The concept of taxation on carbon dioxide emissions has recently gained enormous momentum with citizens, many industries and even the pope.
This enthusiasm is undeniable, so let’s put aside any debate about right and wrong and assume we will pursue such taxation, which many would argue is a worthy and necessary step that cannot be delayed.
The popular targets for carbon dioxide emissions taxes are coal-fired power plants, as there is a belief that shutting them down solves the emissions problem. Would such a tax accomplish the mission?
Well, here’s an inconvenient truth: If we shut down every coal-fired power plant in the U.S., global carbon dioxide emissions would be reduced by 2 percent. That’s right — 2 percent! The mission is emissions reductions, not shutting down coal plants, right?
Some would argue, why not do it anyway? We have abundant, inexpensive natural gas (but not carbon dioxide-free, I might add), renewables’ generation costs are less expensive than ever, and we have a robust electricity grid to support reliable and resilient supply without coal.
While this is partly true in some places in the U.S., it surely is not true globally or even in regions of the U.S. that remain dependent on baseload coal for reliability and affordability.
But I said I would not debate the merits of a tax, so let’s ignore some of these unpleasant facts and focus on the tax itself. How do the dollars get collected, and for what purpose?
Make no mistake: Energy prices, with a carbon tax in place, will be higher and we will be paying the “societal cost of carbon” from our pockets. The idea that the costs will be borne elsewhere is naïve.
The electricity produced by coal or natural gas — over 70 percent of electricity in the U.S. and a greater percentage in China and India comes from these sources — would be much more expensive.
What about the bigger problem of emissions from the tailpipes of gasoline- and diesel-powered vehicles? The vehicles we drive produce far more emissions than coal-fired power plants. Should we tax ourselves as emitters in an attempt to push people to choose electric vehicles? What other changes in our behavior might we be expected to embrace?
Maybe no more sitting in the drive-thru five deep in line in your vehicle with the air conditioning running rather than going inside to make the purchase. Are we ready to spend $100, $200 or even $500 more per month on our energy?
The next question is: Where does the money go? To the federal government for more “progressive” programs? To states to pay off debt? Do we have anything specific in mind other than making our energy costs higher by forcing in renewables that are intermittent suppliers of energy, and forcing out resilient coal-fired electricity? When was the last time you were enthused about giving politicians your money and trusting there would be a great outcome?
Lots of questions, but here’s a thought: Why not use the dollars taxed on carbon dioxide emissions to fund transformative energy research that would enable our society to continue to use the most abundant and affordable fuels with the most progressive technology possible to assure energy affordability and for that energy to be environmentally sustainable in the short and long term?
Let’s do something about carbon dioxide emissions specifically and stop simply being haters of fuels. We cannot grow our energy production to meet societal demands by subtracting fuels that provide affordable, reliable, resilient energy.
Recent progressive tax treatment for carbon capture utilization and storage (CCUS) technology in the form of 45Q is a step in that direction, so all is not lost.
We can design an impactful carbon policy that is thoughtful, strategic and successful. Let’s not employ the “ready, fire, aim,” approach that history has taught us is flawed. Let’s create a comprehensive plan to reduce emissions by developing transformative technology the world can enjoy.
Charles D. McConnell is the executive director of the Energy and Environment Initiative at Rice University. He is the former assistant secretary of energy.