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$1,000/ton by 2030?

Doug Grandt
Forum Posts: 25
Member Since:
March 27, 2014

Online

Given the craziness of the past few months in all aspects of the climate
activist life, I have been wishing my friends and family "Happy Holidaze and
Hopeful New Year", and just wanted to take a moment to share a few tid
bits that impact on this particular topic on the Q&A Forum, and thank Erika,
Stephen and Gary for expressing your thoughts.
I am adamant that a singular carbon price/tCO2 levied equally on all fuels
(varying only on the carbon content of each fuel) and all sectors is
unsubstantiated by fact and logic, and insufficient to impact anything but
coal. And coal is already in remission without a carbon tax! Hence, I believe
we need to focus on liquid fuels in cars, trucks, locomotives, jets and ships
independently to get effective reductions across the board. Buildings are a
separate issues and may have to be addressed as the tail of the
distribution with attrition as the central endgame.
We have not learned much since 1990-1991 when my Rep. Pete Stark
drafted and introduced his H.R.4805 — 101st Congress (1989-1990) on
May 10, 1990, then increased the price and re-introduced it as H.R.1086 —
102nd Congress (1991-1992) on February 21, 1991. Stark was told his
proposed rates were too low by CBO.*
*Refer to the paper "Designing a Carbon Tax: The Introduction of the
Carbon-Burned Tax (CBT)" pages 276-277 of Vol. 10 Issue 2 (1992)
of UCLA Journal of Environmental Law and Policy (UCLA School of Law): 

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D. Political Problems and Prospect
 
Enacting a carbon tax presents a major credibility problem. If
constituents believe that lobbying would result in the repeal of the
tax, then they would resist making the necessary investments for
achieving more efficient fossil-fuel use. If industry believes that the
tax will be short-lived, it will invest neither in currently available,
energy-efficient equipment nor in research and development for the
creation of more advanced technology. For an energy tax to affect
consumption patterns, Congress must convince the public that the
tax has been adopted for the duration. Otherwise, it may be
impossible for the tax to induce sufficient reductions in carbon
dioxide emissions. Utility companies would not switch from coal-
burning equipment. Transportation companies would not retool. Car
manufacturers would refrain from introducing ultra-energy-efficient
automobiles into their product lines because of fear that consumer
purchasing habits would not shift. [This is one response that Mark
Reynolds might have given to Fox News Mark Steyn's 2nd question
Bit.ly/Fox27Dec18]
 
So far, Congress has considered only one specific carbon tax
proposal, H.R. 4805, 101st Cong., 2d Session (1990) (reintroduced
invirtually identical form as H.R. 1086, 102d Cong., 1st
Session(1991)). This proposal, submitted by House Democrat
Fortney Pete Stark of California, proposes different rates for
different types of fuels according to their carbon content. The bill
also provides that the tax be imposed at the dock, mine-mouth or
well-head (i.e.,on the entity that introduces the energy source into
the economy). The bill would tax fuel producers who burn fuel on
their premises.
 
However, the Stark proposal does little to fine-tune the tax to actual
carbon dioxide emissions since, for example, it provides no
feedstock credit. Also, the Stark proposal probably sets the tax level
too low to affect a shift in consumption patterns away from energy-
intensive goods. Stark sets the tax at $30 per ton of carbon
contained in the fuel, much less than the $100 per ton tax the
Congressional Budget Office estimates is necessary to stabilize

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carbon-dioxide emissions at 1988 levels by the year 2000.[160]
Thus, the tax would probably be more effective in raising revenue
than in reducing carbon-dioxide emissions.
 
The Stark bill contains the following features: it indexes the level of
the tax to account for inflation, and it cushions the economy by
providing that the tax be phased in. However, the Stark bill lacks
provisions to account for imports and exports of intermediate and
finished goods, problems of decreased international
competitiveness, and enforcement.
 
The Stark proposal has been languishing in the House
Committeeon Ways and Means. It has no co-sponsors and its odds
of passage are low as evidenced by the passage of H.R. 438 in the
fall of 1990. This resolution expressed the House sentiment that
excise taxes on fossil fuels and carbon emissions should not be
imposed. Although the political chances for the Stark bill seem slim
at this time, there have been indications of bilateral public support
for some kind of carbon tax (though probably not at the level
required to influence consumption patterns significantly).[161]
Educating the public about the relationship between fossil-fuel
combustion and the greenhouse effect and its consequences
appears to be the most likely manner of garnering political support
for a carbon tax.[162]
 
Producers of clean fuels would probably experience gains relative
to the dirtier fuels (the natural gas industry, for example, would
probably be subsidized relative to the coal industry). As a
consequence, clean-fuel producers might lobby in favor of a carbon
tax,thus improving its likelihood for passage. Major opponents of a
carbon tax will include coal producers, coal-producing states, and
industries which have historically used the dirtier fossil fuels (e.g.,
the utility and transportation industries).
 
Given signs of public support for a tax that promotes environmental
goals, other specific proposals will likely be forthcoming once the
economic slowdown reverses. The political palatability of a carbon
tax can be improved to the extent it can be made progressive and

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broad-based. The public would probably favor a tax imposed at the
dock, the mine-mouth or the well-head as opposed to being
imposed directly on consumers.[163] Also, the smaller the tax, the
stronger the public support. If the issues of international
competitiveness and feedstocks can be addressed adequately, the
chances for passage of a carbon tax would improve. Some of the
aids to political palatability would further environmental goals (e.g.,
feedstock credit) while some may inhibit those objectives (e.g., a
public desire for a smaller tax). Care should be exercised that the
designers of the tax, in making it politically acceptable, do not
completely undermine the underlying environmental goals.
 
Take that historical (1992) view into consideration along with the very
recent assessment by Columbia | SIPA Center on Global Energy Policy
July 19, 2018, paper "Emissions, Energy, and Economic Implications of the
Curbelo Carbon Tax Proposal" 
 
Notable statements from Kaufman and his co-authors are good
benchmarks for HR-7173 and S.3971:
 
• The Curbelo proposal leads to the following economy-wide net
greenhouse gas emissions compared to 2005 levels:
◦ 27–32 percent reductions by 2025
◦ 30–40 percent reductions by 2030
• More than 2/3 of these emission reductions occur in the electric
power sector.
• Natural gas production is 2–3% higher in 2020 and 5–8% lower in
2030.
• Crude oil production is not significantly affected, and gasoline and
diesel prices increase by less than 10 cents per gallon.
• Among other factors, large and abrupt shifts in the power sector are
due to available and relatively low-cost abatement opportunities, such
as shifting dispatch from carbon-intensive coal generators to lower-
carbon natural gas or zero- emitting generators.
• Emissions from other sectors also decline under the Curbelo
proposal, but less than in the electric power sector.

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• Some sectors, such as buildings and transportation, tend to be slow
to respond to a carbon tax because of relatively small tax-induced
changes in prices, slow stock turnover, and other nonprice barriers.
• Because the Curbelo proposal abolishes the fuel excise tax, it leads
to small changes in transportation fuel prices and GHG emissions in
that sector. Finally, some emissions are not subject to the carbon tax
and in turn are little changed from current policy.
• Taken together, emissions from the rest of the US economy outside
the electric power sector decline slowly under the Curbelo proposal to
11–17 percent below 2005 levels by 2030.
• Curbelo proposal leads to little change in US petroleum production
relative to current policy (figure 5).
• With no substantial effect on petroleum prices (as discussed below),
demand, or international trade, petroleum production is essentially
unchanged.
• Production increases from approximately 14.5 million barrels per day
in 2020 to slightly more than 15 million barrels per day in 2030 in both
the current policy and Curbelo proposal scenarios. [Current
production is 11.5 million barrels per day.]
• renewable natural gas not subject to the tax becomes cost
competitive and begins to take market share away from conventional
fuels.
• [Energy technology and market assumptions] also includes additional
low-carbon technologies beyond those included in AEO 2017, such
as the availability of carbon capture and storage for industrial facilities
and renewable natural gas. [What exactly is "renewable natural gas"?
I can find no definition within the text or the notes.]

All this is to say that we really don't know to what extent or when Rep.
Carlos Curbelo's or Ted Deutch's respective carbon tax levels will impact
CO2 emissions, just as Pete Stark had no clue and built in provisions to
reduce the annual increases when emission reductions began to occur.
 
Most enlightening are comments made by Joseph Majkut (1:17:40 -
1:18:40) and Noah Kaufman (1:21:40 - 1:23:00) in the video on this
Columbia | SIPA page:
 

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"The Columbia University's Center on Global Energy Policy and the
Niskanen Center, hosted an event with Congressman Carlos Curbelo
(FL-26) to discuss the Market Choice Act, legislation he introduced that
day. After a 1-1 conversation between Congressman Curbelo and Jason
Bordoff, Founding Director of the Center on Global Energy Policy,
we moved to a panel conversation on the energy, economic and emissions
effects of the Congressman’s proposal and carbon pricing more broadly.
Our distinguished panelists included:

• Noah Kaufman, Research Scholar, Center on Global Energy Policy  
• Nat Keohane, Senior Vice President, Environmental Defense Fund
• Lynn Scarlett, Co Chief External Affairs Officer,  The Nature
Conservancy
• Jessica Hogle, Senior Director, Federal Affairs, PG&E Corporation 
• Moderator: Joseph Majkut, Director of Climate Policy, Niskanen
Center”

All of this does not seem overwhelmingly HOPEFUL, but what does give
me hope is the bill that my Junior Senator is presently finalizing and will
introduce in the very near future-possibly February or March judging from
conversations during the past 3-6 months. 
Apologies for being overly detailed, but I sincerely believe it will be and
wish you all a HOPEFUL NEW YEAR, whatever the direction the political
winds may blow and the direction we finally head.
Doug Grandt
Putney, VT
BTW, if you haven't yet read IOP Science publication "Assessing carbon
lock-in" and studied Figure 1, please do.

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