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A Carbon Tax Makes Energy Costs Rational and Why We Should Do It Now

9/6/2020

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Carbon emissions are or will be controllable through control technologies despite industrial postures to the contrary.  Emissions of carbon are resulting in climate change with drastic consequences that have real and assessable costs.  Fossil fuel use is subsidized by the deferred costs paid by society – an artificial cost support with profound negative consequences.  When the real costs of fossil fuels are realized through a carbon tax, carbon emissions will drop drastically and the future of all will improve.

In 2018 U.S. greenhouse gas emissions totaled 6.7 million metric tons of carbon dioxide equivalents.  Total U.S. emissions have increased by 3.7 percent from 1990 to 2018.  Measured over the past 60 years, atmospheric carbon dioxide has increased 100 times faster than previous natural increases.  This is not an impending crisis – we are in the early stages of a catastrophic change in our environment that will injure us all.  We can change the outcome if we act swiftly, and the costs of such changes can be incremental and easily managed.
Picture
BP’s Largest Refinery in Whiting, Indiana
At one point the U.S. EPA published a social cost of carbon value of $45 per ton, then the Trump administration amended that value to between $1 to $6 per ton.  These values are critically important as they drive the evaluation of best achievable control technology (BACT) requirements in permitting of new facilities such as power generating facilities.  A low cost of carbon results in fewer carbon emissions control technology requirements so new facilities will be constructed that do not have these installations.  Other more scientific studies finding that the social cost of carbon is above $100 per ton of carbon dioxide pollution – about 100 times higher than the Trump EPA’s estimate. 

​Annual United States carbon emissions at 6.7 million tons per year (2018) and a cost of $100 per ton mean a cost to United States citizens of $670 million.  Carbon emissions are already tracked by EPA so accurate data exists.  Not realizing those costs now means the United States population is subsidizing carbon emissions.  Regardless of tribal representation, this is a government-sponsored handout to the fossil fuel industry.
Finding an empirical and accepted value for carbon emissions and managing that in a place where it is less susceptible to tribal politics is critical to moving forward and solving the problem.

Big Oil has a defensive posture making commitments to net-zero carbon emissions by 2050.  At the same time in 2018 Big Oil spent about $200 million per year lobbying for fewer federal regulations and funding ‘experts’ providing climate-change-denying arguments.  In 2018 Big Oil spent 1.3% of its budgets on renewable energy – a defensive posture against regulation, not a forward-thinking investment.  Big Oil is not the solution to the problem it creates.

​Although carbon tax advocates have proposed using these revenues toward the general budget – a political approach to making this proposal more palatable to the general public – a more informed solution will be to use these revenues to reduce atmospheric carbon.  Under this schema, the federal government would issue Requests for Proposals to sequester carbon to U.S. companies in a competitive format encouraging the development of U.S. technological capabilities and stimulating U.S. jobs.  The competition will stimulate innovation and provide platforms for the export of American technology.
​Implementing a carbon tax will provide an immediate and positive outcome:
  • Market forces will result in reduced renewable energy costs as sustainable energy facilities scale up production.
  • New industrial and power generating facilities will consider costs of carbon and incorporate control technologies to reduce or sequester it at the source at a lower cost rather than pay the tax, resulting in lower carbon emissions.
  • Coal-fired power generating costs will express the true cost rather than a subsidized value – and so sustainable power will then be even more competitive.  The end of fossil generating will occur faster, resulting in substantially lower carbon emission.
  • The green energy industry will develop as a result of natural markets rather than competing against the subsidized competition.
  • Consumer market pressure will compel more fuel-efficient management rather than artificially support industries – consider Amazon delivery of small items which is subsidized by cheap energy.
  • Habitat reduction will shift with carbon mitigation resulting in the preservation of natural resources.
  • The reduction of petroleum exploration and production will result in the preservation of natural environments – another intangible but substantial improvement.
  • The phaseout of coal-fired power generating facilities will result in lower emission of particulate and lower health effects on human populations – better public health.
  • The U.S. will become a leader in environmental protection rather than being perceived as a curmudgeon which is a significant benefit.
​A discussion of carbon emission rates can be found at https://www.climate.gov/news-features/understanding-climate/climate-change-atmospheric-carbon-dioxide.  More information about carbon can be found at https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2018.  A good primer for costs of carbon capture can be discovered at https://www.sciencemag.org/news/2018/06/cost-plunges-capturing-carbon-dioxide-air#:~:text=But%20such%20technology%20is%20expensive,that%20incentivize%20low%2Dcarbon%20fuels.  Information about the BP Refinery was obtained at https://www.fractracker.org/2017/12/global-oil-refineries-emissions/.  A proposed methodology for analyzing a carbon tax is presented at https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-115.pdf.  
2 Comments
J Lee
9/8/2020 10:45:02 am

Outstanding analysis!

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Mold Remediation Wisconsin link
4/27/2023 10:25:25 pm

Great sharee

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    The Investigator

    Michael Donnelly examines societal issues with a nonpartisan, fact-based approach, relying solely on primary sources to ensure readers have the information they need to make well-informed decisions.​

    He calls the charming town of Evanston, Illinois home, where he shares his days with his lively and opinionated canine companion, Ripley.

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