Climate update: Extinction, the Senate, and yes we still need Carbon Taxes

I. Mainstream scientists are finally speaking and writing explicitly about catastrophic climate scenarios

Until now — with a few exceptions — IPCC reports, other official publications, peer-reviewed science and economics have severely downplayed catastrophic climate risk.  It started in 1979 with the first National Academy of Sciences report by the Charney Commission which mentioned the need for carbon taxes but recommended only “further study.”  

The big models and studies assumed global warming would proceed on a more or less linear trajectory.  Nope.  That’s ignoring forcing feedback and tipping points.  It’s a dangerous over-simplification; climate scientists knew that in 1979.  (But don’t alarm the public.  Or risk being called an “alarmist.”  Besides, feedbacks and tipping points blow up our neat models.)  

A new paper in Proceedings of National Academy of Sciences breaks the silence:

“Temperature rise has a wide range of lower probability but potentially extreme outcomes. Remaining blind to these scenarios is naïve risk-management at best and fatally foolish at worst.” —lead author Dr. Luke Kemp. 

II. Democrats’ subsidy, subsidy and more subsidies climate bill, misleadingly titled the “Inflation Reduction Act” is not likely to help with inflation, though its methane fee will certainly help with climate.

The IRA’s major climate provisions are doing the easy thing, giving away money to renewable energy and rich drivers.  It avoids the necessary thing– raising the cost to pollute.   

“Democrats’ climate bill subsidizes non-fossil energy. But doesn’t recognize Climate Change as a global problem that requires cutting fossil fuel burning. A Carbon Tax is still necessary to actually solve the problem.” —Economist Tyler Cowen

A glaring problem with the IRA’s all-carrots, no-sticks approach: it doesn’t push consumers to conserve energy. Cheaper renewable energy will mean cheaper electricity and gasoline which encourages the opposite — it says “don’t bother to look for ways to cut waste or to improve efficiency.” Those “nega-watts” derived from conservation and efficiency are the cleanest energy in the world. No climate policy that ignores them can fairly be called “comprehensive” or even efficient.

And the bill’s “subsidy, subsidy and more subsidies” approach can’t be replicated across the globe. Even in the U.S., we can’t keep subsidizing non-fossil energy forever. As long as there’s more of the dirty stuff in the ground, and it’s cheap, someone will burn it. Subsidies for renewables increase total energy supply making dirty energy cheaper. That’s bound to be popular, but it’s not really climate policy, it’s more “all of the above” energy policy that brought us the fracking boom.

Unlike subsidies, a tax on climate pollution can go global, particularly if it becomes a revenue source for things voters want from government. Subsidies are only an option in rich countries; and even here they won’t do much for long. If we want to drive out fossil fuels not just spur renewables, we will need a carbon tax.

Subsidies often miss the mark. Think about ethanol. Congress enacted a subsidy and a mandate for adding ethanol to gasoline on the theory that it would displace (imported) petroleum. But for decades, numerous reports by the Congressional Budget Office have documented no climate and no energy benefit from the ethanol subsidy and mandate, mainly because growing corn for ethanol requires lots of fertilizer, almost entirely from natural gas. See e.g., Stop the Ethanol Madness The mainstay of the Renewable Fuel Standard is an unmistakable social and environmental failure. Why does it persist? (The Atlantic, November 2019.) Despite their cost and ineffectiveness, an entrenched lobby keeps ethanol subsidies and mandates going.

And how about the IRA’s subsidies for more attempts at thermodynamically bankrupt “Carbon Capture and Sequestration” demonstration projects? MIT professor Charles Harvey: “Every Dollar Spent on This Climate Technology Is a Waste.” CCS subsidies help justify continued production of coal, oil and natural gas at a time when the world should be ending its dependence on fossil fuels.

Expect more of those endless games with renewable and EV subsidies even if they don’t work as intended. Even before the IRA, it was clear that EV subsidies are going to the wrong drivers. As Kristen Eberhard at Niskanen Center reported, to maximize climate benefits, EV subsidies should go to heavy drivers, not to rich virtue signalers.

Subsidies make the politics of pollution taxes even harder by addicting renewable energy industries to subsidies, shielding them from the need to advocate and enact carbon taxes. A dozen years ago, we asked the American Wind Energy Association to support a carbon tax. Their reply: “Yes, it’s essential. Sorry, we’ve gotta keep our subsidies. We don’t want a fight with the fossil fuel lobby.”

And who benefits from subsidies? They’re terribly regressive.

“Energy subsidies are one of the few domains where there is a near full-throated consensus among progressives, governments, and economists over the need for reform. Nearly everywhere, energy subsidies are regressive, vastly favoring the car- and energy-consuming parts of the population that are often the least in need.” — From Regressive Subsidies to Progressive Redistribution: The Role of Redistribution and Recognition in Energy Subsidy Reform, NYU Center on Environmental Cooperation (November 2021.)

Though to be fair, the IRA does include a number of measures to help balance the distributional burden, so the goodies don’t all flow to the jet set and the Tesla crowd.

And while I rarely agree with Marc Thiessen, he hit the mark here:

“At a time when inflation is forcing many to choose between staples such as gas and food, the Biden administration is providing taxpayer subsidies to couples making $300,000 a year who can already afford a Tesla.”

And as Thiessen reports, despite its title as “Inflation Reduction Act,” various credible economic analyses conclude that the bill is not likely to reduce inflation.

By far, the best climate provision in the IRA is the methane pollution fee, crisply analyzed here, by the Congressional Research Service.

Methane is an extremely potent greenhouse gas, and in many places especially oil and gas drilling sites, it’s just vented to the atmosphere. New satellite imaging and atmospheric monitoring reveal that methane is a much bigger driver of global warming than was known even a few years ago. Equipment to capture methane is widely available and cost-effective, especially if drillers are prodded by a hefty and rising methane pollution tax. Enactment and success of a methane pollution tax could set a precedent for a carbon tax.

III. And yes, we still need that carbon tax.

Another nice try: Senator Sheldon Whitehouse (D-RI) proposed a Carbon Border Adjustment Mechanism, called the Clean Competition Act, a tax on carbon-intensive imports along with an equivalent tax on similar domestic goods. I recommend the short summary by Niskanen Center’s Shuting Pomerleau. And here’s trade expert Jennifer Hillman explaining and extoling CCA: “Congress can address competitiveness and climate change — without breaking trade rules.” 

So here we are. Facing the prospect of near-term human extinction. Today, Senate Democrats passed the “Inflation Reduction Act” without a single Republican vote. A bill that offers voters a measure of hope that Senate Democrats can address climate breakdown, strictly along partisan lines. And without the key policy that the NAS Charney Commission identified 43 years ago as essential to avoiding and curbing runaway global warming — a rising carbon tax to make climate polluters pay so renewable energy and efficiency can compete fairly and phase out fossil fuels.

So, here’s one cheer for the Inflation Reduction Act!

And here’s to electing a more responsive Congress in November. For years, polls have shown strong public support (roughly 2/3) for taxes on climate pollution. And yet it didn’t make the cut in the Democrats’ bill. (Was it Manchin, or some other Democrat who torpedoed a carbon tax? It certainly was discussed.)

Similarly, voters have long shown strong support (again, about 2/3) for the reproductive freedoms that until last month were guaranteed by the Supreme Court in Roe v. Wade. I hope the voters in Kansas, who this week resoundingly rejected and overcame the disastrous and politically reckless Supreme Court overruling of Roe v. Wade, are leading the way. Maybe, just maybe, a wave election in November could open the way for truly effective and globally harmonizable climate policy — a hefty and rising carbon tax.

I’ll give the last word to Dorothy:

Author: James Handley

James Handley coordinates the Carbon Tax Network. From its inception in 2007 until 2016, James served as policy analyst and Washington representative of the Carbon Tax Center. In that capacity, he attended Congressional hearings, studied and digested climate economics and climate policy literature; providing timely reports, summaries and blog posts for CTC's website while building a network of activists, academics and policymakers to support and advance transparent taxes on carbon pollution. Prior to CTC, James represented environmental and citizen organizations, including Beyond Pesticides and the National Organic Consumers Association in public interest litigation. Prior to private law practice, he served 14 years at EPA, enforcing environmental law, where he also served as an officer in EPA's union, representing science and legal professionals, especially whistleblowers. Before law school, James specialized in environmental and energy-efficient design at Brown & Root, Inc. and Scott Paper Co. James holds degrees in Chemical Engineering (Economics minor), Law (JD), and Environmental Law (LLM, highest honors).

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