November 27, 2017
On Election Day 2016, when all our attention was focused on the elevation of Donald Trump to the presidency, another event occurred that should have been equally startling but was little-noticed. On that same day, while Trump was getting trounced by 16 points in Washington State, the same voters defeated a referendum to tax carbon by 59% to 41%.
How could that have happened?
A RUDE AWAKENING
About fourteen months ago, I shifted my life around so that I could spend less time on my lifetime activities in the publishing business and dedicate more time to addressing climate change.
I started out concerned about global warming; that was the catalyst. I quickly learned that the CO2 humans are putting into the atmosphere, primarily by burning fossil fuels, is the biggest cause of the problem and that effectively taxing fossil fuels, making them less commercially attractive compared to energy sources that don’t add to the CO2 load, was the first most obvious solution.
I found out soon after I started paying attention that there was a carbon tax referendum on the ballot in Washington State for a vote on the upcoming 2016 Election Day. As a new recruit to climate change politics, I was following that result (although almost nobody else I knew was).
Of course, I was extremely disappointed at the result, and puzzled at the variance from the presidential vote in what I figured was a pretty liberal state. Then I learned that the Sierra Club and other environmental organizations in Washington had opposed the carbon tax proposal. That explained the difference between the presidential vote and the referendum vote. But, as the saying goes, it also made my head explode.
Even with sixty years of political involvement, daily attention to The New York Times, and enough environmental awareness to be motivated to rearrange my life to help tackle the problem, I was still baffled trying to understand how the HELL this could’ve happened! Most of the smart people I know who don’t live in Washington State don’t even know to this day that there was such a referendum and they have the same reaction of stunned amazement when they are told that the environmental movement defeated this carbon tax.
What follows is a series of fundamental points I didn’t know — or didn’t grasp in a sensible context — when I started this effort. It is clear to me now that even very aware and very informed people are in the same boat I was. But we must all know these things to understand the challenge of CO2, the potential ways to address it, and the politics that make disappointments like Washington happen.
CO2 WILL DESTROY CIVILIZATION AS WE KNOW IT
The first thing to take on board is the unique nature of the CO2 problem among all our environmental challenges. The CO2 load we’ve already created will inexorably warm the planet. That will melt ice and raise sea levels and it will also increase disruption of normal weather patterns and foster more frequent extreme weather events. It could eventually (or even shortly) result in an uncontrolled methane release which will make things get hotter even faster. But, long before that, the sea level rise and the weather disruption will create climate refugees and food shortages that will overwhelm civil society.
So Fact Number One is: CO2 has the unique capability — even the likelihood — of killing enough of us and disrupting weather patterns sufficiently to destroy civilization. Plastic in the ocean won’t do that. Six Fukushimas — or even ten or twelve — wouldn’t do that. But CO2 will. It is Enemy Number One.
PUTTING A PRICE ON CARBON IS THEREFORE ESSENTIAL
The challenges of both curtailing the deposits of new CO2 and somehow removing existing CO2 from the ecosystem absolutely require that we “put a price on carbon”. The economists’ framing for this is that the negative effects of CO2 are “externalities” — costs we bear from burning carbon that are not “priced in” to the fuel itself. There are market-dedicated Republicans who recognize this as a “market distortion”; the “costs” of the CO2 are not accounted for so the market doesn’t “work”. Somehow or other, although we have never done it, we now have to put the societal cost of CO2 into the price of the carbon we burn. That was the point to the carbon tax proposal in Washington State. Virtually everybody who is aware of the CO2 load problem and the need to reduce fossil fuel consumption accepts the simple principle: “we have to put a price on carbon”.
THE TWO GENERIC APPROACHES: CARBON TAX AND CARBON CAP
There are two different approaches to putting a price on carbon.
Under a carbon tax, a fee is paid by the originator of the carbon to the government based on the amount of CO2 burning the fossil fuel will put into the ecosystem. The tax on coal, oil, or gas is assessed when the fossil fuel enters the economy: at the mine or wellhead for domestic production and at the border for imported fossil fuels. That tax is then passed along as an additional cost of raw material as the coal, oil, or gas is processed (if it is) and distributed.
Under a carbon cap, the regulating body for the area being managed (could be a country but, in fact, is often a US state or Canadian province or, increasingly, a group of them working together) determines a limit on the overall amount of CO2 emissions for which permits will be issued. In order to deliver this fuel, or perhaps to burn it, you must have a permit from the issuing body. Obviously, the intention is to keep reducing the amount of CO2 that is “permitted”. The “price” is determined by the market. The more demand there is for permits, the higher their price — money that the governing authority issuing the permits will collect — will be.
In a nutshell, the tax puts a predictable additional and constant price on the fossil fuel but we can’t know how much of a reduction in CO2 will result. The CO2 emissions can fluctuate. The cap puts a predictable limit on the amount of carbon we can emit but the amount it will cost for each ton of CO2 being permitted is determined by the market. So the price will fluctuate.
The carbon tax approach has the advantages of delivering more predictable pricing (important for businesses trying to plan for their energy costs well into the future) and being easier to understand for most people.
The carbon cap approach, of course, addresses the real problem — limiting CO2 — much more directly. Under a tax we don’t really know how much CO2 we’ll get and under a cap we don’t really know what additional costs will be put on the fossil fuels.
WHAT HAPPENS WITH THE MONEY: REVENUE-POSITIVE AND REVENUE-NEUTRAL APPROACHES
Either a tax or cap approach produces revenue. Perhaps it should be no surprise that how the money is used becomes the most contentious element of “putting a price on carbon” and, indeed, this is where important constituencies of the environmental community said they found fatal fault in the Washington State proposal.
The options are between the government spending all or some of the money that is raised (revenue-positive) or returning it completely to the people (revenue-neutral).
It is probably fair to say that a revenue-positive approach is favored by most climate activist organizations. They want to see the money used both to develop and promote alternative energy technologies and to address the inequities of prior pollution, such as dangerous air near where fuels are burned or polluted water such as we see in Flint. (Addressing these inequities come under the heading of promoting “environmental justice”.)
The revenue-neutral approach has been touted as a way to get conservatives who resist putting more money in the government’s hands to accept the price on carbon. There are proposals from two activist organizations (one non-partisan made up of climate activists and one partisan Republican driven by a market-based approach) to achieve revenue-neutrality. Both propose simply paying all the money back to people as a “dividend”, by household or social security number, for example. Revenue-neutrality can also be achieved with “tax swaps”, cutting some taxes on other things to put the cash back into the economy. That is the approach used by British Columbia with the revenue from its provincial carbon tax, for example.
Tax swaps can be progressive or regressive, depending on which taxes are cut to compensate for the CO2-pricing revenues. (Cutting sales taxes would be progressive; cutting income taxes so the higher brackets get a bigger benefit would be regressive.)
The full dividend approach appealed to me immediately. Not only is it simple and easy to understand, it is effectively income redistributive. Poor people usually burn less carbon than rich people. They will tend to get more money back than the tax costs them. People who fly a lot, heat or cool large spaces, or who own multiple dwellings are almost certain to pay more than they get as a dividend. Plus everybody individually is divvying up the money paid by corporations and governments in their carbon taxes.
Most “put a price on it” advocates accept that poor people have to be protected from a tax that will raise the cost of essential heating and transportation. This simple solution accomplishes that.
But it sticks in the craw of some very thoughtful and socially-conscious people that the money is not used to accelerate the development of renewables. The renewables industry and the climate advocates are natural and perpetual allies. It is not hard to understand why they’d be aligned on the notion that a chunk of carbon pricing revenues should be invested in the things they care about.
THE MOSTLY-UNDISCUSSED DYNAMIC OF A FULL DIVIDEND
If money is raised by taxing or capping carbon from the energy used by businesses, governments, and people, but all the money is returned only to people, most calculations reckon that two-thirds or more of people will get more from the dividend than the tax costs them. The income-redistributive aspect of this is often noted, as is the direct impact that will make people supportive of the idea.
What is seldom mentioned is an effect I call the “flywheel”. If we pass a tax that has the result of delivering more than it costs to 2/3 of the people, then we can expect a positive reaction from a big majority to any suggestion that the tax be raised.
This effect is not mentioned by either of the two biggest boosters of full dividend — the non-partisan Citizens’ Climate Lobby (with which I am an enthusiastic volunteer) and the avowedly Republican Climate Leadership Council. Each of them has a “forever” plan for carbon pricing that includes how the carbon tax would rise in the future. CCL’s starts lower and ramps up aggressively. CLC’s starts higher and only rises with inflation.
But both of them restrain their advocacy to carefully ignore — almost certainly intentionally — what seems to be an obvious dynamic. No big proposal remains untouched over time. If either proposal were enacted, after a year or two we’d have a new political environment with 2/3 of the people “profiting” from the tax. Certainly in that case the political circumstances for raising the tax would be far more favorable for a higher price on carbon than it is now!
Since I have encountered experts who have told me that we need to add at least $200 a ton to the price of carbon, using an approach which will foster support for further increases as we learn more (and experience more expensive climate-disruption events like we have in 2017) is very appealing. We don’t actually know for sure what price for carbon will force the consumption shifts we need. So it will be helpful to have political support if we find it needs to go higher. More people actually “profiting” from the tax creates a foundation for that future support.
One more concept that is important to understand around the challenge of managing CO2 is “drawdown”, which refers to pulling carbon OUT of the atmosphere and the oceans where it does humankind so much harm. The most straightforward form of drawdown is forests. Trees pull CO2 out of the atmosphere as long as they are growing. (They release the CO2 when they die, whether they rot or are burned.) Deforestation — clearing land for human habitation or agriculture — is a major contributor to our CO2 problem.
There are a variety of techniques for drawdown: either burying carbon or combining the CO2 with other elements so that it is no longer a global warming contributor. There is a book called “Drawdown” by Paul Hawkenthat explores dozens of these techniques and estimates their cost and potential for pulling carbon from the ecosystem.
The drawdown concept is being boosted by a growing campaign for “climate restoration”, which advocates that we must execute drawdown aggressively to leave the next generation a livable planet.
Some drawdown techniques, such as restoring critical ocean nutrients to allow more ocean-based photosynthesis, raise concerns that such “geo-engineering” could have deleterious consequences. Most responsible drawdown advocates recognize the need for careful testing and consideration of such efforts, but that doesn’t change the fact that there is an element of danger in fiddling with the ecosystem in these ways. Of course, there is already an element of danger in letting nature — as we have now unintentionally manipulated it with our centuries of unconscious geo-engineering— run its course.
Over the decades to come, we will definitely need to incorporate drawdown strategies into our CO2 management. Additional resources — funding — will be needed to explore the techniques, implement them, and to understand and manage the potential consequences we don’t yet understand. There are revenue-positive advocates who want to use carbon fee money this way right now.
FINALLY, A FEW NUMBERS FOR CONTEXT
One of the leading organizations sounding the alarm for CO2 management is called 350.org, headed by Bill McKibben. The organization is named for the number of parts per million of CO2 (which we have been measuring since 1950) that is our upper limit for safety, according to a calculation done some years ago when McKibben was naming his organization and asked James Hansen what that number should be. Hansen is the former NASA scientist who deserves singular credit for putting the whole global warming problem prominently into the public sphere with testimony he gave before Congress in the late 1980s. When Hansen gave McKibben the number, the carbon load already stood at 385 parts per million.
And it has continued rising since. The most current estimates I’ve seen suggest that we’re now at about 410. This is a level of CO2 saturation that has never been seen in human history. And it somewhat understates the perilous position we’re in because most of the excess carbon is being stored in the warming oceans, which are also more acidic (a separate-but-related dire problem) because they’ve absorbed so much CO2.
When thinking about the economic impact of carbon taxes, it provides helpful context to know that a dollar of carbon tax raises gasoline prices approximately a penny a gallon. So when Citizens’ Climate Lobby proposes a $15 starting point and $10 annual raises, they are saying they’ll raise gas prices 15 cents a gallon and an additional 10 cents a year. The Climate Leadership Council’s $40 starting point amounts to about 40 cents a gallon.
WHAT HAPPENED IN WASHINGTON STATE
The Washington State carbon initiative that was defeated in 2016 was revenue neutral. It proposed that some of the money would go to a fund to protect poor people, some to reduce the regressive state sales tax, and some of the funds to reduce an occupancy tax paid by businesses. None of the money was dedicated to green energy development or “environmental justice”.
The objections to the initiative that I saw (and, frankly, the lack of discussion around this since it occurred is startling and, to me, suggests a desire by the environmentalist opponents to avoid discussing the subject) were that the sales tax cut was unreliable in a state that has Republicans in control of at least part of the legislature. (Ironically, as of a recent mid-term election, that is no longer the case.)
AND IN THIS CONTEXT: NUCLEAR AND FRACKING
While we build out renewables (wind, solar, hydro, tidal) to a level where they deliver many times what they can now and develop both the new grid and the storage capacity necessary to handle the intermittency of wind and solar (because the wind doesn’t always blow and even the sunniest places have no sun at night), we will need what is called baseline power: power that doesn’t get interrupted. The two most ubiquitous current “solutions” to this challenge are nuclear power and fracked natural gas.
Most environmentalists have been worried about the dangers — and the “externality costs” — of nuclear power for many years. Three Mile Island is almost forty years in America’s past but the danger of nuclear power has been shown to us since by what happened in Chernobyl in Ukraine and, more recently, the disaster at Fukushima in Japan.
The dangers of nuclear power are real. And the US government’s history of protecting the nuclear energy industry from the true “costs” of that danger — they are protected from liability and we still don’t have a comprehensive plan to deal with nuclear waste — is irresponsible.
But it is also true that nuclear power does not add to the CO2 load. And, in today’s world, decommissioning a nuclear plant almost certainly leads directly and immediately to an increase in fossil fuel consumption. Indeed, Germany eliminated its nuclear power plants starting a decade ago and they now burn more coal as a result. (And coal is, by far, the worst of the fossil fuels.) The human race is not safer for making that switch; we are all in greater jeopardy.
This is certainly not to suggest that there aren’t nuclear plants that should be closed. But the calculation when that is being considered must include what the immediate impact will be on the CO2 load. It usually does not.
Some people who care a lot and know a lot about climate change, including James Hansen, can be extremely strident on the need for nuclear.
There is a similar need to put the discussion about fracking — for natural gas — into context. Gas generates far less CO2 per unit of energy than does coal or oil. When we burn gas instead of coal or oil, we reduce the amount of CO2 we put into the atmosphere.
It has been well documented that fracking can have other adverse affects, releasing methane into the atmosphere and poisonous chemicals into water supplies. It apparently can also cause earthquakes. None of these is a trivial concern. But, in fact, the dangers of the methane release and water pollution can be dramatically reduced or mitigated. Sloppy practices make them much worse. Serious regulation and monitoring could minimize them. And the earthquake risks are real but local; there are clearly places where the danger of creating earthquakes means you can’t frack.
Unfortunately, the response of much of the environmental community has been to advocate “banning fracking” rather than insisting on rigorous regulation of it. Since both the economic incentives and the environmental ones are strong to produce more gas, what we’ve gotten as a result is a lot of totally unregulated fracking and absolutely no distinction between fracking for gas — which at least potentially reduces CO2 over alternatives — and fracking for oil, which doesn’t.
AND NOW YOU’RE READY TO REALLY PARTICIPATE IN THE DISCUSSION
Everything in this piece was not really known by me — or certainly was not clear to me — 14 months ago when I became a climate activist. It is my hope that putting these basic facts into context will help others join the fight that we desperately need to win if humanity is going to avoid catastrophes so dire we don’t even want to contemplate them. These consequences are already evident but will hit with brutal, undeniable, and highly disruptive force within the lifetime of most people alive today.