hot-button issue.

Admittedly, this is a lot to hang on a bill that doesn’t directly tackle the entrenched, intertwined systems that have long locked in Americans’ profligate carbon consumption: massively overbuilt roads, decrepit public transit, low-density zoning, anti-urban bias, rampant inequality, and artificially cheap fossil fuels. But, to borrow from Auden, such are our low, dishonest politics. No bill addressing even one of those matters was ever going to pass this Congress, with the modest exception of a fee on “excess” methane leaks from oil and gas wells and pipelines, starting in 2024.

A mailing from the antinuke Nuclear Information & Resource Service proclaims the legislation’s reactor-preservation provisions “will fail to reduce greenhouse gas emissions by any amount.” Really? The recent shutdown of New York’s Indian Point reactors has increased statewide CO2 emissions by a whopping 8 million metric tons a year.

Instead, we get three big, complementary though indirect ways to cut emissions: monetary rewards for wind, solar, and nuclear—yes, nuclear—generators that make electricity without burning fossil fuels; bigger tax credits to purchase electric automobiles and accelerate the demise of fossil cars and trucks; and tax breaks for US factories to manufacture those new wind turbines and solar arrays.

If much of that sounds technical, wait till you hear Rhodium explain that the Inflation Reduction Act will let clean-energy developers transfer their tax credits to third parties that “have tax liability and [thus] the ability to monetize the credits.” The 700-page bill abounds with just such tools to crack open long-standing bottlenecks impeding the shift to clean energy.

The legislation also swarms with fossil-fuel concessions, most notably a requirement that the Interior Department auction off more public lands and waters for oil drilling. The Center for Biological Diversity last week labeled that provision a “climate suicide pact … that will fan the flames of the climate disasters torching our country [and deliver] a slap in the face to the communities fighting to protect themselves from filthy fossil fuels.”

Fossil fuel extraction and processing are indeed filthy and toxic. But expanding U.S. leasing will worsen total warming only slightly. Since fuels are fungible, stopping one carbon source leads Big Oil to tap supply somewhere else. Rather, by cutting overall demand for fossil fuels, the Inflation Reduction Act “will make oil leasing less profitable and therefore less widespread,” as UC Santa Barbara environmental politics professor Leah Stokes noted last Friday on Democracy Now. Fewer communities overall will be ravaged by drilling, let alone floods and other climate havoc.

People complaining about the provision in the #InflationReductionAct that allows for more drilling on federal lands have a VERY different counterfactual than I do. It would almost be like me complaining there is no carbon tax in the bill…#ClimateCrisis #ClimateAction

— Christopher Knittel (@KnittelMIT) July 29, 2022

Let’s also credit the Manchin-Schumer deal’s potential to leverage U.S. emission cuts by palliating our global climate disrepute, a point long made by Senator Edward J. Markey (D-MA), who along with Rep. Alexandria Ocasio-Cortez (D-NY) and the Sunrise Movement, is widely credited with elevating the Green New Deal into political discourse. “You can’t preach temperance from a bar stool,” Markey said in 2008, adding last week that “you can’t ask China, India, Brazil or other countries to cut emissions if we’re not doing it ourselves in a significant way.”

While we shouldn’t over-credit the immediate carbon reductions from the Inflation Reduction Act, it’s imperative to close ranks behind it, as MIT climate economist Christopher Knittel urged on Twitter last week: “People complaining about the provision in the Inflation Reduction Act that allows for more drilling on federal lands have a very different counterfactual than I do. It would almost be like me complaining there is no carbon tax in the bill.”

Knittel’s counterfactual, of course, was U.S. climate stasis. Mine was as well, along with Democratic Party squabbling. That may have changed last week. We must make the most of it.

Charles Komanoff, a longtime environmental activist, directs the Carbon Tax Center.

Addendum: The Inflation Reduction Act includes a fee on “excess” methane emissions from oil and gas wells and pipelines of $900 per metric ton of emissions above new federal limits in 2024, increasing to $1,500 per metric ton in 2026. MIT economist Chris Knittel (quoted above) equates the $900 methane fee to $60 per metric ton of CO2, a level that would qualify as a fairly robust nose in the proverbial camel’s tent of carbon pricing.

Where We Are, Now that Biden’s Climate Change ‘Revolution’ Isn’t Coming

July 22, 2022 By Charles Komanoff

A New York Times post this week, Biden’s Climate Change ‘Revolution’ Isn’t Coming, caught our attention with its trenchant look at climate policy’s low ebb in the wake of two crushing setbacks in just three weeks: the June 30 Supreme Court ruling blowing up EPA’s carbon-regulating authority under the Clean Air Act, and Joe Manchin’s coup de grace to the remnants of President Biden’s Build Back Better climate package.

Drawing on fellow Times writers, opinion editor Spencer Bokat-Lindell painted an unsparing portrait of U.S. — and global — climate stasis as dangerous heat was enveloping Britain, much of Europe and large swaths of the U.S. Here we reprint his post in full, with our commentary as counterpoint.

Biden’s Climate Change ‘Revolution’ Isn’t Coming.

Introduction

When President Biden took office, one of the first things he did was make a pledge: The United States, he vowed, would finally “meet the urgent demands of the climate crisis” through “a clean energy revolution.” That revolution was to be set in motion by a $2 trillion plan for putting the country on a path to 100 percent carbon-free electricity by 2035 and to net-zero greenhouse gas emissions by 2050, in line with the Paris agreement’s goal of keeping global warming well below 3.6 degrees Fahrenheit above preindustrial levels. (It now stands at 2.2 degrees.)

But after more than a year of negotiations, compromises, deal-making and belt-tightening, that plan appeared to collapse last week when Senator Joe Manchin, a conservative Democrat from West Virginia and a key swing vote in Congress, announced that he would not support funding for climate or energy programs.

What does the collapse of Biden’s agenda mean for the domestic and global politics of climate action moving forward? Here’s what people are saying.

Biden’s Plan, Though Not Revolutionary, Was Bold.

Introduction

Even a fully intact Biden plan would have fallen short of its goals. Nevertheless, its scope and reach would have far surpassed any climate program by any major nation. Build Back Better’s carbon reductions and climate benefits would have been numerically substantial and would also have triggered parallel policies in other countries.

(Chart is from CTC Sept 2021 post, Without a Carbon Tax, Don’t Count on a 50% Emissions Cut.)

1. The climate deal that wasn’t

As my colleagues have reported, experts generally agree that there are two ways of reducing greenhouse gas emissions at the speed and scale required. The first is making fossil fuels more expensive by ensuring that their environmental costs — global warming, for one, but also the staggering harms of air pollution — are reflected in their price. While widely championed by economists, carbon taxes have proved politically unpopular: A carbon tax by ballot referendum in Washington State has failed twice.

Biden hoped to take the other approach: reducing emissions by driving down the cost and improving the efficiency of low-carbon energy sources, like wind, solar and nuclear power. Initially, the centerpiece of his plan was a clean energy standard, which would have legally required utilities to draw 80 percent of their electricity from zero-carbon sources by 2030 and 100 percent by 2035. But when Manchin — who made millions from his family coal business and took more campaign money from the oil and gas industry than any other senator — pulled his support from that scheme in October, Democrats pivoted to a $300 billion package of tax credits to encourage the adoption of renewable energy and electric vehicles.

Now, both avenues to decarbonizing the country have been all but closed off. Even before Biden’s plan was whittled down, there was some debate about whether it was sufficient to meet his ambitions. But now that the president’s most powerful tools for reducing emissions have been confiscated by Congress (and the Supreme Court, which last month limited the power of the Environmental Protection Agency to regulate power plant emissions), “We are not going to meet our targets, period,” said Leah Stokes, a professor of environmental policy at the University of Santa Barbara, California, who has advised congressional Democrats on climate legislation.

Manchin’s reason for scuttling the negotiations, according to his spokeswoman, was his desire to “avoid taking steps that add fuel to the inflation fire.” But in The Atlantic, Robinson Meyer argues that, in addition to being “extraordinarily bleak for the climate,” Manchin’s reversal will actually worsen inflation: By reducing long-term demand for oil, Biden’s plan would probably have lowered gas prices, and an earlier version of the package would have led to hundreds of dollars in annual energy cost savings for the average U.S. household by 2030, according to an independent analysis from researchers at Princeton.

“America’s climate negligence endures,” Meyer writes. “That is not just due to Senator Manchin’s negligence, of course. It is also the collective responsibility of the Republican Party, whose 50 senators are even more resolutely against investing in clean energy than he is.”

1. The long shadow of Washington state’s failed carbon tax referendum

Bokat-Lindell could have said, about carbon taxes, that they are widely championed by economists and others who judge robust carbon taxing as uniquely capable of delivering big emission cuts quickly. Still, his characterization of carbon taxes as politically unpopular was fair.

He was also on solid ground in pointing to the failed Washington State carbon tax referendum. Perhaps even more than Donald Trump’s concurrent electoral win over Hillary Clinton, the 2016 defeat of Initiative 732 put a hurt on U.S. carbon tax organizing and advocacy. After all, if a carbon tax couldn’t garner an electoral majority in a certified blue state — one with a strong outdoors-nature ethic to boot — it was likely to be a tough sell almost anywhere else.

During the run-up to that vote we published a raft of posts calling out progressive icons like Naomi Klein, Van Jones and Mary Kay Henry for willfully distorting I-732 — labelling as a tax cut for the wealthy its swap of the carbon revenues to cut regressive sales taxes, for example. Their high-profile drive-by opposition also encouraged environmental justice groups to view I-732’s revenue-neutral design as a ploy to block green investments in disadvantaged communities rather than a design to offset lower-income households’ higher fuel expenses. Mainstream environmental groups mostly stayed on the sidelines, as did climate champion Bill McKibben. Their neutrality contributed to the 59-to-41 electoral wipeout which poisoned the well for a Green New Deal-style reboot effort in 2018.

Fast-forwarding to 2021-2022, it’s also fair to ask why climate activists trained virtually all of their fire on Joe Manchin, perhaps not grasping that his personal and political indebtedness to fossil fuels — duly noted by Bokat-Lindell — placed him beyond their reach. As The Atlantic’s Robinson Meyer notes, 50 Republicans blocked Biden’s climate package no less than Manchin. Protests in their home states might have moved the legislative needle or at least thrown down a marker to preserve Democrats’ control of Congress in the coming midterms.

2. A domestic defeat with global consequences

Because the United States has spewed more greenhouse gases into the atmosphere than any other nation, it plays a uniquely prominent role in global climate politics. (It’s worth noting that on an annual basis, China is now the world’s largest emitter, having surpassed the United States in 2006, though America’s per capita emissions still far exceed China’s.)

Given the United States’ historical “climate debt,” many lower-income countries have made their climate commitments contingent on those of the United States and other rich countries. Especially after Donald Trump withdrew from the Paris agreement, many world leaders were hopeful that Biden would arrive at the Glasgow climate talks last year having secured some legislative achievement as a mark of political seriousness. That, of course, did not happen.

Now, the United States’ international climate credibility is even more damaged, which will in turn impede global decarbonization efforts, The Times’s Somini Sengupta writes. “Manchin’s rejection and the recent Supreme Court ruling dealt a heavy blow to U.S. climate credibility,” Li Shuo, the Beijing-based senior policy adviser for Greenpeace East Asia, told her. It underlines what many people abroad already know, Li said: that “the biggest historical emitter can hardly fulfill its climate promises.”

The U.S. climate envoy, John Kerry, is expected to attend the next round of climate talks, in November in Egypt, but will once again have little to show for it. The United States “will find it very hard to lead the world if we can’t even take the first steps here at home,” said Nat Keohane, the president of the Center for Climate and Energy Solutions, an environmental group. “The honeymoon is over.”

2. Goodbye to the myth of U.S. global leadership on climate

We noted upfront that in addition to their sheer numerical weight, Build Back Better’s carbon reductions would have triggered parallel policies in other countries. Bokat-Lindell articulates this well, with framing that, appropriately, prioritizes U.S. climate stewardship as “necessary” rather than merely “sufficient.”

What would translate almost automatically from the domestic sphere to the global is U.S. federal-level carbon taxing. The simplicity of a national carbon price alone makes it child’s play to replicate it in any other country — in marked contrast to the welter of tax credits, rules and line items embodying Biden’s climate plan that would be devilishly hard if not downright impossible to copy elsewhere. Moreover, the logical companion piece to a national carbon tax — a Carbon Border Adjustment Mechanism — would powerfully incentivize non-carbon-taxing countries to enact their own in order to capture for themselves carbon tax levies that otherwise would be collected by their carbon-taxing trading partners.

That said, the various stories and authorities cited in the Times column have it exactly right. The heavy weight of America’s outsize cumulative carbon emissions, combined with what now must be seen as chronic federal government inaction — aptly summarized by Greenpeace as (“the biggest historical emitter can hardly fulfill its climate promises”) — expose the U.S. as climate laggard rather than leader.

Unfortunately, that fact didn’t keep U.S. Senator Lindsey Graham (R-SC), who once supported carbon pricing via cap-and-trade (see this 2009 op-ed in the New York Times), from uttering this arrant nonsense this week: “I don’t want to be lectured about what we need to do to destroy our economy in the name of climate change.”

3. Where the politics of climate action go from here

The Biden administration will have to rely on its less powerful arsenal of executive actions to make progress on its decarbonization efforts, however short of its initial targets. As The Times’s Coral Davenport explains, the White House could use its regulatory authority to increase vehicle emissions standards, potentially catalyzing the transition to electric vehicles; to compel electric utilities to slightly lower their greenhouse emissions without falling afoul of the Supreme Court; and to plug leaks of methane — an extremely potent greenhouse gas — from oil and gas wells. Biden may also use his pulpit to push for action at the state level, where climate policy has assumed new importance in the absence of federal leadership. “States are really critical to helping the country as a whole achieve our climate goals,” Kyle Clark-Sutton of the clean-energy think tank RMI told The Times. “They have a real opportunity to lead. They have been leading.” Both California and New York, for example, have committed to reaching net-zero emissions by no later than 2050.

As far as national electoral politics are concerned, The Times’s David Leonhardt argues, the fact that a single Democratic politician was able to derail Biden’s climate agenda should prompt Democrats to redouble their efforts to increase their Senate majority, particularly by winning over more voters in red and purple states. “It is clear that many blue-collar voters don’t feel at home in the Democratic Party — and that their alienation is a major impediment to the U.S. doing more to slow climate change,” he writes.

It is also possible that the government’s sclerosis could spur interest in less conventional and extra-electoral avenues to addressing climate change, among them nuclear power (the promise and drawbacks of which have been explored in this newsletter; the “degrowth” movement; speculative technological fixes such as solar geoengineering; and mass movements of civil and uncivil disobedience, as the ecologist Andreas Malm called for in his book How to Blow Up a Pipeline.

As the Colorado River reservoirs dry up, as the death toll from the record-setting heat waves and wildfires scorching Europe rises, and as more than a billion people in South Asia recover from a season of heat extreme enough to test the upper limits of human survivability, “this moment feels interminable,” Meyer of The Atlantic writes. “But what is unsustainable cannot be sustained. If one man can block the industrial development of what is, for now, the world’s hegemon, then its hegemony must be very frail indeed.”

But then, climate change seems to remain a relatively minor concern among the U.S. electorate: Just 1 percent of voters in a recent New York Times/Siena College poll named it as the most important issue facing the country; even among voters under 30, that figure was 3 percent.

That is just one poll. But it would perhaps be premature to rule out another direction the politics of climate change might take, one that could prove familiar to those who have witnessed how the American public has processed other cumulative traumas, like the drug overdose crisis or gun violence or the pandemic: a resigned acceptance of mass suffering, punctuated by moments of shock that serve only as reminders of how the unimaginable became normal.

3. The impasse at the abyss

Bokat-Lindell packed many leads and ideas into his closing section. We’ve touched on a lot of them in the past year.

Our high points:

A. The “arsenal” of potential executive actions is terribly meager vis-a-vis the task at hand. Stronger CAFE standards, for example, are badly undermined by light trucks’ takeover of the automotive fleet, and are assumed in most climate emission scenarios anyway.

B. States-as-climate-loci is also overblown. A full two dozen are solidly red, i.e., fossil fuel dominated. Even in blue states, policy is circumscribed by federal authority and bureaucracy; the holdup of New York’s congestion pricing program by federal highway officials is one case in point. Moreover, visions of 2050 net-zero or 2035 grid decarbonization by California and New York are almost certainly way out in front of actual commitments and have been made needlessly more difficult by nuclear power plant shutdowns.

C. Securing a true Democratic Senate majority and retaining the House this November are indeed vital.

D. Like Andreas Malm, we believe that direct action in defense of climate and earth needs to come to the fore, as we proposed in two posts last summer inspired by Malm’s book: Christopher Ketcham’s essay, Let’s Blow Up Luxury Carbon, and my own “Rich people cannot have the right to combust others to death.” Both are worth your attention.

E. The low primacy of the climate crisis among voters is both real and arguably not fatal. The U.S. is beset by so many crises that even so committed a climate scientist as Peter Gleick declared this week his greater alarm over incipient fascism.

A greater cause than insufficient ardor of the U.S. failure to enact “revolutionary” or even strong, incremental climate policies is an unproportionate and cumbersome political system that puts up multiple roadblocks to systemic change.

Alas, that isn’t poised to change. More and more, it looks like achieving genuine climate action will require passionate and creative direct action. Targets abound: helicopter commuting, crypto “mining,” obstructionists of wind farms or dense housing or congestion pricing, to name a few. Successful actions will be those that harness broad-based and truly intersectional campaigns attacking not just emissions but privilege and wealth.

We have an idea or two up our sleeve. Perhaps you do as well. We wish you luck. We still insist that carbon taxing is revolutionary — how can tackling a fundament of fossil fuel dominance be otherwise?

A Novel Way to Price Industrial Carbon Emissions?

July 18, 2022 By Mike Aucott

First, the Supreme Court blows up EPA’s carbon-regulating authority under the Clean Air Act. Then Joe Manchin torpedoes President Biden’s Build Back Better package.

Climate policy is on the ropes. Is carbon pricing’s moment at hand? Can it move forward in the face of Republican opposition and Democratic indifference?

No federal legislation with a price on carbon has advanced to a floor vote since the “Waxman-Markey” American Clean Energy and Security Act cap-and-trade bill died in the Senate in 2010. Now Senator Sheldon Whitehouse (D-RI), perhaps Congress’s most outspoken climate hawk, is seeking to tax manufacturers of steel, aluminum, cement and other industrial commodities to the extent that the carbon intensity of their manufacturing process exceeds U.S. averages.

If coupled with a carbon border adjustment mechanism, this approach could establish a U.S. beachhead for carbon emissions pricing at the federal level. The key is its potential to benefit American industry. As Whitehouse puts it, his Clean Competition Act (S. 4355), would “give American companies a step up in the global marketplace while lowering carbon emissions at home and abroad.”

The concept resembles the European Union’s carbon border adjustment mechanism (CBAM) proposal. The Clean Competition Act would charge manufacturers of widely used basic industrial commodities a fee based on their carbon emissions intensity. Firms whose carbon intensity is greater than the U.S. average for that industry would be charged, however, along with importers of goods whose carbon intensity exceeds that of its U.S.-produced counterpart.

Manufacturing and Climate Change

Industrial production is a major generator of climate change. Iron and steel manufacture is responsible for around 8% of global CO2 emissions, according to McKinsey, and aluminum production for around 2%, with cement and ammonia close behind. Current laissez-faire trade policies favor carbon-intensive imports and thus incentivize production in regions with lax emission standards, a phenomenon noted recently in a commentary in Science by 35 academics, mostly from the European Union though including a handful from the U.S. Although raw materials and intermediate goods tend to have high CO2 emissions per unit of value added, they typically face lower tariffs than more finished products with lower carbon intensities.

Whitehouse sees his bill as a way to use U.S. trade policy to drive climate action. He also views its potential to boost U.S. industrial competitiveness as a way to attract bipartisan support. Holcim U.S., whose parent company, Lafarge Holcim, is America’s largest cement manufacturer, supports Whitehouse’s bill.

In its current form, the Clean Competition Act is more conceptual than prescriptive. Should it pass Congress, it will fall to the U.S. Treasury Dept. to codify regulations through administrative rulemaking, which could be complex.

U.S. industrial facilities currently report greenhouse gas emissions to EPA. The bill would use these data and also require submission of electricity use and product weight of covered goods.

So far, so good. Data reporting could be trickier for imported goods, however. Whitehouse’s bill states that, absent specific data, the carbon intensity of an imported good shall be that country’s GDP divided by its “production-based greenhouse gas emissions,” i.e., its economy’s overall carbon intensity. While country-level fossil fuel emissions and GDP data are available, translating those figures to a country’s CO2 emissions per unit of product could be contentious.

Carbon Intensities Compared

Whitehouse and colleagues argue that the U.S. economy is only around half as carbon-intensive as our trading partners’, on average — two-thirds less than China, and three-fourths less than India. While these differences hold promise for attracting domestic political support, they’re not stand-ins for industry-specific data, especially insofar as ratios for specific industrial sectors appear to be less steep.

Steel

According to a recent analysis, U.S. manufacture of steel in blast furnaces and basic oxygen furnaces (BF-BOF) is estimated to emit an average of 1.9 tons of CO2 per ton of crude steel. The respective factors for China and India are 2.1 tCO2/t and 2.9 tCO2/t. Since the U.S. also produces steel in efficient electric arc furnaces utilizing scrap metal, these differences may understate the U.S. advantage. Another study, by the Climate Leadership Council (CLC), found that indeed, the prevalence of electric arc furnaces, the relatively low carbon footprint of U.S. electricity production, and a greater reliance on natural gas rather than coal give U.S. steel production a significant advantage over virtually all major trading partners.

Aluminum and other commodities

U.S. aluminum manufacturers also fare well, with an average carbon intensity of just under 8 tCO2/t vs. nearly 13 tCO2/t for China and 15.5 tCO2/t for India. With cement, however, U.S. production is less energy-efficient on average than in China and India, which have newer factories. However, those countries’ greater coal-dependence for electricity generation may tip the carbon intensity scale in favor of the U.S. For ammonia, the U.S. is likely less carbon-intensive than coal-reliant China, which emits an estimated 45% of that sector’s worldwide CO2 emissions while producing only 30% of the product.

Another factor to consider in evaluating the performance of U.S. industry vs. trading partners is the country of origin. According to the USGS Mineral Commodity Summaries, most U.S. steel imports come from Canada, Brazil and Mexico, while most of our imported cement comes from Canada and Turkey, and most of our imported aluminum from Canada.

Still, China dominates world production of steel, and if CBAM should become established with the European Union or, better yet, with a “climate club” including the U.S., Canada, the UK, the EU and Japan, China’s CO2 emission liability could motivate it to reduce its emissions rather than be disadvantaged in international markets.

Outlook

Could America’s overall carbon superiority over our trading partners help Sen. Whitehouse’s Clean Competition Act attract support from House and Senate Republicans? Climate Leadership Council V-P Catrina Rorke, in a June 13 presentation to Citizens’ Climate Lobby members, cited interest among Republican senators in connecting trade and greenhouse gas emissions. In an August 2021 letter to President Biden, 19 G.O.P. Senators led by Kevin Cramer (R-ND) and Dan Sullivan (R-AS) called on the U.S. to work with EU and other trading partners to design a common approach to climate and trade policy.

While bipartisan action would fly in the face of a dozen years of untempered Republican opposition to climate policy, Sen. Whitehouse is to be commended for pursuing his novel approach. For the climate’s sake, let’s hope his efforts aren’t unrequited.

SCOTUS Ruling: Bad for Climate, Good for Carbon Pricing?

July 1, 2022 By Charles Komanoff

Note: This post was amended on July 6 to include @bobinglis’s June 30 tweet, shown below.

Maybe we’re grasping at straws. But we see a possible silver lining in this week’s grievous Supreme Court ruling striking down US EPA’s authority to regulate carbon emissions via the Clean Air Act.

The gleam of hope is not that the decision didn’t dismember the federal government’s entire “administrative state” apparatus — you know, the tapestry of rules, regulations and procedures designed to further societal health, safety and accountability. We fear investigative journalist Amy Westervelt may be right that the ruling is a harbinger of steps in that very direction.

What I’m not seeing a lot of people get is that the West Va v EPA verdict is a harbinger. It’s the first step not the death blow. Overstating it obscures that, leaving people thinking it’s all over and ill-prepared for what comes next.

— Amy Westervelt (@amywestervelt) July 1, 2022

Rather, our thin beam of optimism is the opening the ruling could provide for carbon tax proponents to persuade our fellow climate advocates to lean less on fraught, slow and even quixotic approaches for tackling climate change, and to instead turn increasingly toward carbon taxing as a more-holistic and bulletproof way to bring down stubbornly high carbon emissions, both in the U.S. and worldwide.

In recent years, this space has done battle with what we’ve regarded as inadequate or even illusory climate strategies.

* We’ve criticized the decade-long campaign to divest financial and social institutions from fossil fuels, arguing in our posts and on our evergreen pages that capital will easily find ways to finance whatever legal product consumers demand, especially a product so economically and psychologically fraught as gasoline.

* We’ve hit back at the IMF’s unfortunate labelling of fossil fuels’ vast externality costs — both climate damage and immediate human-health harms — as “subsidies,” for fostering the fantasy that citizens need only stop their governments from bestowing public tax dollars on fossil fuel companies, and Big Carbon will crumble and wither away.

* We’ve even questioned the keep-it-in-the-ground movement, arguing, heretically, that “Oil that doesn’t flow to refineries through the Dakota Access Pipeline [to take one example] will instead come from somewhere else – Kuwait or Texas or a hundred other places – to be burned in cars, trucks and planes.” Our movement’s focus, we’ve argued, must be demand, not supply.

* And we’ve looked long and hard at the climate value of environmental regulation — the very approach the Supreme Court threw under the bus yesterday. Look at how, a year ago, we contrasted the fabulous success of the 1970 Clean Air Act and its 1977 and 1990 amendments in slashing concentrations of particulates and other harmful pollutants in “ambient air,” with the less-technology-amenable issue of carbon emissions:

These and similar successes have led many climate advocates to urge similar regulatory pathways to curb carbon emissions. [Yet] regulatory approaches may offer only modest prospects for controlling and reducing emissions of carbon dioxide and other greenhouse gases, for several reasons. For one thing, the absence of antipollution devices for capturing or lowering CO2 emissions limits the scope of technology-forcing regulation. For another, promulgation of regulations is necessarily piecemeal and reactive. Moreover, the regulation-setting and administering process itself is cumbersome, delay-prone and subject to legal challenge by carbon interests.

From Niskanen Center post. Link is in text. We’ve added emphasis to #2 and #5.

We backed up that argument with reasoning from a penetrating paper by Case Western University law professor Jonathan Adler. The sidebar at right has Prof. Adler’s own “key takeaways” from the summary version he published on the Niskanen Center’s website. We highlighted two: A, climate regulations that aren’t clearly authorized by legislation will be particularly vulnerable to legal challenges — as we saw this week, when the six right-wing justices took advantage of the absence of explicit mentions of climate or carbon in the Clean Air Act and its amendments. And B, compared to emission-control regulations, a Congressionally enacted carbon tax should be less vulnerable to such challenges.

This isn’t to say that a carbon tax is just around the corner. We readily admit that a path to enacting a meaningful federal carbon tax — not a token, Exxon-style levy that damages coal but not oil or gas, but a robust carbon price that can reach triple digits in a half-dozen or fewer years — is almost impossible to discern.

Rather, now that essentially all of the prominent alternatives have been eviscerated or emasculated, it’s time for climate advocates to rethink, and, hopefully, relinquish, their anti-carbon-pricing positions.

The Carbon Tax Center has strived to be a climate team-player. At least since the start of the Trump administration, we’ve acknowledged the near-impossibility of passing a federal carbon tax in the current political configuration, and have instead pulled for less-ambitious but more-achievable (or so they seemed) incremental steps.

Just last fall, we wrote that “There’s logic in refraining from the one overarching policy that could lead the way to the deep cuts Biden is seeking: an economy-wide carbon tax. Giving businesses and households money to go green [instead] is more palatable, though less potent, than charging them for burning carbon.”

But we’ve also strived to be truth-tellers. That’s why we called that 2021 post, “Without a Carbon Tax, Don’t Count on a 50% Emissions Cut.” And it’s why we’re a little less inclined than some of our climate comrades to go into full mourning over yesterday’s Supreme Court decision .

Supreme Court leaves it up to Congress to act on climate change. That’s OK because Congress can enact a carbon tax and a carbon border adjustment that can make the solution go worldwide. Tax pollution. Un-tax income. Conservatives in Congress, here’s your chance! We need you!

— Former Rep. Bob Inglis (@bobinglis) (R-SC) June 30, 2022

Please also note that unlike the indefatigable Bob Inglis, who bravely fought for carbon pricing as a six-term Member of Congress (1993-1999, 2005-2011) from South Carolina’s 4th District, we’re not calling on “Conservatives in Congress” to push for carbon taxing. We would love it if even a few did, but that ship sailed over a decade ago, as we’ve summarized on CTC’s Conservatives page.

To sum up: Yes, the Supreme Court ruling was ignorant. Yes, it was destructive. Yes, it’s almost certainly a harbinger of worse. But it didn’t demolish policies that were on course to rescue our planet and make Biden a climate hero.

Yesterday’s decision did damage, but maybe it pulled some wool from our eyes as well.

Bitcoin Mining is Gobbling Up New York’s Precious Renewable Energy

May 13, 2022 By Charles Komanoff

(As published today in NYC-based Gotham Gazette. Footnotes appear at end. — C.K., May 13, 2022)

Like time in Steve Miller’s classic-rock song, New York’s decarbonization targets keep slipping into the future.

Highway widenings are spurring more driving. Suburban resistance to upzoning is locking in energy-demanding sprawl. Electricity from the state’s wind turbines shrank last year,¹ even as climate advocates, relying on dodgy U.S. Energy Department modeling, overstate future carbon reductions from “electrifying everything.”²

Promising developments like offshore wind leasing and new transmission to carry hydroelectricity from Quebec barely compensate, if at all, for carbon emissions unleashed by closing the Indian Point nuclear plant. As I have pointed out elsewhere, shutting existing zero-carbon power sources means that new ones don’t actually cut emissions; at best, they keep us running in place, punching huge holes in pledges to achieve a carbon-free power grid by 2040.

To this dreary picture, add crypto mining — enormous networks of electron-eating computers running 24-7 so that digital currencies like Bitcoin and Ethereum can maintain virtual “coins” or “tokens” in encrypted ledgers that bypass traditional third parties like banks.

From Buffalo and the Finger Lakes to the state’s northern tier, crypto entrepreneurs are building new generators or firing up retired ones to power their crypto mining operations. Other crypto sites draw on the grid.

Self-sourced or not, the requisite electricity ends up forcing additional burning of fossil fuels, as Sierra Club researchers documented in extensive comments this week to the President’s Office of Science and Technology Policy, pushing the state’s ambitious decarbonization goals further out of reach. To what end?

In Uber’s Footsteps

Enigmatic, opaque, futuristic — crypto-currency cries out for historical analogues. Here’s one: Uber.

Uber burst on the scene in the early 2010s not as a new form of transportation but a new kind of network enabling a reconfiguration of transportation. Its appeal was tailored around three promises: it would enhance traffic efficiency by eliminating cruising for fares; it would extend convenient for-hire vehicle service outside Manhattan; and it would end service refusals to people of color.

The packaging — sleek and app-enabled — augured a frictionless, digital future. With a few taps New Yorkers could summon a chariot.

The results were mixed. We now know that stockpiling of Ubers in Manhattan has wrought even more gridlock than taxi cruising. But Uber did broaden access to for-hire vehicles, even as it bled ridership from the MTA and, worse, rained economic ruin on the incumbent yellow-cab industry.

Bitcoin and other crypto-currencies come with their own glossy promises, though these are more chameleon-like. (Earlier this year New York Times columnist Paul Krugman disparaged them as “word salad.”) Among them, as Annie McDonough reported recently in City & State, is the prospect of liberation from ingrained discriminatory banking and lending by U.S. financial institutions.

“[Crypto backers] see the technology as an economic equalizer,” writes McDonough. “A tool not just for the rich to get richer, but for people who have been discriminated against by banking institutions or locked out of investment opportunities, including people of color and low-income communities.”

Really? In New York, and almost certainly anywhere else, unbanked households overwhelmingly lack the requisite credit history or liquid assets — bank accounts, debit cards, credit cards — to purchase cryptocurrency tokens. Moreover, scammers and grifters are finding crypto fertile territory for high-tech swindles, as New York Times columnist Farhad Manjoo noted this month. An arguably safer and more effective way to root out credit segregation would be to speed Biden administration rulemaking to add teeth to the Community Reinvestment Act — the 1977 law intended to repair decades of redlining.

The emergence of crypto-front groups like the National Policy Network of Women of Color in Blockchain demonstrates the industry’s readiness to exploit deep-seated bitterness over legacy redlining. So does the participation in crypto lobbying of Bradley Tusk, the one-time Mike Bloomberg consigliere who a decade ago deftly deployed Black fury over persistent taxi discrimination to help Uber eradicate cabbies’ exclusive right to pick up street hails in Manhattan and subsequently helped fend off serious regulation of the app-ride industry for several crucial years.

Let’s Burn Up The Grid

There is no registry of electricity consumed by crypto mining in New York State. Worldwide, though, crypto burns through an estimated 91,000 gigawatt-hours (or, 91 billion kilowatt-hours) of electricity annually, according to a New York Times survey of crypto last September. Some 16% of that, or 15,000 GWh, is said to be consumed in the United States.

While New Yorkers are accustomed to thinking of our state as resource-poor, crypto miners are now exploiting half-a-dozen hydro power sites and formerly boarded-up fossil-fuel plants in northern and western New York. One industry source cited by City & State estimates that 13-14% of his company’s U.S. crypto mining takes place in our state. Extrapolating that share across the industry, crypto is annually consuming 2,000 GWh of electricity in New York State — a figure that could grow not just with increased transactions but with ever-more complex digital encryption.

Even holding at 2,000 GWh, that’s a lot of juice: more than the electricity generated last year from all the solar panels on residential buildings in the state, or more than what will come from the first 100 promised offshore wind turbines once that industry launches (see graph below). And, though crypto in New York consumes less electricity than all current solar or wind, that comparison is of no comfort, as those renewable sources need to be displacing fossil fuels (primarily fracked gas) from the state’s grid — which they can’t do if their output is effectively being consumed mining Bitcoin.

The operative word, “effectively,” encompasses two distinct but complementary dynamics. Grid dynamics dictate that any new locus of demand such as Bitcoin forces utilities to draw more heavily on fossil-fuel generators, because the non-carbon sources — nukes as well as renewables — already run as flat-out as they can. The climate dynamic is that from a statewide perspective, additional use of fossil-fuel generators negates the carbon-reduction benefits that wind and solar and nuclear would otherwise provide.

This perspective casts a harsh light on claims that a particular crypto installation is being renewably sourced. Connecting crypto to a refurbished hydro dam or solar or wind farm may sound green, but all those whirring hard drives are really siphoning off carbon-free electricity that now “won’t be available to power a home, a factory or an electric car,” as the Times’ 2021 story put it. (One hopes that the irony of crypto adherents miscounting green electrons doesn’t carry over to their currency bookkeeping.)

Carbon Tax vs. Crypto?

A stiff New York State carbon tax could slow and even reverse the rise of cryptocurrency here (likewise nationwide).

The rise in electricity prices would undermine whatever competitive advantage Bitcoin miners gain from locating in New York. Some miners would leave, new ones would stay away, and those who stay would endeavor to blunt the impact of the tax by upgrading their efficiency.

Not only that, crypto miners seeking zero-carbon generation increasingly would find themselves competing with non-crypto businesses seeking to contain their power costs. Other businesses, less power-intensive per dollar of revenue, would be in position to outbid the crypto companies.

The prospective flight to other jurisdictions could help build momentum to tax carbon emissions there as well, as more states and countries come to conclude that crypto jobs and revenues aren’t worth straining their grids, not to mention trashing their air-sheds and stealing their quiet.

This isn’t to hold out carbon taxing as a one-bullet crypto killer — we need many bullets for that, the bigger the better — but to illustrate its broad potential to stop frivolous (and in this case imbecilic) new uses of electricity before they can gain a foothold.

Why not regulate crypto away? That battle would consume years, tying down policy resources while emissions continued to spew. Worse, we have neither the time nor the ability to see around corners required to enact, piecemeal, restraints on each new locus of energy demand.

Even as energy-efficiencies continue to do wonders — total U.S. electricity use last year was just a few percent higher than in 2005³ — underpriced electricity elicits new hellspawns of needless use that undo much of that progress.

Carbon taxes by themselves can’t solve everything that ails climate. But they could, for a change, get the solutions out in front of the problems.

***
Charles Komanoff, long-time New York policy analyst and environmental activist, directs the Carbon Tax Center. On Twitter @Komanoff.

¹US Energy Information Administration, “Electric Power Monthly,” Table 1.14.B, “Utility Scale Facility Net Generation from Wind,” shows 4,522 GWh in New York State in 2020 and 4,387 GWh in 2021.

²To estimate future carbon reductions from the December 2021 New York City ban on gas heating and cooking in new buildings, the law’s proponents and the Dec. 15, 2021 New York Times story reporting on it both cited a Dec. 10, 2021 post, Stopping Gas Hookups in New Construction in NYC Would Cut Carbon and Costs, by the consultancy RMI. The RMI authors note that their calculations employed future electricity grid emission factors modeled by U.S. DOE’s National Renewable Energy Lab’s “Cambium” dataset. Examination of that dataset reveals, inter alia, that it assumes a non-existent five-fold increase in New York State on-shore wind-generated electricity from 2020 to 2022.

³Figures from US Energy Information Administration, “Electric Power Monthly,” Table 7.2a Electricity Net Generation: Total (All Sectors)” supplemented by Table 10.6 (“Electricity Net Generation from Distributed Solar”) indicate total U.S. electricity generation of 4,164,565 GWh in 2022 and 4,055,785 GWh in 2005. For those interested, the implied compound annual average growth rate over those 17 years is a minuscule 0.17 percent.

Correction: This post was amended on May 26 to reflect the fact that New York’s estimated 13-14% share of U.S. crypto mining applies to a single crypto company rather than industry-wide. The extrapolation to other companies is the author’s, not the source’s.

May 16 addendum: We strongly recommend How crypto made me fall in love with carbon pricing all over again, an April 27 essay by Frontier Group energy analyst Tony Dutzik covering the intersection of crypto mining, carbon pricing, energy demand and Jevons Paradox.

Reappraising Carbon Taxes

Competing Claimants?

Broader Considerations and Next Steps

Litigating for Climate

Montana litigation supporters weigh in

Banks and Climate

Coda

The “climate bomb” fallacy

IRA vs. Willow: No Contest

Tongue-tied on the campaign trail?

What happened?

The silence of the greens

Possible futures for U.S. passenger vehicles

Biden’s Climate Change ‘Revolution’ Isn’t Coming.

Introduction

Biden’s Plan, Though Not Revolutionary, Was Bold.

Introduction

1. The climate deal that wasn’t

1. The long shadow of Washington state’s failed carbon tax referendum

2. A domestic defeat with global consequences

2. Goodbye to the myth of U.S. global leadership on climate

3. Where the politics of climate action go from here

3. The impasse at the abyss

1US Energy Information Administration, “Electric Power Monthly,” Table 1.14.B, “Utility Scale Facility Net Generation from Wind,” shows 4,522 GWh in New York State in 2020 and 4,387 GWh in 2021.

¹US Energy Information Administration, “Electric Power Monthly,” Table 1.14.B, “Utility Scale Facility Net Generation from Wind,” shows 4,522 GWh in New York State in 2020 and 4,387 GWh in 2021.