Streetsblog Capitol Hill

Some readers took issue with yesterday’s post that characterized a carbon tax as a terrific but politically unlikely proposal, after the Obama administration shot down the idea last week. Putting a price on carbon emissions is, after all, generating renewed interest from across the ideological spectrum. Notably, the libertarian American Enterprise Institute is co-sponsoring a forum on the issue today with the left-leaning Brookings Institution, Resources for the Future, and the IMF.

Grover Norquist, accustomed to reducing politicians to cowering yes-men, has apparently become one himself. Photo: National Journal

And yesterday, Grover Norquist told the National Journal that the blood oath he extracted from a majority of members of Congress not to raise taxes wouldn’t be violated by a carbon tax — if it was accompanied by lower income taxes.

(Here’s the list of pledge signers in the current Congess [PDF] but here’s a tip: It’s quicker just to look at what Republicans didn’t sign — just 13 of them — and what Democrats did — just three. The numbers are lower in the next Congress, as politicians increasingly campaigned against the idea of making a pledge to Grover Norquist, instead of their constituents.)

Norquist only opened the door a crack, however. “It’s a conversation about what color unicorn you’d like,” he said of discussions about how to structure an income-for-carbon tax swap. “It would infuriate taxpayers.”

Apparently it also infuriated the American Energy Alliance — the political arm of the Institute for Energy Research, a think tank devoted to the promotion of fossil fuel development that’s funded in part by the ultra-right Koch brothers and their donor network.

“Grover, just butch it up and oppose this lousy idea directly,” AEA wrote in their daily newsletter today. “This word-smithing is giving us all headaches.” (Note: I don’t regularly read the AEA’s daily newsletter, so a hat tip goes out to ThinkProgress for breaking this news.)

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About 12 hours after President Obama won re-election, Bloomberg News ran this tantalizing headline: “Obama May Levy Carbon Tax to Cut U.S. Deficit, HSBC Says.”

A carbon tax could finally put a price on greenhouse gas emissions, but the Obama administration says it's not on the agenda. Photo: Boxoid

The article suggested that a $20-per-ton tax on carbon emissions, rising gradually over time, could help reduce the deficit by half within a decade.

Within the same story was the antidote to the optimism the headline may have evoked: The founder of the world’s biggest carbon trading exchange said Obama probably won’t seek to install such a program in his second term, but that something might be possible around 2020. As Philip Bump wrote in Grist, it’s best to take with a grain of salt what some guy from HSBC — based in Great Britain — says is a political possibility in the United States. “His finger might not be that close to the pulse of what the White House is thinking,” Bump wrote.

Indeed, the Bloomberg story cited absolutely no reason to think Obama was considering a carbon tax, except that it would be a good idea. And it certainly would be a good idea – incentivizing efficiency, raising revenues, and just maybe slowing the march toward catastrophic climate change.

Indeed, it might be our only hope. The day after the Bloomberg story ran, Oxford economist Dieter Helm wrote in The Guardian that carbon emissions are rising faster now than before the Kyoto Protocol was ratified (in every country in the world except the United States and Afghanistan) and the only way to make a real dent in it is to tax carbon.

But then the White House extinguished the flame of hope right quick.

“The Administration has not proposed nor is planning to propose a carbon tax,” a White House official told The Hill.

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Want to lower taxes? Reduce pollution? Promote savings and investment, rather than borrowing and spending?

Photo: Temple.edu

Well, perhaps the US could take a page from British Columbia. This Canadian province recently upped the pricetag on its wildly successful carbon tax. And, boy, is it paying off.

This $30 (up from $25) per ton tax on pollution has helped BC lower its corporate income taxes from 12 to 10 percent. And there was enough left over to lower income taxes on those making less than $119,000. To top it off, the program has reduced greenhouse gas pollution 4.5 percent in four years, even as the population has grown.

That’s according to economist Yoram Bauman and professor Shi-Ling Hsu in a recent op-ed for the New York Times. According to these scholars, this is a much more enlightened way to issue taxes:

Substituting a carbon tax for some of our current taxes — on payroll, on investment, on businesses and on workers — is a no-brainer. Why tax good things when you can tax bad things, like emissions?

Bauman and Hsu say it’s time for the US to get on board with carbon taxes. A BC-style carbon tax in the US would create $145 billion worth of revenue annually, Bauman and Hsu report. That money could be used to used to reduce individual and corporate income taxes by 10 percent. After that there would be enough left over to reduce estate taxes (to please those on the right) and payroll taxes (for those on the left).

Sound far-fetched? Well, if you recall the United States flirted with the idea of cap-and-trade, a different emissions pricing scheme, in the 2009 Climate Bill. Maybe someday, when Congress tires of jabbing each other with sharp objects, they might be well served to consider the British Columbia approach.

London Mayor Ken Livingstone is on a tear. Yesterday he announced a £500 million investment in new bicycling infrastructure. Today, he approved a plan to charge the drivers of SUVs, high powered sports cars and other large engine, high emission vehicles a £25 fee ($48.75!) to drive into Central London's congestion charging zone. Simultaneously, low emission vehicles will become exempt from paying the charge. In a press release, Livingstone said,

The CO2 charge will encourage people to switch to cleaner vehicles or public transport and ensure that those who choose to carry on driving the most polluting vehicles help pay for the environmental damage they cause. This is the "polluter pays" principle. At the same time, the 100 per cent discount we are introducing for the lowest CO2 emitting vehicles will give drivers in London an incentive to use the least polluting cars available.

BBC News has more:

The new charges come into force on 27 October this year.

Transport for London (TfL) estimates about 33,000 vehicles that will now fall into the £25 charge sector drive into London each day.

It predicts about two-thirds of these will no longer come into the charge zone once the new fee is introduced.

London's transport commissioner, Peter Hendy, said the new charges were likely to bring in £30m to £50m a year, with most of this money going on new cycling and walking initiatives...

...The National Alliance Against Tolls said: "This move is not based on logic but on the whipping up of prejudices against those who use these particular vehicles."

Photo: Bennet Summers / Flickr.

Barack Obama is a long-time cyclist (Photo: Chicago Tribune)

The current crop of Presidential candidates are busy debating the energy crisis, national security, climate change, health care, all of which potentially pose a serious threat to America's future. We can begin to address all of these issues simultaneously by transforming our cities into more sustainable communities and adopting the principles of complete streets. A modal shift away from the automobile toward more bicycle and pedestrian orientated streets will reduce our dependence on fossil fuels, slow the rise of C02 emissions and improve the overall health of Americans.

With the exception of John McCain, none of the Republican candidates seem to be interested in any of this. You may remember their colleague Patrick McHenry, Republican Congressman from North Carolina, who while debating a proposal for a $20/month tax break for bike commuters in the energy bill ridiculed bicycles as a "19th Century solution" to our current energy problems. The tax break was eliminated from a weakened version of the energy bill that was just passed by the Senate.

The Oregonian, however, has discovered that one candidate does understand the importance of this "old fashioned" form of transportation:

Portland's fervent bicycling community has discovered that Democrat Barack Obama is the only one of the Democratic presidential candidates who explicitly encourages bicycle transportation in his platform (and I didn't find much from the Republicans either, other than that Mike Huckabee rides his bike to the grocery store). Here's the relevant quote from Obama's energy platform:

As president, Barack Obama will re-evaluate the transportation funding process to ensure that smart growth considerations are taken into account. Obama will build upon his efforts in the Senate to ensure that more Metropolitan Planning Organizations create policies to incentivize greater bicycle and pedestrian usage of roads and sidewalks, and he will also re-commit federal resources to public mass transportation projects across the country. Building more livable and sustainable communities will not only reduce the amount of time individuals spent commuting, but will also have significant benefits to air quality, public health and reducing greenhouse gas emissions."

It's also worth noting that Chris Dodd is the only candidate with the guts to push for a carbon tax.

Congressional debate on climate change has revealed division among politicians on how to best regulate carbon emissions. From NPR's Marketplace, we get a report on the sharp difference between leading Democrats in both houses, Sen. Barbara Boxer (CA) and Rep. John Dingell (MI)

Boxer is quoted as preferring cap and trade, which seems to be most favored among politicians and big corporations as a way to leverage market forces to address climate change.

"I think cap and trade makes the most sense. When we pass legislation to combat global warming, we will not be hurting this economy. We will be helping it."

Dingell, however, favors a carbon tax as a more direct, visible and predictable means of reducing carbon emissions. He says,

To be fair, the economic pain must be shared all the way down to the consumer. And he says the way to do that is to tax anything that produces too much CO2. "This is going to be tough. And it's gonna cost, and its gonna hurt. In my view, probably the only thing that will really work. In all honesty, I'm not convinced that if you don't change people's behavior, you're going to change the way they behave."

The Carbon Tax Center has a page that explains why it thinks a carbon tax is the way to go. CTC co-director and Streetsblog contributor Charles Komanoff recently published a piece in favor of a carbon tax over at Gristmill. On the other side of the issue is the US Climate Change Action
Partnership, a group of major corporations and environmental
organizations in favor of a cap and trade system. Environmental Defense chief scientist Bill Chameides, wrote a piece in Gristmill as well laying out the case for a cap and trade system.

The debate between Carbon Tax and Cap and Trade is an important one that could lead to new federal legislation by the end of the year.

(Editor's note: Why do I always want to write it, "Cap'n Trade?")

The Atlantic Monthly's Matthew Yglesias argues that high-density living is a key strategy to fight climate change. Yglesias takes issue with fellow Atlantic Online blogger Ross Douthat and author Joel Kotkin, who defend suburban sprawl -- what James Kunstler has famously called "the most destructive development pattern the world has ever seen, and perhaps the greatest misallocation of resources the world has ever known." Reporting on a recent talk by Kotkin, Douthat writes:

The notion that Americans are moving back to downtowns in large numbers is a myth, Kotkin announced; instead, they're moving ever outward, into new exurbs and rural areas. The traditional unipolar urban downtown isn't going to make a comeback: Young couples with families can't afford to live there, and aging Baby Boomers don't want to. The American city of the future will be more of an archipelago of suburbs than the kind of one-downtown organism bred by the Industrial Revolution: "We aren't creating more New Yorks and Chicagos; we're creating more Los Angeleses."

Yglesias counters:

There's the paradox. The urbanist proposal isn't "hey, jerks, why don't you all move to dense downtowns." Rather, the proposal is something like "why don't we impose carbon taxes so that things like driving long distances and heating or cooling large detached structures are priced in accordance with their social cost? Why don't we stop having the federal government heavily subsidize driving cars as the preferred mode of transportation? Why don't we have more areas that allow for high-density zoning, thus reducing the cost of urban housing?" It's not that we urbanists are unaware that many people live in low density areas because its cheaper, it's precisely that we are aware of this fact that makes us believe that the "traditional unipolar downtown" could make a comeback.

Quite naturally, the combination of cars being invented, cars being massively subsidized, and governments being successfully lobbied by car companies to dismantle mass transit systems led to a massive shift in the direction of sprawl. But by that same token, if we step away from those policies to some extent we'll see a rebalancing in the direction of urbanism.

Quebec will become the first Canadian province to impose a carbon tax on energy producers. Bloomberg reports:

The provincial cabinet approved the tax in Quebec City yesterday, according to a statement on the Natural Resources Ministry Web site. Refiners including Valero Energy Corp.'s Ultramar unit and Royal Dutch Shell Plc's Canadian unit will start paying a tax of 0.8 cent a liter on gasoline and 0.9 cent on diesel on Oct. 1. Power producers such as state-owned Hydro- Quebec and gas companies will also be taxed.

"Everyone is talking about the environment; everyone wants to play their part," Natural Resources Minister Claude Bechard told reporters in Quebec City yesterday. "Well, the oil companies too have to play their part."

The province will direct proceeds from the tax to a "green fund" that will invest in commuter rail networks and other forms of mass transit.

Bechard said he expects that the companies will absorb the higher costs, though he "can't guarantee" that producers and refiners won't pass them on to consumers. The tax is based on the "polluter pays" principle. "That is not negotiable," the minister said.

Charles Komanoff of the Carbon Tax Center (and Streetsblog), while hailing the tax as a positive step, notes that it's extremely small, equating to little more than 1% of the tax level that CTC proposes the U.S. phase in over a ten-year period.

Photo: _EM/Flickr

The Independent reports that European CO2 emissions are rising not falling, casting doubt on the EU's touted Emissions Trading Scheme:

Europe's big polluters pumped more climate-changing gases into the atmosphere in 2006 than during the previous year, according to figures that show the EU's carbon trading system failing to deliver curbs. Critics said the data underlined the gap between the rhetoric of European leaders, who have promised to cut C02 emissions by one-fifth by 2020, and the reality of delivering reductions.

Yesterday's figures relate to the carbon produced in 22 nations by big industrial users that accounted for almost 93 per cent of emissions reported in 2005. The European Commission said that carbon output from these sources rose between 1-1.5 per cent in 2006 over the previous year. The statistics suggest the EU is still allocating too many carbon permits to enable the system to work properly.

Meanwhile, the Washington Post reports that an unlikely coalition is coming together in the US to support carbon taxes over emissions trading:

As lawmakers on Capitol Hill push for a cap-and-trade system to rein in the nation's greenhouse gas emissions, an unlikely alternative has emerged from an ideologically diverse group of economists and industry leaders: A carbon tax. A coalition of academics and polluters now argues that a simple tax on each ton of emissions would offer a more efficient and less bureaucratic way of curbing carbon dioxide buildup.

This same argument in favor of carbon taxes was recently put forward by Charles Komanoff of the Carbon Tax Center in a debate on Grist.org with "Dr. Bill" Chameides of Environmental Defense, who favors a cap and trade regime.

Streetsblog contributor Charles Komanoff, along with Daniel Rosenblum, today announce the foundation of their new organization, the Carbon Tax Center. The Center's mission is "to educate and inform policymakers, opinion leaders and the public, including grassroots organizations, about the benefits of and critical need for significant, rising and equitable taxes on carbon emissions from fossil fuels." My favorite part so far? The title of their e-newsletter, "An Inconvenient Tax." Check out their presentation above.

Why carbon taxes? Why a Carbon Tax Center?
Charging American businesses and individuals a price to emit carbon dioxide (CO2) is essential to reduce U.S. emissions quickly and steeply enough to prevent atmospheric concentrations of CO2 from reaching an irreversible tipping point. It's a basic economic principle that prices of goods and services should reflect ("internalize" as the economists say) all of the societal costs (such as pollution) that production of the goods or services imposes on society. Yet the prices of gasoline, electricity and other fossil fuels don't include many of these societal costs, particularly their impact on global warming. The necessary transformation of our fossil fuels-based energy system to reliance on energy efficiency, renewable energy and sustainable fuels simply won't happen without carbon taxes sending accurate and powerful price signals into every corner of the economy and every aspect of life.