Vote now on a new era - new taxes

Published on May 30, 2009

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Electric Vehicle charging station in Paris
Changes are coming!The critical moment, your opportunity to influence future direction, is now.In December, the Copenhagen conference will negotiate a new treaty, replacing the expiring the Kyoto treaty. Governments are likely to agree to mandatory limits on CO2.

The method to achieve these limits will be the introduction of new taxes, taxes on either fossil fuels or on emissions. Here in Europe, the new MEPs to be elected in June will influence that conference, as well as the subsequent implementation of its decisions.

Our task as voters interested in the Copenhagen outcomes is to sort through the slogans, fine print, and technical details of the different parties positions. The beliefs of various parties and their associated groups are not clear from a cursory look at their proclaimed programs. The Green party, the German one in particular, treats "nuclear" as a dirty word. A few parties even maintain that "environment" is a fraudulent term invented by neo-communists. That is still the view of Czech president Klaus who now has his own party affiliated with the Euro-sceptic Libertas group.

Governmental subsidies for selected alternatives, e.g. solar, are favored in some quarters, while in others the wisdom of the market to select the best strategy and best technology is preferred. Some parties, notably the Greens, would like to ban nuclear power plants altogether, but others would fund a crash program to develop the next generation of nuclear fission reactors, which do not produce tons nuclear waste.

Industry promises of "clean coal" have gained support, although skeptics believe that clean coal is an oxymoron. Nearly all parties maintain, of course, that they want more "conservation" and would like to see more renewable sources, particularly solar panels and wind turbines. The real question, however, is how the transition from today's economy based on fossil fuels to an entirely new paradigm will be accomplished. Who will decide how much we will pay? How fast will we move?

For developed countries, switching to a sustainable future, a future which does emit CO2, may require changes as profound as the switch to steam and electricity was in the past two centuries. Trains are likely to resume long haul transport of goods and cars will run on electricity, or hydrogen, or bio-fuels, or a still-unknown source of energy.

We have half a century to accomplish this. As we discussed previously, if we as a global entity do not do this in a rational, peaceful, and cooperative fashion, there is always the option of an all-out war, a fight for the last drop of oil.

Before you vote, you need to know the facts.

Two opposing views on this topic are represented here by the two American think-tanks, the Cato institute and CAPAF:

Issue 1 : The proper role of government

The Cato institute now supports the notion that CO2 emission needs to be limited. True to its philosophy of limiting governmental "meddling in the market," it favors a tax on CO2 emissions. Because all countries share the same atmosphere, this would be imposed and enforced by governments through an international treaty. In this plan, the market, i.e private industry, would find ways to produce energy without poisoning the planet's atmosphere.

They say that every two years the US government comes up with clever ideas of how to achieve energy independence. In 1974, President Nixon launched Project Independence, declaring, "Let this be our national goal: At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy..." President Carter proclaimed his "Moral equivalent of war" in 1977. G.W. Bush spent $1.2 billion on the Freedom Car which would run on hydrogen, with little result. (see the picture of the Hydrogen pump in Washington DC). Many billions of dollars have been spent, but the goal, like the end of a rainbow, seems to be receding. Today, the US is importing 30% of its energy needs.

institute CAPAF argues that the problem is too large, too urgent, to be solved by any private initiative. They point to instances of how government's direct role can facilitate the solving of major scientific and technological problems. At the beginning of WWII, in 1939, it became apparent to physicists that it would be possible to develop a new weapon, a bomb of unequaled destructive power. The concern that Hitler could have this so-called "atomic" bomb first was not unjustified, as fission was discovered in Germany. Today this weapon is called by the more accurate term, a nuclear bomb, and we worry about its proliferation.

Important to note is that President Roosevelt did not wait for private industry to develop this technology and offer it to the Air Force. He invested taxpayers' money into the super secret Manhattan Project, and the US developed this weapon first. A similar effort evolved after the Soviets launched their Sputnik in 1957. Less than a year later, President Eisenhower founded a new agency, NASA, to ensure that the US would not lag behind in rocket technology.

The question is whether the threat of the climate change is of such scope and magnitude that a massive crash program run by international governments is necessary. Such a program, still in the realm of debate, has been dubbed Manhattan II. These could be publicly-funded research projects, such as ITER, Gen-IV reactors, or solar powered satellites .

Local governments and cities can also be actors in this drama. The state of California is funding a network of charging stations for electric cars, while Paris has a network of pumps for hydrogen cars. Perhaps our future transportation system will use a mix of fuels, batteries for passenger cars, and hydrogen for trucks and planes, but it might be useful to have a coordination committee for at least each continent, and a study to select the infrastructure which is likely to prevail. The kinds of market wars that have dominated competing television and video formats are too costly and wasteful to be waged over a problem this large and important.

There are two ways to provide incentives for using alternatives to fossil fuels.

Issue 2: What to tax: carbon or carbon dioxide?

* Carbon tax: This is a tax at the source. Taxes are imposed on the production and on the import of fossil fuels, mostly of coal. This is easy to administer and not easy to cheat on. Coal is difficult to hide and smuggle. The tax would start low and gradually rise for a few decades until alternative sources of energy are found, developed, and be become cheaper than fossil fuels.

Cap and trade: The other method is to tax at the point of consumption. Power plants and other main users of fossil fuels will be allocated emission permits. These are permits to emit certain amounts of carbon dioxide per year. Initially the permits will be sufficient to continue normal operation. Gradually, the amount of permitted emission will be reduced.

A key component is that companies are allowed to trade the permits, providing for a softer transition and the play of market forces. For example, one power plant may find a way to produce electricity from locally available wind or solar resources. By selling its permits, it may be able to raise the capital needed to develop those resources. This method is called "cap and trade" in the USA and ETS (European Trading Scheme) here.

One problem with the first method, the carbon tax, is that coal can be used, and is used, in many ways other than as fuel for power plants. We should not tax all products which use coal, or carbon, only those processes which release CO2 into the environment.

Difficulties and complexities to consider

The issue of "clean coal" illustrates another aspect of the dilemma. The fossil fuel industry is running ads saying that they have found a way produce energy from coal without releasing CO2. Carbon dioxide can be removed from the smoke and sequestered, that is stored underground or turned into minerals, or carbon-containing rocks.

Opponents of clean coal suggest it is unstable to have large stores of CO2 underground, where an earthquake could release them, causing a sudden catastrophe. Experts respond that natural gas was stored underground for thousands of years, until man decided to release it. The same underground reservoirs could now be used to store CO2.

Is that possible and safe, and how much it would cost? We do not know yet. The Bush administration began a large project to demonstrate the feasibility of the clean coal and to determine the costs. It was canceled, then restarted recently. We are still awaiting facts from the U.S. or elsewhere.

Selecting ETS, the second method, has its drawbacks, too. It is the government bureaucracy which must decide both what is a "fair" permit and how quickly these permits should be reduced. Lobbyists are already waging a battle about whether airlines should get permits to pollute and for how long. Not only specific industries but entire countries have a major stake in the decisions. Poland is currently producing 90% of its electricity from coal. How quickly can they retool? China is building a 1 GW coal0powered power plant per day. How much time they should be given to switch to more acceptable alternatives?

An argument in favor of ETS is that this method, "cap-and-trade," was already successfully used when acid rain threatened the environment in the in the US Mid-Atlantic Coastal Plain and in Eastern Canada Burning of coal releases not only CO2 but other oxides, SO2, NO2 .. etc. The SO2 combines with rain to form diluted sulphuric acid, which destroys vegetation. Power plants lobbied against the introduction of caps on SO2, claiming that it would make energy too expensive. Nevertheless, caps were introduced and enforced. Patent filing for scrubbers which remove sulphur from the coal or smoke increased, and in 5 years SO2 emission dropped by 45%.

Acid rain effect In Eastern Europe, then occupied by the Soviet Union, such a program was not enacted, and one could see the devastating effect of acid rain on the woods in the Czech mountains in 1990. Now the scrubbing technologies are used there, too.

Proponents of the carbon tax argue that "cap™" worked on SO2 but question whether it would be successful on the much larger problem of Co2.

There are many technical issues involved but, ultimately, people decide political issues primarily based on their values: How much do we care about the problems we will leave our children? To what extent can we trust the government's ability to make fair decisions and the experts who assert the problems can be solved and tell us what we must do. We need to know the facts and recognize certain political biases in order to predict which of our values are supported and where. The best use of the new tax money may be a mix of these three choices:

Dr Hansen, a climatologist and activist, in an article entitled: www.columbia.edu/~jeh1/mailings/2008/20080604_TaxAndDividend.pdf advocates a 100% dividend. In agreement with the Cato institute, he fears the cost of bureaucracy and the influence of lobbyists ("people in alligator shoes," as he calls them). Hansen's proposal has a certain social impact. Wealthy people using more energy will end up paying more and poorer people using less get a kind of bonus for their smaller environmental impact. This may appeal to EU voters favoring the Social Democratic parties.

Issue 3. How to use the new tax money: Dividend, subsidies or Manhattan II?

Dividends: The money collected is returned to the taxpayers. All get the same refund, so that those who use more carbon will end up paying more.

Subsidies for certain technologies, such as solar panels, more efficient furnaces, and the insulation of homes.

Funding for research into new technologies, perhaps even Manhattan II types of projects.

The more conservative voters of the EPP may favor more merit-based use of carbon tax revenue and use it to subsidize individual projects, in which citizens install solar panels, more efficient furnaces, and thermal insulation on their homes or apartment houses. The Czech government is currently paying up to 50% of such projects, using the funds that gained by sale of the ETS permits.

On the other hand, EPP-type parties, the more right-wing, business and industry-oriented parties, are traditionally opposed to new taxes and tend to be more skeptical when evaluating the negative consequences of global warming. Do you want to give them more power in the EU Parliament?

The parties favored by deniers such as Czech President Vaclav Klaus also present problems. Their position is based on ideology rather than on thoughtful analysis of verified scientific data. That also applies to the other political extreme: the Green party would prohibit the nuclear power plants. A rational decision process requires that energy sources must be evaluated based on the actual damage to the environment.

Nuclear power plants do not emit CO2. Today's power plants use 2nd generation fission reactors, which do produce large amounts of nuclear waste. The waste, when buried, remains in the the environment for thousands of years. But experts say that it is possible to burn the nuclear fuelmore completely. The new, forth generation fission reactors, http://www.gen-4.org/ , GEN-4 reactors, can operate safely and produce only 1% of the usual low radiation waste. They can even burn the existing nuclear waste stored in the cooling ponds of today's 2nd generation reactors. Perhaps a Manhattan II-type project to accelerate their commercialization would be the right strategy. All proposed solutions, from "clean coal", to gen IV nuclear, to solar collectors in the deserts or in space, need to be evaluated and results and costs verified. Can we do it? "Yes we can!".

Mankind at the beginning of the 21st century is like a man with a toothache. Energy is becoming expensive. It is unpleasant but tolerable. Man may decide to go to a dentist, temporarily endure more pain than he currently has, and possibly significant costs, if the tooth has to be extracted and replaced. If he does not go to the dentist but waits, the pain and the problem are likely to get worse, and good remedies will be more expensive or eventually perhaps even impossible.

Conclusion

The choice is yours.

This article had provided a summary of the issues and defines some basic terms. Now that you have the basics. On this page you may click on the icon of the political group to which the party you are considering belongs, then look for their position on these issues. If the program does not even mention environment and energy, that could be a bad sign. You may need to ask some questions. Then decide how to vote. Your comments here are welcome, too.

References

Cap and treade ? US video Gen-IV: Generations of the nuclear fission reactors Reactors producing 40% of emetricity in France are second generation ( gen-II). Reactors currently on the drawing boards,(particulary gen -IV) are very different.

Projected Timeline About the project, GIF forum EU gen-III - recent article in the NY Times.

ITER http://www.iter.org/default.aspx> About the project

wikipeadia article Schematic diagram of the tokamak

SPS: Solární satellites space elevator simulated image of the solar satellite Clean coal : ‘carbon capture and storage’ debate on clean coal skeptical view of Clean coal EU political parties EU election page