Skip navigation
Share via:

Pitch

The Carbon Business Opportunity advances conservative principles for free-market individual and government responsibility.


Description

Summary

Funds collected during the Carbon Business Opportunity are distributed to taxpayers proportional to the amount of tax they pay.  The arrangement is simple, implemented via private banks, in order to minimize government overhead.  This revenue-neutral business opportunity creates jobs and boosts the economy.  Businesses in general will experience roughly the same net costs.  People in general will enjoy the roughly the same cost of living.

Carbon Business Opportunity funds are collected at wells, mines, and borders.  The carbon opportunity would apply to imports (goods and fossil fuels) proportional to the imports’ carbon footprint.  For fossil fuels produced in the U.S., the carbon price is collected at the well or the mine based on the sold production.

The Carbon Business Opportunity is a way for hardworking Americans to leverage the power of America’s free market while unleashing American ingenuity.    The Carbon Business Opportunity:

1.     Creates opportunities in America to reward hard work.

2.     Reinforces individual responsibility.

3.     Avoids dependency on government and dependency by government.

4.     Replaces the economy-dragging mish-mash of complex individual state laws.

5.     Allows American business and Americans to compete on a globally level environmental-footprint playing field.    

The Carbon Business Opportunity is a free-market approach to fund-circulating.  It is not a “tax” because the government never “sees” the money.  It is not income redistribution because the funds circle back to people proportional to their contribution to the economy. The general concept of “fund-circulating” could replace many unnecessarily complex regulatory systems currently employed by big government.


Category of the action

Mitigation - Helping U.S. enact carbon price legislation


What actions do you propose?

Just one action – The U.S. Congress would pass the Government-Shrinking Carbon Business Opportunity Act.

 

Equal Opportunity, Small-Government carbon opportunity

 

Simple collection – Gas, oil, and coal companies already carefully track their production and sales because the volume sold is important to both buyer and seller.  Gas, oil, and coal companies already file tax returns.  No new bureaucracy is needed to collect the carbon business opportunity.  (This simple system would replace the large bureaucracies created for carbon trading and “make work” carbon footprint reporting in some states.)

Governments already have customs inspections on imported goods.  International organizations keep track of each country’s carbon footprint.  Again, keep it simple.  Base the carbon tariff on $ per $ of the good.  Energy used to produce a product is proportional to the cost of the product.  Do not rebate the carbon price to Americans exporting goods; doing so is an unnecessary bureaucracy.

Move the collected carbon opportunity funds via commercial banks.  The banks bid on the business every few years.  Ideally the cash distribution system is as fast as the energy distribution system to minimize idle funds, but with some appropriate trade-off to also minimize the cost of the service.  (Think “free” checking in exchange for using your funds.)

Simple reward – Reward carbon opportunity funds to individuals and corporations proportional to the taxes they pay.  Everyone (including businesses) receives carbon opportunity funds proportional to the U.S. income tax they pay.  Not their taxable income, but the tax they pay after finding all the legal ways they can to avoid paying taxes. 

The taxes we pay include: Income, Corporate, Payroll, Social Security, Medicare, Estate, Capital Gains, gas tax, etc.  However, we should work hard to simplify approximations of the total taxes paid.  For example, basing an individual’s estimated total tax on their Federal income tax is simple.  Simplicity reduces the bank’s administration costs and might enable, rather than inhibit, simplifying the Federal Tax code.  Simplicity is also better for privacy.   

Small-Government – Government never “sees” the carbon opportunity funds.  Self-perpetuating bureaucracies administrating credits or distributing “entitlements” are not created.

Equal Opportunity – Everyone has the opportunity to earn their carbon funds by paying taxes.  There is no dependency.  There are no equal outcomes.

 

Improvements after the initial legislation

 

One Nation – The Carbon Opportunity Act would replace a patchwork of state regulations and bureaucracies with the one simple Federal system.  This streamlines business between states.

Performance-based carbon storage – Companies could elect to store carbon to avoid paying the carbon price.  There are too many options for Big Government to pick the best storage solutions: might be biochar in the ground, lumber in skyscrapers, CO2 dissolved in brine a mile below appropriate geologic formations, CO2 reacted with silicate minerals to form rock, CO2 hydrate contained with natural or man-made materials in or on the seafloor, supercritical CO2 stored in depleted natural gas wells, etc.

Small-Government carbon storage - Create a private insurance free-market carbon-storage system.    Keep this simple with a sliding-scale table of the carbon storage value proportional to the life of the carbon storage and the accuracy of auditing stored volumes.  For example storage with a predicted loss rate of 1% per year might earn 10% of the carbon price, while 1% per thousand years might earn 90% of the carbon price.  All storage earning a portion of the carbon price would include a performance bond and private liability insurance.  If the carbon escapes faster than expected, the bond pays into the carbon fund.  If the carbon escapes slower than expected, the carbon fund pays a performance bonus.  The insurance covers local damages caused by escaping CO2.

More money, less waste – The carbon opportunity expense can be higher for escaped or wasted resources.  The short-sighted flaring of North Dakota’s natural gas suggests businesses are not sufficiently motivated to prevent flaring and leaks.  We can use new technology to minimize how waste is “metered”.  We can minimize bureaucracy by paying a bounty to private citizens for detecting waste before the business detects, reports, and pays the appropriate carbon opportunity.  (Methane can be detected within a few meters by devices attached to smart phones or within a few kilometers by vehicle-mounted devices.  Flares can be detected from space.)

Equal opportunity – There may be some pressure to distribute carbon opportunity funds to those who pay little taxes.  Such distributions can remain equal opportunity, not equal outcome.  Keep such distributions outside of government (via private banks).  Limit the fund amounts to whatever the taxpayers volunteer via their options for receiving carbon opportunity funds. Some examples:

a.     Compensate the hard-working poor with K-12 school vouchers.    American’s centrally-controlled K-12 education system is underperforming.  When more parents choose schools with vouchers, our K-12 education becomes the envy of the world, as our free-market college system already is.

b.     Provide vouchers for natural family planning classes and equipment for men and women proportional to their avoidance of abortions and unplanned pregnancies.  (As the carbon opportunity funds fade away, roll this into health care such that religious health providers can address reproductive health insurance with natural family planning.)

c.      Increase the family carbon opportunity of students passing Science Technology Engineering and Math (STEM) Advanced Placement tests.

 

Americans benefit

 

1.     American Gulf Coast states have a globally unique resource which is more valuable after passing the Carbon Opportunity Act.  University of Texas Professor Steven Bryant noticed the brine deep under Texas, Louisiana, Mississippi, Alabama, and Florida is hot and saturated with methane and minerals.  American companies know how to recover the methane and minerals while converting the heat to electricity.  For example, Simbol Materials of California is mining lithium from geothermal brine in California’s Imperial Valley.  A carbon opportunity increases the value of Gulf Coast states’ brine because they would be paid to saturate the brine with CO2 before sending the brine back underground.

2.     A carbon opportunity will trigger American business to discover and introduce cost saving innovations ahead of other countries.  The Porter Hypothesis predicts the opportunity is exactly the kind of challenge where wide-open free market American ingenuity wins.  Americans are already figuring out how to make carbon-neutral energy costing less than other countries’ fossil fuels.  A few examples:

a.     American ingenuity with Hydrofracturing gives us relatively inexpensive natural gas.  More American ingenuity can capture and store the carbon from natural gas while reformatting it to hydrogen less expensively than any other nation.

b.     American ingenuity with hydrothermal processing from the U.S. Department of Energy Pacific’s Northwest National Laboratory appears to have unlocked cost-effective algae-to-energy.

c.      Americans have developed Solid Oxide Fuel Cells (SOFC) which fit into wells.  While generating electricity, the SOFC generates 500°C+ heat.  The SOFC can be underground where its heat gasifies coal.  With this and other technologies, Americans will be able to capture and store the CO2 from gasified coal less expensively than other nations.  Or Americans earn money manufacturing and selling our technology.

3.     A simple carbon business opportunity makes Russia’s oil and gas reserves worth less.  Russia’s President Putin would have less leverage over Europe for his ambitions in the Ukraine and elsewhere.  Our gas would be more attractive because it is sold with pre-paid carbon.  Pre-paid carbon allows Europeans to keep exporting goods to us (and each other) without a carbon tariff on those goods.  The carbon opportunity can be an updated version of President Reagan’s Star Wars.  With Star Wars, President Reagan used American economic muscle and ingenuity to bankrupt the U.S.S.R. (Star Wars was a Cold War ballistic missile defense technology program.)

4.     A free-market U.S. carbon business opportunity minimizes government dithering and kibitzing on carbon capture and carbon removal technologies.  Some environmentalists prefer rapidly eliminating the use of fossil fuels.  Some scientists suggest carbon dioxide removal (CDR) in addition to eliminating fossil fuels.  The U.S. Unilateral Carbon Price lets the free market decide, rather than legislating winners and losers.  American and Canadian companies leading in CDR include: the Archer Daniels Midland Co facility in Illinois injecting 333,000 tons of carbon dioxide a year into the ground from a factory producing corn ethanol. Husky Energy in Canada producing carbon dioxide from ethanol for injection into oil wells.

5.     Per Robert Bryce in "Smaller, Faster, Lighter, Denser, Cheaper", energy in America costs about half as much as energy in Europe or Japan.  We can ramp up to a carbon opportunity that is 110% the cost of storing the carbon dioxide and still have among the lowest energy costs in the world.  Table 1 shows the resulting increase in gasoline or electricity rates with a carbon opportunity fund, before adjusting for decreasing price due to decreasing demand.  Notice how our gasoline still costs less than most of the world.

Table 1 – Effect of ramping carbon opportunity on gasoline and electricity rates. (Not finding how to insert an Excel spreadsheet table or a PDF or a PNG image.) A carbon opportunity cost ramped up to $120/ton of CO2 (aka $450/ton of C) by 2026 adds $1.10/gallon to gasoline, about $0.11/kWh to coal-electricity, or $0.06/kWh to natural gas electricity.

Business in all other countries will continue to be paralyzed by uncertainty, while U.S. businesses surge ahead.  The certainty of ramping carbon opportunity funds over a decade allows private investors to pick technology “winners” and create new businesses.  For example, Americans have already invested in chemical looping to supply pure oxygen for coal carbon capture and storage via the U.S. Department of Energy’s National Energy Technology Laboratory in Morgantown, West Virginia.  The technology is ripe for private investment given a steady indication of future carbon opportunity funds.

1.     American environmentalists will have an interest in American businesses creating more jobs and generally increasing prosperity while responding to the carbon opportunity.  This means a chance for American environmentalists to reinvent themselves onto the same page as American business – make American energy with the carbon opportunity less expensive than other country’s fossil energy.     

2.     A carbon business opportunity can unleash American ingenuity in nuclear power.  The U.S. is poised to leap-frog nuclear technology with fail-safe thorium reactors, ceramic pellets, and more.  China should be buying the new U.S. technology, instead of old Russian nuclear technology.   

3.     While tax-neutral and U.S. economy-neutral, the carbon business opportunity is a U.S. economic stimulus because it is a national challenge combined with investment certainty.  Knowing the carbon opportunity a decade in advance mobilizes free market innovation better than President Kennedy’s challenge to “Put a man on the moon this decade.”


Who will take these actions?

Ultimately, the U.S. Congress passes legislation, which is signed by the U.S. President.


Where will these actions be taken?

The legislative action is taken in Washington, D.C.


How much will emissions be reduced or sequestered vs. business as usual levels?

The primary objective of the Government-Shrinking Carbon Business Opportunity Tax is to shrink government while helping hard working Americans to realize their dreams.  Emission reductions are not material to its benefits, although free-market activity may reduce emissions.


What are other key benefits?

 

1.     U.S. Federal and State Governments become smaller with the Government-Shrinking Carbon Business Opportunity.

2.     Americans benefit as their productivity increases, their ingenuity is unleashed, and America’s children learn the difference between equal opportunity and equal outcomes.

3.     U.S. businesses benefit from uniform markets across states, certainty of pricing for the new technologies, and reduced government interference in selection of “winning” technologies.


What are the proposal’s costs?

The proposal’s costs are near zero for Americans as a whole.  With private banks allowed time to use of the funds, administration costs can be near zero.  Minimize overhead by keeping the carbon opportunity system simple.  A simple opportunity system so shrinks government and reduces business “friction,” it might be a net cost reduction.

A carbon business opportunity means everyone pays a higher rate for fossil energy and everything made of or delivered by fossil energy.  But everyone’s consumption of fossil energy is roughly proportional to the taxes they pay.  Therefore, the price of most goods will not change and might even decrease.

Consider that food requires energy to grow, process, and distribute.  The carbon opportunity means the energy will cost more, initially.  However, the farmer, the processor, and the distributor all pay taxes proportional to how much they earn from growing, processing, and distributing.  Their tax-proportional income from the carbon opportunity keeps their overall costs the same.  Therefore, the cost of food could decrease because: a) dropping demand-price for fossil fuels; b) American free-market ingenuity using less fossil energy; c) free-market guidance to increased American productivity.

There may be some individuals with a larger carbon-footprint relative to the taxes they pay.  For example, consider a widow taking care of several children, particularly teenagers.  The cost of food for people like the widow would not change if all the carbon business opportunity funds were rewarded only to businesses.  Whereas, if some of the carbon funds are distributed to individual taxpayers, the businesses will experience a net increase in cost, at least until American free-market ingenuity kicks in.  


Time line

The U.S. Government-Shrinking Carbon Business Opportunity Act becomes part of 2014 congressional candidate policy debates and becomes law in 2015.


Related proposals

None.  A Government-Shrinking Carbon Business Opportunity is "coloring outside the lines."


References