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In-Depth Analysis: How A Progressive Carbon Tax Will Fight Climate Change And Stimulate The Economy

by Richard W. Caperton

Superstorm Sandy. Massive droughts. Devastating tornadoes. Horrific wildfires. The United States has certainly seen the dramatic weather-related effects of climate change in 2012, and every American has in some way been negatively impacted. Unfortunately, unless we start taking action now to curb the greenhouse gas pollution that’s causing this extreme weather, things are only going to get worse. Depending on which actions we choose to take, this year will either be the new normal or it will be a glimpse into a future where conditions are much, much worse.

Progressive leaders across the country are beginning to take action and look for ways to fight climate change. President Barack Obama is using provisions of the Clean Air Act to reduce pollution from new power plants. California and some Northeastern states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont—have regional programs that put a price on carbon dioxide and other greenhouse gas pollutants in the hope of reducing their usage. These are powerful steps in the right direction, but they alone cannot solve the challenge of climate change. Avoiding the most catastrophic consequences of global warming will require much broader action.

There are several ways that the United States could make a significant contribution to the global fight against climate change. We could take President Obama’s action on new power plants to the next level and use the Clean Air Act to reduce pollution from existing power plants and other major sources of emissions. The existing regional programs that charge a fee for pollution could be strengthened and broadened to cover more of the country, or Congress could get involved and put a nationwide price on carbon by creating a carbon tax.

Before diving into specifics on a national carbon tax, it’s important to recognize that there are countless ways to put a price on carbon. A cap-and-trade system is one such method, and it’s certainly possible to design a progressive cap-and-trade system. In such a system, a strict cap is set on national pollution, and polluters must have permits for all of their pollution. These permits are freely traded so that companies can reduce their pollution profit by selling permits to other companies that may need more pollution allowances. Analysis showed that the cap-and-trade bill passed in the U.S. House of Representatives in 2009 would have benefited low-income people, reduced the deficit, protected vulnerable industries, reduced pollution, and stimulated investment. That’s why CAP, along with private businesses and a bipartisan majority of the House of Representatives, supported the bill. Unfortunately, it failed to muster the necessary support in the Senate and was never enacted.

Three years later cap and trade is off the table largely because of a polluter-funded effort to deny climate science and delay action on pollution reductions. But Hurricane Sandy, the fiscal cliff, and the debate over clean energy incentives have together made it clear that we must put a price on carbon—and we must do it soon.

Given the track record of climate legislation in Congress—including the failed effort to pass the cap-and-trade bill in 2009—enacting a carbon tax poses more of a challenge than either expanding the regional carbon-pricing actions or using the Clean Air Act to regulate all power plants. While both of these alternatives are steps in the right direction, a national carbon tax would be able to address more than just our environmental concerns. In addition to mitigating the effects of climate change, a carbon tax could help solve our country’s budget crisis and provide revenue for new job-creating investments in clean energy infrastructure. By raising new funds, driving new investments, and reducing the likelihood of the most catastrophic consequences of climate change, a carbon tax is a tool that can take on our country’s three most pressing challenges: the deficit, joblessness, and the climate crisis.

In this issue brief we describe some of the key questions Congress needs to answer in designing a carbon tax. We lay out the principles for making sure that a carbon price puts our country on a progressive path to future prosperity and describe why a carbon tax is a desirable way to price carbon. We then turn to the issues in collecting the necessary revenue. Finally, we discuss how to use the revenue to most effectively solve the challenges facing our country.

Key principles for a progressive carbon tax

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Study: We Can Cut Carbon Pollution One Third By Closing ‘Carbon Loophole’ Through The Clean Air Act

by Whitney Allen

After four years of congressional stalemate on efforts to slash carbon pollution responsible for climate change, the Natural Resources Defense Council released a road map to cleaner electricity this week that relies on existing executive authority rather than Congress.

NRDC’s new report describes how  the Obama Administration can make substantial cuts in carbon pollution from existing power plants, which are the single largest source of carbon pollution in the U.S.  Its strategy would employ Section 111(d) of the Clean Air Act, which gives the Environmental Protection Agency the authority to “set state specific carbon emission rates that reflect the diversity of the nation’s electricity sector and fuel mix.”

This approach differs in a few important ways from earlier pieces of legislation like the 2009 climate bill sponsored by Representatives Henry Waxman (D-CA) and Ed Markey (D-MA) during the 111th Congress. The proposal would set the initial pollution reduction standard for power plants by taking their state’s current energy mix taken into account. That is, a state with relatively low pollution would have a different target compared to a state with high emissions.

In addition, states would be allowed to create regional alliances, such as the ten-state Regional Greenhouse Gas Initiative (RGGI), to work together to meet pollution reduction goals. This is crucial because the electricity supply from power plants frequently crosses state boundaries.

Under the NRDC proposal, states would develop a compliance strategy most appropriate for their mix of electricity generation, as long it achieves pollution reductions. They can develop state policy options that improve the efficiency of current plants, incentivize energy efficiency, shift production to lower-pollution natural gas plants and/or zero-emitting wind or solar generation.

NRDC estimates that its plan would cut carbon emissions by 26 percent below 2005 levels by 2020, and 34 percent by 2025. The accompanying reduction of other power plant pollutants would also save 3,600 lives and prevent nearly 1.2 million asthma attacks in 2020 alone.

These benefits create a significant return on investment. NRDC predicts that successful implementation of the plan could cost around $4 billion dollars in 2020, and lead to a return of anywhere from $25 – 60 billion due to reduced illnesses and other harms from climate change.

The NRDC proposal is already garnering interest. William Reilly, EPA Administrator under President George H. W. Bush, called it “an imaginative proposal that addresses some real needs. It deserves to be carefully analyzed and taken seriously by all the affected interests.”

Carol Browner, former EPA administrator and current distinguished senior fellow at the Center for American Progress, added “NRDC’s proposal is very thoughtful and should be part of any debate on how we build on the work already begun by the administration to reduce greenhouse gas emissions.”

CAP Chair and Former White House Chief of Staff John Podesta put the proposal in context:

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Why China Is So Wary Of Ambitious International Climate Targets

China's chief climate negotiator, Su Wei

by Melanie Hart

From many perspectives, China is a global powerhouse. China is the world’s second largest economy in terms of gross domestic product, the world’s largest energy consumer, and a global leader in renewable energy investment. China is also the world’s biggest greenhouse gas emitter.

It is no surprise, then, that when it comes to global climate change negotiations, such as the U.N. Framework Convention on Climate Change conference currently taking place in Doha, Qatar, many nations are looking for China to step up and play a role more in line with its global economic and emissions status.

From a U.S. perspective, that means demanding that China play by the same rules in a future climate treaty that will be developed between now and 2015, rather than treating it as a developing country on par with Chad or the Congo. Some parties want a new treaty to require legally-binding emission reductions for all (though not the same amount for all parties). Thus far, China has refused to endorse this kind of legal framework, and instead is sticking to the interpretation of “common but differentiated responsibilities,” which creates a firewall between the obligations of developed and developing countries. This puts the United States and other developed nations in one bucket, puts China in a separate bucket along with the poorest countries in the world, and allows the latter to make only voluntary commitments to reduce their emissions (as opposed to the mandatory commitments requested of the developed countries).

The United States has no problem allowing still-developing economies to make less-ambitious emission-reduction commitments. What the United States and other developed nations take issue with is allowing those countries to make commitments that are less binding at the international level than what is expected of developed countries. China, an upper-middle income country according to the World Bank, has a standing voluntary climate commitment under the 2009 Copenhagen Accord to reduce carbon intensity by 40 percent to 45 percent (based on 2005 levels) by 2020. The first phase of that commitment has been incorporated into China’s five-year economic plan and ratified by China’s National People’s Congress, so that commitment is legally binding in a domestic sense.

Unfortunately, those types of commitments from China are not enough to get the rest of the world to sign on to a new global climate treaty. Developed countries in particular want China to upgrade this commitment in two ways:

  • Switch from an emission-intensity reduction target (reducing the amount of carbon dioxide emitted per unit of GDP) to an absolute reduction target;
  • Commit to that target via the same form of international mechanism that will be expected to bind all countries equally, regardless of development status.

Negotiators have stated that the United States is unlikely to sign on to a new climate treaty until China commits to that treaty in the same way that everyone else does. But there is plenty keeping China from making a legally binding international commitment if that is what it takes to fulfill this expectation.

Whereas the global community generally views China as an economic powerhouse with plenty of room to maneuver on climate issues, the view from Beijing is vastly different. From China’s perspective, the past 30 years of rapid economic growth in no way guarantees that they will be able to easily traverse the middle-income trap and actually make it up into the ranks of higher-income economies. Chinese leaders have a deep fear that instead of transitioning smoothly from lower-income to upper-income status, their economy could follow the path of Malaysia, Thailand and the Philippines and fall into a period of economic stagnation. China’s sluggish growth throughout 2012 clearly illustrates that the country is not immune to an economic slowdown, and it is important to remember that any major slump brings with it a very high risk that the Chinese Communist Party will lose public support and be forced to forfeit its authoritarian political power.

Within that context, Chinese leaders are not yet willing to take on international climate commitments that could reduce their flexibility to keep the economy growing. That does not mean there is no room for negotiation. It does mean, however, that in the near term China will continue approaching international climate negotiations with more caution than leadership. The negotiators now meeting in Doha will need to keep this in mind as they spend the next three years hashing out the terms of a new treaty with the ambition that it be equally “applicable to all,” in the terms of the Durban Platform.

Rising energy demand and consumption in China

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NASA: Climate Models Project Increase In U.S. Wildfires, ‘Causing A Further Rise In The Release Of Carbon Dioxide’

This research brief was originally published at NASA.

Scientists using NASA satellite data and climate models have projected drier conditions likely will cause increased fire activity across the United States in coming decades. Other findings about U.S. wildfires, including their amount of carbon emissions and how the length and strength of fire seasons are expected to change under future climate conditions, were also presented Tuesday at the annual meeting of the American Geophysical Union in San Francisco.

Doug Morton of NASA’s Goddard Space Flight Center in Greenbelt, Md., presented the new analysis of future U.S. fire activity. The analysis was based on current fire trends and predicted greenhouse gas emissions.

“Climate models project an increase in fire risk across the U.S. by 2050, based on a trend toward drier conditions that favor fire activity and an increase in the frequency of extreme events,” Morton said.

The analysis by Morton and colleagues used climate projections, prepared for the Fifth Assessment Report of the United Nations Intergovernmental Panel on Climate Change, to examine how dryness, and therefore fire activity, is expected to change.

The researchers calculated results for low and high greenhouse gas emissions scenarios. In both cases, results suggest more fire seasons that are longer and stronger across all regions of the U.S. in the next 30-50 years. Specifically, high fire years like 2012 would likely occur two to four times per decade by mid-century, instead of once per decade under current climate conditions.

Through August of this year, the U.S. burned area topped 2.5 million hectares (6.17 million acres), according to a fire emissions database that incorporates burned area estimates produced from observations by the Moderate Resolution Imaging Spectroradiometer instruments on NASA’s Aqua and Terra satellites. That is short of the record 3.2 million hectares (7.90 million acres) burned in 2011, but exceeds the area burned during 12 of the 15 years since record keeping began in 1997. This and other satellite records, along with more refined climate and emissions models, are allowing scientists to tease out new information about fire trends.

“Fire is an inherently global phenomenon, and the only practical way to track large-scale patterns and changes in fire activity is with satellites,” says Louis Giglio of the University of Maryland at College Park and Goddard.

As the U.S. land area burned by fire each year has increased significantly in the past 25 years, so too have the emissions. Carbon dioxide emissions from wildfires in the western U.S. have more than doubled since the 1980s, according to Chris Williams of Clark University in Worcester, Mass.

The satellite-based view allowed Williams and his colleagues to quantify how much carbon has been released from fires in the U.S. West. The team used data on fire extent and severity derived from Landsat satellites to calculate how much biomass is burned and killed, and how quickly the associated carbon was released to the atmosphere. The team found carbon emissions from fires have grown from an average of 8 teragrams (8.8 million tons) per year from 1984 to 1995 to an average of 20 teragrams (22 million tons) per year from 1996 to 2008, increasing 2.4 times in the latter period.

“With the climate change forecast for the region, this trend likely will continue as the western U.S. gets warmer and drier on average,” Williams said. “If this comes to pass, we can anticipate increased fire severity and an even greater area burned annually, causing a further rise in the release of carbon dioxide.”

Researchers expect a drier and more wildfire-prone U.S. in future decades. Previous research confirmed the connection between the measure of an environment’s potential evaporation, or dryness, and fire activity.

From a fire and emissions management perspective, wildfires are not the entire U.S. fire story, according to research by Hsiao-Wen Lin of the University of California at Irvine. Satellite data show agricultural and prescribed fires are a significant factor and account for 70 percent of the total number of active fires in the continental U.S. Agricultural fires have increased 30 percent in the last decade.

In contrast with wildfires, agricultural and prescribed fires are less affected by climate, especially drought, during the fire season.

“That means there is greater potential to manage fire emissions, even in a future, drier climate with more wildfires. We need to use cost-benefit analysis to assess whether reductions in agricultural fire emissions — which would benefit public health — would significantly impact crop yields or other ecosystem services,” Lin said.

NOAA: Climate Change Driving Arctic Into A ‘New State’ With Rapid Ice Loss And Record Permafrost Warming

Arctic sea ice is melting much, much faster than even the best climate models had projected (actual observations in red). The reason is most likely unmodeled amplifying feedbacks. The image (from Climate Crocks via Arctic Sea Ice Blog) comes from a 2007 GRL research paper by Stroeve et al.

“Scary New Report on Arctic Ice” is the Weather Channel’s headline for NOAA’s sobering 2012 Arctic Report Card.

Everyone should indeed be scared by what we are doing to the Arctic because it will accelerate global warming, speed up sea level rise, and make deadly superstorms like Sandy more frequent and more destructive (see “NOAA Bombshell: Warming-Driven Arctic Ice Loss Is Boosting Chance of Extreme U.S. Weather“).

This is what’s new up north in 2012:

New records set for snow extent, sea ice extent and ice sheet surface melting, despite air temperatures — a key cause of melting — being unremarkable relative to the last decade.

Multiple observations provide strong evidence of widespread, sustained change driving Arctic environmental system into new state.

Here’s a video summary from NOAA:

Two of the most worrisome highlights are:

The record Greenland melt is scary because if the Greenland ice sheet disintegrates, sea levels would rise 20 feet — and the process appears to be accelerating to a critical “tipping point” (see also “Science Stunner: Greenland Ice Melt Up Nearly Five-Fold Since Mid-1990s”). Indeed, polar researcher Jason Box, lead author of the Greenland section of the report, told the annual meeting of the American Geophysical Union in San Francisco:

“In 2012 Greenland crossed a threshold where for the first time we saw complete surface melting at the highest elevations in what we used to call the dry snow zone,” he told reporters at the AGU. “As Greenland crosses the threshold and starts really melting in the upper elevations it really won’t recover from that unless the climate cools significantly for an extended period of time which doesn’t seem very likely.”

The tundra warming is scary because it is a frozen locker of carbon whose defrosting will further accelerate warming (see “Carbon Feedback From Thawing Permafrost Will Likely Add 0.4°F – 1.5°F To Total Global Warming By 2100).”

Here is more detail on what’s happening in the tundra:

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U.S. Energy Outlook: The Good, The Bad, And The Ugly

by Daniel J. Weiss

New projections released by the Department of Energy show a mixed — but mostly scary — picture for America’s energy and environmental future.

This week, the Energy Information Administration released its “AEO 2013 Early Release Overview.” It is the preview version of its complete Annual Energy Outlook 2013 due next spring.  This updates AEO 2012 by factoring in newly adopted policies – such as the 2017-2025 fuel economy standards for light duty vehicles – for EIA’s projections of energy production, consumption, and carbon pollution between now and 2040.

AEO 2013’s “reference case,” which assumes no future policy changes, includes good, bad, and ugly predictions for our energy system. Efforts to limit carbon pollution responsible for climate change fall into the ugly category. EIA’s estimates make it shockingly clear that under existing energy policies there will only be a small decrease in carbon pollution from the energy sector between now and 2040, condemning us to increasingly deadly climate change.

Here are some of the highs – and lows – of the AEO 2013 Early Release.

First, the good news. EIA predicts a sizable drop in gasoline consumption due to more stringent corporate average fuel economy standards. The agency estimates that liquid fuel consumption (mostly gasoline) will be 7 percent lower in 2020 compared to 2011, or about 600,000 barrels per day less.  As you can see in the graph below, these reductions continue until the early 2030’s when nearly all of the cars on the road are built with an average fuel economy standard of 54.5 miles per gallon.

Along with a decrease in liquid fuel consumption, EIA also projects that “crude oil production, particularly from tight oil plays, rises sharply over the next decade.”  Growing development of shale oil fields in North Dakota and Texas will help increase domestic oil production under current energy policies by 2 million barrels per day between 2010 and 2020 – a 36 percent increase.

The improved fuel efficiency, combined with this growing domestic oil consumption, means that foreign oil imports will fall by one quarter between 2010 and 2020. From a narrow energy security perspective, this means less money sent overseas to buy foreign oil. However, from a climate perspective, this keeps us on a path toward disaster: according to the International Energy Agency, we need to keep 2/3rds of proven carbon reserves in the ground through 2050 in order to avoid catastrophic climate change.

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Carol Browner: ‘Stunning’ Climate Denial In The House Prevents Any Action On Climate In Washington

by Luke Morgan

Former EPA Chief and White House Climate Czar Carol Browner says that climate deniers in the House of Representatives are the biggest impediment to getting a price on carbon.

When asked what the most significant obstacle in passing climate change legislation is during an event in Washington on the Clean Air Act yesterday, former EPA Chief Carol Browner pointed to Republicans in the House and their “stunning” denial of the reality of earth’s changing climate.

“I think unfortunately, right now a majority in our House of Representatives appears to not even think the problem is real,” Browner said. “It’s sort of stunning to me because I’ve never seen the breadth of scientific consensus on an environmental issue like there is on this.”

Speaking directly after Browner was Texas GOP Representative Joe Barton. Barton is the chairman emeritus of the House Energy and Commerce Committee, and sits on the Environment and the Economy subcommittee.  However, while collecting $1.7 million from Big Oil over the years, he has displayed alarming ignorance on climate reality.

Barton claimed that carbon dioxide is not only irrelevant to the Clean Air Act, but that it’s not dangerous at all because it’s “a necessity for life.” To illustrate his example, he noted that he was exhaling carbon dioxide as he spoke, and actually argued that people should build greenhouses because they create life, so greenhouse gases are good.

“There’s a reason that you build things called greenhouses, and that’s to help things grow,” he said.

Barton also claimed that the atmosphere had, in the past, contained carbon dioxide levels greater than 5,000 parts per million (ppm), implying that we could do so again today.  The current scientific consensus, however, is that 350 ppm is the safe upper limit.

Barton said that he accepted the climate is changing, but he discounted human influence and the rise in extreme weather as “opinions.” Both the anthropogenic causes of climate change and its effects on extreme weather events are extremely well-documented in the scientific community.

Barton’s remarks came during a panel convened by National Journal and the American Lung Association on the legacy and future of the Clean Air Act.  Although he spoke alone, many of the other speakers either pre-empted or responded to his off-base remarks.

Dr. Jerome Paulson of the Children’s National Medical Center pointed out the silliness of Barton’s argument that CO2 is a necessity for life.  Paulson noted, “If we had no sodium, we wouldn’t be alive.  But there does come a point where if people consume too much sodium or if there’s too much sodium in their bodies, then it becomes toxic and people can die.”

The same is true, Paulson said, of CO2 in the atmosphere: it’s necessary, but too much of it is clearly a bad thing.

The event, which can be viewed online, focused mainly on the Clean Air Act and whether it had been successful, and how successful it could be moving forward.  While Barton incorrectly argued that CO2 is not a dangerous pollutant and therefore not subject to the jurisdiction of the Clean Air Act, Browner – who was also the longest-serving EPA Administrator – pointed out that the agency is required by law to regulate anything it considers to be detrimental to environmental health.

Barton also repeated the Republican talking point that the EPA places an undue burden on businesses.  However, Browner pointed to the EPA’s review of the Clean Air Act, which detailed $2 trillion dollars in economic savings through 2022.  Browner has made similar arguments before to Stephen Colbert.

Barton expressed doubt that Congress would be legislating on the Clean Air Act at all in the current Congress.  Browner, however, noted that current law allows the EPA and the executive branch to make significant progress in combatting CO2 without needing Congress’s stamp of approval, and that the Supreme Court has upheld that right.

Luke Morgan is the executive Intern at the Center for American Progress.

December 6 News: Russia Proposes ‘Fantastically Bad’ 2020 Targets That Would Allow Carbon Emissions To Rise

Russia plans to set itself a binding 2020 goal for carbon emissions, a top climate change official said on Wednesday – the only problem is it would allow them to rise. [Point Carbon]

Global warming is rapidly driving the Arctic into a volatile state characterized by massive reductions in sea ice and snow cover, more extensive melting of the Greenland ice sheet, and a host of biological changes, according to a comprehensive report published by the National Oceanic and Atmospheric Administration (NOAA) on Wednesday. [Climate Central]

President Obama plans to ask Congress for about $50 billion in emergency funds to help rebuild the states that were ravaged by Hurricane Sandy, challenging deficit-minded lawmakers while worrying regional leaders, who complained Wednesday that it was not enough. [New York Times]

President Barack Obama’s envoy at United Nations global-warming negotiations said he’s willing to participate in discussions on the issue of fairness in how nations plan to curb climate change, paving the way for drafting a new treaty by 2015. [Bloomberg]

China has pledged to make its “due contribution” to cutting greenhouse gas emissions and tackling climate change, but said developed countries must do more. [Guardian]

Cheatgrass, an invasive grass accidentally introduced by settlers more than a century ago, is fueling bigger, more frequent wildfires in that empty stretch of the West. [Los Angeles Times]

For decades, the United States has been the land of the gas guzzler. But that’s changed significantly over the past five years. New vehicles purchased in November of 2012 got 24.1 miles per gallon, on average. That includes all new cars, SUVs, and light trucks. By contrast, new vehicles averaged just 20.1 miles per gallon average back in the fall of 2007. [Wonk Blog]

In an effort to speed up development, the U.S. Department of Energy has set a goal to improve battery and energy storage technologies by five times that of today–in the next five years. [Christian Science Monitor]

With many roads and bridges washed away, rescue teams struggled Wednesday to reach isolated villages in the southern Philippines after a powerful out-of-season typhoon tore through the region, leaving at least 325 people dead and several hundred more missing, officials said. [New York Times]

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