Global Warming Impact Fee … Has its time arrived?

Today, Democratic Presidential candidate Senator Dodd came out with a speech in which he called for a Corporate Carbon Tax.  While I have much in agreement with this, in reality, the nation should not have a “tax” but a fee.  A Global Warming Impact Fee …

Times have changed in DC and the nation when it comes to Global Warming.

When it comes to Global Warming, there is no question (at least in a reality-based world) that there has been global climate change already and that there will be more.  The questions are:

  • Just how bad it will be?
  • How drastic will the effects be? And,
  • What steps will be taken from individuals to the global community to turn aside from the worst scenarios.

Of course, the reality is that it will get worse.  There is a time delay from emissions to their global impact.  And, even in the most optimistic and aggressive scenarios, emissions worsen before they get better.

And, the challenge is not just in the developed world — moving industrialized nations (especially the United States) onto less polluting paths but also helping developing nations leapfrog polluting stages of industrialized life directly into a sustainable and prosperous future even while the world population continues to expand (peaking at ? billions?).

And, the reality of Peak Oil (whether it occurred last Thanksgiving at 3:45 pm or if it will happen in 2012) complicates the situation horribly as the hydrocarbon options for replacing oil as liquid fuel source are more polluting than burning sweet crude out of Saudi oil wells.

Thus, we need to get about Winning the Oil Endgame while drastically reducing our (global humanity) GHG emissions, if not figuring out a way to actually draw carbon out of the atmosphere and the oceans (to turn it into carbon fibers for building tomorrow’s infrastructure?).

We must recognize that we are where we are and try to create conditions to minimize just how bad it will get. Every day the situation worsens but we remain always with possibilties to turn the path toward mitigation of the extent of damage.  And, there are many real options for doing so.

Many business leaders expect there to be carbon taxes and thus would like them to be imposed so that there is certainty is a good sign.

This perfectly exemplifies the principle that we should Make the right choice the easy choice for:

  • Government, at all levels;
  • Corporations, businesses, and other organizations;
  • Communities and associations; and,
  • Individuals.

A carbon fee, of sorts, sensibly applied could provide a means for supporting this objective, turning people away from polluting coal and oil and toward more sustainable energy choices — globally. Thus, perhaps it is time for a carbon fee — globally.  As along the lines of the gas tax proposed in Energize America 2020 discussions, such a fee should be imposed gradually — but with certainty — over the course of a decade (or indefinitely?).

At what level would this work?  While perhaps something even stronger would work to mitigate global warming better, there are real limits of what might pass (especially in the United States). Understanding this limitation, perhaps the fight should be for something like $12 per year ($1 per month) per ton of carbon emissions. This would give a fee of $120 per ton at the end of that decade.  

How might this affect life?  Today, ‘dirty’ coal in the United States can be burned for electricity at as low as 2 cents per kilowatt hour (kwh).  This cost, however, does not account at all for all of the damage to the commons (long-term mining impacts, polluted air for breathing, mercury that ends up in the food system, and carbon in the atmosphere contributing to global warming).  Quite roughly, that dirty coal kilowatt hour equates to one pound of pollution.  Thus, for every $20 per ton of a carbon fee, this would equate to about 1 cent per kilowatt from dirty coal.  

In the United States, diry coal electricity can be quite profitable for Duke Energy and other producers of the world — produced at 2 cents and sold retail at an average of about 9.5 cent per kwh.  A few hundred billions of these and soon you’re talking real money and real profits.  A Duke Energy, knowing that their price would be hit by roughly .6 cents per kwh from dirty coal every year, year-in and year-out, would make decisions about investments for tomorrow’s power generation.  Do they want carbon sequestration?  How much can they do at 3 cents per kilowatt hour (the fifth year of the tax)?  Do they want to invest in wind power (which is roughly a 4-6 cent kwh production cost)?  Or, solar? Or, nuclear?  

The above is, of course, just for electricity.  What about other carbon pollution.  This carbon worksheet provides a way to learning one’s carbon impact — with number of pounds per activity. For example, a gallon of gas is roughly 22 pounds of CO2 from its roughly six pounds of carbon (plus carbon from its production …).  Thus, the $12 per ton, per year would mean roughly 3.5 cents Global Warming Fee per gallon, per year.  And, so on through all the energy system … While the $.03 is relatively low compared to calls for gas tax, this would be a sure $.30 over a decade.  there would be real impacts.

A known fiscal impact would enable Duke to plan and invest. As it would for everyone else in the economy. Thus, this would provide a steadily mounting level of fees that would enable all decision-makers (from the individual consumer to the major industry to national leadership) to make investment decisions, knowing with some certainly the future fiscal impacts of those decisions.  

And, this fee should be announced simultaneously by Japan, the EU (which already has about $26/ton of tax, as I recall), and the United States.  Path around Kyoto complaints of the developing world is that these nations — the principal importers in the world — should agree that all imports will be judged by this standard: if the originating country does not impose carbon tax fees, then the fee will be imposed on entry into their country. This would, IMHO, quickly get other nations in line.  Would China want the United States collecting Global Warming Impact fees on all imported goods for spending as the US government deems most effective or would it want control over these resources to focus their moves away from hydrocarbon dependence and to reduce pollution within China?

But, how to use the fees? This is to mitigate an issue of global and not just national challenges.

Perhaps 50% of the fees should be used — by agreement with an international monitoring — toward moving toward sustainable energy (energy efficiency, renewable energy), global warming mitigation (including carbon sequestration), and environmental action. All of this should be additive on top of what already exists.  And, there should be a commitment for perhaps 10% of that 50% (or 5 percent of the fees) to be dedicated toward programs for sustainable energy and global warming mitigation activities in the developing world.  

And, a large portion of that money should be spent to reduce the carbon impact of every citizen (but most aide to the least financially able among us) to enable everyone to reduce their carbon footprint every year so that there costs from increased carbon fees per ton would actually even out (if not lower) in terms of total costs.

Within the United States, the other 50% should likely go to a mix of putting the fiscal house in order (and enabling pay-as-you-go implementation of critical programs).

Business leaders’ comments suggest that there are major players in the United States who would feel the impact of such fees who are ready to deal with them.

There is a breath of fresh air when it comes to Global Warming and politics in Washington.  It is no longer be politics as usual and real potential exists to move America — and the world — toward a more sustainable and prosperous energy future.  

A Global Warming Impact Fee could be a key tool toward achieving that better tomorrow.

There will be action this year in Congress … and likely something that President Bush will sign. One item of discussion — that likely will not pass any votes this year — is the potential for a Carbon Tax.   Truth be told, we should be considering what is the proper Fee to be charging polluters for their rights to pollute the commons. And, then, figuring out how to use those funds to make a better world.


4 responses to “Global Warming Impact Fee … Has its time arrived?

  1. I love Chris Dodd…I just wish he and all the Democrats would get clever and not use the word “Tax” which makes people shudder with a primative fear.

    Perhaps he should call it a Carbon Rebate where the taxpayers get a rebate from polluters…to fix the environment they spoiled.

    We need to take a lesson from the Republicans and hide what what is being done (no matter how good!).


    The Clean Skies Act of 2003 (What a fraudulent name!)

    Among other things, the Clear Skies Act:

    Weakened the current cap on mercury pollution levels from five tons per year to 26 tons.

    Weakened the current cap on nitrogen oxide pollution levels from 1.25 million tons to 2.1 million tons, allowing 68 percent more nitrogen oxide pollution.

    Weakened the current cap on sulfur dioxide pollution levels from two million tons to 4.5 million tons, allowing 225 percent more SO2 pollution.
    Delay enforcement of smog-and-soot pollution standards until 2015.

    Allowed industrial buildings undergoing renovation, modernization, or expansion not to install machines that allow the building to come into current environmental standards compliance.

    By 2018, it would allow 450,000 more tons of nitrogen oxides, one million more tons of SO2, and 9.5 more tons of mercury than what would be allowed by enforcement of the Clean Air Act.[32]

    Better yet, charge polluters “Rebates” so large that taxpayers would get a real rebate to buy green energy and pay for thier health care.

    If the American public bought into “The Clean Skies Act” which was harmful, certainly we can sell “the Clean Environment Tax Rebate” which will benefit them more than they will ever know.

    Sen. Dodd, you’ve got to act a little Republican (dishonorable and downright sneaky) to get you well intentioned work done for the environment!

  2. Doug Snodgrass

    JRREAD-The Republicans have been very disciplined in this regard and have taken the art of MediaSpeak to an unprecedented level in recent years. If only the same energy would have been dedicated to good policy…

    Their propensity for crafting then repeating MediaSpeak ad naseum is eerily Orweillian. The problem that they’ve run into is that in using language in many instances to put a good face on items that had opposite repercussions, they’ve accelerated the mistrust that the public now has for them. Of course this mistrust is preceded by the fact that the overwhelming majority of the American public believes that they were misled into a colossal mistake of a war. And I can’t state this strongly enough: If our troops are still on the ground in 2008, the Republicans have absolutely no chance of winning the white house or a majority in either house. ZERO. In fact, the Democratic majority in both houses will increase significantly. The American public views Iraq as a Republican-owned disaster of monumental proportions, and there is no MediaSpeak that can change that.

    This brings us back to the issue of whether those in power should use these tactics of language. Today’s politicians live and die in the MSM world of short-attention-span theater. MediaSpeak is now a survival skill. The challenge is to craft policy that will stand the smell test so that if the lustre of the language wears off, the public doesn’t feel like they’ve been left holding a lemon.

  3. You operate under the assumption that corporations pay taxes.

    Corporations don’t pay taxes. Consumers pay taxes. If you make corporations pay taxes, consumers pay “higher costs”.

    Do you really want to put the GOP in the position of being the party that tells the truth: that the government is forcing upon the people a lower standard of living?

  4. Darren,

    Are you simply purposefully misleading?

    1. Do I say anywhere that I support Dodd’s titling with “Corporate”? Personally, I don’t get that.

    2. With the shifts of tax burden and corporate profits in the United States, there is some space where you are probably wrong. The share of taxes paid by Corporations has nose-dived while profits have skyrocketed. Have to wonder whether a rebalancing is viable.

    3. Real issue — as I raise — is how the raised money is spent. If there is a GWIF that, for example, is used to greatly reduce payroll taxes, people could have much better lives as they invest in energy saving options.

    4. Or, money could be used to help people/communities make the upfront capital investments to reduce their long term costs.

    5. You discount 100% (e.g., you give no value to), it seems, the improved standard of living through reduced pollution and its congruent improvements in health across society.

    Etc …

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