Time to Comment on Proposed Carbon Tax Legislation

Last week, two US Senators and two US Representatives proposed new legislation that would tax greenhouse gas emissions (GHG).

picture of a bill

Comment period open for Carbon Tax Legislation until April 12, 2013. Read on for more details

Waxman, Whitehouse, Blumenauer, and Schatz Release Carbon Price Discussion Draft
Tuesday, March 12, 2013

WASHINGTON, DC— Today, Representative Henry A. Waxman, Senator Sheldon Whitehouse, Representative Earl Blumenauer, and Senator Brian Schatz released draft carbon-pricing legislation and solicited feedback on it from stakeholders and the public.  The legislation would establish the polluter pays principle for dangerous carbon pollution, requiring large emitters to pay for the pollution they emit.

As someone who prefers a carbon tax over a cap and trade system to regulate GHG emissions, I am very excited to see progress beginning to happen in Washington. They have asked for our input, yours and mine, on how the tax should be structured, how much should it be, how to return the revenue to the people, etc.

The Lawmakers are requesting that comments be submitted no later than April 12, 2013.  All comments are welcome and can be submitted by email to cutcarbon@mail.house.gov.

Here are the comments I submitted.  You are welcome to copy and use these or modify them to fit your opinion.  I have also published a shorter version on my green living blog at Green Lifestyle Changes: Input Wanted on Carbon Tax. Continue reading

How much oil the US imports is truly shocking!

In 2012, the US imported 3,878,250,000 barrels of crude oil and other petroleum products according to the EIA.  That works out to $433 Billion spent on importing oil last year!  That is a shocking amount of money leaving our economy.

In 2012, the US spent $433 billion on imported oil

$824,000 per minute spent on foreign oil

We should be investing heavily in local renewable sources of energy like solar, wind, geothermal and biomass to improve our own economy and reduce our CO2 green house gas emissions.

One way to jump start that and kick it into high gear is to implement a meaningful price on CO2 emissions through a program like the Pennies Per Pound Carbon Tax.

Please sign a petition to your Congressional Representative and US Senator letting them know you support a carbon tax like Pennies Per Pound.


picture of a bill

Key Concepts in Pennies Per Pound Carbon Tax

I came up with Pennies Per Pound to address climate change, reduce our nations dependence on oil and improve our economy. The overall action that is needed is to drastically reduce our CO2 and other green house gas (GHG) emissions.  The exact implementation of a carbon tax to accomplish this will be challenging.  I am open to alternatives that accomplish the same key principles of Pennies Per Pound:

  1. Increase the cost of all energy consumption proportional to GHG emissions, not just gasoline
  2. Make the added price of GHG emissions enough to incentivize implementing efficiency & conservation improvements
  3. Provide some form of relief for our nation’s most vulnerable who would be in proportionally impacted by this consumption tax

In the current Pennies Per Pound Carbon Tax & Energy Stamp program, these goals are accomplished by adding an end use consumption tax that ramps up over time combined with an energy stamp program for lower income families.  The PPP CO2 tax starts out at $20/ton of CO2 equivalent GHG emissions and over ten years ramps up to $200/ton of CO2 emissions.  The energy stamp program would be modeled after the Supplemental Nutrition Assistance Program and could even leverage the same basic infrastructure and eligibility status to maximize governmental efficiency and keep costs low.

Just a BillRecently, Senators Bernie Sanders (I-VT) and Barbara Boxer (D-CA) put forward a bill to enact a $20/ton CO2 tax on emissions beyond a certain point with a built-in 5.6% annual increase to the price of CO2 emissions.  If this bill becomes law, I do not think that at $20/ton CO2, the  increase to the cost of energy consumption will be enough to make meaningful impact.  That said, I do like the alternate approach they use for providing relief for the most vulnerable:

  • 60% of the revenue from the carbon fee would be rebated to every legal US resident similar to Alaska’s oil dividend program.

I also like that some of the revenue goes to weatherization programs, tripling the budget for ARPA-E, a sustainable technologies financing program and investing in domestic manufacturing.  You can read more details in the summary released by Sen. Sanders’ office.

In the coming weeks and months, I hope we will see renewed efforts to pass meaningful climate change legislation in both the House and the Senate.  Please take a minute and sign the Pennies Per Pound CO2 Tax Petition.  The online petition will send a letter to your Congressional representative and Senators.


What does the rest of the world pay for gas?

In the United States, we complain bitterly when the price of gas goes up, but if you look at what the rest of the world pays at the pump it is no surprise that we lag the world in fuel economy.  Below is a chart of what the rest of the developed world pays for gas in $/liter.  The darker blue is the taxes, and the lighter blue is mostly the cost of the fuel on the world market.

1 liter is just over a quarter of a gallon so multiple the costs below by 3.785 gal/L to get prices in terms of $/gal.

As you can see above, the US has the lowest duty and taxes on unleaded gasoline and the lowest price by a lot.  The Economist put it well when they wrote:

The low cost of petrol encourages greater dependence; the average American uses much more oil per day than other rich world citizens. This dependence also impacts infrastructure investment choices, leading to substantially more spending on highways than transit alternatives. And this, in turn, reduces the ability of American households to substitute away from driving when oil prices rise.

Gasoline Prices per Gallon Comparing US with PPP of $1.94/gal with Developed World Today

Comparison showing US Gasoline Price + PPP tax still less than the rest of the developed world as of November 2010

Even if you add the full 10¢/lb of CO2 for Pennies Per Pound to the price of gasoline or about $1.96/gal the US still would have the lowest price for gasoline in the developed world as I showed in my earlier post.

We need to do something now to address climate change.  Every day we don’t means it will cost us even more to save the world from ourselves as Fatih Birol, Chief Economist for the International Energy Association, discusses in regards to the recently released World Energy Outlook 2012 ReportSign the petition now urging your legislature to consider Pennies Per Pound as a solution!


Thank You!

Other Carbon Tax Ideas

In August 2012, Sebastian Rausch and John Reilly, two researchers at the MIT Joint Program on the Science and Policy of Global Change, released their report Carbon Tax Revenue and the Budget Deficit: A Win-Win-Win Solution? which analyzes the economic impact of a $20/ton CO2 tax on the US economy. In summary, the report finds:

The country faces difficult tradeoffs in getting the Federal budget deficit under control. In our analysis of a carbon tax, we find a win-win-win situation that requires no tradeoff at all. Carbon tax revenue allows (1) cuts in other taxes, (2) benefits the economy, and (3) reduces CO2 emissions and oil imports.

Similar to the Pennies Per Pound (PPP) idea, the Carbon Tax that Rausch & Reilly analyzed adds a price to carbon emissions that is then used to offset tax revenue or fund social programs. The added cost incentivizes efficiency, alternative energy sources and conservation while at the same time the offset taxes stimulate the economic growth of the country.

Both PPP and the $20/ton carbon tax in their research start at 1¢ per pound of CO2 emissions. Rausch & Reilly use a 4% annual increase to the price of carbon in their plan indefinitely whereas the PPP program increases much faster adding another penny per pound each year for ten years. Thus PPP will have a greater impact on reducing CO2 emissions because of the higher cost associate with them and will be able to offset significantly more in income, payroll and corporate tax revenue.

The carbon tax discussed by Rausch & Reilly can effectively only lower any given tax rate by about 1%, whereas with the much faster increase in the PPP program can lead to tax cuts on the order of 10% across the board. With PPP, the resulting CO2 emission should see a decline well below the 5,000 million metric tons of CO2 annually as forecast by Rausch & Reilly.

The other major difference is that PPP includes an energy stamp program similar to the supplemental nutritional assistance program (SNAP – aka food stamps) that can directly benefit the lower income families that would not see the direct benefits of lower income or corporate tax rates.

In summary, both carbon taxes would move the economy in the right direction and reduce our emissions of green house gases. I feel that the Pennies Per Pound Energy Stamp and CO2 Tax would be more effective because of the higher price set on carbon over the first ten years and the direct assistance for lower income families provided by the Energy Stamp portion of the program.

Please sign the Pennies Per Pound petition to share the idea with your legislators in Congress and the Senate.



Oil barrel with the text "In 2011, the US spent $460 Billion on imported oil

How much did the US spend on imported oil in 2011?

Oil barrel with the text "In 2011, the US spent $460 Billion on imported oilI have often wanted to know how much we spend on foreign oil each year, but have found it harder than I would expect to look up. So as a good engineer would do, I estimated it based on EIA sources.

In 2011, the United States spent over $460 billion on imported foreign oil.

That represents 3% of the $15 trillion GDP for 2011.

In 2011, the US imported 4,146,266,000 barrels of crude oil and petroleum products.
Source: U.S. Imports of Crude Oil and Petroleum Products (Thousand Barrels)

Multiply that times the Brent Crude Oil Average Price Per Barrel for 2011: $111.26 and we get the total of $461,313,555,160 spent on imported foreign oil in 2011. That is over $875 thousand a minute on foreign oil. Think about what that money could do if it was invested in our economy to produce clean renewable energy.

reposted from Green Lifestyle Changes with permission

Gasoline Prices per Gallon Comparing US with PPP of $1.94/gal with Developed World Today

Answers to your questions about Pennies Per Pound

As I have been speaking to people about my Pennies Per Pound CO2 Tax and Energy Stamp Program (PPP) I have been hearing a number of questions and concerns.  I love hearing from people that totally support the program, but it is even more important for me to hear from those that don’t support it yet or disagree with me.  If you have hesitations about signing the petition, or see major problems with PPP, please leave a comment or email me at ecodad@greenlifestyleconsulting.com.

Below are answers to the two most common questions/concerns I have heard so far.

Q: $1.94 per gallon tax is outrageous!

Gasoline Prices per Gallon Comparing US with PPP of $1.94/gal with Developed World Today

Comparison showing US Gasoline Price + PPP tax still less than the rest of the developed world as of November 2010

Actually it is not outrageous.  If we look at the rest of the developed world, adding $1.94 in taxes (after year 10) on a gallon of gasoline, we would still be paying less than the majority of the developed world.  See the chart for more detail.

Also, keep in mind that the proposed 10¢ per pound after 10 years is just a discussion point.  The exact amount of the tax would have to be something worked out by legislators.  Maybe adding half a cent per year per pound would be better.

The piece that I think is most critical is that the tax be predictable and understandable while still significant enough to spur change and unleash the market forces to drive innovation and adoption of energy efficient technology and approaches.

Q: The most vulnerable cannot afford to pay for gas at the current price, let alone 19¢ more per gallon.

Given the growing world demand for energy including gasoline, the price of gasoline is going to go up over time.  Not long ago we were paying over $4 per gallon and in some places over $5 per gallon. Today, as I drove past my local gas station, it was $3.53 per gallon for regular.  Continuing to subsidize fossil fuels with billions of dollars in tax breaks each year can only keep the cost of fuel down so long and it is going to rise.

In the long run, Pennies Per Pound will lead to better fuel efficiency and better alternatives in transportation, but I understand in the near term the burden on struggling families to even a small price increase is big.  That is why the Energy Stamp program is so critical to the success of Pennies Per Pound.

As with SNAP (Food Stamps), qualified recipients would receive a EBT debit card for energy purchases.  They could then use that card to pay for gasoline at the pump and their utility bills.  As with SNAP, there would be restrictions to prevent the misuse of the card for any non-energy related purchases.  Depending on their situation, they could qualify for more credit than the PPP tax.  Also, because it is a debit card system instead of a tax credit, families that do not pay income taxes because their incomes are so low could still qualify.

The details of how the Energy Stamp program would be set up, what the eligibility factors are and how it would be administered would need to be worked out by the legislators.  A key thing to keep in mind though is that this program would be entirely funded by the revenue generated by the PPP tax, so it would not add to the federal deficit.

Please take a minute sign the petition urging your Congressional Representatives and Senators to support Pennies Per Pound, then share the idea with your friends.  If you have questions or concerns, leave them as comments below or email me.  Let’s discuss this critical topic in an open and thoughtful way.

Stack of 19 pennies representing the cost of a penny per pound for gasoline

Pennies Per Pound to Save the Economy and the Planet

If you have read my posts before, you probably know that I am a proponent of implementing some sort of energy tax to drive behavior toward energy conservation, energy efficiency and renewable energy.  I have finally connected the various threads in my head and am now working to build grass roots support for the idea I call “Pennies Per Pound (PPP).”I believe enacting a Pennies Per Pound (PPP) CO2 Stamp & Tax Program on fossil fuels would create green jobs, decrease dependence on foreign oil, raise revenues, lower the nation’s debt and lead to a healthier planet with lower healthcare costs. Said differently, Pennies Per Pound would save our economy and the planet. Continue reading

Why Pennies Per Pound is better than previous Cap & Trade ideas

Stack of 19 pennies representing the cost of a penny per pound for gasoline

19 pennies for the 19.4 lbs of CO2 per gallon of gasoline

Cap & Trade is a complicated system which might make sense to someone with a PhD in Economics, but for the rest of us is extremely complicated and hard to predict what it will mean to our expenses now and in the future.  The WikiPedia entry for Emissions Trading has a good explanation of what it is and how it works, but it takes pages and pages to explain.  Here is a brief excerpt:

A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permits from those who require fewer permits.[1]

The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society.

On the other hand, Pennies Per Pound is easy to understand and easy to predict.  Under Pennies Per Pound business and individuals will be able to project what the future impact of the straight forward energy tax will be.  Also, it empowers business and individuals to make choices today to save energy and money in the future.  The tax based on carbon emissions, instead of some complicated formula subject to pressure from lobbyists, will encourage power generators to move towards lower emissions of carbon without the government trying to pick which solutions or technologies are best.


Act Now! Sign the petition supporting Pennies Per Pound!


Return to the Pennies Per Pound Overview