Carbon Taxes and Carbon Offsets -- A Path to Net Zero?

Posted on July 18, 2019 by Jeffrey C. Fort

Two recent press pieces caught my eye.  “UK Signs Net-Zero Emissions Requirement into Law,” and “GOP Pollster pitches Republicans on carbon pricing.” The first reflects recent studies with respect to a potential [or even likely] environmental calamity; the other suggests signs of political reconsideration on climate change.  As welcome as the latter is, and most economists praise the use of a carbon tax, it is likely not nearly enough.

According to the latest scientific forecast, meeting the Paris objective of no more than a 2 C increase in global temperatures from pre-industrial temperature levels will require worldwide net zero emissions of carbon-dioxide-equivalent (CO2e) gases by 2050.  In any event, the UK, France, Norway and Sweden have adopted a net-zero requirement to be achieved no later than 2050 and more than a dozen large US cities have done likewise.

How a net-zero requirement can be met, with all the extant emissions from industry, transportation and buildings, is perhaps the most important research and development task facing us.

Consider whether another approach should be considered. In a 2017 op-ed Wall Street Journal piece, James Baker and George Schultz recommended a “carbon tax” on emissions of carbon dioxide equivalent gases.   This recommendation is the centerpiece of a memorandum to “Interested Parties” by a Republican pollster and strategist suggesting that the Republican Party should heed polling results and embrace the Baker/ Schultz suggestion that the Republican Party ought to support a “Carbon Dividends” proposal. This proposal would feature “four pillars”: a tax (of $42/ metric tonne of CO2e, indexed to rise with inflation), an equivalent “dividend” to working class Americans, a border adjustment for carbon content of imported goods, and elimination of EPA’s regulatory authority concerning climate issues.  The tax revenues would be returned to private citizens with the lowest incomes, as a “Carbon Dividend” to mitigate the increased energy costs.

However, the Carbon Dividend proposal says nothing about reducing emissions other than by raising a “price on carbon.”  But will a tax achieve that goal? Some parties may choose to emit and pay the tax so there is no guarantee that emissions will be reduced and certainly not to achieve net-zero emissions. Any reduction in energy use by businesses would depend on the elasticity of the market for other inputs and competition for the output products. For businesses that have inelastic demand curves the costs just get passed through with no or little emission reduction.  In other words, a carbon tax will not yield significant environmental results, however admirable its intentions.

However, emission reduction credits, or “offsets,” is a tool which has been used for nearly 50 years under the Clean Air Act.  Verified offsets provide real reductions.   Verified offsets have been used to allow large new construction projects in dirty air areas, to reduce the costs of compliance measures in state implementation plans, and now as a means of reducing costs in most of the climate legislation around the world.  Offsets are not easy to create.  Using standard protocols, there must be a scientific method which has been adopted in a public process and adherence to that methodology then for a project to be undertaken.  Both are validated and verified by an independent third party. Only then is the “offset credit” created.  Offsets seem to attract entrepreneurs who have a “better idea” of what projects can be implemented at a much lower cost that an EPA-approved, command and control requirement.   The U.S. now has three independent offset verifiers which have produced millions of tonnes of extra reductions -- proving that the concept can work at scale.   These are real and verified reductions and the current prices are a small fraction of the $42 per tonne price in the Carbon Dividend proposal.  Verified offsets are a much better and cost-effective way to produce reduce real emission reductions.  

For a “tax” on carbon emissions, we would start with an existing and established measuring tool; those sectors covered by the Mandatory Reporting Rule (MRR).  The covered sectors have already been established as the most carbon-intensive industrial activities.  The MRR is established and tested and would not require a new system.

A proposed carbon tax systems could then allow a credit or a “deduction” for other state requirements for GHG controls.  State carbon reductions requirements (e.g. AB32 in California and RGGI in the Northeastern states or other state adopted requirements, see) could be recognized, which would reduce the taxable quantity.  Allowing offsets, including those purchased from sources “outside the [MRR] cap” would provide further reductions, and further reduce net taxable emissions.   But a complete elimination of taxable carbon emissions appears unlikely in the near term.

There are many sectors who now perform “voluntary” projects, at a cost far below $42/ metric tonne.  Among the sectors outside the MRR list, are:

  • agricultural and forestry programs (famers and foresters have produced substantial volumes of offset credits to date);
  • unregulated industrial processes, such as those emitting methane, nitrous oxides and hydrofluorocarbons, which are not subject to the MRR; and
  • abandoned coal and gas well vents.

Not only would using offsets provide an incentive for extra reductions on a voluntary basis, the existing voluntary programs are examples of innovation. Small businesses, new ideas, and new ventures have created most of the offsets now used in compliance and voluntary systems.

Carbon offsets are real reductions, and not just a fiscal policy redistribution.  In addition to providing a “dividend,” a carbon tax offset policy could stimulate new ideas and businesses as well as substantially reduce carbon emissions.  This would align sound climate policy with sound tax policy by using a tool developed long ago, updated based on recent experience.

The Seals of Disapproval, and the Return of Jaws

Posted on July 12, 2019 by Samuel I. Gutter

We are fortunate to live on Cape Cod, where the abundant marine life is a consistent source of joy.  We watch osprey and terns diving for fish, and crabs scuttling along the beach.  The local radio station announces when the blues and stripers are running, and where best to find them.

But all is not well in and on the water.  In the midst of stories about the depletion of marine resources, the Cape, we now know, has an overabundance of a particular marine mammal:  the grey seal.  Once widely hunted by early European settlers and then by fisherman who viewed them as competitors for the fishstock, in recent years the seals have rebounded with stunning success.  An estimated 30,000 to 50,000 grey seals make their home on the Cape, densely clustering in areas like the Monomoy National Wildlife Refuge off Chatham, where the seals are so plentiful that they can be seen from space.

Many people, of course, love the seals, with their sleek fur, woeful eyes, and playful antics.  But people aren’t the only ones attracted to seals:  sharks “love” them, too, for obviously different (and decidedly gustatory) reasons.  And not just any sharks.  We’re talking about great white sharks, the predatory hunters with rows of razor-sharp teeth that inspire primal fear among beachgoers.  After all, while “Jaws” was set in the mythical New York town of Amity, the locals all know that it was filmed on Martha’s Vineyard, a scant few miles off Cape Cod.

Given the huge seal population, even the most inept and myopic shark should have no problem finding something it likes on the seal take-out menu.  And Jaws aside, sharks are not known to intentionally hunt humans.  Shark attacks are rare – generally believed to be the result of human/seal mistaken identity.  But last August, a swimmer in Truro, on the Outer Cape, suffered serious injuries from an attack by a great white 50 yards off shore, and a month later the Cape experienced its first fatal shark attack since 1936, when a man riding a boogie board was attacked and killed by a great white in Wellfleet, close to shore.

While attacks are rare, shark sightings are becoming more common.  The vigilant can even track sightings on The Sharktivity App.  Sightings have forced the temporary closure of popular Cape beaches, likely causing some to consider the appeal of alternate vacations on quiet mountain lakes, where the top aquatic predator is the largemouth bass.  And that presents another sort of problem.  Sharks might thrive on seals, but Cape Cod thrives on tourism, and sharks (other than sales of toothy t-shirts) are bad for business.

Enter Willy Planinshek and his partner Kevin McCarthy of Deep Blue LLC, who have come forward with a plan to use an underwater sound system to scare the seals away from beaches.  Where the seals go, their theory holds, the sharks will follow.  Although Messrs. Planinshek and McCarthy have no particular expertise, funding, prototype or research to back up their proposal, they still managed to draw a capacity crowd to a meeting of the Barnstable County Commission to consider the concept.  They have been invited back in the fall for further consideration.

But as we all know, even the best ideas are often beset by regulatory and bureaucratic hurdles.  In this case, the Barnstable County Commissioners will be well-advised to read the Marine Mammal Protection Act, 16 U.S.C. 1361, et seq.  Under the MMPA, it is illegal to “take” any marine mammal without a permit.  Moreover, “take” is broadly defined to include not only the hunting and killing of marine mammals, but harassing them, as well – which is, after all, the entire point of the underwater sound blast.  Additionally, the ensuing federal permitting process would surely trigger some level of NEPA review.  And let’s not forget potential applicability of the Coastal Zone Management Act, as well as federal and state endangered species laws (grey seals aren’t endangered, but other marine species that frequent the area might be).

Such hurdles aside, the ultimate question remains whether any such plan, if approved, will even work.  Seals eager to get to their mating grounds might habituate to the sounds, or simply swim with their heads above water.  As the fictional Ian Malcolm (played with perfect nerdiness by Jeff Goldblum) proclaimed in Jurassic Park:  “Life will not be contained.  Life breaks free.  It expands to new territories, crashes through barriers, painfully, maybe even dangerously.”  In more colloquial terms, beware the unintended consequences of messing with Mother Nature – seals and sharks included.

Over/Under—Great Environmental Fiction/Nonfiction

Posted on July 10, 2019 by Dick Stoll

I just finished reading two books that I would highly recommend to anyone concerned about the environment and global climate:

—  The Overstory, a novel by Richard Powers.  It won the 2018 Pulitzer Prize for fiction.

—  Underland, a 2019 non-fiction “deep time journey” by Robert Macfarlane.  

Each book is exceedingly sweeping in scope and chock full of scientific information and details that even I (a political science and English major) could essentially understand and find captivating.   An overriding theme of each book is that humans aren’t doing much good for this planet.  

Each book may fairly be called a magnum opus, and I can’t even begin to describe their full sweep in a blog like this.   So I urge you to do a little googling for reviews.   I am linking a good review of each here:

https://www.theatlantic.com/magazine/archive/2018/06/richard-powers-the-overstory/559106/

https://www.npr.org/2019/06/03/729156788/underland-connects-us-to-dazzling-worlds-beneath-our-feet

The Overstory is mainly about trees and people — how trees interact with each other, how people interact with each other, and how people interact with trees.   Lots of bad things get done by some people, some good things get done by some people, and lots of good things get done by trees.   

After reading the book, I am paying a heck of a lot more attention to trees than I ever did before.  In fact, my current iPhone wallpaper is a close-up of a beautiful redwood I recently photographed in northern California.  

Underland primarily focuses on what goes on under the earth’s surface — today, for millions of years before today, and projectively for eons to come. The author relates how humans have used the “underland” over history in various positive and negative ways for all kinds of storage, disposal, and extraction.  He describes intriguing and dangerous underground “journeys” of his own in several places around the world.  His last journey is to a repository being readied for nuclear waste way under Finland.  

Each book is laden with concerns about the future for the global environment and climate.   The Overstory hits hard on deforestation, Underland hits equally hard on melting ice.

I am retired now and have more time to read books like these.   But I encourage those of you still practicing to find the time.