Some very interesting arguments below. I think Ned Ford makes some very credible arguments when he says that we need to talk about spending realistic amounts of money and that such spending should be discussed in the context of how much money it saves comparted to doing nothing.

I also think we need to continue talking about how to end burning of coal for electricity within 20 years, and end natural gas within 5 years after that. When we make that argument, the concept of investing in energy infrastructure (power plants, transmission lines, scrubbers, etc.) that is dependent on fossil fuels makes little sense. We need to be planning for the relatively near-term shut-down of these plants, rather than investing to keep them open longer.

Enjoy.

JBK

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Ned Ford Ned.Ford@FUSE.NET 4/16/2010 11:30 PM >>>

Hi Dave,

If you're hung up on a tax that is large enough to cause behavior change, I think you are going to have a long wait. If we separate the two unrelated concepts - a tax large enough to cause behavior change - from a tax large enough to solve global warming - we begin to have options that might really pass Congress.

I can't imagine how the United States would arrive at a political decision on how to spend $500 billion per year. We only spend about a trillion dollars per year on energy - given that it can rise to almost $1.5 trillion based on the wild movements of gas or oil prices. We don't need half of that per year to eliminate fossil fuel use. Nor is there a chance that such a large amount of money could be spent responsibly. Look at how much trouble they are having spending the stimulus money.

We need to spend about $18 billion on electric efficiency, which will generate about $54 billion in savings. Then we need to spend about $18 billion of those savings to supplement the $20 billion or so we are already spending on electric renewables. (We're already spending $5.4 billion on electric efficiency, and saving about $16 billion as a result, but hardly anyone knows that). That puts us on track to end coal in 20 years and natural gas five years later. We need to spend about $12 billion per year on natural gas efficiency, and work like hell to get zero energy buildings to be the standard in as few years as possible. That puts us on track to end natural gas use for heating in about forty or fifty years - we might have to use renewable electricity to heat some older buildings which can't be retrofit. We can have the highest efficiency vehicles and as many electric cars as possible, and we will still be using about half as much petroleum as we are using now. There are probably other solutions that we can develop in ten or twenty years, but I'm not sure what they are. That's about $50 billion per year. The concrete limits on rate - things like the rate of building new buildings and retrofitting old ones, the rate at which we can build wind turbines and replace lightbulbs, and much more, all create absolute limits to how much can be done in a given time period.

Tossing out large numbers sounds powerful, but it departs from political reality. To get a solution we need to emphasize that it saves money compared to doing nothing, And we do need some influences on behavior, but those are better achieved through standards than taxes. No matter what the economists think, efficiency programs work better than high prices. The efficiency programs are proven. The high prices are not. (When I make this argument, people talk about gas taxes in Europe. But which came first, the high energy taxes or the infrastructures in European cities which promote walking, public transit, and the traditions of living close to work?) No one really knows how effective energy taxes are in causing behavior. The best indicator we have is the effect of gas prices on consumption, and that's not very promising.

- Ned

David Simons wrote:

15 cents per gallon is nowhere near enough to influence people's behavior or purchasing, e.g. more efficient cars. Nor is it enough to significantly finance the energy transition we so desperately need, that must happen rapidly. Even $1 per gallon would not be enough. We should be looking at and promoting a carbon tax evenly applied to all sources, capable of producing maybe $500B per year, to address the oncoming crisis adequately. Maybe 20% of that could subsidize low income people. 80% should be invested in the deployment of clean energy technologies, with a small portion put into R&D. The benefits to society at large and to the economy would be enormous.

From: Ned Ford Ned.Ford@FUSE.NET ( mailto:Ned.Ford@FUSE.NET ) To: CONS-SPST-GLOBALWARM-CHAIRS@LISTS.SIERRACLUB.ORG Sent: Fri, April 16, 2010 1:18:40 PM Subject: Re: [GW-ACT-LEADERS] Senators consider gasoline tax as part of climate bill

This is really important. It would work. 15 cents per gallon would raise about $23 billion per year, which would more than double the new wind installed last year. It would be the largest and most effective carbon reduction strategy I can think of that the petroleum sector could fund. Anything else that was economically and carbon-comparable could be funded too, if wind was the benchmark.

I know the public doesn't like taxes, and gas prices are going up, but sell it as a package to reduce the cost of driving. The wind would cut the cost of electricity for the electric car, cut the cost of electricity for everyone (since the total construction of the new wind would be funded independently, and we could link it to things like free air at gas stations and a push for higher tire inflation to save more gas than the tax costs. I'm sure there are other petroleum measures which this could be coupled with that would make this easier to sell and accomplish more.

- Ned

Carolyn Chase wrote:

Senators consider gasoline tax as part of climate bill http://www.ab32ig.com/inthenews.htm#clip1 The Los Angeles Times

Estimates put it in the range of 15 cents a gallon. Some oil companies are on board with the plan because it would cost them far less than other proposals to cut greenhouse gas emissions. Jim Tankersley - Los Angeles Times -- April 14, 2010 Leading voices in the Senate are considering a new tax on gasoline as part of an effort to win Republican and oil industry support for the energy and climate bill now idling in Congress. The tax, which according to early estimates would be in the range of 15 cents a gallon, was conceived with the input of several oil companies, including Shell, BP and ConocoPhillips, and is being championed by Republican Sen. Lindsey Graham of South Carolina. It is shaping up as a critical but controversial piece in the efforts by Graham, Sen. Joe Lieberman (I-Conn.) and Sen. John Kerry (D-Mass.) to write a climate bill that moderate Republicans could support. Along those lines, the bill will also include an expansion of offshore oil drilling and major new incentives for nuclear power plant construction. Environmental groups have long advocated gasoline taxes to reduce fossil fuel consumption; the oil industry has spent heavily in recent years to fight taxes, which it says would harm consumers. In this case, though, several oil companies like the tax because it figures to cost them far less than other proposals to reduce greenhouse gas emissions, including provisions in the climate bill the House passed last year. The Senate bill's sponsors appear to want the revenue raised from the tax to fund a variety of programs that would lower industrial emissions, including helping manufacturers reduce energy use or boosting wind and solar power installations by electric utilities. But the tax has encountered stiff behind-the-scenes resistance from some Democrats, who fear the political specter of increasing gasoline prices as the national average cost of gasoline is expected to crest $3 a gallon this summer. And no other Republicans have publicly announced support for the framework legislation that Graham and the others are circulating on Capitol Hill. Attracting significant Republican support for a bill featuring a tax increase would run counter to historical political trends and to the anti-tax outrage percolating among the "tea party" activists in the GOP base. Sources say the resistance extends to some Obama administration officials. In a statement, White House spokesman Ben Labolt said only that President Obama was "encouraged by the work of Sens. Kerry, Lieberman and Graham to move forward bipartisan, comprehensive energy and climate legislation" and that "we look forward to reviewing the details of the legislation when they are finalized." Some industry analysts and environmentalists question how much a tax would do to reduce emissions from gasoline, particularly if the extra cost to motorists is measured in cents, not dollars. Proponents call the tax approach under consideration a "linked fee," because it links the extra cost for gasoline to the average cost of greenhouse gas emission permits created through a so-called cap-and-trade system for electric utilities. That system would set a declining limit on emissions from power plants and force utilities to buy permits, on a trading market, to emit heat-trapping gases. Under the linked-fee proposal, gasoline taxes would rise in tandem with the prices of industrial emission permits, or fall if the price of permits declines. As negotiations build toward a scheduled unveiling of the bill next week, it's still unclear whether major oil companies and their trade group, the American Petroleum Institute, will explicitly endorse the legislation or at least agree not to fund an ad campaign opposing it. Proponents of a climate bill say such backing would be a major coup. "Getting major oil companies to truly and aggressively support a specific bill mandating greenhouse gas emissions limits and a carbon price would be a significant political accomplishment," said Paul W. Bledsoe, a former Clinton administration official now with the bipartisan National Commission on Energy Policy. Other analysts wonder whether increasingly populist Republicans would follow the industry and support the bill. "It's not clear that a linked fee creates a path to 60 votes" to overcome Senate procedural hurdles, said Scott Segal, a lobbyist for the Bracewell & Giuliani law firm in Washington who represents utilities and refiners on climate policy. Unquestionably, Big Oil can be a formidable opponent: The petroleum institute recently spent millions on ads blasting an Obama proposal to end some industry tax breaks. The group is currently neutral on the linked-fee plan. It needs to see details on the full climate bill and an Energy Information Administration analysis of its effects before taking a position, said Lou Hayden, its senior director for federal relations. If oil companies do back the bill, climate activists will find themselves joining forces with an industry they've long demonized. The tax could also put senators who vote for the bill at the mercy of election attacks if gas prices spike before November -- even though the tax would probably not kick in for several years.

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