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History shows that incentives to reduce emissions are more effective reducing emissions than simply increasing the price of fossil fuels.


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Summary

The Carbon Tax is levied on fossil fuels based upon the carbon dioxide emissions generated by each fuel. Historical price increases of fossil fuels from 2000-2012 show that significant increases in prices can have little impact on consumption.  In 2000, the average price of gasoline was $1.76/gallon.  By 2012, the price increased to $3.40, an equivalent increase of a $184/ton carbon tax rate. During the same time, consumption increased by 306% nationwide. Those states that increased spending on conservation, renewable and alternative energy programs saw fossil fuel consumption (and thereby emissions) decrease significantly compared to other states.  When some funding is allocated towards conservation, renewable and alternative energy incentive programs, these funds become seed capital that is matched by state programs & owners. Multiplying the amount spent on emission reductions and accelerating emission decline.  It is possible to track spending, and project how these programs reduce emissions and create jobs.  Massachusetts leads the nation as the most energy efficient state in the nation with programs like the Massachusetts Renewable Energy Trust (MRET) and the Regional Greenhouse Gas Initiative (RGGI).

Carbon Tax proposals for revenue to go back to citizens and corporations do not guarantee that the money will be spent to reduce emissions.  Also, a flat rate return does not help lower-income citizens who are more impacted by increases in fuel costs. Incentives to reduce emissions can be structured as revenue neutral such as tax credits or rebates.  Other examples include the MRET or the British Columbia Energy Plan, which includes incentives to reduce emissions and a Carbon Tax.

Since the goal of such a tax is to reduce emissions, over time there will also be reduced fossil fuel consumption and also a reduction in revenue from this tax.  Therefore replacing one tax with a carbon tax would not be “revenue neutral” but, in fact, be “revenue negative” over time


What actions do you propose?

 

There are equations used to calculate the Carbon Tax based on the chemistry of the fuel. The general rule is; the more solid the fuel, the greater the tax.  Even though the tax is levied at the fuel source; it is a consumer tax.  The more carbon fuels consumed, the larger the carbon tax bill, the higher the tax revenue. There are two fundamental issues of Carbon Tax: One of math and one about policy.

•    What is the Carbon Tax Rate?

•    Where does the revenue go?

 

Nobody likes increased taxes. The political reality about increasing taxes in modern times makes any tax increase an issue.  A Carbon Tax that is too high, or is poorly structured can create an populist uprising during an election that can overturn an unpopular Carbon Tax bill, as was demonstrated by Australia in 2014.  A well structured bill, demonstrating effective emissions reductions can be popular with the public, such as the BC Carbon Tax, which is part of a broader energy plan that includes various incentives to reduce emissions as “carrots” to the “stick” of increased fuel prices. To reduce emissions there needs to be efforts throughout society for conservation, renewable and alternative energy projects. To diversify our energy portfolio takes money, the question is how to fund these efforts. Incentives will accelerate the adoption of alternative energy and reductions in fossil fuel emissions and consumption.

 

While there are many proposals that advocate a “revenue neutral” plan that exclusively provides money back to the people and/or corporations, this approach has no means to track if or how this money is spent to reduce emissions. Providing incentives through tax rebates or matching grants provides consumers and business means to reduce their fossil fuel consumption and become more energy efficient, resulting in long-term financial savings for consumers and increased competitive advantages for businesses.  This approach also provides a means to track spending on emissions reduction and projections of emission declining over time.

 

6 of the top 7 global companies create wealth with fossil fuels and dominate the global energy supply and agenda.  They are fighting this transition and don't want to end on the trash heap of history.  These companies will either have to redefine themselves or drop significantly in their global rank. It will take a significant scale in the change of capital investments from fossil fuels to renewable and alternative energy to break civilization away from the grasp of the carbon fuel colossus that powers our civilization and poisons our planet. It is top dog in our modern times and its fall will be tragic for some, joyous for others.  An effective Carbon Tax can make sure it does not take down our civilization with it.


Who will take these actions?

Activist must reach out to their elected officials to demand action on climate change can provide measured results in reduction.  This proposal is an example of effective climate change legislation that can accelerate emission reduction. To change the national agenda about climate change, it must be the top issue in the 2016 Presidential elections.  Activists must question all candidates on how they plan to address climate change at every possible opportunity.

A Senator brings a snowball onto the Senate floor to claim that global warming is a hoax. Some Presidential candidates don’t believe climate change happening, or addressing global warming will have a negative economic impact. Others are claiming civilization has nothing to do with climate change and people are “Neanderthals” if they think so.

None of these beliefs are true. Unfortunately politicians don’t do through a peer review process similar to scientists.


What challenges will be faced in implementing this proposal and how will they be overcome?

We must create political action to make climate change the top issue in the 2016 election.  Politicians who deny, question or otherwise obstruct climate change action should be voted out of office. 


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

It is important to note that emissions have been declining for this country, even though the latest information does not take into account emissions from the recent fraking technology revolution.

Building new alternative energy and renewable energy infrastructures takes both time and money.  The result is fuel savings over decades, from solar panels on family roofs to off shore wind farms. Unlike other carbon tax approaches, funding these incentives will provide a means to measure emissions reductions.  Funds are matched, projects are documented, emission reductions can be estimated and in the long term, reductions in consumption can be measured.

Fossil fuel price increases from 2002-2012 show simple price increases do not guarantee emission reduction.  By including incentives for conservation, renewable and alternative energy provides these technologies help to compete against existing tax and financial advantages held by the dominant fossil fuel industry.


What are other key benefits?

While a share of the revenue funds emissions reduction, some money would be returned to citizens and corporate as tax refunds or rebates to “sweeten” the deal; but this proposal is not a placebo.

A Carbon Tax Bill is a jobs bill.  These investments have a long-term benefit for the owner and create construction and other service jobs. When revenue from a Carbon Tax is spent on conservation programs, the result is insulation and heating improvements and repair.  Investments in Alternative Energy could fund Wind farms further offshore than Cape Wind.

The focus of this approach is to reduce the demand for fossil fuel consumption by increasing incentives and programs for conservation, public transportation renewable and alternative energy. Reducing demand for fossil fuels also reduces emissions through the entire fossil fuel supply chain.  The end-game of any successful climate change action is to keep fossil fuels in the ground because we don’t need them anymore.


What are the proposal’s costs?

The proposed Carbon Tax cost is the following:

  • A Carbon Tax starting at $10/ton, increasing at $5/ton until the peak of $50/ton is reached.  This tax will cover all fossil fuels at the source of entry into the supply chain. Businesses who use these fuels in manufacturing processes (i.e., not burned) will be provided with a waiver that can be including within their quarterly tax filing.
  • The allocation of revenue from this tax would include tax refunds for citizens (25%), Businesses based on their full-time employment (25%), consumer and business incentives for conservation, renewable and alternate energy programs  (25%), energy assistance for lower income families (10%), Experimental Alternative Energy Research (5%) and assistance to cities, towns and non-profits (5%) and funding of Public Transportation (5%).  The latter groups typically have the oldest, draftiest buildings and thereby have the greatest opportunity to reduce emissions.

While this tax increase is phased in over a decade, the increase is significantly less than the fossil fuel price increase from 2002-2012.  This allows consumers and business to plan ahead for future price increases. As was demonstrated in this previous decade, some people and corporations may take advantage of this opportunity while some will not.

A well-planned Carbon Tax can cut emissions, reduce the environmental impact and improve the economic foundations by reducing the import of energy and fuels. It is more like silver buckshot instead of a silver bullet and should be part of a broader energy plan and strategy to reduce consumption and develop a more energy independent infrastructure for each region of the country. The reduction of carbon dioxide emissions over time also reduces annual Carbon Tax revenue. 

The bottom line:  An effective Carbon Tax that funds programs and incentives to reduce carbon dioxide emissions will reduce the tax burden over time while providing long-term savings consumers and businesses.


Time line

Seriously, nothing will change in Washington as long as a powerful minority is successful in electing politicians who deny or oppose climate change.  Any political change will need to be achieved through elections.  Between now and the 2016 election the primary focus must be to put climate change as a primary issue for the Presidential campaign. Either the candidates who deny climate change will change their opinion, or (hopefully) not win in in the election.

 

Working with politicians to address climate change would take another 2-3 years to pass through legislation.  Once the tax is enacted the full rate would be phased in over another 10 years.  While the tax rate increases, incentives for emission reductions also increase, accelerating emissions decline.

 

As was demonstrated by the Massachusetts Renewable Energy Trust, the more conservation, renewable and alternative energy projects the less demand for fossil fuels.  Funding for other alternative energy programs (such as fusion) can provide utility-grade power on demand to offset sporadic alternative energy sources such as wind and solar.

As demand for fossil fuel drops, prices drop, production drops, and fossil fuels remain in the ground.  Eventually future generations will be shocked and surprised that this current age used such a precious commodity for manufacturing like oil to burn as fuel.


Related proposals

This contest is about "how" a national price on carbon could be implemented, not just what that price would be.

Many of the submissions for 2015 propose various ways to increase the price of carbon fuels and/or shift other sources of tax revenue to the carbon tax.

While these proposals sound straightforward, there is very little coverage regarding to the political reality of what it will take to implement true climate change legislation in this country.

The progressive party is already convinced climate change is an issue. The conservative party either needs to change from inside to acknowledge climate change is an issue or loose elections because climate change is an issue that they have ignored or denied that their own political peril.


References

Explanations of how modern civilization is causing climate change

Media Articles on Civilization Causing Climate Change

 

Other Sources

 

Benefits of funding carbon emission reduction programs

American Council for an Energy-Efficient Economy has a report on Energy Efficiency Tax Incentives in the Context of Tax Reform

Germany leads the way in reducing emissions and supporting renewable energy through incentives and taxes.  The result is a positive impact on the German economy.

The World Resources Institute Report called "Seeing is Believing" is outstanding.

The Center for American Progress report on how "Progressive Carbon Tax Will Fight Climate Change and Stimulate the Economy"

MIT Report – Cutting Emissions pays for itself

Forbes Magazine and ACEEE rank states for energy efficiency.  It’s interesting to point out that the top ranking states spend the most on conservation, renewable and alternative energy programs per capita.

Carbon Taxes already in Place (or have been)

BC Climate Action Plan & their (popularCarbon Tax

An finally, the failure of Australia's Carbon Tax covered in the Guardian.