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Dingell: A dingbat proposal re Global Warming?

by a siegel Thu Sep 27th, 2007 at 07:28:35 AM EST

Representative John Dingell (D-auto industry?) has put out his thoughts re a potential carbon tax and is asking for comments.  Dingell stated that

Because of the complexity and importance of the issue, this is the right time to open up a public discourse on a carbon emissions fee bill.

Representative Dingell has, well, been far from a friend to sensible energy policy, fighting CAFE standards and many other elements that would move the nation toward a better energy policy.

Yet ... yet ... let us take Dingell at face value (for a moment) and examine his concepts.

NOTE This are first draft reactions to the proposal ... so help out in the comments.

Summary of Draft Carbon Tax Legislation Representative John D. Dingell
First off, this has a very serious framing problem ... "Carbon Tax". No, this is not a "tax". The air is a common heritage, what people will be doing is paying a fee for polluting the air that we all breath and the water we all drink and ... Like paying a dumping fee at the local trash dump, polluters should pay a FEE, not a tax!
The earth is getting warmer and human activities are a large part of the cause. We need to act in order to prevent a serious problem. The world's best scientists agree we need to reduce greenhouse gas emissions by 60-80 percent by 2050 in order to limit the effects of global warming and this legislation will put us on track to do just that.
This is true, sort of, but an incredible understatement of the facts. * "human activities are a large part of the cause": truth, the primary cause, e.g., the majority (if not vast majority) * "need to act in order to prevent a serious problem" Guess what, we have a serious problem. We, the Globe, are already seeing real impacts, serious problems. We must act to avoid catastrophic global impacts, that threaten the very concept of the American dream (along with so many other things. * "60-80 percent by 2050": well, the top scientists are stating that 80 percent is a minimum target. The objective should be a Prosperous Climate Friend Economy (e.g., carbon neutral), with 80% a minimum threshhold * "this legislation will put us on track to do just that" well, have to say, I don't quite understand how a carbon tax can assure that. Now, to be honest, this serious understatement and weak language as to risk and scientific views concerns me.
This is a massive undertaking, and it will not be easy to achieve, but we simply must accomplish this goal; our future and our children's futures depend on it.
Yes ... truth ... truthful. Is this, again, a strong enough statement? Is the necessary call to arms required to get Americans to support a carbon fee?
In order to get to this end we need to have a multi-pronged approach. In addition to an economy wide cap-and-trade program, which would mandate a cap on carbon emissions, a fee on carbon emissions is the most effective way to curb emissions and make alternatives economically viable.
Tend to agree, that there needs to be a "multi-pronged", holistic approach. Note that the term "fee" is used here, rather than tax. And, well, I tend to agree that a fee is "the most effective way" in terms of economic management.
Below you will find a summary of the carbon tax legislation I am working on. I invite you to commenton the proposal. Once I have received your comments, I will look at ways we can address the ideas and concerns brought to my attention by the American people.
This is just my first look at this. I plan to look again and comment. I hope that you will as well.
We must remember we all have a common goal and are in this fight together.
Taking this at face value .... YEAH! If this is a serious effort to start a real discussion about best ways forward, fantastic.
I look forward to hearing from you.
Well, he will hear from me. You?
The legislation I am proposing would impose the following:
Well, is this legislation yet? I thought he was asking for our input, our comments before introducing legislation. Confused. ... Dizzy ... Uncertain ...
A tax on carbon: $50 / ton of carbon (phased in over 5 years and then adjusted for inflation) Coal, including lignite and peat Petroleum and any petroleum product Natural gas
Again, that tax line. Now, this is actually sadly rather sloppy in its overall formulation. Okay, this is a $50/ton taxation on carbon. Or, is it? In this case, this would translate to a $13.63 per ton of CO2 fee. (Due to the relative carbon and oxygen weights, divide CO2 by 3.7 to arrive at the carbon weight.) And, well, is that enough to have great meaning in changing the market. As per one of the comments below by NRGGuy, "The actual per pound fee/tax would be less than one cent (0.68 cents), which would only add about 1.5 cents per kWh to the cost of coal fired electricity and a trivial 8 cents per therm of gas. The $/ton is too small to have the kind of impact we need." But, this is a very unclear document. Is carbon the only GHG-related pollutant to be taxed? What about methane? Remember that different Greenhouse Gases (GHGs) have different global warming implications. Methane, again, is roughly 23 times the impact of CO2 (although with a shorter lifespan in the atmosphere). ????????????? Questions abound.
A tax on gasoline: $0.50 / gallon of gas, jet fuel, kerosene (petroleum based) etc?(added to current gas tax) (phased in over 5 years and then adjusted for inflation)
Very much like the first act of Energize America, which proposed a 1 cent/month increase in a gas tax, although EA2020 calls for it to be a 10-year process. Note that this level of taxation would have only a relatively small direct impact on gasoline usage. This would leave US taxes almost an order of magnitude lower than, for example, most European economies.
Exemption for diesel: The fuel economy benefits of diesel surpass even its emissions benefits; it provides about a thirty percent increase in fuel economy and a twenty percent emissions reduction
Europeans favor diesel, to reduce fuel use and, therefore, CO2 emissions. But, the fuel efficiency should help pay for itself. Not quite sure that I can agree with this tax benefit.
Biofuels that do not contain petroleum are exempt. Biofuels blended with petroleum are only taxed on the petroleum portion of the fuel.
Well, biofuels (at this point) are far from carbon pure considering the energy required to make them. But, perhaps the 'absence of tax' could replace the direct tax subsidy that corn-based ethanol now receives.
**The .50 gas tax is in addition to what is derived from the per ton carbon tax in the previous bullet.
This would mean that the gas tax, in effect, would be roughly 60 cents as a gallon of gas has about 5.5 pounds of carbon. Note, that Americans have faced a tripling of their price of gasoline since the late 1990s and, yet, the use of gasoline has increased.
Phase out the mortgage interest deduction on large homes. These homes have contributed to increased sprawl and longer commutes. Despite new homes in and of themselves being more energy efficient, the sheer size, sprawl and commutes lead to dramatically more energy use, or to put it more simply, a larger carbon footprint.
This is a bold statement and justification. But, if we are basing things on carbon and pollution, how to differentiate between a highly efficient large home with solar water, solar electricity, wind electricity, gray water filtration, etc and a small home with no insulation, an inefficient heating system, etc? If the objective relates to GHG, this is an uncertain move -- even if it might be right for other reasons. And
Specifically, the proposal: Phases out the mortgage interest on primary mortgages on houses over 3000 square feet. Exemptions for historical homes (prior to 1900) and farm houses. Exemptions for home owners who purchase carbon offsets to make home carbon neutral or own LEED certified homes. An owner would receive 85% of the mortgage interest deduction for homes 3000-3199 square feet 70% for homes 3200-3399 square feet 55% for homes 3400-3599 square feet 40% for homes 3600-3799 square feet 25 % for homes 3800-3999 square feet 10% for homes 4000-4199 square feet 0 for homes 4200 square feet and up See an example of how the changes in the mortgage interest deduction would work.
Again should a 2500 square foot home that is horribly energy inefficient be favored over the renewable power run 5000 foot home? Why not an energy rating system, with some balancing for size/overall use if we are going to take this route. This seems designed to anger people, add confusion to the tax code, and only peripherally address GHG issues.
Where will the revenue go?
This is a very good question. Let's take a look.
First and foremost, the Earned Income Tax Credit will be expanded. This helps lower income families compensate for the increased taxes on fuels. Expansion of the Earned Income Tax Credit Zero Children: max earned income level from $5,590 to $7000 Phase-out from $7000 to $9000 One Child: Max earned income level from $8390 to $10,000 Phase-out from $15,390 to $17,000 Two or More: Max earned income level from $11,790 to $15,000 Phase-out from $15,390 to $18,000
Okay, something that I can support, that makes sense to help those lower on the economic ladder deal with carbon fees.
The revenue from the gas tax goes into the high way trust fund, with 40 % going to the mass transit and 60 % going to roads. The revenue from the tax on jet fuel goes into the airport and airway trust fund.
Huh??? A big huh??? Why not far more of the gasoline tax to building a better rail network across the nation? Why should the fees be spent, so much, to subsidize the very things that we want to move away from. Why not, at minimum, use jet fuel fees for fostering mass transit to airports, reducing airport CO2 footprints, and R&D for more efficient aviation? But, actually, more appropriately, for everything in the economy other than aviation.
Finally, the revenue from the fee on carbon emissions will go into the following accounts: Medicare and Social Security Universal Healthcare (upon passage) State Children's Health Insurance Program Conservation Renewable Energy Research and Development Low Income Home Energy Assistance Program
This is a reasonable 'draft' list, sort of ... Why, however, should we fund SCHIP through carbon fees, specifically? Why should this fund Medicare and Social Security? Why? Why not address all national financial requirements, e.g., pay for Iraq via a gas tax? Why not take 50% of the fees and give them to all Americans, on an equal basis, as a check 1 December each year -- it is our common property that is being devastated after all. And, the other 50% should be 100% focused on energy and global warming related items. Do things to lower energy costs for average Americans, American government (at all levels), American businesses. This list is, again, a lot of 'feel good' items but it does not suggest a serious thinking through of the issue. For example, how much money would such a fee make available and how would it be split via these areas? By the way, notice that Dingell gives no indication, in any way, as to the quite real economic benefits from things like reduced health impact from pollution, jobs for energy efficiency and renewable energy, savings in homes/businesses/government due to energy efficiency, etc ... This truly does not seem to be a seriously worked out concept and proposal, it certainly is not fully fleshed out. And, well, there is another quite serious question about this. Notice how this plays to RWSM noise/talking points about the "tax-and-spend Democrat Party". * Create a tax * Hit a major tax benefit * Give money solely to 'librul' sounding programs Hmmm ... is this is seeking to outrage rather than create support? Is Dingell sincere? Now, there are reasons to question John Dingell's sincerity on this. He is far from the greatest friend to the environment. In the environment and Democratic Party friendly Wall Street Journal earlier this year he was quoted negatively based on this CNN (thank you David Roberts) exchange.
SWAIN: Mr. Chairman, I want to go back to your statement that the American people want action [on climate change]. Does that also correlate with the American people being willing to pay higher prices, because of energy legislation? DINGELL: I sincerely doubt that the American people are willing to pay what this is really going to cost them. I will be introducing in the next little bit a carbon tax bill, just to sort of see how people really feel about this. And it will impose, for example, on gasoline a 50 cent tax. It also will place a very substantial tax on CO2 emissions, amounting to a double-digit tax on tons of CO2 emitted. And I think, when you see the criticism I get, you'll understand that you will be getting the answer to your question.
Hmmm ... does this look to be a plan to do something to undermine momentum for action? We could look to the NYTimes from 5 Sept: What Is John Dingell Really Up To?
Since [the CNN interview], though, he has explained away the interview by saying that it’s the job of political leaders like him to persuade Americans to change their minds. He has also been offering eloquent, full-throated defenses of the tax. And here’s the thing: he has a really good argument.
From that quite interesting article, trying to figure out Dingell's motivations, the ending
I asked him whether Mr. Gore, who has been both a Dingell nemesis and ally at various times, had been right for all those years he was pointing out what was happening to the earth’s climate. “I think a cold statement on that point would be yes,” Mr. Dingell replied. And would it have been easier to solve the problem if we had started earlier? “What’s the saying? The saddest words in the English language — ‘might have been.’ ”
Is Dingell is serious here? Are the problems with this initial concept simply problems for something that will be strengthened? Or, is this a poison pill? I don't know. But, my comments to the site will treat this seriously, suggesting ways to make this better. And, providing arguments to support the requirement. *UPDATE*: Grist has published a glowing, high quality analysis of the proposal by Charles Komanoff, Carbon Tax Center: Dingell opens the door. Do make sure to consider/read that before going to comment on the proposal at Dingell's site.

Congressman Dingell,

Thank you for enriching the discussion with this proposal and opening it for comment.  Here are a few of my initial reactions.

 I do not believe that we should call this a "tax". Polluters should pay a FEE (or a royalty) for the privilege of polluting.  Just as one pays the local dump a "fee" for dumping trash.

 I am concerned that this summary does not discuss, in any meaningful way, the positive benefits that would come from reduced CO2 (and related) pollution.  Such as improved health from reduced coal-fired particulates in the air, etc ...  This "summary" is not placing a very difficult issue in a good context.

Also on benefits, there should be discussion as to the economic benefits (jobs, reduced imports, etc ...) and security (reduced need to protect oil) and ... benefits of reducing reliance on fossil fuels and going to energy efficiency/renewable energy as cornerstones to the economy.

 The summary understates the science, the target is not strong enough, and the threat/benefit (as above) is not clearly/strongly enough stated.

 The proposal only talks to carbon ... not methane and other GHG. Just wondering.

 I disagree with the targeted use of funding.  (a) should be much (MUCH) more heavily focused on making the nation more ENERGY SMART -- help poorer people flatten their total energy bills by rapidly helping them be more energy efficient (thus reducing the carbon fee's impact).  Foster overall energy efficiency (thus enabling shutting down coal-fired electricity plants).  Help government at ALL levels be more energy efficient (which would reduce the citizen's burden for paying for government).  Too many of the items within the list are items that should be funded (through other means).  And, for example, national health care will end up lowering the nation's total health care bills (as would aggressive energy efficiency.

I disagree with so much of the gasoline tax money going to roads and airports, reinforcing the polluting systems -- for example, why not use the money for improving rail, electrifying it, and increasing its reach/extent to reduce demand for road/air travel.  Why not use "gasoline tax" to help people pay for PHEVs (plug-in electric vehicles)?

 There is nothing here about how to capture the Chinese / Indians / anyone else who does not undertake something similiar. (Why not cooperate with the Europeans and Japan to impose import duties on imports from any country that does institute a carbon fee and use those resources to create a Prosperous, Climate Friendly Economy based on energy efficiency and renewable (or nuclear) energy?

Sir, there has been much discussion that this is being floated solely to help kill the potential for passage of critically needed legislation to help change the nation's reckless path toward energy and Global Warming disaster. I hope that is not the case. At this time, however, I find that your summary significantly understates the threat re Global Warming (and doesn't mention Peak Oil, cost of oil imports, etc); does not discuss the significant benefits from a changed path re energy and pollution; and proposes a use of money that will engender criticism of this as massive "tax and spend Democrat Party" concepts to hurt the economy.

Blogging regularly at Get Energy Smart. NOW!!!

by a siegel (siegeadATgmailIGNORETHISdotPLEASEcom) on Thu Sep 27th, 2007 at 07:29:47 AM EST
I'm against carbon taxes, precisely because governments treat taxes as income they can spend on other things.

Unless the money is being used to directly offset and minimise carbon production, the idea of a carbon tax is another clueless sop to the 'markets will fix everything' belief, with a bit of statist spin.

What's needed is carbon rationing. If you don't use your allowance, you can sell it. If you need to use more than your allowance, you'll need to buy it at the going rate.

Governments should administer the scheme, and take a cut from sales which can be spent on carbon mitigation, sustainable R&D and policy research to retool the entire economy in a more sustainable direction - not just by making obvious energy savings, but by restructuring food production, commuting, and other pre-carbon traditions.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Sep 27th, 2007 at 07:53:46 AM EST
All proposals to change behavior by use of economic inducements can be traced back to an unexamined axiom - the existence of the rational consumer.

Take the example of the cap and trade proposals. One can rephrase them as so: "We will make it more expensive to continue along the present course, as a result the world will find a technological way to compensate for the new restrictions."

Taxes and quotas can provide an incentive to work on innovation, but they can't guarantee innovation. The "free market" allocates resources, it doesn't invent things.

We are currently faced with two problems with no present technological solutions. First, is any way to control carbon emissions that is not related to decreased consumption. This can be through improvements in efficiency or actual cuts in demand. A tax scheme could work in China, for example, where new coal-fired power plants are not using the best available technology. It can't do anything for plants that are already technologically advanced.

The second problem has to do with the pervasiveness of globalization. Things are now routinely shipped around the world that used to be produced locally (or not found in the local market at all). I just bought some Australian lamb in the supermarket. We have sheep right here in NY State. Why aren't they for sale?

The globalization has also led (indirectly) to exurban sprawl. Transport infrastructure needed to ship goods by truck over large distances allows housing to be built along these routes without the builders having to incorporate the costs of access into their housing prices. As a consequence there are more cars on the road and they travel further. There are no viable alternatives to this at present - carbon tax or no.

To install mass transit or change commuting and shopping behavior will take more than a new tax. Once again raising the cost provides an incentive, not a solution.

A tax has great appeal to politicians. It is easy to pass, it is easy to collect, it is indirect so no one is to blame and it requires no changes in infrastructure. The fact that it won't achieve the aims claimed is for future generations to deal with. Mr. Dingell won't be around to see the consequences of his symbolic actions. (I'm assuming that he will live a normal lifespan and he is already 81 - I'm not wishing him dead.)

Until a new wave of leaders emerges that is willing to break some eggs to make the omelet, nothing substantive will happen. If Katrina hasn't been a wake up call, I don't know what it will take.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Thu Sep 27th, 2007 at 09:33:10 AM EST

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