CONTENTS
CO2 Labels
Labels would help us choose products
wisely, and would influence producers to reduce their CO2 emissions
as much as they can. A British system
encourages labels on products. A Swedish
system encourages fact sheets on the web (these are extracts of their
"Environmental Product Declarations").
Cooling the Earth
Capturing CO2 in the oceans, with plants, or with other offsets does not seem to be feasible, but reflective roofs
and burying charcoal can help.
Money Incentives
We can be creative when the incentives are strong.
The strongest incentive is a rising fee for CO2 emissions, with wide
public support for the fee. Wide support for a large fee will come only if we
distribute all the revenue in a public dividend. Alaskans support oil
royalties, because they get a dividend. Workers support Social Security,
because it comes back to us. People will support a growing CO2 fee
if the money comes back to us. Start at a penny per pound of CO2,
which will provide $440 to each American. Then watch while we creatively save
CO2 and support fee increases which raise our dividends, until the
dividends finally fall off when CO2 use drops
|
Americans at
Five Levels of CO2 |
Fee , at 3¢ per
Pound of CO2 |
Dividend |
Gain or Loss
per Year per Person |
|
22,000 lb CO2, Half of Average Use |
$660 |
$1,320 |
$660 Gain |
|
33,000 lb CO2, Below Average Use |
$990 |
$1,320 |
$330 Gain |
|
44,000 lb CO2, US Average |
$1,320 |
$1,320 |
$0 US Average |
|
55,000 lb CO2, Above Average Use |
$1,650 |
$1,320 |
$330 Loss |
|
66,000 lb CO2, Heavy Use |
$1,980 |
$1,320 |
$660 Loss |
The UN Development Program estimates 3¢ to 5¢ will
stabilize the climate. Start at a penny and phase it in, which accomplishes 8
goals:
* Strong political support, since people are
receiving dividends.
* Gains for people who use below
average CO2, including the poor and energy conservers
* Losses for people above average
CO2, giving an incentive to reduce
* A fiscal stimulus since people
know the price of all products will rise, so better to buy now than after the
next fee increase
* Long term planning by
businesses, households and investors, since people would know what prices to
expect
* Big sudden shocks are avoided
* Steady reduction in CO2
use
* The chance to stop raising the
dividends when CO2 responds enough
Administering a CO2
fee is simpler
than most taxes, since there are relatively few refineries, etc, where the tax
would need to be collected. Each person could choose, as with income tax
refunds, to get credit toward the next income tax, or immediate payment, such
as by topping up a debit card each month with an equal share of CO2
fees received.
Imports can be charged fees to reflect their CO2
content also. These charges on imports would extend the reach of one country's
CO2 price to encourage reductions in suppliers abroad too. The World
Trade Organization allows such charges (p.xix of Trade
and Climate Change, 2009, WTO & UNEP, also cited by Krugman).
CO2 levels and climate stability are
discussed in our Sustainability page.
UNDP's estimate of 3¢ to 5¢ per pound (p.127, 2007-8 Human
Development Report) is smaller than the International Energy Agency
estimate of 9¢ (p.11, World Energy Outlook
2008). Neither estimate is large compared to US average spending, so we
should start and see how fast CO2 use drops.
Caps, Fees, Taxes, Auctions
Some authors call this a tax, others a
fee for a permit to release CO2. In either case politicians will
decide what is a reasonable level and start there.
Instead of setting the fee, one can set
a cap on the annual amount of CO2 and auction permits.
Businesses then bid whatever price it takes to get the CO2 permits
they need. Environmentalists like this way of capping CO2, but it
has two defects
* An auction discourages long term
planning, since people and businesses cannot be sure what price they will have
to pay.
* A cap is not
absolute, since politicians fear an auction price going too high and hurting
the economy. So politicians will decide what is a reasonable level which
the economy can handle. That is a ceiling for the auction, with unlimited
permits available at the ceiling price. The auction price can be anything up to
the ceiling.
On the other hand if there is NO cap,
politicians decide what is a reasonable level which the economy can
handle, and set that price, which they may call a fee or a tax. An auction
generally gives a lower price.
Who would want an auction which sets the
CO2 fee below the reasonable level? Low fees encourage
CO2 use now, and we would need to compensate by reducing the final
CO2 levels even more: The cumulative total controls global warming.
In other words the faster we cut, the less far we will have to cut, because we
won't have as much catch-up to do. The more slowly we cut CO2, the
more we emit now, the farther down we will have to cut, in order to compensate.
Deeper cuts are a heavy price to pay for delay.
Tobacco and liquor taxes are not set by
auctions. The government chooses a tax to discourage use and raises it
periodically.
Other sites discuss Dividends to citizens, Carbon taxes, reasons for optimism, and an
extensive discussion of the economics of
pricing CO2.
It is
hard to reduce CO2 enough in an energy-intensive economy, so
collective solutions are needed.
For a
sense of the direction needed, think about doing three items from the list
below. Each item uses a
third of the 3,700 pound goal,
per person per year. To be sustainable we can only do three items like these.
Can we imagine getting even part way to this level?
[]
Use $1.40 (14KwH) of electricity from the grid per week, or $6
per month (60 kWh)
[] Use 200 kWh of solar electricity per week
[]
Use 1 gallon of gasoline or ethanol per week
[]
Buy 2 pounds of products per day, or 16 pounds per week
[]
Take a one-way plane trip each year of 800 miles.
[]
Travel by train 3,000 miles per year
[]
Travel by long distance bus 7,000 miles per year
[]
Buy 20 lbs of computers per year (making them uses lots of
energy)
[]
Buy 20 square feet of solar panels per year
'Twas a dark and stormy
night, and
we looked at the CO2 we use. It's in our food, schools, healthcare,
roads, even in renewable energy. We lobbied for CO2 fees and labels.
A 3¢ fee per pound of CO2 paid for a $1,300 dividend to everyone.
The fee encouraged conservation, while the dividend won voter support.
The fee rose in steps; we
always hurried to buy what we needed before the fee went up again. Our spending
created jobs. Predictable fees let businesses plan. We cut CO2 to
4,800 lbs per person per year, and still use 200 kilowatt hours of solar
electricity, and a gallon of gas or ethanol, per person per week.
We saved species, coral, crops, and avoided bad
storms, floods, droughts and tropical diseases. We lived happily ever after.