[Congressional Record Volume 160, Number 142 (Wednesday, November 19, 2014)]
[Senate]
[Pages S6149-S6153]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WHITEHOUSE (for himself and Mr. Schatz):
  S. 2940. A bill to provide for carbon dioxide and other greenhouse 
gas emission fees; to the Committee on Finance.
  Mr. WHITEHOUSE. Mr. President, I am here now for the, I guess, 80th 
time in my weekly series of speeches about carbon pollution to ask the 
Senate and Congress to wake up to the growing threat from climate 
change, and today I am also announcing the introduction of the American 
Opportunity Carbon Fee Act.
  Carbon dioxide from burning fossil fuels is changing the atmosphere 
and the oceans. We see it everywhere. We see it in storm-damaged homes 
and flooded cities. We see it in drought-stricken farms and raging 
wildfires. We see it in fish disappearing from warming and acidifying 
waters. We see it in shifting habitats and migrating contagions.
  All of these things we see carry costs--real economic dollars-and-
cents costs--to homeowners, to business owners, and to taxpayers. That 
cost is described as the social cost of carbon. It is the damage that 
people and communities suffer from carbon pollution and climate change. 
None of those costs from carbon pollution are factored into the price 
of the coal or the oil or the natural gas that releases this carbon. 
The fossil fuel companies that sell and burn those products have taken 
those costs and offloaded them onto society--onto the rest of us.
  That is not fair. If you rake your lawn, you don't get to dump all 
the leaves over your neighbor's fence and leave him or her the problem 
of cleaning up your leaves. If you are located on a river, you don't 
get to dump your garbage in the river and leave it to the downstream 
property owners to clean up your mess. Yet the big carbon polluters 
transfer the costs--all those costs of climate change--onto everyone 
else--all the rest of us.
  The U.S. Government has done some estimating about what that social 
cost of carbon pollution is and their estimate is that it is around $40 
per ton of carbon dioxide emitted, and that that amount rises over time 
as carbon pollution creates more and more harm and havoc. So a climbing 
$40 per ton is the cost, but the current effective price on carbon 
pollution is zero.
  By making their carbon pollution free, we subsidize fossil fuel 
companies to the tune of hundreds of billions of dollars annually. By 
making their carbon pollution free, we actually rig the game, giving 
polluters an unfair advantage over newer and cleaner technologies. It 
is a racket. It is a form of cheating. And corporate polluters love it 
because it gives them advantage, and they fight tooth and nail to 
protect it in this body. But it is wrong.
  As University of Chicago economics professor Michael Greenstone 
recently explained, this concept--that offloading social costs is wrong 
and that there should be a proper price on carbon--is very widely 
accepted. Here is what he said:

       The media always reports that there's near consensus among 
     scientists about the fact that human activity impacts climate 
     change. What does not receive as much attention is that 
     there's even greater consensus among economists, starting 
     from Milton Friedman and moving into the most left-wing 
     economists that you could find, that the obvious correct 
     public policy solution to this is to put a price on carbon. 
     It's not controversial.

  Mr. President, I ask unanimous consent to have printed in the Record, 
at the conclusion of my remarks, an article from The Economist 
magazine.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WHITEHOUSE. The economics editor of The Economist magazine--which 
is certainly no hotbed of left wing sentiment--Ryan Avent, has posted a 
comment on climate policy and his question is: ``Do economists all 
favour a carbon tax?'' He says:

       The economic solution is to tax the externality--

  That is the offloaded cost.

       --so that the social cost of carbon is reflected in the 
     individual consumer's decision. The carbon tax is an elegant 
     solution to a complicated problem.

  So today I am introducing this bill to put a price on carbon 
emissions. It is simple. It will require the polluters to pay a per-ton 
fee for their pollution and all of the revenue generated by those 
payments will go back to the American people.
  I want to thank Senator Brian Schatz of Hawaii for cosponsoring this 
measure. He has been a great colleague on environmental issues and on 
our discussion regarding climate change. The bill that we introduce 
today establishes an economy-wide fee on carbon

[[Page S6150]]

dioxide and other greenhouse gas emissions, tracking that social cost 
of carbon, starting at $42 per ton and going up by 2 percent per year, 
plus inflation.
  We know how much carbon dioxide each unit of coal, oil, and natural 
gas produces, so we assess the fee on fossil fuel producers, 
processors, and importers. That makes it simple to administer. The 
whole bill is only 29 pages long.
  For other varieties of greenhouse gases and nonfossil fuel sources of 
CO2, we assess our fees only on the very largest emitters--
those emitting more than 25,000 tons a year. This is the same universe 
of companies that we already require to monitor and report on their 
carbon emissions.
  A significant greenhouse gas concern is the methane that escapes 
throughout production and distribution. To address this, we require 
annual reports on methane leakage and direct the Treasury Secretary to 
adjust the fees on fossil fuels to account for that leakage. This fee 
will promote innovation and help further reduce carbon emissions.
  Fossil fuel companies that capture and sequester or use carbon 
dioxide or innovate new ways to encapsulate it in materials or products 
will get credits to offset the carbon fee.
  We also take care to ensure that American manufacturers are not put 
at a competitive disadvantage globally. Imports from nations that don't 
price emissions will face a tariff that the Treasury Secretary is 
authorized to impose at the border. Likewise, the Secretary is 
authorized to rebate American producers on their exports.
  I would note one thing. Since regulation is usually a response to 
market failure, a well-designed carbon fee would also properly open a 
conversation about which and, indeed, whether carbon regulations are 
still needed. A carbon fee by itself is much more efficient and 
predictable than complex regulations, and I am open to that 
conversation.
  That is it. It is that simple. Make the polluters pay the full costs 
of their products; end the cheating; level the playing field for other 
forms of energy, such as wind and solar, to compete fairly; keep the 
fee mechanism simple; and maintain a border adjustment that keeps 
American goods competitive. Twenty-nine pages.
  On the flip side, the carbon fee will generate significant new 
Federal revenue. The technicians are still working on the official 
revenue estimate for the bill, but it should be at least $1.5 trillion 
and perhaps more than $2 trillion over the 10-year budget periods we 
work with in Congress and on the Budget Committee.
  Whatever the exact number is, all of it should be returned to the 
American people. So the bill establishes an American opportunity trust 
fund to hold the revenue and return it to the American people. This 
could include through tax cuts, through student loan debt relief, 
through increased Social Security benefits for seniors, through 
transition assistance to workers in fossil fuel industries, or even 
just a direct dividend back to the American family. I am looking 
forward to deciding with my colleagues on both sides of the aisle what 
is the best way to return this revenue, but I do believe every dollar 
should go back to the American people in some form. To use economic 
jargon, this should be revenue neutral.
  This is one example to consider, just a hypothetical: What could we 
do? We could cut the corporate tax rate in America from 35 percent to 
30 percent. That has been a bipartisan goal for a long time. It was 
part of Romney's Presidential campaign. We could accomplish it with 
this measure.
  We would have enough money left to go to the payroll tax and for 
every worker rebate the first $500 they paid in payroll tax. So every 
American worker who paid more than $500 in payroll tax would get a $500 
check to spend on whatever they wanted. The first tax reduction at the 
corporate level uses about $600 billion to offset. This uses about $700 
billion to offset.
  Third, we could add to that a boost to the EITC--the earned income 
tax credit--which supports many American families at the very low end 
of the economic spectrum. We could do that by literally hundreds of 
dollars a year for millions of lower income families. Again, there has 
been bipartisan support for expanding the earned income tax credit.
  Three important goals, all reducing taxes or adding to a tax credit--
all should have strong bipartisan support.
  The American Opportunity Carbon Fee Act has revenue that could make 
our companies more competitive, could give every single worker a tax 
rebate, and could boost benefits for struggling low-income families.
  Last month the Des Moines Register ran a column titled `` `Carbon 
tax' would help Iowa, planet.'' The column said this:

       The United States could take the lead by acting on its own, 
     watch its economy grow, and let the rest of the world catch 
     up.
       In the process, the United States would gain mastery of the 
     sustainable-energy technology that will drive economic growth 
     in the future.

  I ask unanimous consent that the article be printed in the Record at 
the end of my statement.
  George W. Bush's Treasury Secretary Hank Paulson gave the same 
message earlier this year, saying:

       A tax on carbon emissions will unleash a wave of innovation 
     to develop technologies, lower the costs of clean energy and 
     create jobs as we and other nations develop new energy 
     products and infrastructure.

  Emphasizing that, coincidentally, is an article in today's New York 
Times headed ``A Carbon Tax Could Bolster Green Energy.'' As we all 
know, green energy jobs are exploding in this country, and we need more 
of them.
  Treasury Secretary Paulson continued:

       Republicans must not shrink from this issue. Risk 
     management is a conservative principle.

  Secretary Paulson is not alone. Conservative figures such as George 
Shultz, who was Secretary of State under President Reagan, emphatically 
support a carbon fee as the best way to address carbon pollution.
  Art Laffer, one of the architects of President Reagan's economic 
plan, had this to say about a carbon tax and related payroll tax cut:

       I think that would be very good for the economy and as an 
     adjunct, it would reduce also carbon emissions into the 
     environment.

  I ask unanimous consent that a 2013 New York Times op-ed be printed 
in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WHITEHOUSE. In this New York Times op-ed, Bill Ruckelshaus, 
Christine Todd Whitman, Lee Thomas, and William Reilly wrote:

       A market-based approach, like a carbon tax, would be the 
     best path to reducing greenhouse-gas emissions.

  I know the big carbon polluters want this issue ignored. I know that. 
They want to squeeze one more quarter, one more year of public subsidy 
for their product from the rest of us. From their point of view, lunch 
is good when someone else is picking up the tab. But notwithstanding 
the power of the big carbon polluters, I still believe this is a 
problem we can solve.
  Not long ago this would have been a bipartisan bill. Not long ago 
leading voices on the Republican side agreed with Democrats that the 
dangers of climate change were real. Not long ago leading Republican 
voices agreed that carbon emissions were the culprit. And it was not 
long ago that leading Republican voices agreed that Congress had a 
responsibility to act. One Republican Senator won his party's 
nomination for President on a solid climate change platform. Other 
Republican colleagues in the Senate introduced, cosponsored, or voted 
for meaningful climate legislation in the past. Some of the proposals 
were market-based, revenue-neutral solutions aligned with Republican 
free market values, just like my bill today.
  The junior Senator from Arizona--a Republican--was an original 
cosponsor of a carbon fee bill when he served in the House of 
Representatives. That proposal, introduced with former Republican 
Congressman Bob Inglis, would have placed a $15-per-ton fee on carbon 
pollution in 2010, more than $20 in 2015, and $100 in 2040. At the 
time, our colleague from Arizona had this to say:

       If there's one economic axiom, it's that if you want less 
     of something, you tax it. Clearly, it's in our interest to 
     move away from carbon.

  We simply need conscientious Republicans and Democrats to work 
together in good faith on a platform of fact and common sense. We know 
this can be done because it is being done.

[[Page S6151]]

  At the end of a speech about the American Revolution, the historian 
David McCullough was asked by someone in the audience why it was that 
our Founding Fathers had the courage to pledge their lives, their 
fortunes, and their sacred honor to the cause of independence when 
signing the Declaration was signing their own death warrant. He had a 
very simple answer. He said: It was a courageous time.
  Well, clearly in courageous times Americans have done far more than 
simply stand up to polluters to serve the interests of this great 
Republic. It only takes courage to make this a courageous time too.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   [From The Register, Oct. 4, 2014]

                  `Carbon Tax' Would Help Iowa, Planet

                           (By Richard Doak)

       Six years ago, the Canadian province of British Columbia 
     decided to go it alone in fighting climate change. It imposed 
     a tax on fossil fuels--coal gasoline, diesel fuel, propane 
     and natural gas.
       By most accounts, the ``carbon tax'' has been a success. It 
     made fossil fuels more expensive, so British Columbians began 
     to conserve them and use them more efficiently. Revenue from 
     the carbon tax allows other taxes to be reduced, so the 
     province enjoys the lowest personal income tax rates in 
     Canada and some of the lowest corporate taxes in the 
     developed world.
       Contrary to fears, the carbon tax did not cause the economy 
     of the province to collapse. Economic growth is slightly 
     better than in the rest of Canada, and the forward-looking 
     energy policy gives British Columbia a reputation as a world 
     leader in green entrepreneurship.
       Why can't Iowa be like that?
       Indeed, Iowa should be like that, and circumstances might 
     be right for Iowa to become the first American state to 
     employ a full-fledged carbon tax.
       Iowa and other states already have partial carbon taxes. We 
     pay them at the pump when we buy gasoline or diesel fuel.
       In Iowa, all gasoline and diesel fuel tax revenue is 
     earmarked for highway construction, maintenance and 
     administration. Paying the gas tax is how motorists pay for 
     the bridges and highways.
       After the November election, when candidates are no longer 
     afraid to talk about taxes, a consensus will probably develop 
     to raise Iowa's motor fuel taxes. The current gasoline tax of 
     21 cents per gallon (19 cents for ethanol blend) and diesel 
     tax of 22.5 cents bring in about $450 million but leave the 
     state an estimated $215 million short of what's needed for 
     highways every year.
       Closing that gap would require raising motor fuel taxes by 
     about 10 cents per gallon.
       Instead, why not abolish motor fuel taxes and replace them 
     with a carbon tax?
       A carbon tax would apply to all fossil fuels, not just 
     gasoline and diesel fuel. The tax on each fuel would be based 
     on its carbon content. Carbon-dense coal would be taxed more 
     heavily than relatively carbon-light natural gas.
       The carbon tax on gasoline and diesel fuel could be 
     calibrated to bring in about the same amount of revenue as 
     the existing motor fuel tax. Additional revenue to close the 
     highway-funding gap could come from the carbon tax paid on 
     coal and natural gas used to generate electricity. This would 
     be a way for electric car owners to begin paying their share 
     of highway maintenance.
       Electric cars contribute less for highway maintenance than 
     gasoline- or diesel-burning vehicles. (Electric cars don't 
     pay gasoline tax, but they do pay license fees and use 
     taxes.) In the future, if electric vehicles become 
     ubiquitous, it will be essential to have some source of 
     highway money beyond the gasoline tax. Having a carbon tax 
     would put Iowa ahead of the game of paying for roads in an 
     electric-car future.
       Additional revenue from a carbon tax, beyond that needed 
     for roads, could be used to lower other taxes, as in British 
     Columbia. Since the biggest burden of a carbon tax would fall 
     on low-income people, reductions or credits for low-income 
     people should be the first priority. Lowering for abolishing 
     the corporation tax, as an incentive for businesses to locate 
     in Iowa, might be the second choice.
       The idea of a carbon tax is to use market forces to reduce 
     the amount of carbon dioxide spewed into the atmosphere when 
     fossil fuels are burned. Economists use the term carbon 
     pricing. When the price of something goes up, people use less 
     of it. A carbon tax is intended to raise the price of fossil 
     fuels enough to discourage consumption as well as to create 
     an incentive to find alternatives.
       As leader in biofuels and wind turbines, Iowa should be for 
     anything that incentivizes the switch to alternatives.
       Perhaps Iowans should even be cheering for a carbon tax to 
     be imposed nationally, because, among the states, Iowa may be 
     one of the best positioned to benefit from it.
       Of course, a national carbon tax is off the table as long 
     as Congress is full of climate-change deniers who are 
     beholden to the fossil-fuel industries. But, outside of 
     Congress, the carbon tax and other carbon-dioxide-reducing 
     strategies appear to be gaining credibility.
       A number of major corporations, banks and institutions have 
     begun to question the conventional thinking that the economy 
     would suffer if carbon dioxide emissions were curbed. Most 
     recently, the Global Commission on the Economy and Climate, a 
     group of heavyweight international leaders and economists, 
     issued a report showing that reducing carbon emissions would 
     cost the economy very little and might actually stimulate 
     economic growth. Other research published by the 
     International Monetary Fund suggests that carbon taxes, 
     rather than being a drag on an economy, can be a benefit.
       It also appears that cutting carbon emissions can help a 
     country's economy even if other countries don't go along. 
     British Columbia has shown that a state can go it alone 
     without other states.
       Nationally, the United States is waiting around for some 
     big international agreement that will require all countries 
     to reduce their emissions in unison. That shouldn't be 
     necessary. The United States could take the lead by acting on 
     its own, watch its economy grow, and let the rest of the 
     world catch up.
       In the process, the United States would gain mastery of the 
     sustainable-energy technology that will drive economic growth 
     in the future.
       Sadly, the odds of the president and Congress acting that 
     boldly on climate change are roughly nil. But maybe the 
     little state of Iowa, out here in the heart of America, could 
     nudge the nation in the right direction by setting an example 
     on its own.
                                  ____


               [From the New York Times, August 1, 2013]

                  A Republican Case for Climate Action

   (By William D. Ruckelshaus, Lee M. Thomas, William K. Reilly and 
                        Christine Todd Whitman)

       Each of us took turns over the past 43 years running the 
     Environmental Protection Agency. We served Republican 
     presidents, but we have a message that transcends political 
     affiliation: the United States must move now on substantive 
     steps to curb climate change, at home and internationally.
       There is no longer any credible scientific debate about the 
     basic facts: our world continues to warm, with the last 
     decade the hottest in modern records, and the deep ocean 
     warming faster than the earth's atmosphere. Sea level is 
     rising. Arctic Sea ice is melting years faster than 
     projected.
       The costs of inaction are undeniable. The lines of 
     scientific evidence grow only stronger and more numerous. And 
     the window of time remaining to act is growing smaller: delay 
     could mean that warming becomes ``locked in.''
       A market-based approach, like a carbon tax, would be the 
     best path to reducing greenhouse-gas emissions, but that is 
     unachievable in the current political gridlock in Washington. 
     Dealing with this political reality, President Obama's June 
     climate action plan lays out achievable actions that would 
     deliver real progress. He will use his executive powers to 
     require reductions in the amount of carbon dioxide emitted by 
     the nation's power plants and spur increased investment in 
     clean energy technology, which is inarguably the path we must 
     follow to ensure a strong economy along with a livable 
     climate.
       The president also plans to use his regulatory power to 
     limit the powerful warming chemicals known as 
     hydrofluorocarbons and encourage the United States to join 
     with other nations to amend the Montreal Protocol to phase 
     out these chemicals. The landmark international treaty, which 
     took effect in 1989, already has been hugely successful in 
     solving the ozone problem.
       Rather than argue against his proposals, our leaders in 
     Congress should endorse them and start the overdue debate 
     about what bigger steps are needed and how to achieve them--
     domestically and internationally.
       As administrators of the E.P.A. under Presidents Richard M. 
     Nixon, Ronald Reagan, George Bush and George W. Bush, we held 
     fast to common-sense conservative principles--protecting the 
     health of the American people, working with the best 
     technology available and trusting in the innovation of 
     American business and in the market to find the best 
     solutions for the least cost.
       That approach helped us tackle major environmental 
     challenges to our nation and the world: the pollution of our 
     rivers, dramatized when the Cuyahoga River in Cleveland 
     caught fire in 1969; the hole in the ozone layer; and the 
     devastation wrought by acid rain.
       The solutions we supported worked, although more must be 
     done. Our rivers no longer burn, and their health continues 
     to improve. The United States led the world when nations came 
     together to phase out ozone-depleting chemicals. Acid rain 
     diminishes each year, thanks to a pioneering, market-based 
     emissions-trading system adopted under the first President 
     Bush in 1990. And despite critics' warnings, our economy has 
     continued to grow.
       Climate change puts all our progress and our successes at 
     risk. If we could articulate one framework for successful 
     governance, perhaps it should be this: When confronted by a 
     problem, deal with it. Look at the facts,

[[Page S6152]]

     cut through the extraneous, devise a workable solution and 
     get it done.
       We can have both a strong economy and a livable climate. 
     All parties know that we need both. The rest of the 
     discussion is either detail, which we can resolve, or 
     purposeful delay, which we should not tolerate.
       Mr. Obama's plan is just a start. More will be required. 
     But we must continue efforts to reduce the climate-altering 
     pollutants that threaten our planet. The only uncertainty 
     about our warming world is how bad the changes will get, and 
     how soon. What is most clear is that there is no time to 
     waste.
                                  ____


                  [From the Economist, Sept. 19, 2011]

                 Do Economists All Favour A Carbon Tax?

                          (By R.A. Washington)

       Last week, a Twitter conversation broke out among a few 
     economists concerning whether any serious economists opposed 
     a carbon tax. No, concluded the tweeters, but Tyler Cowen 
     begged to differ. Mr. Cowen writes that he personally favours 
     a carbon tax but can imagine a number of principled reasons 
     other economists might not.
       Why would we expect economists to support a carbon tax? Its 
     very close to the economic ideal. Global warming is a 
     phenomenon associated with emissions of greenhouse gases over 
     and above natural cycles--largely those resulting from the 
     burning of carbon fuels humans have dug up out of the ground. 
     We expect normal economic activity to maximise social good 
     because each individual balances costs and benefits when 
     making economic decisions. Carbon emissions represent a 
     negative externality. When an individual takes an economic 
     action with some fossil-fuel energy content--whether running 
     a petrol-powered lawnmower, turning on a light, or buying a 
     bunch of grapes--that person balances their personal benefits 
     against the costs of the action. The cost to them of the 
     climate change resulting from the carbon content of that 
     decisions, however, is effectively zero and is rationally 
     ignored. The decision to ignore carbon content, when 
     aggregated over the whole of humanity, generates huge carbon 
     dioxide emissions and rising global temperatures.
       The economic solution is to tax the externality so that the 
     social cost of carbon is reflected in the individual 
     consumers decision. The carbon tax is an elegant solution to 
     a complicated problem, which allows the everyday business of 
     consumer decision making to do the work of emission 
     reduction. It's by no means the only economically sensible 
     policy response to the threat of climate change, but it is 
     the one we'd expect economists to embrace.
       Mr. Cowen argues for caution on this point for several 
     reasons. A carbon tax will be less effective if it's not 
     universally applied, potentially leading to carbon leakage to 
     countries with looser environmental rules. He worries that 
     where carbon fees have been applied innovation has not been 
     quick to respond. He fears that good substitutes for carbon 
     fuels don't exist, especially in the transport sector, and 
     worries that higher fuel prices might harm the economy. He 
     suggests that a ``green-energy subsidies first'' policy might 
     make more sense, and he talks about distributional and rent-
     seeking costs of the policy.
       I think the weakness of these arguments is telling, and 
     it's not surprising that Mr. Cowen continues to support a 
     carbon tax. What if a carbon price doesn't immediately drive 
     emission reductions? Then the tax will be an effective 
     revenue raiser, much more efficient than a tax on income. 
     Either way you win. The worry about carbon leakage is a real 
     one, but this dynamic also implies that each new country that 
     prices carbon increases the benefit of existing carbon-price 
     policies in other countries.
       Substitution in the transport sector is somewhat 
     problematic, but a viable carbon price would not have much 
     effect on petrol costs at the outset. A carbon tax of $30 per 
     tonne of CO2 would only increase petrol costs by about 9 
     cents per gallon. This is dwarfed by moves in the market 
     price of petrol. The vulnerability of the American economy to 
     oil shocks argues for an increased tax on petrol, but that's 
     a different policy debate. Mr. Cowen seems to ignore the fact 
     that oil is just one small part of the American economy's 
     fossil-fuel use.
       A carbon tax would attract rent-seeking, but arguably less 
     than alternative policies, like subsidies or a cap-and-trade 
     system. Importantly, money spent on adaptation or post hoc 
     climate-disaster relief is also subject to rent-seeking and 
     corruption issues. Given that many poor countries with weak 
     institutions are likely to feel the brunt of the impact of 
     global warming first and are likely to be poor spenders of 
     the aid money that will invariably flow, a carbon tax looks 
     like one of the policy solutions best suited to the 
     minimisation of these ills.
       Mr. Cowen doesn't mention what I see as one of the most 
     important roles of a carbon tax: as a check on other ill-
     advised programmes. A carbon tax would have quickly made the 
     net dirtiness of corn-based ethanol obvious (by helping to 
     offset subsidies and making corn-based ethanol more 
     expensive). It would be more difficult to roll out and 
     sustain such misguided programmes with a carbon tax, and the 
     ones that went ahead anyway would do less damage. A carbon 
     tax is also the easiest way to capture whatever low-hanging 
     emission-reduction fruit is out there. Right now, consumers 
     are generally indifferent between similarly-priced goods with 
     wildly different carbon profiles. A carbon tax encourages 
     consumers to realise the easy carbon gains available from 
     switching to good low-carbon substitutes wherever they exist.
       The biggest problem with a carbon tax is that America's 
     government seems unable to deliver one. Attitudes may change, 
     however, and near-uniform economist support for the policy 
     (probably) doesn't hurt its odds of eventual passage.
                                  ____


                [From the New York Times, Nov. 18, 2014]

                A Carbon Tax Could Bolster Green Energy

                          (By Eduardo Porter)


                             ECONOMIC SCENE

       A couple of years ago, the smart money was on wind. In 
     2012, 13 gigawatts worth of wind-powered electricity 
     generation capacity was installed in the United States, 
     enough to meet the needs of roughly three million homes. That 
     was some 40 percent of all the capacity added to the nation's 
     power grid that year, up from seven gigawatts added in 2011 
     and just over five in 2010.
       But then a federal subsidy ended. Only one gigawatt worth 
     of wind power capacity was installed in 2013. In the first 
     half of 2014, additions totaled 0.835 gigawatts. Facing a 
     Congress controlled by Republicans with little interest in 
     renewable energy, wind power's future suddenly appears much 
     more uncertain.
       ``Wind is competitive in more and more markets,'' said 
     Letha Tawney at the World Resources Institute. ``But any time 
     there is uncertainty about the production tax credit, it all 
     stops.''
       Wobbles on the road to a low-carbon future are hardly 
     unique to the United States. In its latest Energy Technology 
     Perspectives report, the International Energy Agency noted 
     that the deployment of photovoltaic solar- and wind-powered 
     electricity was meeting goals established to help prevent 
     temperatures from rising more than 2 degrees Celsius (3.6 
     degrees Fahrenheit) above the average in the preindustrial 
     era, the limit agreed to by the world's leaders to avoid 
     truly disruptive climatic upheaval.
       In the same report, however, the organization noted that 
     other technologies--bioenergy, geothermal and offshore wind--
     were lagging. And it pointed out that worldwide investment in 
     renewable power was slowing, falling to $211 billion in 2013, 
     22 percent less than in 2011.
       These wobbles underscore both the good news and the bad 
     news about the world's halting progress toward reducing the 
     greenhouse gas emissions that are capturing heat in the 
     atmosphere and changing the world's climate.
       The good news is that humanity is developing promising 
     technologies that could put civilization on a low carbon path 
     that might prevent climate disruption.
       These technologies allowed the Environmental Protection 
     Agency to pass new rules aimed at achieving a 30 percent 
     reduction in carbon dioxide emissions from American power 
     plants by 2030, compared with 2005.
       They allowed President Obama last week to promise that the 
     United States would curb total greenhouse gas emissions by 26 
     to 28 percent from 2005 levels by 2025--a big step that, 
     White House officials say, can be achieved without further 
     action from Congress. And they allowed China to commit to 
     start cutting emissions after 2030.
       The bad news is that civilization is mostly not yet on such 
     a low carbon path. While promising technologies to get there 
     have been developed, it is unclear whether nations will 
     muster the political will and mobilize the needed investments 
     to deploy them.
       New energy technologies have become decidedly more 
     competitive. The United States' Energy Information 
     Administration projects that the levelized cost of onshore 
     wind energy coming on stream in 2019--a measure that includes 
     everything from capital costs to operational outlays--could 
     be as little as $71 per megawatt-hour measured in 2012 
     dollars, even without subsidies. This is $16 less than the 
     lower cost projection four years ago for wind energy coming 
     online in 2015.
       Similarly, projections for the levelized cost of energy 
     from photovoltaic solar cells have tumbled by more than 40 
     percent, much faster than the cost projections of energy from 
     coal or natural gas.
       Challenges remain to relying on intermittent energy sources 
     like the sun or the wind for power. Still, experts believe 
     that hitching solar and wind plants to gas-fired generators, 
     and using new load management technologies to align demand 
     for power with the variable supply, offer a promising path 
     for aggressively reducing the amount of carbon the power 
     industry pumps into the atmosphere, which accounts for nearly 
     40 percent of the nation's total carbon dioxide emissions.
       And new Energy Information Administration projections to 
     2040 show prices for renewables falling even lower. By then, 
     electricity from photovoltaic solar plants could be generated 
     for as little as $86.50 per megawatt-hour, without subsidies. 
     In some areas wind-based plants could produce it for as 
     little as $63.40.
       Nuclear energy is also becoming more competitive. Without 
     any subsidies, new-generation nuclear power coming on stream 
     in 2040 could cost as little as $80 per megawatt-hour, all 
     costs considered. This is only marginally more expensive than 
     electricity produced with coal or natural gas, even without 
     the added cost of capturing the carbon dioxide.

[[Page S6153]]

       And there are much more optimistic cost assessments out 
     there than the Energy Information Administration's.
       But for all the optimism generated by cheaper renewable 
     fuels, they do not, on their own, put the world on the low-
     carbon path necessary to keep climate change in check.
       Progress is faltering on several fronts. The precipitous 
     fall in the prices of photovoltaic cells from 2008 to 2012 
     pretty much stopped in 2013, after rapid consolidation of the 
     industry.
       The International Energy Agency now projects that installed 
     global nuclear capacity in 2025 will fall 5 percent, to 24 
     percent below what will be needed to stay on the safe side of 
     climate change. And carbon capture technologies, which will 
     be essential if the world is to keep consuming any form of 
     fossil fuel, remain hampered by high costs, meager investment 
     and scant political commitment.
       ``The unrelenting rise in coal use without deployment of 
     carbon capture and storage is fundamentally incompatible with 
     climate change objectives,'' noted the International Energy 
     Agency in its Technology Perspectives report.
       Despite the falling costs of renewable energy in the United 
     States, the Energy Information Administration's baseline 
     assumptions project that in 2040 only 16.5 percent of 
     electricity generation will come from renewable energy 
     sources, up from some 13 percent today. More than two-thirds 
     will come from coal and gas. Without some carbon capture and 
     storage technology, drastic climate change is almost 
     certainly unavoidable.
       What is necessary to get us on a safer path?
       White House officials trust that the administration has the 
     tools, including fuel economy and appliance efficiency 
     standards, the Environmental Protection Agency's new limits 
     on power plant emissions and regulations to limit other 
     greenhouse gases.
       Yet the Energy Information Administration's projections 
     suggest how hard the task will be. Though they were developed 
     before the Environmental Protection Agency issued its new 
     rules, they included hypothetical outlines that could mimic 
     some of its effects. In one, coal power plants were 
     decommissioned more quickly; in another, subsidies to 
     renewable energy were kept until 2040. In another, the price 
     of renewables fell faster than expected. None of them did 
     much to move the carbon dial.
       There is one tool available to trim carbon emissions on a 
     relevant scale: a carbon tax. That solution, however, remains 
     off the table.
       If a carbon tax were to be imposed next year, starting at 
     $25 and rising by 5 percent a year, the Energy Information 
     Administration estimates, carbon dioxide emissions from 
     American power plants would fall to only 419 million tons by 
     2040, about one-fifth of where they are today. Total carbon 
     dioxide emissions from energy in the United States would fall 
     to 3.6 billion tons--1.8 billion tons less than today. By 
     providing a monetary incentive, economists say, such a tax 
     would offer by far the most effective way to encourage 
     business and individuals to reduce their use of fossil fuels 
     and invest in alternatives.
       Is this enough? No. This proposal still leaves the United 
     States short of the 8o percent cut in greenhouse gas 
     emissions that the White House is aiming for and that experts 
     consider necessary by 2050 to prevent climatic havoc. But at 
     least it's in the same order of magnitude.
       Most important, perhaps, the Energy Information 
     Administration's estimates make clear that the real 
     constraint lies not in our ability to develop the necessary 
     technologies but in our political will to deploy them.
                                 ______