Hill Heat: Tag carbon tax

Climate Change Legislation and Revenue Recycling

The Cunctator — Tue, 16 Sep 2008 08:00:00 -0500

Clean Air-Cool Planet and the Environmental and Energy Study Institute (EESI) invite you to a policy discussion to explore how revenues generated through potential climate change legislation can be recycled through the tax code to lower the overall societal cost of reducing greenhouse gas emissions. During debate of climate legislation on the Senate floor earlier this year, use of generated revenues was a significant area of discussion.

The expert panel will include a Member of Congress who has sponsored climate change legislation that provides for revenue recycling; a senior analyst from the Congressional Budget Office who has written extensively about the design of efficient climate change legislation; a leading academic; and experts from two think tanks.

Panelists:

Rep. John Larson (D-CT), Member, House Ways and Means Committee
Terry Dinan, PhD, Senior Advisor for Climate Policy, Congressional Budget Office
Kenneth P. Green, PhD, Resident Scholar, American Enterprise Institute
Robert Repetto, PhD, Senior Fellow, UN Foundation
Robert J. Shapiro, PhD, Chairman of Sonecon, LLC; former Under Secretary of Commerce for Economic Affairs

Continental breakfast will be served.

Please RSVP to Brenda Rogers at (202) 775-8971 or BRogers@cleanair-coolplanet.org with your name, affiliation, phone number and email address.

Counting the Change: Accounting for the Fiscal Impacts of Controlling Carbon Emissions

The Cunctator — Thu, 01 Nov 2007 11:30:00 -0500

The purpose of the hearing is to explore the fiscal and distributional impacts of limiting greenhouse gas emissions.

Witnesses

Dr. Peter Orszag, Director, Congressional Budget Office
Robert Greenstein, Executive Director, Center on Budget and Policy Priorities
David D. Doniger, Policy Director, Natural Resources Defense Council
Anne E. Smith, Ph.D., Vice President, CRA International

Witnesses testified that global climate change will have serious effects— Witnesses testified that the atmospheric concentrations of greenhouse gases, particularly carbon dioxide, have gradually increased over the past century and are contributing to the warming of Earth’s climate.

In light of the scientific evidence about the potential damages this could cause, momentum is growing to impose mandatory limits to stabilize and eventually reduce U.S. emissions of greenhouse gases.

Taking action now to mitigate greenhouse gas emissions would produce social benefits exceeding costs, according to the Congressional Budget Office (CBO)— While it is difficult to assign a quantitative value to the benefits of climate change mitigation, CBO testified that “most analyses suggest that a carefully designed program to begin lowering carbon dioxide (CO2) emissions would produce greater benefits than costs.” This hearing examined ways to minimize the cost of climate change policy, apart from the benefits that would be derived from pursuing the policy in the first place.

CBO values carbon market in the billions—One of the most prominent methods of reducing greenhouse gas emissions involves a “cap-and-trade” mechanism. Under this system, the total level of CO2 emissions would be capped and corresponding emissions allowances would be issued. According to CBO, “the annual value of emissions allowances would be roughly $50 billion to $300 billion by 2020.”

According to CBO, under a cap-and-trade system, giving allowances away for free would generate windfall profits for private industry and shareholders—According to CBO’s review of the evidence, less than 15 percent of the total value of the allowances would be needed to compensate for the net financial losses of companies affected by the policies to restrict emissions. CBO cites one study that examined the impacts of a 23 percent reduction in emissions. Under this scenario, if all of the allowances were distributed for free to energy producers, stock values would double for oil and gas companies and increase more than sevenfold for coal producers.

Giving emission allowances away will not solve issue of energy prices, according to testimony—Witnesses testified that it is a common misperception that giving away the allowances to affected companies will mitigate against energy price increases. The law of supply and demand means that energy prices would be expected to rise whether energy companies have to buy allowances or are given them for free. A cap on emissions will limit the amount of energy produced from fossil fuels. Regardless of whether the government gives away or sells the allowances, witnesses testified that market forces would be expected to raise the price of fossil fuel energy.

Witnesses testified that government’s capture of the carbon market’s proceeds can be used to mitigate economic impacts— If allowances are sold, such as through an auction, the government would capture significant resources that could then be used to buffer the negative impacts of carbon trading systems for certain sectors, regions, and households.

Climate change control policies could disproportionately affect low-income households— The Center for Budget and Policy Priorities (CBPP) estimates that the average increase in energy-related costs for the poorest fifth of the population could amount to $670 to $950 per year (from a modest 15% emissions reduction). “Households with limited incomes will be affected the most by those higher prices, since they spend a larger share of their incomes on energy-related products and services than more affluent households do,” said Bob Greenstein, Executive Director of CBPP.

14 percent of auction proceeds would fully offset the increased costs to impoverished families, according to CBPP— CBPP estimates that the impact of carbon controls on the poorest 20 percent of the population could be fully offset by using just 14 percent of the total resources.

According to CBPP, use of existing mechanisms such as electronic benefit transfers and increases in the Low Income Home Energy Assistance Program would be the most effective way of reaching large numbers of low-income households.

Carbon tax vs. cap-and-trade— Carbon taxes represent another option to control greenhouse gas emissions. While CBO pointed out that “a tax is generally the more efficient approach,” CBO Director Peter Orszag (along with other panelists) suggested that there are ways of enhancing the economic efficiency of a cap-and-trade program to provide flexibility and minimize price spikes.

Federal cap-and-trade system may be reflected in the budgetary scoring process— CBO indicated that “there is a solid case to be made that even allowances that were given away by the government should be reflected in the budgetary scoring process—specifically that the value of any allowances initially distributed at no cost to the recipients should be scored as both revenues and outlays, with no net effect on the budget deficit.”

A Climate of Change: Economic Approaches to Reforming Energy and Protecting the Environment

The Cunctator — Tue, 30 Oct 2007 09:00:00 -0500

On October 30, The Hamilton Project at Brookings will host a two-part forum on mitigating climate change through market mechanisms and new technologies. In addition to the release of a new Hamilton Project strategy paper, the forum will highlight two new discussion papers on how to best design market mechanisms to reduce greenhouse gas emissions and will include proposals to expand — and possibly restructure — the federal research and development program to better promote the development of new greenhouse gas reducing technologies.

Former U.S. Treasury Secretary Robert E. Rubin and Hamilton Project Director Jason Furman, also a Brookings senior fellow, will open the event with a special award presentation, followed with opening remarks by former U.S. Treasury Secretary Lawrence H. Summers on economic approaches to energy security and climate change—the subject of the new strategy paper.

The new Hamilton Project strategy paper argues that the best way to address climate change is to give the private sector the right incentives to undertake emissions reductions. At the same time, the strategy calls for policies to protect low- and middle-income families from the consequences of higher energy prices.

The two new discussion papers will feature alternate views on how to best harness market forces to protect the environment. Gilbert E. Metcalf of Tufts University will discuss his proposal for a carbon tax and Robert N. Stavins of Harvard University will present his proposal for a cap-and-trade system. John Deutch of the Massachusetts Institute of Technology and John Podesta of the Center for American Progress will also discuss their recent proposal for a new federal research and development strategy, and Richard Newell of Duke University and Resources for the Future will share his ideas for creating science and technology policies that would enable new technologies to work effectively.

Welcome and Special Presentation

Robert E. Rubin, Citigroup Inc. and Jason Furman, The Hamilton Project

An Economic Approach to Energy Security and Climate Change

Lawrence H. Summers, Harvard University

Panel One

Creating a Green Market: How to Best Price Carbon

Moderator: Sebastian Mallaby, Council on Foreign Relations
Gilbert E. Metcalf, Tufts University
Robert N. Stavins, Harvard University
Jason Furman
Kathleen McGinty, Pennsylvania Department of Environmental Protection

Panel Two

Warming up to New Technologies: Innovating Our Way To a Stable Climate

Moderator: Roger C. Altman, Evercore Partners
John Deutch, Massachusetts Institute of Technology
John Podesta, Center for American Progress
Richard Newell, Duke University
Kelly Sims Gallagher, Harvard University
David Sandalow, Brookings Institution

Hyatt Regency Regency Ballroom 400 New Jersey Avenue, NW Washington, DC

Dingell Unveils Carbon Tax Proposal

The Cunctator — Wed, 26 Sep 2007 21:01:00 -0500

As he announced he would last month, Rep. John Dingell (D-Detroit), chair of the House Energy and Commerce Committee, unveiled draft legislation for a carbon emission fee and related elements.

Dingell is soliciting comment online.

The elements:

A $50 tax per ton of carbon (approximately equivalent to a $14 price on CO2, not the $100/ton CO2 reported by CNSNews) to be phased in over five years and then indexed to inflation
- Revenues will be apportioned to Medicare and Social Security, universal healthcare, SCHIP, conservation, renewable energy research and development, and LIHEAP
A $0.50/gallon gasoline tax to be phased in over five years and then indexed to inflation
- Diesel would be excluded from this tax because “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,” figures basically in line with the Union of Concerned Scientists report, The Diesel Dilemma “on an energy-equivalent basis, each gallon of diesel fuel results in about three percent more heat-trapping gas emissions than gasoline.”)
- Biofuel blends would only be taxed on their petroleum content
- Revenues go to the highway trust fund, with 40% going to the mass transit and 60% going to roads
A $0.50/gallon jet fuel tax, with revenues going into the airport and airway trust fund
McMansion provision: Phases out the mortgage interest deduction on primary mortgages on houses over 3000 square feet, going to zero for homes 4200 square feet and up
- 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
- Budget savings will go to pay for an increase in the Earned Income Tax Credit

Larson Carbon Tax Bill: America's Energy Security Trust Fund Act (HR 3416)

The Cunctator — Thu, 16 Aug 2007 11:27:00 -0500

Just before the August recess, Congressman John B. Larson (D-Conn.) introduced HR 3416, a federal carbon tax proposal that follows the basic model of Al Gore’s carbon tax recommendation.

Elements:

Covers coal, petroleum, and natural gas
Only regulates carbon dioxide content, not other GHG emissions (the bill calls for a proposal to cover those emissions within 6 months of enactment)
Tax starts at $15 per ton and rises at 10% faster than the cost of living adjustment each year
Tax refunds or credits include feedstock and any offset project other than enhanced oil recovery, and all exports
Revenues raised go into “America’s Energy Security Trust Fund”. 1/6 up to $10 billion goes to clean energy technology R&D, 1/12 goes to industry relief (declining to zero by 2017), and the remainder goes to offset payroll taxes.

John Dingell Announces Global Warming Proposal

The Cunctator — Mon, 13 Aug 2007 15:30:00 -0500

At his town hall meeting last week, House Energy and Commerce chairman John Dingell unveiled the outline of his global warming legislative plan, which he will introduce in committee on September 1:

cap-and-trade system with an 80% cap by 2050
$100 per ton CO2 emissions tax
50-cent increase in federal gax tax
funding for research on renewable energy
ending the McMansion mortgage deduction (homes larger than 3,000 square feet)

Glenn Hurwitz at Grist pens a stinging assessment of the chairman: Dingell is dispensible.

So far, he’s fought hard against all steps forward, but it hasn’t made much difference in policy. That suggests that environmentalists and Democrats would be well served to reconsider conventional wisdom about Dingell. Partly because of his gratuitous and repeated swipes at leadership and the environmental movement, his sway with both leadership and rank-and-file Democrats is considerably less than it once was. As the RES vote and Hoyer’s prediction that Congress will pass aggressive fuel efficiency standards shows, his support is no longer essential to passing major environmental legislation. This doesn’t mean that Democrats or environmentalists can ignore all sometime-opponents of environmental progress within the caucus (some, like Gene Green and Charlie Gonzalez, have shown that they retain considerable pull), but it does mean we can stop obsessing about Dingell.

Earlier at Grist David Roberts criticized the Greenpeace activists protesting Dingell’s recent efforts to block an increase in CAFE standards: Dingell’s dimwitted detractors.

Argh. Silly, gimmicky, irrational crap. If this is what Dingell runs into, it’s no wonder he holds green activists in such contempt. Relative to what Dingell’s proposing, the difference between a 35mpg CAFE (which he supports) and a 45mpg or 50mpg CAFE (which greens support) is meaningless. Utterly and completely trivial. A distraction. If we could get in place a carbon tax and a cap-and-trade system, the effects will dwarf minor changes in CAFE. Instead of hectoring Dingell about CAFE, activists should be using their energy to push other legislators to support these bills.

What's Missing from the House Energy Bill; Dingell on Carbon Tax

The Cunctator — Thu, 02 Aug 2007 10:10:00 -0500

The New York Times has an editorial on the energy bill to be debated this week (HR 3221): An Incomplete Energy Bill.

The House will begin debating Friday on a generally useful energy bill that would increase energy efficiency, encourage more responsible oil and gas development on public lands and stimulate investment in cleaner fuels. Yet the bill is incomplete. If it truly hopes to address the problems of global warming and energy independence, three vital issues need to be addressed.

The three missing components:

CAFE Standard (Markey-Platts, HR 1506)
Renewable Energy Standard (Udall, HR 969)
Low-Carbon Fuel Standard

This is also the Union of Concerned Scientists platform.

Rep. Dingell, meanwhile, wrote an op-end on the carbon tax: The Power in the Carbon Tax. It’s a critical insight into the thinking of perhaps the most influential person in Congress in shaping global warming policy.

I apparently created a mini-storm last month when I observed publicly for at least the sixth time since February that some form of carbon emissions fee or tax (including a gasoline tax) would be the most effective way to curb carbon emissions and make alternatives economically viable. I said, as I have on many occasions, that we would have to go to some kind of cap-and-trade system for carbon emissions.