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What Are EVs Good For?

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This essay also appeared today in Streetsblog USA. The version here adds a table and line graph and a few explanatory words. 

U.S. electric vehicles are only slightly less harmful to the environment and society than conventional gasoline cars, according to a new in-depth analysis by researchers at Duke, Stanford, U-C Berkeley and the University of Chicago.

This surprising finding — a mere 10 percent difference between electric and gasoline vehicles’ lifetime externality costs — emerges from a detailed “working paper” that the team of researchers posted earlier this month to the prestigious National Bureau of Economic Research.

The paper, The Effects of ‘Buy American’: Electric Vehicles and the Inflation Reduction Act, includes the first attempt in a decade or more to monetize and aggregate automobiles’ primary direct harms: climate damage from manufacture as well as driving, along with crash deaths and non-climate pollution. EVs perform worse than GVs (gasoline vehicles) on three of these scores, according to the paper. Only on climate-damaging carbon emissions from driving do electrics triumph decisively over gasoline cars.

What’s keeping EVs from slam-dunk superiority over GVs? In a word, batteries. The batteries required to keep an electric vehicle moving make car manufacture far more energy-intensive for EVs than GVs, while their increment to vehicle weight — half-a-ton for a small EV, a ton or more for a standard large — renders EVs deadlier in crashes.

None of this comes as news to regular Streetsblog readers or aficionados of “car bloat” arch-foe journalist David Zipper. The new wrinkle in the NBER paper is its extensive monetization of harms. The paper suggests that the combination of EVs’ excess manufacturing energy and extra weight-caused fatalities undoes a third to a half of electric vehicles’ societal benefit from their lesser carbon emissions from driving. (See graph above.)

There’s more. Putting aside CO2 and climate, the NBER paper rates electric cars as worse polluters than gasoline cars when electrics’ associated smokestack emissions are properly counted. Yes, you read that right: the paper finds that particulate and gaseous emissions resulting from EV battery recharging are more harmful to health and the environment than gasoline cars’ tailpipe emissions — contrary to widespread faith in electric cars as an urban pollution solution.

Incremental vs. Average Emissions

Making sense of that finding starts with grasping that emission controls and cleaner gasoline — mandated by federal regulations that the auto and oil industry fought every step of the way — have slashed pollution from conventional autos compared to their 20th century precursors. I remarked on this enormous if underappreciated change in my tribute on Streetsblog to Brian Ketcham, the protean automotive engineer who died in August.

Data in table were used to derive bar chart, above.

Moreover, most U.S. power grids remain majority-carbon, notwithstanding wind and solar power’s rapid expansion. This means that plugging in an EV for recharging rarely summons additional power from non-carbon-based renewables or nuclear plants, since these are already running at their maximum capability. Rather, EV recharging anywhere in the 50 states tends to trigger increased output by gas- or coal-fired generators, especially the latter, which these days function as many grids’ swing generation.

The NBER authors’ pollution accounting meticulously (and correctly) assign those power plants’ incremental carbon and particulate emissions to the EVs. (Use of grid averages — the “default” in popular EV-climate discourse — isn’t just lazy, it greenwashes electric vehicles by crediting them with carbon-free electrons that should be allocated to pre-existing electricity usages.)

Despite my comfort with “incremental” rather than “average” pollution accounting — the approach I practiced in my long-ago career analyzing the U.S. power sector — I was still taken aback by the NBER researchers’ finding that EVs’ smokestack particulates and gases outweigh gasoline vehicles’ tailpipe harms by 6-to-1. But even dropping these “local damages” from the comparison, the other three harm categories combined give EVs only a 20 percent win vis-a-vis GVs. While that advantage ain’t beanbag, it’s a far cry from the prevailing conception of EVs as “green.”

It’s also a stark reminder of automobile dependence’s social unsustainability. Like it or not, the fact is that electric vehicles, though endlessly touted as benign, impose immense harms. And the NBER cost figures exclude the tens of thousands of permanently disabling car injuries each year (they only include fatalities), the health and ecosystem damage from the heavier EVs’ extra tire wear, and car culture’s budget-busting, soul-breaking impacts on Americans.

Also bear this in mind: The climate costs in the graph at the top of this post were calculated with a fairly aggressive “social cost of carbon” of close to $250. While the true cost of each metric ton of CO2  emitted today is probably higher — think of Hurricanes Helene and Milton, and the coming fallout from skyrocketing or unavailable home insurance, for starters — no country in the world actually prices (i.e., taxes) its carbon emissions at even half that rate. Using cost figures in the NBER paper, I’ve calculated that at any social cost of carbon below $150, the average EV is more harmful societally than the average gas vehicle.

That EVs improve only modestly on GVs under reasonably broad social accounting is sobering. Yes, their climate benefit is substantial, around 1.7 to 1 (throwing in manufacturing CO2 with driving CO2). But that ratio is miles away from a clean sweep. And with NIMBYs, NEPA and other obstacles to a truly green grid, it’s not going to rise very much for a while.

A caveat: cataloguing and estimating automobile externalities, while a feature of the NBER paper, wasn’t its focus, which was to evaluate the generous subsidies to EVs (and their batteries) in the Biden administration’s Inflation Reduction Act of 2022. The paper itself is technical and laced with jargon and I may not have grasped every nuance.

That said, here are the NBER paper’s key bottom lines on car harms, as I understand them:

  1. Based on current U.S. electric grids, and including vehicle manufacture along with driving, EVs are 40 percent less climate-polluting on average than gasoline vehicles (GVs).
  2. Adding in the costs of car crash deaths to the above climate (carbon) pollution costs, EVs in the U.S. are 19 percent less societally harmful than GVs, on average.
  3. Also adding “local” tailpipe and smokestack pollutants to the calculation in #2, EVs are only 10 percent less societally harmful than GVs.
  4. Finding #3 rests on figures in the NBER paper indicating that smokestack pollution from EV charging causes six times as much health and other harms as GV tailpipe pollution — a finding that warrants close vetting. (The NBER authors directed me to their model results but refused my entreaties for a more convincing explanation of that finding.)
  5. Results 1-3 omit non-fatal crash injuries (an omission favoring EVs), particulates from tire wear (also favoring EVs), geopolitical entanglements from oil dependence (an omission favoring GVs), noise pollution, and other physical and societal maladies from automobile dependence.
  6. Even with those omissions, the lifetime unpriced costs from both types of vehicles average more than $20,000, a figure that would tack on 40 percent or more to today’s average U.S. $48,000 purchase price of new automobiles.
  7. Findings 2, 3 and 6 assume a fairly aggressive “social cost of carbon” — close to $250 per metric ton of CO2.

Yes, EV harms will diminish over time as U.S. grids decarbonize. Nevertheless, the NBER paper suggests that progress in that direction has fallen short of green hype, and that on a broad social scoreboard EVs’ greater mass is undercutting electrics’ climate potential.

What Price Giant Wind?

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Belief that bigger is better — or, at least, a lot cheaper — helped sideline nuclear power. It now imperils wind power.

In July, at the first commercial-size U.S. wind farm under construction, near Martha’s Vineyard, a turbine blade split apart and fell into the Atlantic. In May and again in August, at the new Dogger Bank wind farm 80 miles east of England, blades broke off their towers and slammed into in the North Sea.

All three failures involved a mammoth new wind turbine design from GE Vernova, optimized to abundant offshore winds. The 13-megawatt turbines, dubbed Haliade-X by GE Vernova, a spinoff from the old General Electric conglomerate, are the world’s largest, and are nearly four times more powerful than the average wind turbine installed in the U.S. last year, and a full order of magnitude (10x) beyond typical windpower machines installed 20 years ago, according to U.S. Department of Energy data.

Photo of Vineyard Wind farm by Randi Baird. This image led the Sept 12, 2024 NY Times business section.

To be sure, dozens of other turbines at both wind farms are operating trouble-free and helping displace fossil-fuel generation, although the Vineyard Wind farm is now shut. The expected output of each 13-MW unit, 56 million kilowatt-hours a year, will let power grids pull back on incumbent fossil-fuel power plants that would otherwise spew 25,000 tons a year of climate-disrupting CO2, while maintaining wind energy’s meteoric growth. In Great Britain, wind turbines now stand neck-and-neck with power plants burning “natural” (methane) gas as the top electricity source, providing a third of Britain’s electric generation in the first quarter of 2024, according to Energy Advice Hub. In the U.S., although wind power’s kilowatt-hour production fell by 2 percent in 2023 — the first year-on-year slip this century — wind turbines are producing 40 times more electricity than two decades earlier and now account for 10 percent of the nation’s electricity generation.

Despite, or perhaps because of, wind power’s growing prominence, the concatenation of the three incidents is worrisome. The Vineyard breakage seemed to validate the fears of East Coast commercial fishers and other objectors to the large-scale offshore windpower development that has become a linchpin of regional and national drawdowns from fossil fuels. “Jagged pieces of fiberglass and other materials from the shattered blade drifted with the tide, forcing officials to close beaches on Nantucket,” the New York Times reported this week.

Indeed, the Times headlined its story on the Vineyard mishap, “Broken Blades, Angry Fishermen and Rising Costs Slow Offshore Wind,” adding the subhead, “Accidents involving blades made by GE Vernova have delayed projects off the coasts of Massachusetts and England and could imperil climate goals.”

What happened?

Why the blades broke apart isn’t yet clear. According to the Times’ story, GE Vernova has labeled the three incidents “one-offs rather than systemic flaws … but has provided few details about their causes.” The first failure at Dogger Bank, in May, resulted from “an error during installation,” a company spokesperson told the paper, while the second, in August, “happened because a turbine was left in a ‘fixed position’ during a storm.” Trade publication Maritime Executive reported that GE Vernova told investors that the Vineyard blade rupture resulted from a “manufacturing deviation” in the bonding of the blade at a Canadian production facility. But the company “declined to confirm any details about the blade[s] that failed at the UK wind farm and if [both] came from the same manufacturing facility,” the publication said.

[On Sept. 20, just hours after we posted this story, GE Vernova said it planned to downsize its offshore wind business with 900 job cuts, many at the company’s turbine factory in Saint Nazaire, France.]

A GE Vernova 13-MW wind turbine blade awaiting shipment offshore, photographed for NY Times by Bob O’Connor. Its weight is almost certainly double and perhaps triple that of conventional 3.3-MW blades.

The cause could be rooted in the sheer size of the blades and, perhaps, the rapidity with which the industry has scaled up. The blades on the Haliade-X offshore wind turbine are 50 percent longer than those on a representative 3.3-MW land-based wind turbine: 220 meters tip-to-tip for the 13-MW model, according to GE Vernova, vs. 148 meters for the 3.3-MW machine, per the U.S. National Renewable Energy Laboratory’s 2022 Cost of Wind Energy Review (pdf). The disparity in bulk is probably well over 2 to 1; if the blade shapes are the same, the ratio of their areas would be 1.50 squared, i.e., 2.25 to 1. If the bigger blades are thicker as well, their weight could be triple that of the conventional blades.

It may be that current technology can’t mass-produce such enormous objects to the quality required to withstand the stresses from constant rotation. Even slight manufacturing defects that smaller turbines could handle might be unforgiving for giantic blades.

This isn’t to say that advances in metallurgy, material bonding and non-destructive testing couldn’t restore reliability for giant wind turbines in the future. The checkered history of rapid size-scaling in the U.S. nuclear power industry may be instructive.

Boosting reactor sizes proved disastrous in the U.S.

Throughout U.S. nuclear power’s “bandwagon era” — circa 1957-1974 — the U.S. Atomic Energy Commission and reactor manufacturers subscribed to the idea that nuclear costs would enjoy pronounced economies of scale. Their rule of thumb was that any doubling of reactor capacities — from 100 to 200 megawatts (for so-called “pilot” plants) and, later, from 500 to 1,000 MW — should raise costs only around 50 percent, tantamount to a 25 reduction in per-kW costs.

(The 50 percent cost rise would equate to a factor multiple of 1.50. Dividing that by two, for the doubling in megawatts, would yield a per-kW cost multiple of 0.75, i.e., a 25 percent drop.)

This impressive scale-economy made sense — on paper. Costs tend to track equipment surface areas, while capacity is proportional to reactor volume, portending only a 60 percent rise in costs per doubling of capacity. (Mathematically, two raised to the two-thirds power is roughly 1.6. Why two-thirds? Because surface area rises with the square of length while volume rises with the cube.) This would dictate a 20 percent reduction in per-kW costs from doubling plant capacity. Other cost elements like siting, permitting, engineering, and project mangement would, it was thought, display steeper economies, lifting the overall per-kW cost reduction per doubling of capacity to around 25 percent.

These upbeat expectations from reactor upsizing motivated successive doublings in reactor capacities through the 1960s and into the 1970s. The size increases did cut per-kW costs (or, at least, they helped hold back the tide of increased costs to comply with increasingly stringent safety regulations), but with diminishing returns. My own empirical analysis of costs to complete U.S. reactors, published in 1981, found only a 13 percent drop in per-kW costs per doubled reactor size, even when controlling for so-called regulatory creep. That saving was only half as great as the AEC had posited. Worse, larger reactors took far longer to build than smaller ones, which tied up vast amounts of capital, postponed nuclear displacement of fossil-fuel electricity, and spooked investors.

Larger reactors also proved harder to keep in service, their “teething” problems sometimes persisting for decades. That troublesome era is now decidedly in the past. The U.S. nuclear power sector’s average “capacity factor” has climbed steadily from the post-Three Mile Island accident trough of 55-60 percent operability to nearly 90 percent since around 2000. Still, with investor losses, high utility bills and excess carbon emissions, the toll from too quickly upsizing U.S. nuclear power plants proved immense.

A mid-range carbon price would match cost savings from doubling wind turbine sizes

The scale-economy curve for wind power in the graph above isn’t statistically stout, having been extrapolated from a mere two data points for land-based turbines in the NREL Wind Energy Cost report referenced earlier. (Readers with additional data: please share it with us!) That said, it conveys a message: double the size of an individual wind turbine and the per-kW capital cost should diminish by 18 percent. Factor in greater productivity — I assume that each kW of capacity of the larger turbine produces 9 percent more kWh’s than the smaller one — and the overall cost per kWh of wind power (“levelized cost of electricity,” in industry parlance) falls by 25 percent with a doubling of the turbine’s megawatt size.

That’s no small saving for supersizing, though of course it requires that projects employing the extra-large turbines actually come to fruition. According to the most recent (Aug. 19) Nantucket Town and County 2024 Turbine Blade Crisis Updates page — the name alone is a telling indicator — all installation and operation of turbine blades for the Vineyard Wind project are on hold, though placement of towers and nacelles (the equipment-bearing structures topping each tower) is permitted.

For Vineyard Wind, then, and perhaps for the Dogger Bank project as well, paper savings from going large have become a cruel joke, at least for the time being. Putting that aside, I’ve calculated the theoretical carbon price that would raise the sale price of wind electricity by the same amount that a halving of turbine capacity raised its all-in cost. Rephrased as a question: How big of a carbon price would have to be baked into the cost of prevailing fossil-fuel electricity — assumed to be from the mainstay of the U.S. power system, a combined-cycle power plant burning methane gas — to compensate for sticking with prior 6-7 MW sized offshore wind turbines and, thus, foregoing the assumed 25 percent per-kWh cost reduction from doubling turbine sizes to 13 megawatts?

The answer is displayed in the text box at right: $72 per ton of CO2 (equivalently, $80 per metric ton, or tonne; these figures decrease somewhat if we factor in separate methane fees such as the levy enacted as part of the Biden Inflation Reduction Act).

In other words, a $72/ton CO2 price would have given the offshore windpower industry the same profitability enhancement it thought it would reap from doubling its wind turbine megawatt capacities . . . but without the heavy blow rendered by the multiple Haliade-X blade failures.

Granted, there’s no actual link between instituting robust carbon-emissions pricing and easing up on the impulse to push technological advances faster and faster. Even with a $72/ton carbon price, offshore wind turbines would still be in a size race.

The point, rather, is to illustrate the economic power of carbon pricing. If a $72/ton carbon price could raise wind farm profitability by the same degree as a huge and perhaps premature push into bigger frontiers, imagine the leverage that robust carbon pricing could exert on every sphere of economic and physical activity.

A Bitcoin Mining Exposé Strengthens the Case for a Carbon Tax

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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.

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.

Why This Week’s Other Breakthrough May Pay Off Faster Than Fusion

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While the world is abuzz with the news that a fusion laboratory in California recently generated more energy than the reaction consumed, a different breakthrough in Europe may portend bigger, faster progress on carbon emissions and climate: European national governments and the European Parliament have reached an agreement to tax imported goods and materials based on the carbon dioxide emitted in making them.

The levies will initially apply to imports of iron and steel, cement, aluminium, fertilizers, hydrogen and electricity, according to Euractiv, the Brussels-based pan-European news site specializing in EU matters, which also reported that the mechanism “will mirror the EU’s own domestic carbon price.”

That price — the price of emissions allowances traded on the European Union’s Emissions Trading System (ETS) — on Dec. 1 was 85 euros per metric ton, equivalent to around $91 per metric ton, or nearly $83 per short (U.S.) ton, a far higher price than the starting levies embodied in most U.S. carbon tax proposals. If “mirrors” means “duplicates,” imports from non-carbon-taxing countries may soon face steep charges indeed.

English translation: For the climate, as Europeans, we are constantly taking action. The European Union today adopted a carbon border tax. Our requirement to reduce greenhouse gas emissions will thus apply to the products we import. We are going forward!

With the agreement, which caps more than a year of negotiations, the European Union is poised to “insert climate-change regulation for the first time into the rules of global trade,” the Wall Street Journal noted. Pascal Canfin, chair of the European Parliament’s Environment Committee, was even more emphatic, telling the New York Times that “We are putting carbon and climate at the heart of trade.”

The Journal added that “The plan, known as the carbon border adjustment mechanism, would be the world’s first tax on the carbon content of imported goods.”

CBAM could become a breakthrough

What could make the EU agreement a climate breakthrough is the tantalizing possibility that carbon border adjustment mechanisms (CBAMs) may compel the United States, China and other major emitters to finally enact national carbon taxes or equivalent carbon-pricing mechanisms.

The initial step in this scenario, which the Journal says “the EU is expected to adopt in the coming weeks as part of a sweeping package of legislation [to] step up the bloc’s efforts to limit global warming,” is to tax imports of key industrial commodities like steel, aluminum and cement to the extent that the carbon intensity of their manufacture exceeds EU averages. Exporters then have two ways to avert the trade tax. They can cut down on the carbon emitted to produce their product. Or the country in which they produced it can tax carbon emissions to the same level as the EU’s carbon price.

The climate wins either way. The first way directly cuts emissions in the industrial sectors covered by the tax. The second cuts emissions indirectly, but far more broadly, via the carbon tax’s economy-wide incentives that steer all energy supply and demand away from fossil fuels by making the market prices for coal, oil and gas reflect at least some of their climate damage.

The announcement from Europe follows by less than a week the Biden administration’s transmission to the EU of a proposal suggesting “creation of an international consortium that would promote trade in metals produced with less carbon emissions, while imposing tariffs on steel and aluminum from China and elsewhere,” according to the New York Times.

While the Biden proposal is merely a “concept paper” and is being kept under wraps, the Office of the United States Trade Representative, which drafted it, has at least given it a name — the Global Arrangement on Sustainable Steel and Aluminum. The Times story called it “the first concrete look at a new type of trade arrangement that the Biden administration views as a cornerstone of its approach to trade policy … one [that] would wield the power of American and European markets to try to bolster domestic industries in a way that also mitigated climate change.”

The trade concept paper appears to embody the principles underlying the Clean Competition Act (S. 4355) introduced in June by U.S. Senator Sheldon Whitehouse (D-RI), perhaps Congress’s most indefatigable climate hawk, to tax both domestic and foreign manufacturers of steel, aluminum, cement and other industrial commodities to the extent that the carbon intensity of their manufacture exceeds U.S. averages.

(A July post here by CTC contributor Mike Aucott, A Novel Way to Price Industrial Carbon Emissions?,” has terrific details on how CBAMs would look from a U.S. perspective, and includes a link to a comprehensive  report by the Climate Leadership Council on the relative carbon advantage of U.S. industry compared to Russia, China and the authoritarian petro-states. In a similar vein is a September report from Resources for the Future that compiles carbon emission intensities of both domestic and foreign producers for 39 industrial sectors.)

As for nuclear fusion …

National Ignition Facility, seen from above. Its huge scale is indicated by three helmeted workers near foreground. Photo courtesy of Lawrence Livermore National Laboratory, National Ignition Facility & Photon Science.

We’re thrilled that on Dec. 5, the National Ignition Facility in Livermore, CA achieved an historic first in efforts to harness nuclear fusion, when their laser-driven fusion device, in a brief (100 trillionths of a second) burst, achieved “positive net energy” by generating a flow of neutrons carrying 3 megajoules of energy, exceeding by almost 50 percent the 2.05 megajoules the lasers consumed in the process, as New York Times science correspondent Kenneth Chang reported yesterday.

That’s terrific news for science and, maybe someday, human prosperity and global sustainability. It’s been a long time coming.

We’ve been reading, and dreaming, about the wonders of fusion power — seemingly low and short-lived radioactivity, impossibility of runaway reactions or meltdowns, abundant resource base (deuterium and tritium in seawater), and of course carbon-free — since the 1960s.

But for almost as long, we’ve been mindful of the dauntingly high hurdles that nuclear fusion must clear to ever operate on a commercial, global scale. As climate activist and author Bill McKibben usefully pointed out this week, “producing [the Livermore Lab] reaction required one of the largest lasers in the world.” Not only that, “the reaction creates neutrons that can destroy the very equipment required to produce it” through chronic embrittlement.

Amplifying those concerns, Arthur Turrell, deputy director for research and economics at the U.K.’s Office for National Statistics (ONS) Data Science Campus, and author of The Star Builders: Nuclear Fusion and the Race to Power the Planet, reminded listeners on the Brian Lehrer Show yesterday that for the Livermore Lab breakthrough to lead to the advent of commercial, global-scale electricity, it must be miniaturized and also made modular and scalable.

Perhaps this can happen someday, with enough time, money and commitment. But the march to that point will be measured not in years but in many — multiple — decades.

Consider that a quarter-century elapsed from the first sustained fission chain reaction at the University of Chicago, in 1942, to New Year’s Day 1968, when the first non-prototype nuclear power plants in the United States, Connecticut Yankee and San Onofre 1 (around 500 megawatts each), achieved commercial operation. And harnessing nuclear fission was a far simpler task than achieving breakeven with nuclear fusion, judging by the multiple order-of-magnitude scale differences between Enrico Fermi’s fission team — which operated in a confined space beneath the college football stadium! — and the enormous National Ignition Facility shown in the photograph.

Clearly, it would be folly to ease up on the multiple, synergistic programs to move the U.S. and the rest of the world off of fossil fuels, including implementing the Inflation Reduction Act of 2022 and progressing with carbon pricing. As Stephen Sondheim’s mythical, murderous barber Sweeney Todd pronounced, in a somewhat different context: The work waits!

No such thing as Green Bitcoin

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Call me a neigh-sayer, but the pretty horses decorating yesterday’s NY Times story about Argo Blockchain, Inc.’s “Green Bitcoin” venture can’t hide the oxymoron that lies beneath: no matter how many wind turbines and solar panels Bitcoin miners build or buy to run their ravenous processors, crypto is fundamentally filthy.

Image from March 22 NYT front-page Business Section. The caption read, “Wind turbines next to Argo Blockchain’s new facility in Dickens County, Texas; the site would be fueled mostly by wind and solar energy.” Photo: Carter Johnston.

The reason is straightforward: all the new green energy we can capture from the air and the sun needs to serve a higher purpose: replacing fossil fuels. Wind farms and photovoltaic arrays stop the combustion that’s causing climate change only when they take the place of coal- and gas-fired power plants. If they’re hooked up to Bitcoin computers, they can’t substitute for anything. The net gain for climate is zero.

To be sure, it’s better to run Bitcoin machines with renewables than with fossil fuels. But even 100%-renewable Bitcoin isn’t climate-positive, since the land supporting the new green stuff powering the Bitcoin mining is perforce unavailable to aid the climate. At some point — a year from now, five years on, ten — some other entrepreneur, one focused on renewables rather than crypto-currency, could have built the same arrays and dedicated their output to the grid. That would actually push out fossil fuel generation and achieve the carbon cuts the climate needs.

If it helps, think of the difference between the engineer’s perspective and the climate economist’s. The engineer counts X many kilowatt-hours of wind and solar feeding Bitcoin computers that draw the same X kWh’s and calls it a wash: “carbon-neutral.” The climate economist sees those figures but also debits the Bitcoin operation for the opportunity cost of its computer banks whose voracity renders the green kWh’s unable to take the place of fossil-fuel kWh’s. The “wash” that the engineer touts is actually the persistence of coal- and gas-fired electricity generation that will keep spewing carbon.

What I call the climate economist’s perspective is something I’ve cultivated lately, since I started rethinking the climate consequences of the closure of the Indian Point nuclear power plant, in New York City’s far-north suburbs. In 2020, in a post I called Drones With Hacksaws, I equated shutting a large source of essentially carbon-free electricity such as Indian Point to unleashing a swarm of hacksaw-wielding drones to lay waste to a hypothetical giant offshore wind farm by lopping off its thousand or more turbine blades. The climate consequences of the two acts were, I argued, identical, since both involved doing away with steadily-functioning zero-carbon power sources whose operation obviated the need to run carbon-fuel-burning power plants.

This photo of the Argo Blockchain electrical distribution panels ran below the horses picture in the NYT story. Powering them takes lots of juice.

Applying this perspective to Argo Blockchain helps us see that from a climate perspective, its wind turbines (and promised solar arrays) add up to nada. The potential climate good from the company’s green power sources is squandered in powering an artificial and unnecessary service. From a climate standpoint, Argo’s wind and solar arrays at best break even, rather than provide a net benefit.

The Times story missed a lot of details: how much electricity Argo Blockchain’s Bitcoin mining facility outside Lubbock, in northwest Texas, will consume; how much of it will come from the row of wind turbines visible in the distance; how much of world Bitcoin “demand” the facility will satisfy. But it did include these helpful pointers:

Crypto mining does not involve any picks or shovels. Instead, the term refers to a verification and currency creation process that is essential to the Bitcoin ecosystem. Powerful computers race one another to process transactions, solving complex mathematical problems that require quintillions of numerical guesses a second. As a reward for this authentication service, miners receive new coins, providing a financial incentive to keep the computers running.

In Bitcoin’s early years, a crypto enthusiast could mine coins by running software on a laptop. But as digital assets have become more popular, the amount of power necessary to generate Bitcoin has soared. A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to power the average American household for 73 days, researchers estimate.

Earlier this year, the New Yorker magazine writer David Owen used crypto mining as an object example in his Jan. 15 article, How The Refrigerator Became an Agent of Climate Catastrophe. After citing a 2011 U.S. Energy Department (D.O.E.) study touting massive carbon reductions from federal regulations upgrading refrigeration efficiency, Owen trenchantly pointed out that “In 2011, the D.O.E.’s forecasters presumably didn’t anticipate that improvements in energy efficiency would make it increasingly economical to power and cool the server farms that mine and manage cryptocurrencies.”

Owen’s article, which is well worth reading for its narrative power and climate relevance as well as its iconoclasm, was his latest exposition of Jevon’s Paradox, the phenomenon by which increases in energy efficiency lower the price of “energy services” and thus lead to more use, undercutting the efficiency gain. The antidote, of course, is to ensure the energy services — cooling, travel, lighting, and so forth — don’t plunge in price by raising the price of energy provision, as I pointed out a decade ago in a post in Grist, If efficiency hasn’t cut energy use, then what?

We could do that, of course, with a carbon tax.

When it comes specifically to blunting Bitcoin and other cryptocurrencies, there are three broad ways that carbon taxing could help.

Carbon taxing can at least nudge greenward the mix of power sources used by Bitcoin miners: less coal or gas firing, more wind and solar. That won’t make Bitcoin green, but it will lessen its climate-destructiveness.

Second, carbon taxing could cut into Bitcoin’s growth by increasing electricity distribution companies’ economic incentives to bid green power supplies away from cryptocurrency manufacturers, thus making Bitcoin mining cost more.

Last, carbon taxing could conceivably strengthen social-shaming of Bitcoin entrepreneurs and users by reframing crypto as a refuge for losers.

This notion, though admittedly speculative, would be the most enduring. There’s a range of consuming activities that need to be deemed off-limits on account of their unsustainability, destructiveness and uselessness: helicopter flights, driving giant SUV’s, monster-size homes. Crypto belongs on that list.

A Carbon Tax Can Put Zero-Carbon New Jersey In Closer Reach

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Note: This post has been updated from its original March 1 posting: new closing section, some “line edits,” new headline.

That was quite a feel-good story in Yale Environment 360 last week. The headline, On U.S. East Coast, Has Offshore Wind’s Moment Finally Arrived?, didn’t really rate a question mark, considering how the subhead brimmed with optimism:

After years of false starts, offshore wind is poised to take off along the East Coast. Commitments by states to purchase renewable power, support from the Biden administration, and billions in new investment are all contributing to the emergence of this fledgling industry.

About time. Early this century, I was an ardent proselytizer for wind power, “the only non-polluting means of generating energy that is commercially available on a large scale,” as I described it in an Appeal to the environmental community to support the Cape Wind project in Nantucket Sound in 2002.

Block Island Wind Farm south of Rhode Island, the first commercial offshore wind farm in the U.S. The 6-megawatt turbines stand 600 feet tall. Photo by Don Emmert / AFP via Getty Images, courtesy Yale Environment 360.

Sadly, in one of the worst NIMBY flameouts ever, the 470-megawatt Cape Wind project was set upon by well-connected Cape Codders like the Kennedy family and Walter Cronkite, keeping it from fruition. and creating a playbook for wind foes everywhere. Even a proposal to repurpose a mine-damaged Adirondacks mountaintop with a mere half-dozen turbines proved no match for preservationists who prioritized their views over sustainability.

But wind power’s political travails did help kindle my interest in carbon taxing. “If carbon fuels were taxed for their damage to the climate,” I mused in a 2006 article in Orion magazine, “wind power’s profit margins would widen, and surrounding communities could extract bigger tax revenues from wind farms,” helping ease the path to public acceptance and regulatory approvals. A few months after writing that, I co-founded CTC.

Wind power today

Today, though fewer than ten wind turbines operate at just two offshore U.S. sites, tens of thousands of onshore turbines together are generating 8 percent of U.S. electricity (based on preliminary 2020 data). Percentage-wise, Iowa led all states with 42 percent of its electricity production coming from wind in 2019. Texas (yes, Texas) led in absolute megawatt-hours from wind last year with a whopping 93 million megawatt-hours, nearly 28 percent of the U.S. total.

Now, the Yale story reports, “New York, New Jersey, Virginia, Massachusetts, Connecticut, Rhode Island, and Maryland have together committed, through legislation or executive action, to buying about 30,000 megawatts (MW) of offshore electricity by 2035.”

A quarter of those megawatts, 7,500, would be located off New Jersey’s Atlantic coast, a goal that NJ Gov. Phil Murphy affirmed in a statement last September announcing the state’s Offshore Wind Strategic Plan.

What physical scale do those 7,500 megawatts constitute? Let’s use as our metric the new crop of super-giant turbines. According to the Yale story, Vestas, Orsted and General Electric are today selling wind machines in the 12-14 megawatt range — an impressive notion, considering that not long ago the 3.6-megawatt Cape Wind turbines were said to be pushing the envelope.

These machines, which the manufacturers are selling today, are truly massive, with towers extending 850 feet above the ocean’s surface, and 350-foot-long blades.

Let’s stipulate 12.5 megawatts, since 80 of them conveniently multiply to 1,000 MW. Meeting NJ Gov. Murphy’s 7,500 MW target would then entail erecting 600 of these super-giants off the state’s roughly 115-mile-long Atlantic coast.

GE’s specs for its new ‘Haliade’ wind turbines.

If 600 huge windmills seem daunting, try multiplying the number by five. Yes, 3,000 mammoth turbines providing 37,000 MW from offshore wind is what could be required if New Jersey goes all-in for decarbonization over the next several decades, according to one energy vision that is a kind of apotheosis of the Green New Deal.

The idea of 100% Wind-Water-Sunlight

That vision is the all-renewables 100% wind-water-sunlight (“100% WWS”) conception propounded by Stanford physicist-engineer Mark Jacobson and colleagues, under the aegis of an NGO known as the Solutions Project.

The idea is for electricity to power all energy uses — not just lights and appliances and electronics but also cars, trucks, heat and industry. Even, eventually, aircraft, either through batteries or, more likely, hydrogen fuel manufactured by electrolyzing water. Electricity is both an efficient energy form for delivering “energy services” and the easiest to provide from all-zero-carbon sources: wind turbines, solar panels and other sunlight-based generation, and water power from rivers or tides.

The Jacobson et al. vision has been written about widely (here’s Jacobson’s 2014 TED talk; also see link to pdf paper at the end of this paragraph) and need not be rehashed here. We use it here as a benchmark. References are to the detailed 2015 paper by Mark Z. Jacobson et al., “100% clean and renewable wind, water, and sunlight (WWS) all-sector energy roadmaps for the 50 United States,” Energy Environ. Sci., 2015, 8, 2093 (14 MB pdf).

By The Numbers: New Jersey Offshore Wind in an All-Renewables Scenario (without a Carbon Tax)

  • 32,900 MW — New Jersey’s total 2050 “end-use energy load” under 100% WWS, expressed as megawatts operating continuously all year. From Table 1 of the Jacobson paper.
  • 288,204,000 MWh — New Jersey’s total 2050 “end-use energy load” under 100% WWS, in megawatt-hours. Calculated by multiplying the preceding MW figure by the number of hours in a year (8,760).
  • 55.5% — Share of New Jersey’s electricity to be provided by offshore wind, from Jacobson’s Table 3. Another 10% is assumed to come from onshore wind, for a total NJ wind percentage of 65.5%, which is consistent with Jacobson’s U.S. total of 50% (31% onshore, 19% offshore), considering the state’s small land area relative to its coastline. (Another 27.25% of the needed electricity in the 100%WWS scenario would be generated by utility-owned-and-managed photovoltaic arrays, with another roughly 3% each from PV installations on residential and commercial buildings.)
  • 160,000,000 MWh — New Jersey’s 2050 electricity to be provided by offshore wind. Calculated by multiplying the #2 and #3 figures above.
  • 50% — assumed capacity factor of the offshore wind turbines. That’s more than the 42.5% in the Jacobsen paper (Table 2, FN), but less than the 60-64% that General Electric optimistically touts for its 12-14 MW turbines.
  • 54,750 MWh — annual electricity from each 12.5-MW offshore turbine. Calculated by multiplying 12.5 MW figure by the number of hours in a year.
  • The result: 3,000 offshore wind turbines — calculated by dividing the #4 figure by the #6 figure. (The calculation yields 2,920, which we round to 3,000.)

Can this be done? Can New Jersey install (or, more precisely, organize and govern the installation of) 3,000 giant offshore wind turbines?

A robust carbon tax would let NJ dispense with 35-40% of the offshore turbines

When we posted this blog on March 1, we promised to estimate how much a robust carbon tax could trim the need for New Jersey offshore wind by trimming energy demand.

At the end of the first decade of a U.S. carbon tax starting at $15 per ton and rising annually at that rate, an estimated 37% of CO2 reductions would be from reduced demand/usage. The remaining 63% would come from decarbonizing electricity and fuels. Source: CTC carbon tax model.

We’ve now (March 12) done the calculation: it appears that a carbon tax starting at $15 per ton of CO2 and incrementing annually (and indefinitely) by that amount would achieve roughly five-eighths (63%) of its carbon reductions through fuel-switching, i.e., by swapping out fossil fuels in favor of renewables — wind turbines, solar panels, etc. The other three-eighths (37%) of the carbon reductions would come from reducing energy demand as a result of energy being made more expensive relative to other goods and services.

The latter figure — the 35 to 40 percent reduction — means that New Jerseyans could achieve 100% wind-water-sunlight energy provision with 35-40 percent cuts across the board in the amounts of wind, solar and water power that the Jacobson scenario would otherwise entail. The requirement to build 3,000 giant offshore wind turbines would become “just” 1,800 to 1,900.

April 10 postscript: What do we mean by “monster” wind turbines?

Friend of CTC Peter Jacobsen (no relation to Mark Jacobson; different spelling, in fact) tipped us off yesterday to the size matchup between what the New York Times recently called GE’s new “monster” wind turbines and the smokestacks of what was the largest U.S. coal-fired power plant until its closure in 2019 and demolition last year, the Navajo Generating Station in northern Arizona, near Lake Powell.

The Navajo plant smokestacks were 775 feet tall. Photo, courtesy Power magazine. GE turbine diagram courtesy NY Times.

Some folks view giant smokestacks and giant turbines as pretty much the same. Two decades ago, a newspaper story about a proposed wind farm outside Cooperstown, NY, near the Finger Lakes, closed with a quote from a Manhattan television executive who was retiring to a hilltop home in the area: “I think the towers would make my property worthless,” he said. “To see these giant towers near your house — it would be like driving through oil derricks to get to your front door.”

A few years later, I toured a nearby wind farm while researching an essay on wind power for Orion magazine. “To my eye,” I wrote, “the wind turbines were anti-derricks, oil rigs running in reverse. The windmills I saw in upstate New York signified, for me, not just displacement of destructive fossil fuels, but acceptance of the conditions of inhabiting the Earth.”

To perform calculation: Download CTC’s carbon-tax spreadsheet model (xls). Stay within the first “tab,” Inputs-Summary. In Col. I, make sure Rows 19, 22 and 27 are set to $15.00 and Row 21 is set to Linear. The 37% result may be found in Cell G224. We hope to update the model’s 2017 parameters to 2019 (pre-pandemic) levels by the end of May.

What does the cessation of renewables’ exponential growth augur for climate policy?

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World solar and wind electricity production data for 2019 have just been released, and they appear to confirm the trend we discerned in our June 9 post, How fast can solar push out fossil fuels?. Exponential growth appears to be finished for both of these pillars of renewable energy.

In this post we show that the linear growth pattern into which solar and wind have apparently settled, while impressive on many counts, isn’t steep enough to displace fossil fuels fast enough to avert climate catastrophe.

There’s no question that solar and wind have grown rapidly worldwide, stimulating hopes that these technologies represent a transformational juggernaut that can carry us into a fossil fuel-free future. Between 2000 and 2016 global solar electricity production grew at an average rate of 44% per year while wind electricity production, starting from a larger base, grew at 25% per year, according to the BP Statistical Review of World Energy, 2020.

A consistent increase by a constant percentage represents exponential growth. Continuation of the 2000-2016 percentage growth rates would lead to enough energy production to blow fossil fuels out of the picture within several decades. But a closer look reveals that solar and wind’s worldwide percentage growth rates have recently been declining. Figures 1 and 2 above show actual growth to 2016. Figures 3 and 4 add production that would have been expected through 2019 and this year as well if exponential growth had persisted, with the yearly growth percentages to 2016 remaining constant.

The takeaway from Figures 3 and 4 is that solar and wind appear to be transitioning from their early, exciting, exponential growth phase into a more settled linear pattern. In each year from 2016 to 2019 global solar electricity grew only by approximately the same absolute amount per year, not by over 40% per year as it had earlier. A straight line fits this recent trend well, indicating a linear (i.e., additive), not exponential (i.e., percentage) rate of increase. The same applies to wind.

That solar and wind growth should transition from exponential to linear shouldn’t come as a surprise. As I noted in my June 9 post, maintaining exponential growth over long periods of time is extremely challenging. Most technologies, after an initial exponential growth spurt, tend to grow in a linear manner, adding a more-or-less constant increment each period. This pattern fits U.S. automobile ownership, railroad track mileage and electricity production — despite consistent technological improvements — to name just a few technologies, and natural systems as well.

If the solar and wind transition to linear growth is confirmed over the next few years, how much electricity production are they likely to contribute by 2040? Linear growth would represent more-or-less steady production of a constant amount of new capacity each year, with the amount being a function of manufacturing capacity and other constraints such as siting and financing. Based on their 2016-2019 growth, the upper limits of future annual growth are 161 TWh/y for solar and 216 TWh/y for wind. (These are upper limits, at the 95% confidence level; mean growth rates for 2016-2019 were 132 TWh/y for solar and 153 TWh/y for wind.) Solar would then provide about 4,000 TWh to world electricity supply in 2040, and wind approximately 6,000 TWh, as Figures 5 and 6 show.

To put these future productions levels in context, we need to look at how much electricity production will be required. World electricity production last year totaled about 27,000 terawatt hours. That figure will almost certainly grow not only to spread prosperity to the one to two billion people who currently use little or no electricity, but to shift provision of transportation, heating and factory production to electricity from petroleum fuels on account of climate concerns.

In a recent report, Global Energy Outlook, the U.S. NGO Resources for the Future (RFF) reviewed and compared projections from some of the world’s leading energy institutions. Because many of the projections used different assumptions, RFF “harmonized” them to bring them into an apples-to-apples alignment. An approximate average of these projections is that world production of electricity will grow by 2040 to about 40,000 TWh. I myself derived a considerably higher figure for the same year, around 70,000 TWh, when I used the En-ROADS simulation tool developed by Climate Interactive, Ventana Systems and MIT Sloan School and set electrification of transportation, buildings, and industry to a maximum level. (Projections this far into the future are fraught with uncertainty but are nevertheless useful in framing the discussion.)

In a non-climate-challenged world, steady linear growth leading to a total 10,000 TWh of production from these two renewable sources by 2040 would be a worthy achievement. But it’s barely a third of today’s electricity consumption, and just one-fourth or less of the expanded generation that’s likely to be needed in that year. Without major changes that significantly accelerate development of low- and zero-carbon power sources, or that drastically reduce the need for energy, the “missing” electricity will come from fossil fuels, exacerbating the already ominous impacts of climate change.

Such major changes could include emergence of one or more disruptive new technologies, such as utility-scale storage cheap enough to ameliorate wind’s and solar’s intermittency, more efficient methods of harnessing solar, wind, and geothermal energy, a radically different, easily deployable version of nuclear power, or something else not yet above the horizon.  The need for new low-carbon tech was underscored this week by the International Energy Agency, whose new Clean Energy Innovation report concluded that “Without a major acceleration in clean energy innovation, net-zero emissions targets will not be achievable.”

Another major change could be a revolutionary policy that dramatically accelerates progress in energy efficiency and funnels significantly more funding to R&D of new power sources. One policy that could catalyze that is a steadily increasing fee on emissions of carbon dioxide. Pricing carbon emissions so that uses of fossil fuels include their true climate costs would incentivize development of low- and zero-carbon power sources and encourage the full gamut of low-carbon alternatives from energy efficiency and conservation to more-efficient and less-carbon intensive factories, transport and electricity. This could be done in an income-progressive, revenue-neutral fashion, as in proposed legislation H.R. 763, the Energy Innovation and Carbon Dividend Act, introduced early last year by Representative Ted Deutch (D-FL).

But the time left to phase out fossil fuels and avoid the worst effects of climate change is dwindling fast. After three consecutive years of incontrovertibly linear (additive) growth — extrapolation of which leads to scenarios falling far short of what’s needed to meet the twin imperatives of prosperity and decarbonization — the onus should be on renewables advocates to demonstrate why the world’s hopes should continue to be placed largely on solar and wind.

The Good News: A clean electricity boom is why the Clean Power Plan is way ahead of schedule

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We’ve just updated this post, replacing estimated 2016 electricity data with actual. The pdf in the link in the first paragraph has been updated as well. — C.K., March 22, 2017 

Today we released a new CTC paper (pdf) reporting and explaining what we call the good news of the U.S. electric power sector’s rapid decarbonization over the past decade.

The paper quantifies the power sector’s sizeable reductions in carbon emissions since 2005 and clarifies what accounts for it. We show that while substitution of fracked gas for dirtier coal contributed significantly to reducing emissions, a greater role was played by clean electricity: an up­surge in electricity production from renewables (wind turbines and solar photovoltaic cells), and electric­ity savings that caused electricity usage to flatten even as economic output increased.

Clean Energy = Electricity Savings + Solar + Wind

By the end of 2016, the U.S. power sector had reduced its emissions of carbon diox­ide by 25 percent since 2005, thus achieving nearly four-fifths of the 2030 carbon-re­duction goal set by the Obama Clean Power Plan. While this suggests the CPP goals were too modest, this is genuine progress, even if confined to electricity (omitting vehicles, refineries, industrial processing, etc.).

The good news gets even better: we estimate that 58 percent of the electricity sector’s CO2 reduction in 2016 vis-a-vis 2005 was due to clean electricity, and just 42 percent due to replacing coal with natural gas. This finding belies the prevailing narrative crediting fracked gas for reducing coal burning and lowering carbon emissions.

The electricity sector’s reduction in carbon emissions is good news not only because of its magnitude but because it effectively “banks” emission reductions against a slowing of progress looming under the Trump administration. The leading role played by clean electricity is good news because it comes without the climate-damaging methane emissions associated with natural gas extraction and transpor­tation, and because it signifies the emergence of a new energy economy built on inherently clean energy production and usage tech­nologies that can scale rapidly, economically and gracefully.

While this trend is heartening, far more is needed for the United States to meet its economy-wide car­bon-reduction pledge under the Paris climate agreement, especially in light of the rise in emissions in the transportation sector spurred by cheap petroleum fuels, which we’ve been reporting for two years. That surge underscores the need for robust carbon taxes to stimulate big emission reductions.

Key to the emission reductions is the the virtual leveling off of U.S. electricity usage and generation since 2005. Total U.S. electricity generation in 2016 was just 1 percent greater than the 2005 baseline. In fact, electricity generation and use for the entire post-2005 period has been remarkably constant, i.e., flat. This leveling of electricity generation over the past decade is a striking exception to the history of electric power in the United States, when electricity production and use doubled every decade from 1900 to 1970 and more than doubled again from 1970 to 2000.

Of course, the post-2005 period includes the Great Recession, whose epicenter was 2009 and from which the re­covery has been sluggish. It’s tempting to attribute the post-2005 flattening of U.S. electricity use to anemic economic growth. But that would be not only simplistic but mistaken. GDP grew by 17 percent during 2005-2016. As we show in the report, if the 1975-2005 relationship between growth in GDP and growth in electricity generation had continued after 2005, then electric output in 2016 would have exceeded 2005 output by 13 percent, rather than the mere 1 percent increase for 2016 over 2005.

What we’ve done in The Good News is quantify that difference, in both saved electricity and avoided carbon emissions. In terms of climate impact, the electricity savings in 2016 was roughly as consequential as the vaunted pushing out of coal-fired electricity by natural gas. Indeed, if not for the savings, much of the boom in fracked gas would have been in addition to continued coal consumption.

Our “Good News” report is data-intensive.

Important note for table: Sector-wide CO2 reduction in last cell (609 million metric tons) is smaller than sum of CO2 reductions credited to gas (371 million) and clean electricity (521 million) because latter figure credits efficiency for averting CO2 increases that would have resulted if electricity use had grown parallel with economic activity.

Why has electricity usage become decoupled from overall economic activity? Many factors have been involved, and they tend to be both overlapping and hard to quantify. They include a shift by young adults to urban living and delayed family formation; new energy-reducing technologies that are being adopted by a widening base of engaged customers (who in turn feed demand for these devices and systems); ratepayer-funded energy-efficiency programs along with governmental codes and standards for buildings, appliances and other end-use equipment, all increasingly backed by a support struc­ture of software, best practices, and monitoring and evaluation; structural changes in the economy including the shift from energy-intensive heavy manufacturing to service industries; emer­gence of a robust business sector that finds, finances and delivers money-saving efficiency improvements in commercial buildings and multifamily housing; and widening penetration of digital technologies in everything from energy management to product design, most notably in LED’s but also in thermostats and appliances. (See the report for fuller discussion.)

“Briskly Rising Tax” uses rate proposed by former U.S. Rep. Jim McDermott. Year 2016 isn’t shown because of graphic quirk in CTC model.

“Briskly Rising Tax” uses rate proposed by former U.S. Rep. Jim McDermott. Year 2016 isn’t shown because of graphic quirk in CTC model.

The progress to date in reducing electricity-sector emissions has been accomplished without a price on carbon pollution. Notwithstanding the election result, a carbon tax remains the most powerful policy tool for rapidly driving down emissions in the power sector and, especially, the rest of the economy. The chart at left illustrates just how fast a robust and briskly rising carbon tax could drive down electricity-sector emissions. Such a tax would accelerate the ongoing decarbonization of electricity supply by increasing the returns from substituting zero-carbon electricity sources for fossil fuel generation. The tax would further reduce emissions by dampening electricity usage through the charge it adds to electric rates; however, that effect would be relatively modest and transitory since the carbon content of each kWh would shrink over time, diminishing and ultimately zeroing out the tax base.

We’ve estimated that the carbon tax levels mandated under the McDermott bill would have reduced economy-wide CO2 emissions from fossil fuel combustion — not just from electricity but from motor vehicles, air travel, industry, etc. — by one-third within a decade. While the political hurdles are higher under a Trump administration, the need for a robust carbon tax remains at least as strong as ever.

Addendum, Jan. 11, 2017: Today, the Sallan Foundation published another take by us on this topic, Almost Unnoticed, Flat Electricity Demand Is Crushing U.S. Carbon Emissions. It has two new graphs and a bit more detail than this post outlining how and why U.S. electricity use has flatlined since 2005.

Elon Musk’s Powerful Case for a Carbon Tax

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Nov. 2 addendum: Read Musk’s carbon tax pitch, transcribed from Leonardo DiCaprio’s new climate change documentry, Before The Flood, at bottom.

Visionary inventor-entrepreneur Elon Musk is constantly in motion. Last week he was in Nevada checking on his Gigafactory, which purportedly will be the world’s largest-footprint building (as big as 107 football fields) and make enough batteries each year to power 1.5 million Tesla Model 3s. Yesterday Musk revealed his intention to merge Tesla Motors and SolarCity — a $2.6 billion wager that Tesla owners will use those batteries to store power from SolarCity panels.

This is big business, big climate and big vision rolled into one. Large-scale deployment of batteries could let solar and wind resources dominate electricity production without need for carbon-emitting grid support by fossil fuel plants. Replacing gasoline-powered autos with electrics will almost certainly squeeze carbon emissions out of transportation faster than biofuels or other low-carbon liquid fuels.

Elon Musk carbon tax meme _ 2 aug 2016In Nevada, Musk also spoke up for carbon taxes, though hardly for the first time. Four years ago, for example, at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, CA, Musk disparaged tax credits for green cars and declared that “the best method for addressing climate change in the automotive industry is to impose a tax on carbon dioxide emissions,” according to the trade journal plugincars. But what he said last week was so richly detailed and articulated that it deserves to be quoted in full.

As reported by Benjamin Spillman in the Reno Gazette-Journal, Musk was asked whether the Gigafactory would have been economically viable without over a billion dollars in state incentives, plus federal tax credits for electric vehicles and solar panels. He replied:

[I]f you accept the scientific consensus[,] every oil burning activity is subsidized, dramatically. If you believe there is a value to the CO2 capacity of the atmosphere and oceans and that CO2 capacity is not being paid for by the price at the gas pump or the coal that is being burned for electricity generation or whatever its use may be then every single fossil fuel burning activity is massively subsidized.

After reminding his Nevada audience that climate change “has become sort of an ideological issue because there are people who think that global warming is not true,” Musk continued:

[A]ll we are doing [with a carbon tax] is trying to match the inherent subsidy for fossil fuels . . . on the sustainable energy side. Fossil fuels are already getting a massive subsidy if you believe in global warming. If you don’t then [the subsidy] seems really unfair. If you do then it is like oh we are just trying to correct it.

But Musk was just warming up to the carbon taxing subject:

The real right way to correct [the subsidy] would be to establish a carbon tax. If you ask any economist they will tell you that is the obvious thing to do, put the correct price on carbon because we currently have an error in the economy which misprices carbon at zero or something closer to zero. It is a fundamental economic error.

He then turned to the supposed conflict between libertarian ideology and taxation:

For people that have a sort of libertarian bent they get a little confused. . . They need to appreciate the high level principle of why they are opposed to government intervention. They are actually opposed to government intervention because it causes false pricing. If the government says we are going to massively incent the production of corn, so that effectively corn gets mispriced and we make too much corn, that . . . does not benefit the country if you make too much of something because of a government driven pricing error . . . That is sort of what people with a libertarian bent are opposed to.

However if you have . . . an unpriced externality [with] the CO2 capacity of the oceans and atmosphere priced very close to zero then any government action to increase the price above zero reduces the error in the economy. [What libertarians] should actually be opposed to is anything that increases the error in the economy, a pricing information error. So pricing carbon, if you believe in global warming, does not increase the price of the error it decreases the price of the error.

Spillman tweeted these remarks, and Musk retweeted his approval:

Whether or not you identify as libertarian, you should savor Musk’s bracing clarity on (and for) carbon taxing. Maybe in time, other solar and wind advocates will bolster their customary pleading for subsidies with their own clarion call for carbon taxing.

Addendum, Nov. 2, 2016: Musk did a star turn in support of carbon taxes in the Leonardo DiCaprio climate docu, Before The Flood. This transcript is courtesy of EcoWatch. The film is up on YouTube through Nov. 6. Afterwards, only in theaters.

DiCaprio is in the Nevadan desert visiting the “gigafactory,” the latest project of Tesla founder Elon Musk. Once at full operation by 2020, the vast factory aims to be producing annually 500,000 electric vehicles and batteries/cells equal to 85 GWh/yr. Musk explains why this could be a game-changer:

Elon Musk: What would it take to transition the whole world to sustainable energy? What kind of throughput would you actually need? You need a hundred gigafactories.

Leonardo DiCaprio: A hundred of these?

Elon Musk: A hundred. Yes.

Leonardo DiCaprio: That would make the United States…

Elon Musk: No, the whole world.

Leonardo DiCaprio: The whole world?!

Elon Musk: The whole world.

Leonardo DiCaprio: That’s it?! That sounds manageable.

Elon Musk: If all the big companies do this then we can accelerate the transition and if governments can set the rules in favour of sustainable energy, then we can get there really quickly. But it’s really fundamental: unless they put a price on carbon…

Leonardo DiCaprio: … Then we are never going to be able to make the transition in time, right?

Elon Musk: Only way to do that is through a carbon tax.

What an Energy-Efficiency Hero Gets Wrong about Carbon Taxes

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It’s rare that critiques of carbon taxing are as quantitative as the post last month by David Goldstein on the Natural Resource Defense Council’s Searchlight blog.

Goldstein qualifies as a genuine energy-efficiency hero, in my book. He has spearheaded NRDC’s pioneering analyses of appliance engineering, manufacture and marketing since the 1970s and guided the council’s strategic interventions in utility governance and energy standard-setting in California and at the federal level. This in-the-trenches work has slashed power consumption and carbon emissions from refrigerators, air conditioners, light bulbs and building envelopes in all 50 states. Goldstein’s 2002 MacArthur Foundation “genius award” was richly deserved. (The Washington DC-based American Council for an Energy-Efficient Economy, ACEEE, merits a shout-out as well.)

Befitting his analytical bent, Goldstein’s critique sticks to the high road. No self-fulfilling taunts about carbon taxers’ naivete or the tax’s political infeasibility. His post does drag out a straw man, though, insisting up-front that “carbon emissions fees alone cannot solve the climate problem” — a position held by few carbon tax advocates. (We ourselves “recommend carbon taxes in addition to energy–efficiency standards.”) His criticism sharpens at the end: “In summary, carbon pollution fees, as a stand-alone policy, are incapable of doing much to solve the climate problem.”

Goldstein has certainly thrown down the gauntlet. He has four main arguments, which I’ll treat in order. Some math is involved, but it’s central to the issue.

Argument #1: Carbon Taxes Must Raise U.S. Energy Prices 44-Fold to Meet Our Carbon Targets

Let’s start with an assertion by Goldstein that is startling but accurate — mathematically:

If we wanted energy demand to drop by 85 percent [the minimum required for the U.S. to meet IPCC temperature-rise targets] due to price, the math behind elasticities shows that we would require a price increase of 44 times. This is an impossibility condition. (emphasis added)

Price-elasticity is how economists denote the extent to which a rise in price causes demand or usage of a good or service to diminish. Assuming, as Goldstein does for argument’s sake (and as we do in modeling carbon taxes), that the price-elasticities of the various forms in which energy is used in the U.S. have an average value of minus 0.5, then a doubling of energy prices, whether effected through a carbon tax or market fluctuations, will cause energy use over time to shrink by 29 percent. (See sidebar for calculations.) With two doublings in price, the shrinkage would be 50 percent.

Elasticity math. You can do it.

Elasticity math. You can do it.

Note that the second doubling in price produces less of a decrease in usage than the first, reflecting the famed Law of Diminishing Returns. Indeed, three doublings, increasing the price 8-fold, would only bring about an overall 65 percent drop in usage. To hit the 85 percent reduction target requires a 44-fold energy-price rise. Goldstein’s math is spot-on.

But not the use to which it is put. While an 85 percent reduction in energy use would indeed cure the United States’ carbon obligations (not to mention protect and conserve air, water and land), it far exceeds what’s required, thanks to the ongoing and parallel reduction in the carbon intensity of energy supply. This decarbonization of supply is prominent in energy and climate discourse, and has been evident in the electricity sector over the past decade. Measured as pounds of CO2 emitted per kWh generated, the emission rate for all electricity generated in the U.S. last year was 16 percent less than the rate in 2005. For that we can thank increased generation from lower-carbon natural gas and zero-carbon wind. (Solar electric generation, though growing very fast, started from a tiny base and wasn’t a notable factor in the decarbonization to date.) Energy efficiency has helped as well by reducing the need to fire up high-carbon coal plants.

A carbon emissions tax, which by its nature favors wind and solar over gas, and gas over coal, will help sustain and accelerate this encouraging supply-side trend. Indeed, the price-sensitivities built into CTC’s spreadsheet model imply that energy supply decarbonization will account for an estimated 53 percent of the overall projected CO2 reductions from any carbon tax. This means that reductions in emissions via demand, i.e., conservation and/or efficiency, that are Goldstein’s stock-in-trade need only accomplish a bit under half (47 percent) of the total task.

Price-Elasticity Curve for Energy-Efficiency Hero post _ 2 Sept 2015The relevant math, then, is this: Thanks to supply decarbonization, the U.S. can limit its reduction in energy usage to 59 percent and still achieve the 85 percent CO2 reduction target. While a roughly 60 percent reduction in energy consumption is still a tall order, it’s far less fantastical than 85 percent. Assuming energy price-elasticities average minus 0.5, that 60 percent reduction in usage could be effected with a “mere” 6-fold rise in energy prices. No 44-fold rise required. (See calculations at end of this post.)

 

Argument #2: A Carbon Tax High Enough to Be Effective Would Distort the U.S. Economy

To his credit, Goldstein appears to have anticipated my rebuttal above. He posits a 5-fold increase in energy prices, slightly on the easy side of my 6-fold rise, which he then dismisses on three grounds. Each is problematic, however:

1. “Energy would be pushing a fourth of GDP” (vs. today’s share of ten percent or less), says Goldstein, and, thus, would gobble up too much economic activity. The idea of expensive energy colonizing the economy is definitely a concern in a last-gasp laissez-faire economy in which the costly energy arises through “extreme extraction” of oil from the Arctic, deep waters, and tar sands. But a carbon tax would have the opposite effect, obviating most energy exploration, extraction, conversion, transport and combustion, in accordance with the 60 percent decline in usage posited above. In short, a carbon tax will make our society and economy less energy- and fuel-intensive, not more (while the energy barons, with their wealth clipped, will wield less political power).

2. A 5- or 6-fold increase in energy prices “is not politically possible. Electricity at 50 cents a kilowatt hour?,” Goldstein asks rhetorically. “Gas at $12 a gallon?” Here, Goldstein presumes that a carbon tax would lead to those lofty prices overnight, rather than phasing in over decades. In the latter scenario, the impacts will be softened, yet the price signals guiding long-term investments will be loud and clear. The impacts will be tempered further as the improved efficiency of usage lets businesses and households heat, cool, light and move with fewer units of energy. (Ironically, it was Goldstein and his NRDC colleagues who coined the mantra that what matters is electricity bills and not rates. Note also that CTC is on record criticizing proposed carbon taxes that would start with abrupt energy price rises, on account of the likelihood of economic dislocation.)

3. The carbon tax required to boost energy prices 5- or 6-fold “would be potentially devastating to the poor,” Goldstein argues. Potentially yes, if the wealthy are allowed to siphon off the carbon tax revenues that could buffer U.S. households from the higher energy prices. But the carbon tax designs with the most adherents are those that either use the proceeds to reduce regressive job-killing payroll taxes or distribute them pro rata to households as “fee-and-dividends.” In fact, the need for a socially and economically just distribution of carbon tax revenues only underscores the urgency for environmental progressives to coalesce now behind carbon tax legislation that can safeguard the 90 percent rather than solidifying the advantages held by the top 10 or 1 percent.

Argument #3: Energy Demand is Price-Inelastic, So a Carbon Tax Won’t Affect It

Goldstein next revisits energy price-elasticity in an attempt to show that its actual value lies closer to a barely behavior-influencing (minus) 0.1 than the more robust (minus) 0.5 figure he granted earlier for argument’s sake. But curiously, he builds his case on a commodity that no end-user actually purchases: crude oil. Refineries consume crude, of course, but the businesses and households whose decisions determine aggregate demand consume petroleum products: The fuels whose price-elasticities need to be estimated empirically are gasoline, diesel fuel and jet fuel ― not crude oil.

Over the years there’s been no dearth of claims by representatives of Big Green groups that changes in the price of gasoline elicit little change in usage. Most of these claims are either mere assertions or rest on cursory and selective glances at the data. Perhaps this year’s surge in gasoline sales will finally put that notion to rest: U.S. gasoline sales in the first half of 2015 were 3 percent above 2014 sales — the biggest year-on-year increase in gasoline demand since the late 1970s (subject to the caveat that the comparison covers only six months in each year). The driving force behind this surge isn’t economic activity, since GDP for the first half of 2015 grew only at a middling rate of 2.8 percent; the reason is free-falling pump prices. (NB: The original version of this post had first-half 2015 sales growth at 3.3% over 2014; that figure has been changed to 3.0%, with revised data. The assertion that this is the biggest increase since the late seventies remains valid.)

Year-on-Year Changes in U.S. Gasoline Consumption for Energy-Efficiency Hero post _ 25 Sept 2015In any event, the way to estimate gasoline’s (or other fuels’) price-elasticity is with multivariate regression analysis. Here’s a summary of the estimation I performed for gasoline for CTC’s carbon-tax spreadsheet:

Using an approach suggested by retired energy economist Vince Taylor, who earned his PhD at M.I.T. from Nobel laureate Robert Solow in the 1960s, and whose insights animated my 1981 magnum opus on nuclear power cost escalation, I “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.

Two “models” best fitted the data, both statistically and conceptually. (All variables were statistically significant.)

  • One model yielded an income-elasticity of 0.47; an immediate price-elasticity of (minus) 0.12; and a lagged price-elasticity of (minus) 0.21. The sum of the immediate and lagged price-elasticities was (minus) 0.34.
  • The other model added a “dummy” variable to adjust for an arguably atypical six-year period covering 2002-2007. This variable was premised on the unusually high discounts/rebates offered for SUV’s during that period, as well as America’s post-9/11 paranoia and Iraq War-inspired triumphalism that may have contributed further to higher purchases and use of SUV’s. (SUV’s average more gas per mile than sedans, of course.) The regression results were, respectively: +0.46, -0.13, -0.24, and +1.4%, indicating an income-elasticity of 0.46; an immediate price-elasticity of (minus) 0.13; and a lagged price-elasticity of (minus) 0.24. The sum of the immediate and lagged price-elasticities was (minus) 0.37. (We ignored the dummy variable as transitory; its inclusion in the model was to filter out influences that could distort the elasticity estimates. May 2016 addendum: we repeated both regressions with 2015 data added. The only change was a slightly reduced income-elasticity in the three-variable model in the prior bullet, to 0.46, from 0.47.)
  • From the two sets of regressions, we rough-averaged the respective price-elasticity sums of (minus) 0.34 and (minus) 0.37. The result, a figure of (minus) 0.35, is the price-elasticity we use in our spreadsheet model to estimate the long-term responsiveness of gasoline demand to a carbon tax.

In the CTC carbon-tax model we specify higher price-elasticities for other energy-use sectors: (minus) 0.5 for diesel fuel, (minus) 0.6 for jet fuel, and (minus) 0.7 for electricity. We premise them on businesses’ greater capacity to respond to higher energy prices than drivers’, and on our gleanings from the extensive literature of price-elasticity.

The takeaway? The price-elasticities of U.S. energy usage, while not necessarily high (all are below one), are not only much greater than what Goldstein suggests; they’re large enough to establish beyond any doubt that taxing carbon emission will indeed reduce energy usage, rather than merely punishing consumers into paying more for the same amount of energy.

Argument #4: The Best Path to Carbon Reductions is Prescriptive Energy Policies

So what is the Goldstein-NRDC solution, if not carbon emissions pricing? Here’s Goldstein’s prescription:

This [pessimistic] analysis does not apply to actually implemented or proposed cap-and-trade plans, such as the one adopted by California pursuant to AB32 or the one proposed in the Waxman-Markey bill, both of which rely primarily on non-price energy policies. The overwhelming bulk of emissions savings come from (1) improved building and equipment efficiency standards, (2) integrated land use and transportation system planning that meets goals for travel reduction, (3) emissions standards on fuels and vehicles, (4) requirements for utilities to purchase and integrate renewable energy sources, (5) regulatory reforms that encourage utilities to rely primarily on energy efficiency, and (6) a host of other policies that are independent of energy prices. Numerals added; otherwise quoted verbatim.

That’s NRDC’s credo in a nutshell, and much of it is admirable — particularly #1, which I touted at the start of this post; also #4, which helped jump-start the U.S. wind-power industry (though perhaps no more than did the federal Production Tax Credit for wind electricity), and #5, an effort in which I participated peripherally as a utility reform advocate at the dawn of the “demand-side management” era several decades ago.

On the other hand, it can be argued that the vaunted CAFE standards (#3) were only able to be legislated in the mid-1970s and ramped up several times since then because of rising gasoline prices — somewhat mooting the standards and demonstrating the power of prices that Goldstein largely discounts. Moreover, Goldstein’s #2 is stunningly squishy (“planning that meets goals for travel reduction”); yes, Goldstein had to shoehorn his description but the fact is that NRDC’s standards-and-regulations approach, which has proven so potent in making appliances more efficient, is powerless to rein in the use of vehicles.

The Crux

And therein lies the fundamental difference between Goldstein’s (NRDC) and my (CTC) respective approaches. Miles-per-gallon rules reduce carbon emissions per vehicle-mile driven, but they do nothing to affect the other half of the formula that equally determines emissions: the number of vehicle-miles driven.

In contrast, a carbon tax effectively makes every action that reduces fossil fuel use less costly, by raising the rewards from using less fuel. Taxing carbon will open up multiple paths that will influence the literally billions of daily decisions that determine energy usage and, hence, carbon emissions.

In driving, a carbon tax will affect whether and how far and often to drive . . . which car to take on a family trip . . . how high an mpg rating to demand in the next lease or purchase . . . and, at the societal level, whether public transit investments “pencil out” and might be prioritized over wider highways, and whether hyper-efficient car designs pencil out in corporate boardrooms and venture-capital spreadsheets.

Second Sidebar for Energy-Efficiency Hero post _ 3 Sept 2015

The power of carbon-taxing, in a nutshell.

The same goes for other energy-use sectors. Costlier diesel fuel will not only stiffen legislators’ and regulators’ spines in promulgating truck mpg standards; they’ll incentivize local and regional provision over far-flung shipping of food, raw materials and consumer goods, thus cutting down on freight-miles and resultant emissions. Rising electric rates — at least during the decades until carbon fuels are eliminated — will not only strengthen NRDC’s and ACEEE’s case for ever more-efficient appliances; their price pressures will help restrain the size and number of appliances sold and also motivate consumers to use them more efficiently.

Costlier electricity and natural gas will likewise discourage developers from building, and families from insisting upon, gargantuan homes whose outsize volumes must be heated and cooled. Not to mention that a carbon tax provides an antidote to the oft-postulated “rebound effect” by which increased energy efficiency, by reducing the implicit price of energy services, can engender greater energy usage and inadvertently cancel some of the intended savings from those efficiencies. A carbon tax acts as a direct brake on that implicit price reduction and, thus, on the rebound effect.

The point is clear: No other policy can match a carbon tax’s reach, or its simplicity. As we wrote last year in comments we submitted to the Senate Finance Committee concerning energy subsidies and pricing:

The U.S. energy system is so diverse, our economic system so decentralized, and our species so varied and innovating that no subsidies regime, no matter how enlightened, and no system of rules and regulations, no matter how well-intentioned, can elicit the billions of carbon-reducing decisions and behaviors that a swift full-scale transition from carbon fuels requires. At the same time, nearly all of those decisions and behaviors share a common, crucial element: they are affected, and even shaped, by the relative prices of available or emerging energy sources, systems and choices. Yet those decisions cannot bend fully toward decarbonizing our economic system until the underlying prices reflect more of the climate damage that carbon fuels impose on our environment and society.

Carbon Taxing Going Forward

Two carbon tax bills now before Congress — submitted by Reps. Jim McDermott (D-WA) and John Larson (D-CT) — ramp up the tax level steadily and predictably to reach triple digits (i.e., $100 per ton of CO2) a decade on. Our modeling suggests that either bill, by the end of its tenth year, will have reduced total U.S. carbon emissions from fossil fuel burning by more than 30 percent, vis-à-vis 2005 emissions — with the reductions rising as the tax level continues ramping up. As noted, a little more than half of the reductions will come about by sustaining and accelerating the ongoing decarbonization of the U.S. fuel mix, not just in electricity but by motivating increased electrification of sectors like driving that are now dominated by hydrocarbon fuels. The remainder will result from energy efficiency and conservation, i.e., reduced usage per unit of economic activity.

Such a carbon tax has myriad other advantages, including the ease with which it can be replicated globally, that no other approach can match. One unsung advantage is that taxing carbon harmonizes with other measures for reducing energy consumption and carbon emissions. My or other individuals’ energy-savings don’t undermine the tax’s effect on other economic actors ― whereas under cap-and-trade, autonomous energy-saving actions lower the price of the emission permits and thus attenuate the price signal. Likewise, a carbon tax reinforces the economic effectiveness of the appliance and vehicle and building efficiency standards so ably championed by David Goldstein and NRDC, just as those standards play an essential role in overcoming the market failures that are hard to counteract with price signals alone.

It’s 26 years and counting since my first carbon tax op-ed, and almost 9 years since I co-founded the Carbon Tax Center. We at CTC have long since abandoned the hope that NRDC or the other big green giant, the Environmental Defense Fund, would lead the charge for a U.S. carbon tax. We’re okay with that, but we ask our environmental colleagues to refrain from devising and attacking straw-man versions of carbon taxes.

We’ve never said that “carbon emissions fees alone can . . . solve the climate problem.” Rather, we believe that the climate problem can’t be solved without them.

Calculations for 9th paragraph in post: If decarbonization of supply is to account for 53% of the CO2 reduction, and reduction in usage for the other 47%, then K, the percentage change in usage needed to reduce CO2 by 85%, is calculated by the equation: K x K x .47/.53 = 0.15. That is solved by K = 0.41, which equates to a 59% reduction in usage. To effect such a reduction, assuming price-elasticity of -0.5, the factor increase in energy prices, M, is given by the equation: M^(-0.5) = 0.41. The solution is M = 5.95, denoting a 6-fold price rise.