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Pricing carbon efficiently and equitably

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

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

 — C.K., Feb. 1, 2024

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

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

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

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

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

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

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

Whence the error?

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

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

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

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

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

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

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

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

Why it’s important to correct the error

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

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

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

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

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

Carbon Pricing Is Anti-Colonialist

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Israel’s bombardment of Gaza in response to Hamas’ October assault on Jewish civilians is prompting much soul-searching. One reappraisal that caught my eye was Who’s a ‘Colonizer’? How an Old Word Became a New Weapon, which ran earlier this month in The New York Times.

The piece, by veteran NY Times correspondent Roger Cohen, centers on two opposing ideas — clashes, if you will. One, particular to the current war, concerns the charge that Israel is an outpost of “settler colonialism” and the counterclaim that the Jewish state, “far from being colonialist,” in Cohen’s words, “is a diverse nation largely formed by a gathering-in of the persecuted.” The other is what Cohen calls “a fundamental reframing” of history away from an East-West conflict canonized in the American and French revolutions, toward a North-South struggle “focused on the millions of lives lost to the slave trade and the genocide of the native American peoples.”

The scene in San Francisco on Sept 10, 2018 as activists with the Climate Justice Alliance demonstrated outside California Gov. Jerry Brown’s Climate Action Summit.

Cohen’s grappling with colonialism and colonization took me back to 2018 and the image shown at left. Outside a “Climate Action Summit” convened in San Francisco by Jerry Brown toward the end of his fourth and final term as governor of California, activists from the Climate Justice Alliance hoisted a banner proclaiming “Carbon Pricing Is Colonialism.”

To me, the message was shocking but not surprising.

Shocking, in equating carbon pricing — an admittedly technocratic but singularly powerful policy tool for cutting carbon emissions and, thus, aiding vulnerable nations and communities considered most gravely threatened by climate chaos — with the centuries-long colonial project that subjugated and plundered the Global South to benefit the colonizing North, and whose psychological and financial toll endures.

Unsurprising, in light of the climate-justice movement’s embrace of intersectionality, and with it, conflation of carbon pricing with predatory capitalism that, over centuries, bestowed riches on Europeans and North Americans by stealing the lands of Indigenous people, the labor of people of African descent, and the mineral resources of the entire Global South.

What Is Colonialism?

Wikipedia usefully defines colonialism as “a practice by which one group of people, social construct, or nation state controls, directs, or imposes taxes or tribute on other people or areas, often by establishing colonies, generally for strategic and economic advancement of the colonizing group or construct.”

Notwithstanding Wiki’s disclaimer in the same paragraph that there’s “no clear definition” of colonialism, this one is distinct and, with its reference to taxes, pertinent.

How Carbon Taxing Actually Works

Suppose carbon emissions were taxed in every country. Would that entail colonizing of poor nations by the rich? It could, but only if the carbon-tax wealth — the revenue generated by the tax on carbon emissions — was siphoned off by the rich countries.

There is no carbon-taxing or pricing system under which that would take place.

Keep in mind that carbon taxing is a charge on carbon emissions. If Country A exports fossil fuels to Country B, the carbon tax arises when the fuels are burned, which takes place in Country B. The tax is imposed in and collected by Country B, and the revenues adhere to Country B.

What about Country A? Its carbon tax applies to fuels burned there — to power vehicles, to generate electricity, to run factories, to heat buildings, and, yes, to operate the machinery that extracts the fossil fuels from the ground and brings them to docks for export. Each of those combustion processes generates carbon emissions in Country A which will be taxed by Country A and whose revenues will stay in Country A.

There are genuine debates to be had as to how Country A, the exporter, will spend its revenues, just as there are or should be debates in Country B concerning disposition of its carbon revenues. Nevertheless, under no conceivable carbon-pricing regime will revenues from Country A’s carbon tax flow to Country B.

Where in this picture is colonialism?

Is it in the prospect that taxes on carbon emissions in Country B and other importing countries will cut demand for Country A’s fuel exports . . . which will lower demand for Country A’s fuels and depress its commerce in extracting and exporting fossil fuels? No. This lowering of demand is part of the intent of taxing carbon — “a feature, not a bug,” per the expression.

Shrinking global demand for carbon fuels and thereby reducing Country A’s carbon commerce isn’t colonialism. It’s not a coercive transfer of wealth or imposition of tribute. Rather, it’s part of how the world cuts emissions and protects the climate, accomplished entirely by and under the control of Country A.

The Colonial Adjacency of Carbon Offsets

Carbon offsets are accounting devices to enable “polluters,” who may be countries, companies or individuals such as air travelers, to avoid having to reduce their own emissions, by purchasing offsets or “carbon credits” that ostensibly cut emissions elsewhere, e.g., by planting trees or destroying greenhouse chemicals like Freon. Plagued from the start by the rap that they are little more than get-out-of-jail-free cards for the Global North, and further undercut by repeated evidence of fraud, carbon offsets have not only hindered effective climate action but have also ended up sullying the cause of carbon pricing.

We tweeted this after seeing the activists tweet their banner on Sept 10, 2018.

The Carbon Tax Center’s website section on carbon offsets recounts their history and controversy. Suffice it to say that offsets’ ties to various carbon cap-and-trade programs such as the European Union’s Emissions Trading System and California’s AB-32 carbon cap-and-trade program have led climate-justice campaigners to condemn not just offsets or carbon cap-and-trade but any proposed or actual form of carbon pricing — even straight-up carbon taxing with no offsets whatsoever.

What the Colonial Powers Owe Their Former Colonies

Let’s be clear that the developed countries owe an immense debt to the Global South for exhausting most of our planet’s carbon budget: trillions for climate adaptation; massive financing for clean-energy infrastructure; and large-scale technology transfer. Sweeping debt forgiveness would help as well. These obligations are, or should be, compulsory. But they have nothing to do with carbon pricing. They certainly won’t be exacerbated by taxing carbon emissions whether in the Global South or North. Rather, the emission reductions that carbon pricing will spark will buy extra time for former colonies to manage, adjust and thrive as the payments, financing  and technology ramp up.

Carbon Pricing is Anti-Colonial

We conclude this with its headline. Carbon pricing is utterly and intrinsically anti-colonial. Nations levy their own carbon price and collect the revenues, which they allocate or invest as they see fit.

It’s not perfect. No policy is. And it’s not a silver bullet. When it comes to protecting and restoring climate, there’s no such thing.

But carbon taxing promises huge reductions in carbon emissions — 30 percent or better within ten years if ramped up steadily, in the case of the United States. And it’s complementary with virtually every other carbon-cutting action, be it regulatory, investment, or even clean-energy subsidization, to go far beyond that 30 percent mark. Moreover, pathways abound for allocating, or, our favorite approach, dividending the revenues to keep whole the vast majority of the most-vulnerable households

Carbon pricing is a policy path any nation can undertake on its own and manage as it chooses. If that’s not the essence of political autonomy, what is?

Environmental justice misgivings about carbon pricing, and antidotes to same, are discussed at length on our Carbon Pricing and Environmental Justice page.

“Our action brought them back to earth.”

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The Intercept today published Christopher Ketcham’s and my essay, The Shutdown of “Luxury Emissions” Should Be at the Center of Climate Revolt. I’ve cross-posted it here to allow comments by Carbon Tax Center subscribers and readers. Let us know what you think.

    — C.K., December 13, 2022

Climate disorder won’t be remedied through an orderly march of green energy. The world must also rein in consumption.

By Christopher Ketcham & Charles Komanoff ▪ Photos and captions are copied from The Intercept.

SEVEN HUNDRED SELF-DESCRIBED “climate rebels” breached the chain-link fence surrounding Amsterdam’s Schiphol Airport, the world’s third-busiest hub for international passenger traffic, on November 5. With bolt cutters they opened holes in the fence and poured in, some of them on bicycles, and raced across the tarmac. Others laid ladders against the 9-foot-high fence and topped it on foot.

They had to move quickly before military police, tasked with securing the airport, saw what was happening. The rebels targeted 13 private jets parked or preparing for takeoff, at least two belonging to NetJets, the Berkshire Hathaway subsidiary that bills itself as the world’s largest jet company and sells fractional ownership shares in private business jets.

They swarmed each of the jets in groups of 20 or 30 or more and sat down before the looming machines, there to stay for the next six-and-a-half hours, unmoving, until at last police waded in and started hauling the rebels to jail. Some of the 413 arrests were violent. “There was fear and rage, for the state of the world and for my own future,” said one of those arrested.

Another 800 people gathered for a march and sit-in at the airport’s main plaza, and at least 30 activists blocked the road that serves as the supply route to Schiphol. Every single private jet at Schiphol ended up grounded that day, not merely the 13 that were surrounded.

“The superrich have got used to polluting as they please with a total disregard for people and planet, and private jets are the pinnacle of these luxury emissions that we simply cannot afford,” Jonathan Leggett, one of the activists, told us. “Our action brought them back to earth. We wanted to show the extremeness and injustice related to this manner of transport.”

In other words: a perfectly tailored climate action. Not a highway sit-down ensnaring hapless motorists and keeping cars running, and emitting, longer. Not sit-ins at banks that broker investments in fossil fuels but don’t directly cause their combustion. And certainly not spattering soup on museum art, with its unsettling aura of sullying humanity’s heritage in order to save it.

No, the Schiphol action went for climate change’s jugular: self-indulgent carbon-spewing. It did so balletically, in the democratic and fuel-efficient motion of humans racing on foot or whirling about on bicycles. And ecologically: In the words of one participant, “We made sure that any planes could still land, because the last thing we wanted was for them to be unnecessarily flying for any longer than they already were.”

It was an action that bared the gluttony and entitlement of fossil fuel usage. “Keep it in the ground” protesters confine their blockades to energy supply infrastructure and studiously ignore the demand half of the equation. This has been a shortcoming of the climate movement for too long, as it passes up one opportunity after another to rouse millions against the class that, even more than the corporations of Big Carbon, perpetuates the climate crisis: the world’s wealthy.

Limits of Green Energy

Climate disorder won’t be remedied through an orderly march of green energy. Replacing fossil fuels with a planetary buildout of wind turbines and solar panels, while simultaneously making and plugging in a billion new electric furnaces and vehicles, looks straightforward in a spreadsheet. In truth, though, ramping up green energy alone won’t cut fossil fuel use quickly enough to meet the Paris warming limit of 1.5 degrees Celsius. Supplanting the world’s combustion-based energy infrastructure with an all-electric model will be too lumbering, too roundabout, and too full of its own drawbacks to fully bend the emissions curve in the brief time left.

The world must also rein in consumption. For reasons both symbolic and practical, the climate movement must strike not just at pipelines and mines, but also at obscene wealth.

The justification is unarguable. Large personal fortunes feed carbon consumption and make a mockery of programs to curb it. As well, the surplus wealth of the superrich is probably the lone source of capital that can finance the worldwide uptake of greener energy and also pay for adaptation where it’s most critical.

At the nexus of consumption and wealth sits luxury carbon. Which is why the Schiphol action was so strategic.

Consider that the world’s richest 10 percent account for 50 percent of fossil fuel burning and carbon emissions. Consider that climate reparations, for which the Global South won acknowledgment but little more at last month’s COP27 climate talks, can’t be funded at scale by tweaking wealthy countries’ hidebound taxation-as-usual. Consider that carbon emissions pricing, an indispensable policy tool for shrinking fossil fuel demand, can’t be made politically palatable in the U.S. — even with worthy “dividend” schemes — so long as middle- and working-class families must witness the superrich lording and polluting at will.

Prodigal Aviation

As the Schiphol rebels surely know, luxury carbon, like all manufactured desire, is a contagion, oozing inexorably from the sanctums of the few to become desires of the many. Few Americans, and even fewer Europeans, flew in airplanes in 1950. These days, half of U.S. residents fly each year, averaging half a dozen flights each, according to the industry’s annual “Air Travelers in America” reports. As commercial aviation grew safer and more affordable, feeding the increase, business and pleasure travel became normalized.

Today, “general” aviation — private jets, business jets, air tourism — is undergoing a similar liftoff as well-heeled flyers seek refuge, and a status boost, from the indignities of commercial service. And nowhere is private jetting’s carbon waste as blatant as it is in Europe, with its extensive rail network. Per passenger, private air travel is five to 14 times more carbon-polluting than commercial flights, and 50 times more than high-speed rail, according to the European NGO Transport & Environment.

In the Netherlands, 8 percent of the population takes 40 percent of flights. Worldwide, the difference is even more stark: One percent of the population is responsible for 50 percent of pollution due to aviation, making air travel a textbook example of how pollution by the rich leads to consequences and injustices for those who have not caused the climate crisis.

Naysayers will note that the tactic of occupying and disrupting airports has been tried before, as in the case of the Plane Stupid campaign of the 2000s and 2010s. Radicals in the climate movement such as Andreas Malm, who advocates property destruction of fossil infrastructure, point out that Plane Stupid was ineffective in bending the arc of emissions.

“What the Schiphol people needed to do is destroy the airplanes on the tarmac and then destroy the airplane manufacturers,” said an ecosaboteur named Stephen McRae, an acquaintance of one of the authors, who recently completed a six-year prison sentence for industrial sabotage. Although he no longer participates in such criminal acts of destruction, he has a point. The planes grounded on November 5 are already back in the air. That doesn’t diminish the value of what the Schiphol rebels did, however. Actions that disrupt carbon comfort without violence or hardship are morale-building, the material from which more actions and eventually mass movements are made.

Ripple Effect

A few days after the Schiphol revolt, climate activists under the banner of Scientists Rebellion disrupted operations at private airports in four U.S. states and a dozen other countries, according to a New York Times roundup.

While the Times attributed the rising militancy of scientists to “the increasing clarity of the science,” it was more likely propelled by the impulses that motivated protesters in the Netherlands: rage at a future “thrown away for the profits of a few,” in the words of one Schiphol rebel, and the palpable need “to stand there and know we actually were grounding private jets and … actively stopping this manner of pollution,” per another.

Along with their clarity in targeting the true fountainhead of climate disorder — sybaritic carbon profligacy — what stands out most about the Schiphol action is its organizational breadth and cohesion. On top of the 700 occupying the tarmac and the 800 marching and sitting-in at the main plaza were those “working throughout the day, and in the days and weeks beforehand, in a range of supporting roles,” as one organizer reported, describing legal and media teams, an arrestee support team, and a team of caterers. “The diversity of roles worked to our advantage: There are as many ways to engage with activism as there are people, everyone has their own way of contributing.”

Social solidarity on this scale helped buffer the cruelty of airport police who in some cases “ripped people from their groups and held [them] in painful positions even though they were cooperating,” reported one first-time protester who joined the action as a medic. “What started as a nervous morning ended with a fulfilling and accomplishing situation,” he said. “We did this.”

Carbon Behemoth China

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A post last week by a U-C Berkeley Business School professor got me fretting over the staggering rise in China’s fossil fuel use over the past two decades and wondering what it will take to not just rein it in but reverse it.

Just since 2000, Prof. Lucas Davis wrote in Putting China’s Coal Consumption in Context, the amount of electricity China generates from coal, which of course is the most carbon-intensive of the three fossil fuels — went from one-half that of the United States to six times as much, as shown in his graph reproduced here at left. That’s a 12-fold reversal (!), which he parses into China’s nearly five-fold increase at the same time that U.S. coal-fired electricity production was falling more than two-fold.

Our remake of Prof. Davis’s graph from his post cited in text.

It was heartening that Davis, an energy and climate specialist at the business school’s Haas Energy Institute, said straight-up that “The biggest single factor explaining the divergent patterns is that China’s demand for electricity is soaring, while U.S. demand is practically flat.” Too many commentators simplistically credit cheap fracked gas for the sharp, sustained drop in U.S. coal-fired power generation, ignoring the flattening in electricity use that allowed gas-fired electricity to substitute for coal rather than simply add to it — a phenomenon we pointed out in 2016 and again in 2020, in our twin “The Good News” reports, which also quantified wind and solar power’s rising contributions.

That said, the subject here is China, whose electricity use has skyrocketed while its mix has stayed nearly locked in place. The surge in solar and wind electricity generation, though considerable, hasn’t kept coal-fired power generation from growing rapidly. China now accounts for more than half of the entire world’s production of coal-fired electricity, according to Prof. Davis. Moreover, as we show below, China’s year-to-year increases in kilowatt-hours made from fossil fuels have exceeded the same year’s combined increases in wind and solar electricity in all but 2 of those 20 years.

(Note, “coal” and “fossil fuels” are used interchangeably in this post, befitting coal’s dominance over the other fossil fuels in making electricity: in 2020 the respective kilowatt-hours percentages were 95.0% coal, 4.8% gas, 0.2% oil.)

Coal’s Unbroken Electricity Dominance

Following Davis’s lead, we charted China’s annual electricity production by fuel type from data compiled by the U.S. Energy Information Administration. To help the graph pop, we consolidated coal, oil and gas into a single fossil fuel supergroup. We also combined wind and solar, and dropped the small “biomass and waste” category.

The biggest takeaway is the unrelenting growth in fossil (coal) generation, despite the concurrent expansion of both hydro-electricity (concentrated in the first decade) and wind and solar (more pronounced in the second decade).

Indeed, coal/fossil accounted for 63 percent of the increase in China’s electricity generation over the entire 20-year period. Even in just the past five years, when wind and solar have enjoyed their greatest increases in absolute terms, 50 percent, or half, of China’s increased electricity generation has been via fossil fuels; solar and wind combined accounted for only a quarter, 25 percent.

To make these changes easier to see we created another graph showing year-to-year growth (or contraction) in the same four categories. Note the 2014-2015 period when fossil-fuel production of electricity barely grew, on account of both below-average growth in total electricity generation and above-average rises in hydroelectric and nuclear power output.

Those two years coincided with a flowering of climate optimism, with the U.S. and China reaching a bilateral agreement to curb emissions — ostensibly dissolving the “alliance of denial” by which both countries used each other’s inaction as a pretext to forego action on climate — and setting the stage for the 2015 Paris climate accord. Beginning in 2016, however, China’s fossil-fuel electricity generation (again, overwhelmingly coal-fired) recovered most of its prior increase pace. Year-to-year growth in fossil output has averaged 200 annual terawatt-hours since then.

When Will China’s Fossil Generation Start to Contract?

At some point, the rises in wind and solar, supplemented by increased nuclear power production, will almost certainly exceed growth in overall electricity demand. That will allow the gargantuan fossil-fuel generation sector to begin to contract, as it has done in the United States since 2007. (Comparing 2021 to 2007, the peak year, U.S. fossil fuel power generation is down more than 16 percent, whereas in China the same metric doubled.)

That kind of turnaround does not appear imminent for China, however, as suggested by the right-hand part of the graph directly above, showing year-to-year changes. Annual rises in fossil electricity production continue to exceed annual rises in wind and solar. (The relative dip in fossil-electricity growth in 2020 was mostly an artifact of the pandemic-induced global economic slowdown.) Indeed, the 2021 BP Statistical Review of World Energy, published in June 2022, shows more than a 400 TWh jump in China’s coal-fired electricity generation, which would be the second largest year-to-year rise in the country’s history, topped only by the 2011 increase.

Moreover, reports of frightful heat waves and drought in much of China this summer almost certainly point to a slackening in hydroelectricity and a resulting upward bump in use of coal-fired power plants. At the same time, the push to electrify transportation, which is progressing much faster in China than in the United States, will spur increased use of electricity, making it harder to bend downward the curve of fossil-fuel burning to make electricity.

(Addendum from Nov 14: The new Global Carbon Budget 2022 report, prepared by an international group of some 100 climate specialists, projects that China’s carbon emissions from fossil fuel combustion will decrease by 0.9 percent in 2022 vs. 2021, as reported by the New York Times’ Brad Plumer in Carbon Dioxide Emissions Increased in 2022 as Crises Roiled Energy Markets. We’re tracking this and will update with new data.)

Other Energy Usage in China

Electricity isn’t the only form in which energy is used in China, or anywhere else, of course. Liquid fuels derived from petroleum power cars, trucks, planes and construction machinery. Natural gas and coal burned directly (rather than to make electricity) fuel industry, especially steel and cement making, and also heat homes and non-residential buildings.

But in China, no single energy application rivals the burning of coal to produce electricity. It accounts for around one-third of the country’s primary energy consumption — a figure we computed by multiplying coal’s 55 percent share of 2021 China primary energy (see donut chart) and electricity’s estimated 60 percent share of the country’s total coal consumption (per the U.S. Energy Information Administration’s extensive write-up of China’s energy sector, which we referenced earlier).

In the United States, the electricity sector has functioned as the proverbial low-hanging fruit for decarbonization, literally accounting for the entire estimated 2005 to 2021 decrease of 866 million metric tons in total CO2 emissions from fuel burning. The trend in China has been diametrically opposite, with the country’s 2005-2021 rise in CO2 emissions from the burning of fossil fuels to make electricity more than four times as great as the U.S. decrease.*

(* = Derived as follows: Per EIA data cited in text, China generated 1,866 TWh of electricity from burning coal in 2005, and 4,775 TWh in 2020. The increase of 420 TWh to 2021 (from BP data cited in text) brings the latter figure to 5,195 TWh, which represents a rise from 2005 of 3,329 TWh. We apply the U.S. average of 2.22 lb per kWh from burning coal and raise that by 10% to reflect presumed inefficiencies in China’s coal-fired power sector and also allow a margin to reflect the small but non-zero amount of natural gas-burning to make electricity. Converting to metrics, the calculation is 3,329 x 10^9 x*2.22*1.1 / 2205, yielding a 2005-2021 increase of 3,687 million tonnes of CO2.)

Addendum, Nov. 9

We didn’t see it till today, when it hit the print edition, but on Nov. 3 the NY Times ran a long, sobering piece, China Is Burning More Coal, a Growing Climate Challenge.

Timed to the start of COP27, the story noted that China’s greenhouse gas emissions grew in 2021 at their fastest pace in a decade, though that was partly an artifact of the slow increase in pandemic 2020. A more startling factoid was that China’s carbon emissions just from burning coal now exceed total energy-related U.S. emissions — a statistic we confirmed by looking up U.S. 2021 energy-related CO2 emissions in our carbon-tax model, 5,289 million metric tons, and computing China’s 2021 CO2 emissions from burning coal to make electricity; coincidentally, they were the same: 5,289 million metric tons.

Though the the story’s subhead said that “Beijing is looking for alternatives,” it presented little if any evidence. Particularly unsettling was the revelation that in contrast to the U.S., where peaking power for the hundred or so highest-demand hours each year comes from quick-start gas-fired generators, China services peak usage with old coal-fired generators that can’t rapidly ramp up and down, which leads to running those plants for thousands of hours a year. Only now is China supposedly retrofitting those plants for more flexible use and, more importantly, beginning to price peak power at premiums that could incentivize customers to install on-site solar to meet peak demand.

Though the Times story includes the obligatory nod to fast-growing wind and solar in China, our second chart, above, makes clear that their growth hasn’t been nearly fast enough to enable a cap on coal-fired power. As we noted, from 2015 through 2020 the growth in coal-fired electricity generation in China was twice that of wind and solar combined. The story’s overall picture is that the planet’s carbon behemoth is not yet intent on backing away from coal.

A Novel Way to Price Industrial Carbon Emissions?

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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.

A Pause in Globalization Could Reset Carbon Emissions — and U.S. Politics

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Last weekend I bicycled to Long Beach, the Long Island town where I grew up. From the boardwalk, squinting into the sun, my riding partner Dave and I could make out a dozen freighters strung in a long line in the Atlantic Ocean, stacked up like aircraft waiting to land.

Giant ships offshore weren’t something you saw often from Long Beach in the last century. A solitary ordinary freighter was noteworthy. The dozen big ships last Saturday doubtless were a symptom of some downstream jam-up in the supply chain. But they were also a telltale of the vast expansion of global trade since globalization took rise several decades ago and made Asian factories the prime U.S. source of consumer goods.

Yellow circles mark cargo ships we saw strung out in the Atlantic. Photo: David Clark.

As coincidence would have it, both Dave and I had read Paul Krugman’s day-before NY Times column, Putin May Kill the Global Economy. “There are good reasons to worry that we’re seeing an economic replay of 1914,” Krugman wrote, referring to “the year that ended what some economists call the first wave of globalization, a vast expansion of world trade made possible by railroads, steamships and telegraph cables.”

Krugman envisages Russia’s invasion of Ukraine triggering a replay of 1914. Not just the withdrawal from trade of Russian hydrocarbons and Ukrainian wheat but a “partial retreat from globalization,” i.e., a shrinkage in the “world-spanning supply chains” that now constitute global manufacture.

“What Putin has taught us is that countries run by strongmen who surround themselves with yes-men aren’t reliable business partners,” Krugman says, eyeing China above all. “So if you’re a business leader right now,” he writes, “surely you’re wondering whether it’s smart to stake your company’s future on the assumption that you’ll keep being able to buy what you need from authoritarian regimes. Bringing production back to nations that believe in the rule of law may raise your costs by a few percent, but the price may be worth it for the stability it buys.”

Who can disagree? What Krugman didn’t consider, though, is that the simplification and shortening of global supply chains as an antidote to irrational autocracy could become the political equivalent of carbon taxes on international shipping.

I’ve long harbored the notion that a sufficiently airtight regime of global carbon taxes might put a damper on world trade by making ocean-going shipping more expensive. Much trade would remain, of course, although the extent would depend on the magnitude of the tax. At the margin, though, the enormous movement of raw materials and goods across thousands of miles of ocean (or, more expensively, via air freight) would slow and perhaps even decline.

Krugman didn’t see deglobalization’s silver linings. We do.

The resulting cut in global carbon emissions would be no small thing. Global shipping accounts for 2.2 percent of greenhouse gas emissions worldwide, Time magazine reported recently, a figure that encompasses methane and other GHG’s and thus probably equates to 3 percent of worldwide CO2.

Deglobalization’s salutary effect on domestic manufacture might ripple even wider. Automation notwithstanding, relocating the making of goods for the U.S. market to the United States would raise factory employment and the number of stable, high-wage jobs. That in turn might restore a semblance of cohesiveness and meaning to the vast hollowed-out regions of middle America that since the Great Recession have turned in despair to opiates — pharmaceutical and political.

To be sure, this can sound very pie-in-the-sky, until you remember the pre-eminent role that dignified, well-paying manufacturing jobs played in U.S. progressive politics in the last century. Starting with Franklin Roosevelt and continuing until Reagan, labor and political organizing in America’s industrial unions played a vital part in furthering racial and economic equality through policies like progressive taxation and civil rights legislation, as historian Michael Kazin recounts in his latest book, What It Took to Win: A History of the Democratic Party.

It’s not a huge stretch to triangulate from Kazin’s history of mid-century democratic capitalism and Krugman’s prognosis of deglobalization to imagine a resurgence in the kind of working-class progressivism that has largely been missing from the push for a Green New Deal. The victory last week through nontraditional, grassroots organizing by the worker-led Amazon Labor Union in Staten Island, NY, points in this direction. Over time, rising labor power accompanying renascent domestic manufacturing could help deliver the electoral wins and legislative energies needed to help the U.S. transit from fossil fuels to green energy.

Of course this is my take, not Krugman’s. What worries him about deglobalization isn’t the prospect that “wealthy, advanced economies will end up slightly poorer” as cheap imports recede. It’s the possible brake on economic advancement in “nations like Bangladesh that have made progress in recent decades [due to] access to world markets.”

Curiously for a columnist who frequently invokes climate change, Krugman didn’t mention the other, more dire prospect facing Bangladeshis: that continued “progress” in the form of fossil-fueled growth will lead to massive destruction of their country as the sea overwhelms it, monsoons fail, crops collapse, and desperate migrations of biblical numbers ravage the inland. Unless some thing or combination of things creates a different future.

In his 2020 novel, The Ministry For The Future, the “speculative fiction” writer Kim Stanley Robinson conjured a distinctive deus ex machina: “crash day” — an anonymous worldwide action causing jetliners to fall from the sky, killing passengers and crews but bringing down the curtain on hydrocarbon-fueled, climate-damaging aviation (zero-carbon airships take their place) and catalyzing, finally, a rapid global turning from fossil fuels.

After a decade of pining for a global carbon tax to reverse American deindustrialization, constrain global shipping, and then some, Krugman’s forecast of an autocrat-driven but nonviolent trade slowdown can look mighty attractive.

Addendum, May 9: A May 4 NY Times story, The Era of Cheap and Plenty May Be Ending, about the new logistical fragility of global supply chains, noted: “More firms reported moving their supply chains out of China to other countries, and American executives were more positive about bringing more manufacturing to the United States.”

War, oil, and carbon taxes: A primer

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Prices of gasoline and other petroleum products as well as methane (“natural”) gas were already unusually high in the U.S. before Russia invaded Ukraine on Feb. 24. Less than two weeks on (March 9), they’re at levels not seen since 2008, prompting the usual motorist grumbling but also creating hardship for squeezed families. Here we shed light on four key questions:

  1. Is the backlash against high pump prices an argument against pursuing carbon taxes?
  2. How big a hit are U.S. consumers taking from the higher fuel prices?
  3. Is demand for gasoline sensitive to the price at the pump? If so, how much?
  4. How much could the U.S. cut oil demand, right away?

Q1: Is the backlash against high pump prices an argument against pursuing carbon taxes?

A1: No.

Joseph Majkut explains:

Let’s unpack the tweet from Majkut, former Senate staffer and Niskanen Center climate specialist now with the national security think tank CSIS.

Supply shocks, like today’s, exact monies from businesses and consumers and transfer it to the oil industry — extractors, refiners, traders, brokers, insurers.

Carbon pricing, in contrast, is imposed by governments. And though it leads, deliberately, to higher fuel prices, the tax monies are collected by government and become revenues that can be used for public purposes. The “canonical” outlet — the one increasingly urged by carbon-pricing advocates in NGO’s and government — is to distribute (“transfer,” in Majkut’s phrase) the revenues as equal “dividends” to households.

The wealthiest U.S. household quintile spends 3.3 times as much on gasoline as the poorest. So dividing the revenue pie equally among all households yields a big net plus to lower-income families.

This fee-and-dividend approach, pioneered by Citizens Climate Lobby, is income-progressive because lower-income households spend fewer dollars on fuels (directly plus indirectly) than wealthier households. Fuel price shocks, on the other hand, are regressive because lower-income households spend a larger share of their budgets on fuel.

If these points appear contradictory, please study the donut chart at right, or consult our page, Ensuring Equity. It’s the dividend that makes carbon pricing progressive, and the lack of a dividend that makes oil shocks regressive.

Q2: How big a hit are U.S. consumers taking from the higher fuel prices?

A2: A pretty big one, though it’s probably transitory.

In 2019, the last pre-pandemic year, the U.S. consumed 32.2 quads of methane (“natural”) gas and 43.5 quads of petroleum products. (A quad, or quadrillion Btu, is a standard metric for characterizing enormous energy quantities.)

Methane gas is used for power generation, heating of homes and commercial buildings, and as process heat for industry. Petroleum products encompass not just gasoline but home heating oil, diesel fuel burned by large trucks and machinery, kerosene for aircraft, residual oil for large commercial ships, propane for heating (largely in rural areas that aren’t connected to gas lines) and lubricants. Non-gasoline fuels typically account for a little over half of petroleum usage, with gasoline a bit less than half. (CTC’s carbon-tax model breaks down a lot of these uses.)

On a per-btu basis, i.e., for an equivalent amount of heat or energy, petroleum products are far more costly than methane gas. Gasoline at $4.00 a gallon, the approximate national average pump price in early March, equates to $32 per million Btu; whereas during 2016-2020 methane gas averaged only a little more than $2 per million Btu at the wellhead and $6 delivered to the average customer. (Yes, refining crude oil into petroleum products is really costly.)

We made a back-of-the-envelope estimate of what the disruption of global energy markets due to the Russian invasion of Ukraine is costing U.S. consumers. We assumed a 15 percent rise in petroleum-product prices, along with a 50 percent rise in the wellhead price of methane gas as profit-maximizing owners diverted some supplies to LNG tankers bound for Europe. With these assumptions, the impacts on U.S. consumers — businesses along with households — are in the neighborhood of $400 million a day for higher petroleum fuels and $100 million a day for costlier methane gas. (Gasoline accounts for “only” $150 to $200 million of the $500 million total.)

Mathematically, the total, around $500 million a day, works out to around $4 a day in added costs for an average U.S. household. With a robust carbon tax in place, the supply shock would be far smaller. Households wouldn’t be consuming as much oil, and the increased slack in the world oil business would shrink the opportunities for profiteering by oil owners and traders.

Q3: Is gasoline use sensitive to the price at the pump?

A3: More than most people think, though less than we wish.

We examined the price-elasticity of gasoline in 2015, in a post, What an Energy-Efficiency Hero Gets Wrong about Carbon Taxes. The post presented a linear regression model that correlated year-to-year changes in U.S. gasoline consumption with changes in economic activity (GDP) and in the real (inflation-adjusted) price of gasoline. Here’s what we wrote then:

We “regressed” the annual percentage changes in U.S. gasoline consumption from 1960 through 2014 on three independent variables: (i) the same year’s percentage change in economic activity (GDP); (ii) the same year’s percentage change in the average real retail price of gasoline; and (iii) the average percentage change in that price over the 10 years prior to the current year. The third variable was intended to reflect lags inherent in Americans’ responses to changing gasoline prices, insofar as automobile purchases and location choices that affect usage tend to change over years rather than weeks or months. The parameters may be referred to as income-elasticity, immediate price-elasticity, and lagged price-elasticity, respectively.

Imagine the benefits from impounding vehicles like these for the duration of the Ukraine War — or the climate crisis!

This week we updated the model with gasoline consumption and price data through 2021. Here’s what we found:

  • The  income-elasticity of gasoline consumption is a little over 0.5 (0.53, to be precise), meaning that a 1 percent rise in GDP is associated with a 0.5 percent rise in gas use.
  • The immediate price-elasticity of gasoline consumption is (minus) 0.11, meaning that it takes nearly a 10 percent hike in the average price at the pump to bring about an immediate 1 percent drop in usage; this validates the perception that in the short run. gasoline use is only barely responsive to price changes.
  • The lagged price-elasticity of gasoline consumption is (minus) 0.19. The sum of the immediate and lagged price-elasticities is (minus) 0.30, indicating modest sensitivity of usage to price over a longer time horizon. A sustained 10 percent hike in gasoline prices would tend to elicit a 3 percent drop in usage.

(Incidentally, this 3-variable model — actually, we used 5 variables, including “dummy” variables to isolate gas use in 2020 and 2021, the pandemic years — explains nearly 80 percent of the year-to-year variation in U.S. gasoline consumption.)

Here are four takeaways from our modeling:

  1. Holding prices constant, gasoline usage in the U.S. has been partly decoupled from economic activity, since two units of economic growth lead to only one unit of growth in gasoline use.
  2. U.S. gasoline demand isn’t entirely price-inelastic, though it is nearly so in the immediate (short) run.
  3. Over a longer period, demand for gasoline displays some price-sensitivity, suggesting that by raising pump prices, carbon taxes can have some sway over usage.
  4. Still, the relative price-inelasticity of gasoline indicates that even robust carbon taxes won’t have a big direct effect on usage; the bigger impacts will come from speeding the transition to electric vehicles and, we hope, fostering turns in the culture that promote and valorize reduced fuel use

Q4: How much could the U.S. cut oil demand, right away?

A4: By a lot. (But we won’t.)

In early 2002, not long after the Saudi-enabled attacks that destroyed the World Trade Center, I published a blueprint for achieving an immediate (“overnight”) 5% cut in U.S. oil consumption, with the reductions reaching 10% within six months.

I produced this U.S. oil-saving plan in early 2002, hoping to rally post-9/11 public opinion to slash U.S. oil dependence.

Given the reality that changes in capital stocks that underlie oil consumption — the cars people own, the cities and towns where they live — can’t change overnight, the booklet’s guiding idea was to “collectively change individual behaviors” that added up to the 19.3 million barrels of petroleum products being consumed daily in the U.S.

My thinking then was that behavior changes away from petroleum consumption could finally explode from niche to commonplace if the changes were hitched to a higher purpose — national security and patriotism, in this case. Bicycle commuting, carpooling, thermostat setbacks, electricity conservation would become widespread as their aura changed from fringe-y to patriotic.

Sadly, this never caught on. Our declaration “that we face a choice between love of oil and love of country” and our call to the Bush administration “to break with past policies of subsidizing oil consumption and treating every oil-consuming activity, no matter how discretionary or wasteful, as essential,” fell on deaf ears.

Today, U.S. oil consumption is greater than it was on 9/11. U.S. households, businesses and industry consumed an average of 20,540,000 barrels of petroleum products in 2021, around 5 percent more than the 19,700,000 barrels used daily in 2000.

If anything, calls to alter individual behavior to cut down on consumption of oil and other fossil fuels, whether for geopolitical purposes (to shrink Russian government and oligarch cash reserves) or for climate (to dial back carbon emissions), are frequently derided on the left as “lifestyle-shaming” and diversions from the “urgent task of system decarbonization.” In a New Yorker magazine profile of Sunrise Movement organizers earlier this month, for example, one activist dismissed Al Gore’s exhortation in 2006 to replace electricity-gulping lights because “even if you change all the light bulbs in the country, you don’t come close to preventing catastrophe.” In fact, multitudes of bulb swaps since then have helped flatten U.S. electricity demand, keeping hundreds of millions of tons of coal in the ground — this country’s biggest climate triumph to date.

We conclude this post with a screenshot of the opening pages of “Ending the Oil Age.” The full 44-page report may be downloaded here (pdf). Readers with an historical bent, take note: The report also proposed hefty taxes on gasoline and jet fuel that, in my telling, could replace the patriotic impulse to conserve petroleum as the murderous, petro-dollar-fueled attack on the World Trade Center began to recede into the past.

Pages 1 & 2 from “Ending the Oil Age.” Link to the report is in the last text paragraph, above.

Since climate progress is stalled, let’s unload on fee-and-dividend

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Someone chose an inopportune time to beat up on carbon taxing’s fee-and-dividend variant. Not U-C Santa Barbara political scientist Mitto Mildenberger, whose paper, Limited impacts of carbon tax rebate programmes on public support for carbon pricing, co-authored with scholars from Montreal, Vancouver and Bern (Switzerland), appeared this week in the prestigious journal, Nature Climate Change. No, I mean iconoclast blogger David Roberts, who used Mildenberger’s provocative paper as a launching pad to again dunk on carbon pricing and people who still hold out hope for it.

Roberts’ post, Do dividends make carbon taxes more popular? Apparently not., published on Monday on his Volts platform, gets off on the wrong foot right away, claiming:

Economists have long insisted that pricing carbon is the most efficient way to reduce greenhouse gases. For years, they hijacked the climate discourse, with untold money and effort put behind proposals for various increasingly baroque pricing schemes, to very little effect. (emphasis added)

Roberts may be right about efficiency and economists, but his description doesn’t fit climate hawks like Citizens Climate Lobby and Carbon Tax Center. We place our chips on carbon taxes not on account of their economic efficiency but because of their unrivaled potential to slash carbon emissions quickly in the U.S. — and also their global portability.

The meat of Mildenberger’s paper and Roberts’ post, distilled in their respective titles, is that in the only two countries with some form of fee-and-dividend carbon pricing, not just public support but basic awareness of the programs, particularly the dividends themselves, is middling at best.

We think this “finding” is both questionable and beside the point. Let’s take a close look at each of those countries: Switzerland and Canada.

Switzerland

Official Swiss notice of this year’s carbon dividend. At the current 1.09 exchange rate, 88.20 CHF = $96.14.

Switzerland’s carbon tax began in 2008 and reached its current level of 96 Swiss francs per metric ton in 2018. Converting metrics and currencies, that equates to $95 per ton of CO2, the kind of level that carbon taxers dream about. According to CTC’s carbon tax model, if the U.S. next year started a $15/ton carbon tax and ramped it up to reach $95 in 2030, emissions in that year would be 33% less than in 2005, taking us 2/3 of the way to the Biden target of halving 2005 emissions in 2030.

Not only that, a U.S. carbon tax at the Swiss level of $95 a ton would generate a carbon dividend in 2030 of $1,500 per person, even allowing for reduced emissions and a larger population and equal shares for children. Surely, a $1,500 carbon check — or, if you prefer (and we do) 12 monthly carbon dividends of $125 per person — would translate into strong and rising popularity, especially considering that a majority of people and households would be expending less than those amounts in increased direct and indirect energy costs.

That’s the straw man. The reality is that Switzerland’s $95/ton (U.S.) carbon tax will deliver only $96 in per-person dividends for the entire year. (See document at left, downloadable here.) That’s less than one month’s worth of what U.S. residents would receive under a full fee-and-dividend scheme for a Swiss-level $95 carbon tax. In that light, it should be no surprise that Mildenberger and his co-authors didn’t find residents of Geneva or Zurich dancing in the streets over their carbon dividends. In U.S. terms, Swiss residents’ 2022 carbon tax dividend is what Americans would get in 2030 from a piddling carbon tax of $5.50 per ton of CO2. 

Why the discrepancy? Why is Switzerland’s carbon dividend only 1/15 as great as what a U.S. dividend would be from a carbon fee of the same level?

Excerpt from Switzerland Federal Office for the Environment document, “The Swiss Approach to Carbon Pricing,” May 2021.

There are four big reasons. First, Switzerland’s energy consumption is far less per capita than that of the United States. Second, hydro-electricity rather than carbon-based fuels like coal and methane powers the country’s grid. Third, the Swiss carbon tax exempts transport and agriculture and more than half of Swiss industry (see graphic at right; full document here). Fourth, part of the tax revenue is siphoned off by businesses before the dividends get calculated.

No wonder, then, that Switzerland’s carbon dividend is so meager. Consider further that, as Mildenberger et al. point out, “Citizens receive their rebates as a discount on their health insurance premiums, with annual notifications about this monthly benefit through health insurance forms.”

Annual notifications through health insurance forms. This is reasonable, even enlightened, public policy. It’s also almost diabolically designed to obfuscate the dividend side of the carbon fee coin.

Canada

Canada’s carbon tax is far more complicated than Switzerland’s. When we last updated CTC’s Canada page, in March 2011, we characterized carbon pricing in the country’s 13 provinces as follows:

  • Six provinces, including Ontario and Alberta, were covered by the federal pricing scheme that would reach $50/tonne in 2023 — around $36/ton in U.S. terms — and then ramp up sharply to $170/tonne by 2030.
  • Four were deploying their own carbon tax, led by British Columbia, which inaugurated the Western Hemisphere’s first meaningful carbon tax in 2008.
  • Quebec and Nova Scotia were part of a two-country carbon cap-and-trade program that is anchored by California.
  • New Brunswick employed an output-based carbon pricing system.

Wording courtesy of UCSB Prof. Matto Mildenberger, lead author of the Nature Climate Journal article discussed here.

Given this patch-quilt, as well as the novelty of carbon pricing in most of Canada, it seems to us unsurprising that polling that commenced in February 2019 (and extended through May 2020, with five “waves” in all) would yield the mixed results reported in the Midenberger paper: upticks in two provinces, Ontario and British Columbia, and downturns in the other three, Quebec, Alberta and Saskatchewan.

The “core question” asked in the Canada polling, as described by lead author Mildenberger, who graciously shared it with us yesterday via email, is shown at left. The language is neutral, perhaps to a fault. It offered no affirmative spin, such as “Canada recently began taxing fossil fuels in order to protect the climate, with the money rebated in ways that will help households get ahead financially.” That kind of favorable tilt could perhaps be justified as necessary to counter the negative vibe surrounding taxation generally.

To be sure, that negative vibe is precisely what drives pundits like Roberts to deride carbon taxing, as he did in the second and third paragraphs of his post:

Over time, political experience with carbon taxes has highlighted a truth that should have been obvious long ago: carbon taxes are taxes, and people don’t like taxes. People don’t like paying more money for stuff.

More broadly, carbon taxes are an almost perfectly terrible policy from the perspective of political economy. They make costs visible to everyone, while the benefits are diffuse and indirect. They create many enemies, but have almost no support outside the climate movement itself. All the political intensity is with opponents.

We get it. We know full well the albatross that taxation always bears. But we also know that taxes on “bads” have been enacted into law. The U.S. government taxes cigarettes, as does every state. New York City taxes grocery bags, and Philadelphia and Berkeley, CA tax sugary soft drinks.

Obviously, taxing something as supercharged financially and culturally as fossil fuels is a much heavier lift, as evidenced by the absence of explicit carbon taxing anywhere in the fifty states. (We exclude federal and state motor fuel taxes, due to their tie-in to roads rather than health or climate; we also exclude New York State’s Petroleum Business Tax, though its support of NYC metro-area transit perhaps merits an honorable mention; conversely, New York City’s congestion pricing program, now scheduled to begin in 2023, will create a strong template for carbon taxing, as we’ve pointed out many times, including in The Nation magazine in 2019.)

So yes, carbon taxing — not fig-leaf $20/ton-and-no-higher carbon taxing a la Exxon or the occasional Republican, but a levy rising steadily to triple digits before 2030 — is hard stuff. But so is just about every other decarbonization policy or program, especially if done at scale.

Well-heeled NIMBY’s have whittled down wind projects for years; now, so too may supply-chain problems. Rooftop solar endures pushback not just from utilities and their high-wage unions but also from concerns that lower-income residents could gett stuck with higher utility bills. Only splinters of President Biden’s Build Back Better plan, which wasn’t going to be able to deliver its promised 50% cut in emission by 2030 anyway, will pass, thanks to one or two Democratic senators and 50 Republicans. Even the push to electrify everything may find its vaunted carbon benefits a good deal less potent than advocates imagine, an issue we intend to explore in a future post.

A record one-third of Americans in the latest “Global Warming’s Six Americas” are “alarmed” by climate change.

Still, though, the biggest misdirection in the Mildenberger et al. paper and the Roberts post may be their fretting over public opinion in the first place. The public doesn’t have to love carbon fee-and-dividend. It simply needs to embolden political leadership that will enact it (and the raft of complementary policies) into law and ensure that the fee, which shouldn’t be set too high to start, can keep rising over time.

Public opinion increasingly supports climate action, not tepidly but “with alarm,” as the latest Yale – George Mason opinion survey of “Global Warming’s Six Americas” attests (see graphic at right, and more detailed treatment with link here). It’s past time for carbon pricing naysayers to throw off their ideological blinders and get behind policies that can pass and deliver.

PS to David Roberts: Contrary to your Volts post, fee-and-dividend did not “los[e] badly in a public referendum in 2016.” What went down to defeat in Washington state was a sales tax swap of the carbon revenues, necessitated by the state’s constitutional prohibition against dividend-type state tax treatments. And what doomed the proposal was opposition from climate hawks who took umbrage at being leapfrogged politically, and in revenge brought in lefty heavy hitters to slime the measure. But that’s another story.

Huge hat tip to friend of CTC Drew Keeling for Swiss materials and perspective. Drew’s most recent Carbon Tax Center post, Rural disgruntlement, pro-climate complacency sink expansion of Swiss carbon tax, appeared in June 2021.

Renewables Conundrum: Wind and Solar’s Rapid Growth Isn’t Decarbonizing Fast Enough

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Encouraging reports keep emerging about growth prospects for renewable energy. The International Energy Agency’s November report, Renewables 2020: Analysis and forecast to 2025, projects that by 2025 electricity from renewable sources will surpass that from coal, the world’s biggest and dirtiest power source. Also last month, Max Roser, writing in Our World in Data, became the latest journalist to report that in most parts of the world, new wind and solar generating stations can make electricity more cheaply than new plants powered by fossil fuels.

The common driver behind both developments is renewable technologies’ impressive learning curves. Each doubling of cumulative installed capacity has brought a constant price decline, which Roser pegs at about 20% (see chart). The upshot, say Roser and others, is that large investments into scaling up renewable technologies will pay off with still cheaper prices, driving a “virtuous cycle” of ever-cheaper wind and solar power.

Fossil fuel power had its own learning curve, mostly from ever-larger generators, but these petered out a half-century ago. In the competition between carbon-based and carbon-free power, it seems the latter’s price advantage will only grow. This should ensure that the world’s new power supply comes mostly from zero-carbon sources — even without carbon taxes or other carbon-pricing measures.

These reports generated lots of enthusiasm. The British NGO Carbon Brief headlined its story on the IEA report, Wind and solar capacity will overtake both gas and coal globally by 2024. On Twitter, New York Times columnist Paul Krugman touted Roser’s cost curves as evidence of a “technological miracle” portending that “heading off catastrophic climate change now looks vastly easier than we could have imagined.”

Growth in renewables clearly is cause for optimism. But does it herald rapid decarbonization by itself, without aggressive complementary policies? Let’s consider.

First, the IEA prediction that wind and solar capacity will overtake that of gas and coal by 2024 doesn’t equate to these sources overtaking those fuel’s electricity production by then. Wind and solar generators have lower maximum capacity factors than the coal and gas power plants they are intended to replace. This puts the ascendancy of wind and solar over coal and gas in terms of electricity generated — the metric that matters for cutting CO2 — further off in the future.

Second, IEA’s renewables category included hydropower, which in 2019 generated twice as much electricity as solar and wind combined. (Current energy data in this post are for 2019 and are drawn from BP’s Statistical Review of World Energy, 2020.) But hydro isn’t going to grow much. The most productive sites have already been developed, and opposition is fierce in any case. Going forward, the heavy lifting for renewables must be done primarily by solar and wind.

Unfortunately, the evidence is strong that renewables’ exponential growth phase has ended. This shouldn’t be surprising. As I discussed in my June 9 and July 2 posts, nothing, whether it be technologies or bacterial colonies, grows exponentially — increasing by a given percentage each year — indefinitely. The one notable exception, and the iconic one, has been the steady doubling of the number of transistors on a computer chip, although, as engineering and technology blogger John Loeffler explains, even that exponential growth rate has begun slowing.

For both solar and wind electricity output, what was exponential growth has now entered the linear phase — increasing by a given absolute amount per year. My earlier posts make this clear at the global level. Since the U.S. is further along in developing renewables than most other countries, their contributions to energy supply here probably represent an upside of their global potential. And linear trends in both solar and wind electricity production now seem well-established for the U.S., as the chart at right shows.

Still, it’s fair to ask why, given the steady percentage drop in prices of solar modules noted by Roser, IEA, Naam and others, solar electricity production (for example) is no longer growing exponentially. There are two main reasons.

First, even with the downward pressure of the learning curve, the drop in the price of modules must level off, due to sheer arithmetic: as costs fall, the same percentage drop in costs translates to ever-smaller numerical drops.

Look again at the cost data from the “Our World in Data” chart at the top of this post, this time plotted on an arithmetic scale.

See how the declines in the cost of solar modules level off over time. World installed solar PV capacity currently stands at about 600,000 MW, with a price at the margin of about $0.36 per watt. Using Roser’s relationship of costs declining by 20% with each doubling of capacity, today’s costs are about $0.20 per watt less than five years ago, when world installed capacity stood at around 200,000 MW. If world solar capacity keeps growing at the historical rate, reaching 3,500,000 MW in 2050, its cost will have dropped only another $0.20 per watt — a decline of less than a penny per year.

The second and perhaps more important factor is that the cost of solar modules no longer dominates the total cost of PV installations. Solar projects require inverters, trackers, cabling and mounting, as well as labor and often land. Actually bringing each job to fruition also entails permitting, along with insurance and other business and contractual steps. While small-scale solar installations present somewhat different “balance-of-system” cost scenarios than utility-scale installations, the same general dynamics are at play in both.

Few if any of these balance-of-system costs follow steep learning curves. True, business arrangements have evolved toward greater efficiency as solar has expanded from its initial seat-of-the-pants basis. (This is true for wind power as well.) But these cost economies are finite and modest.

The result is that the total costs of new solar and wind energy facilities are levelling off, as shown in the charts below from lazard.com.

Source: Lazard.com, “Levelized Cost of Energy and Levelized Cost of Storage – 2020,” posted Oct. 19, 2020.

Moreover, these individual-facility costs do not include the costs to accommodate the variable nature of solar and wind power production, such as electricity storage (more on this below). Nor do today’s solar price reports or quotes include safe disposal of the panels once their useful life (of 25 years of so) is over.

Still, could renewables’ ostensible price parity (or superiority) versus fossil electricity augur a return to exponential growth for annual wind and solar additions?

Such a change would be shocking. Current growth trends are so robustly linear, and prospective declines in costs of new wind and solar projects are so gradual, that a shift back to exponential growth seems unlikely, at least under current market conditions.

Even the “monster wind turbines” that the New York Times said in a New Year’s Day headline were “upending the [green-power] industry” are more an extension of increases in turbine scale that have continually cut wind-power costs, rather than the harbinger of a dramatic price breakthrough that could accelerate renewables’ growth rate.

In addition to new policies that would favor renewables, two technological developments could change this picture.

One would be a breakthrough in electricity storage technology. A recent study by Jessika Trancik’s group at MIT estimates that dropping storage costs to approximately $150/kWh would allow variable sources such as wind and solar to fulfill all but 5 percent of electricity requirements — not quite a carbon-free grid, but almost. That would entail a roughly five-fold reduction from current costs, a development that energy blogger David Roberts believes may be closer than we think.

The other change would be increases in energy efficiency sufficient to allow the growth in renewables to slash fossil fuel combustion rather than simply cut down on its growth, even as the world replaces with carbon-free electric power the carbon-based liquid fuels that today power transportation and most space heating and process heat. Unless those energy requirements are reduced significantly, replacing them with electric power — as decarbonization requires — will vastly increase the quantity of electricity needed to power our economy.

Let’s assume that major conversions to electricity will be accomplished. How much will electricity demand grow? Projections vary (the uncertainties are wide), but it is likely that without extensive cuts in consumption, electrification sufficient to eliminate U.S. fossil fuel combustion will at least double electricity demand.

For example, Princeton University’s new, ambitious Net-Zero America modeling effort has concluded that all-electric scenarios eliminating U.S. carbon emissions by 2050 will require between a doubling and quadrupling of nationwide electricity generation. (See p. 75 of the linked report.)

This daunting increase range is broadly consistent with global projections by the U.S. NGO Resources for the Future, in its Global Energy Outlook, as well as estimates made with the En-ROADS simulation tool discussed in my July post. On a far smaller scale, it is also in harmony with the projection developed for my home state of New Jersey’s 2019 Energy Master Plan, that fully electrifying transportation and buildings sectors in that state will more than double electricity requirements by 2050.

If in fact U.S. electricity usage more than doubles by 2050, our total electric output then will reach 8,800 TWh. Yet wind and solar, growing at their current linear rate, are on track to provide the U.S. only about 1,550 TWh, or just 18% of that total, as our final chart indicates. Without concerted effort to change the current trajectory, most of the remaining electricity will come from combustion of fossil fuels.

The time left to phase out carbon fuels and avoid the worst effects of climate change is dwindling fast. Growth in solar and wind isn’t close to accomplishing that. Denying this borders on magical thinking. And bad magic at that, since it could undermine efforts to enact a powerful and potentially progressive tool to support U.S. decarbonization: a transparent and robustly rising price on carbon.

Ed. Note: The paragraph about “monster-size” wind turbines was added several days after this post went up.

Downturn in U.S. driving led 2020 global CO2 decline

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[Note: A Feb. 23 update to this post with full-year 2020 vs. 2019 data for all eight world sectors revised, downward, the shrinkage of U.S. ground transport carbon emissions that we had highlighted here. That revision is substantial.]

The world’s emissions of carbon dioxide from burning fossil fuels diminished by more than 1.6 billion metric tons in the first three quarters of 2020 from the same period in 2019, a decline of 6.3 percent. Fully one-fifth of the decline, 320 million tonnes, was due to the nearly 25 percent drop in ground transport in the United States, according to data compiled and made available this week by Carbon Monitor, an international collaboration of energy and climate specialists providing regularly updated, rigorous estimates of daily CO2 emissions.

The Carbon Monitor data, downloaded and reshuffled by Carbon Tax Center, reveal the sources and extent of the drop of emissions during the COVID-19 pandemic. In both absolute and percentage terms, the total U.S. year-on-year January-September decline — 514 million metric tons and 13.1 percent — outpaced the world’s other major emitting nations and regions. The percentage drop of 13.1 percent through September more or less guarantees that U.S. carbon emissions for all of 2020 will fall below year-2019 emissions by double digits.

Close behind the United States in percentage terms of decline were Brazil, with a 12.9 percent drop from 2019 to 2020, and India with 11.7 percent. But because U.S. emissions are so large in absolute terms, the tonnage drop here dwarfed that of India (225 million tonnes) and Brazil (44 million tonnes).

China was far down the ranks of emission reducers. From the first three quarters of 2019 to the same period in 2020, its emissions shrank by just 109 million tonnes, a decline of only 1.4 percent. Although China’s ground transport carbon emissions did fall by 15 percent — just short of the rest of the world’s 16 percent decline for that category — none of the country’s other major emitting sectors showed pronounced declines, except for domestic aviation, which fell by 26 percent. Omitting China from the calculations, world CO2 emissions fell by 8.4 percent over the three-quarter periods, though admittedly that construct is a bit like considering recent U.S. presidential popular votes without California.

Nearly half of the global CO2 decline — 787 million tonnes out of the overall 1,621 million tonne drop — was accounted for by reduced ground transport emissions. With truck traffic probably little affected by the pandemic, as indicated by the mere 3.4 percent drop in world carbon emissions from industry, the decline presumably is attributable to decreased use of passenger vehicles. The reduction in aviation emissions was even more pronounced, at 36 percent, as many air travelers deemed it unwise to spend hours in confined aircraft spaces, and teleconferencing filled in for most business travel. The reduction rate might have been higher still, but for “ghost flights” resulting from byzantine government regulations and financial incentives.

Same data as in first chart, shown by use. Ground transport emissions fell the most.

There’s something satisfying in seeing year-on-year carbon emission figures in negative-land, even as we can’t deny the enormous human and social suffering that not only accompanied but to an extent delivered the reductions. A global pandemic causing over 1.3 million deaths and rising, according to the count maintained by Johns Hopkins University, and stunting child development as “remote learning” replaces in-person schooling, to name but one societal forfeiture, is not the path anyone would choose to curb climate-wrecking use of fossil fuels.

Perhaps we could look to the European Union, which pulled off a nearly 14 percent drop in carbon emissions from power generation, accounting for an absolute reduction of 105 million tonnes thus far in 2020 vs. 2019. In contrast, Carbon Monitor’s “Rest of World” group — encompassing all countries other than China, India, USA, Russia, Japan, Brazil and the EU — shaved only 1 percent from its power generation emissions, a decrease of just 27 million tonnes from 2019 emissions of 2,775 million tonnes. A deep dive into the disparate reductions might be useful for devising abatement strategies going forward.

Slicing the 2020 declines in the world’s CO2 emissions.

This post only skates the surface of the data made available by Carbon Monitor. Their downloadable Excel file comprises some 36,000 entries: CO2 emissions for every 2019 and 2020 day (Jan-Sept) for five categories by eight countries or regions (some rows capture individual European countries: France, Germany, Italy, Spain and the UK). The daily data provide a quantitative window into that terrifying but bracing springtime period when lockdowns pushed emission rates in the US and other countries 20 or even 40 percent below year-earlier levels. The CM graphics (same link as above) are marvelous as well, as is an Oct. 14 article in Nature Communications by three CM staff distilling and interpreting their quantitative findings.

The second bar graph was added on Nov. 24. Drop us a line (email here) to share your own excavations of the Carbon Monitor data, or if you’d like us to send you our spreadsheet distilling CM’s data as used in this post.