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Published on March 31st, 2014 | by Tina Casey


Why Shale Gas Is Toast: Texas Wind Power Sets New US Record

March 31st, 2014 by  

Texas set a new US record for wind power generation last week, and the surge in output demonstrates how quickly the US domestic energy landscape is shifting. Just a few years ago, word was that shale formations  in North America held enough natural gas reserves to last for decades. Today, shale drillers face a perfect storm of economic challenges, environmental headaches, and stiff competition from the wind sector and other forms of renewable energy.

Sure, yesterday’s rosy predictions about shale gas could bear out in terms of  years, but the high cost of shale drilling, the rapid rate of well depletion, and increased gas exports will translate into higher domestic prices.

In the context of surging renewable energy development, natural gas will become an expensive, marginalized fuel in the US domestic market, and Texas is a perfect example of how and why that will come about sooner rather than later.

Texas wind power sets record

Toast by Maik Meid.

The Texas Wind Power Beast Roars

Check out any old John Wayne western and you can see the seeds of the Texas wind power revolution in the iconic wind mills cranking away over the watering trough.

Aside from a technology leap of epic proportions aided by federal research labs, the difference today is a hefty dose of support from federal taxpayers and a tweaking of state laws.

From the federal taxpayer side, we have the much-maligned (well, by the usual suspects) federal production tax credit for wind. Despite the naysaying, the tax credit basically provides the wind industry with the same consideration as conventional energy, in terms of supporting domestic production of a vital resource for the sake of the greater good.

The state law tweak is where things really get interesting for Texas. Last year, we noted that Texas was on the verge of completing a $7 billion transmission project designed to bring wind power from remote areas of West Texas to population centers in Dallas and elsewhere, in addition to supporting West Texas consumers.

The 3600 miles of new transmission lines have a capacity of 18,500 MW and we’re already crediting them with pushing back on additional nuclear development in the state.

The transmission boom was set in motion by the Texas legislature in 2008, which designated five zones called CREZ (Competitive Renewable Energy Zones) for new wind power development. The same legislation also restructured the electricity industry to enable Transmission Service Providers to offer transmission services to other utilities throughout Texas.

The goal was to ramp the state’s wind generation capacity up to 18,456 MW. By way of comparison, the installed capacity of Texas wind power just five years ago, in 2007, was only 4,296 MW.

Keep in mind that the wind will keep blowing over a wind turbine site long after a typical shale gas well has reached the end of its useful lifespan, and you can see why some shale investors, notably Shell, are beginning to pull back.

Texas Sets US Wind Power Generation Record

Getting back to that record-setting event, let’s note up front that available output generally runs lower than instantaneous output, which is the data frame for the new record.

With that in mind, the main Texas grid operator ERCOT (Electric Reliability Council of Texas) reported that it had achieved an instantaneous output of 10,296 MW for wind power at 8:48 on the night of March 26.

That beat ERCOT’s previous record, set just last month, by a good 600 MW.

It also established a new record for wind power generation by any power system in the US, according to the American Wind Energy Association.

To show what a difference the new CREZ and transmission lines are making, most of the record-setting generation (8,863 MW) came from West Texas.

All together, wind accounted for an impressive 29 percent of electricity on the ERCOT grid at the time the record was set.

Record-setting aside, wind power already accounts for a nice chunk of ERCOT’s grid.  It accounted for 9.2 percent of the total energy used by ERCOT consumers in 2012, and bumped up to 9.9 percent in 2013.

As for that initial goal of 18,459 MW set back in 2008, ERCOT notes that it already has a commercial wind power capacity of 11,000 MW. Another 8,000 MW are in development currently, and 26,700 MW are under study.

Last Hurrah For Shale Gas

While all that new wind development activity naturally brings up the NIMBY issue, all things being equal the advantage of wind power is that once a site is established, it will continue to harvest energy indefinitely.

For that matter, the same site could easily grab more energy in the long run, not less, as earlier technology reaches the end of its lifecycle and is replaced with more efficient equipment.

Contrast that with shale gas, which as previously mentioned has earned a reputation for rapid well depletion. The consequence is that thousands of new wells must be drilled in the US alone just to maintain production.

That doesn’t even account for increased domestic demand and expansion of the export market.

While some gas and oil giants are pulling back from shale investments in order to reduce “stranded asset” exposure, it’s worth noting that the shale gas giant ExxonMobil has been doubling down on shale gas, possibly with an eye toward supplying the gas-to-plastics market rather than the energy market.

Diverting more gas from the domestic energy market would exert even more upward pressure on fuel gas prices, and with gas prices on the rise you’re going to start setting more pushback from consumers and less support for fracking (short for hydrofracturing), the shale drilling method that has been causing so many problems in local communities.

When even a top ExxonMobil executive starts complaining about the impacts of fracking, you know that shale gas is on shaky ground.

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About the Author

specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.

  • Jim

    Oh yea,what all you idiots need to do is move up north,so when winter hits,,,we can turn that horrible gas off and freeze all your ignorant obama loving asses off. Please leave, or go nack to where the hell you came from,probably came here for a job because the liberal idiots running your part ofmthe country cant keep you in a job.. Oil and gas is whats holding the country afloat you goofy bastards.

  • Jim

    Bahahahahah! Obamabot,look at her,crying treehugger / activist,just by looking at her pic.

  • Bob_Wallace

    “Both wind and gas cost about $84 a megawatt hour to install worldwide”

    But then you have to purchase fuel for gas plants and wind is free everywhere.

    “The best wind farms may operate 45 percent of the time”

    This tells one that the author doesn’t know enough about wind. He is confusing CF (capacity factor) with hours of production. 45% CF is good, but there are better.

    ” plunged to $3.73 last year”

    That’s cheaper than the cost to drill/frack new wells. The low price of NG is due to over-investment in drilling. It’s created a surplus and caused prices to crash. They’ll move back up to drilling costs + other expenses once we’ve burned through the surplus.

    What we’re likely to see over the next couple/few years is a lot more solar capacity added to the grid as solar delivers during high demand hours. Wind will probably play a secondary role in terms of new capacity. Solar, wind and NG will be used to replace the 200 or so coal plants being closed.

    We’ve got preliminary data that says that in 2013 the average selling price for wind was 2.1c/kWh. That would make it about 4c/kWh without subsidies. And, if so, very competitive with NG even without subsidies.

    Don’t let anyone get you too excited about short term “noise”. Look at the longer picture.

  • MJTex

    These “records” are occurring at nighttime/overnight hours during springtime when electricity demand is at its lowest and, coincidentally, wholesale electric prices are also at their cheapest, in stark contrast with higher cost wind energy which skews up the overall cost of overnight electricity supply. We don’t see anywhere near that level of wind production on a hot summer afternoon. 10,296 MW @ 3/26 8:48PM, 9,868 MW @ 3/27 3:19AM, etc. Like solar, wind may help displace a fraction of the annual electricity we get from fossil resources but let’s not delude ourselves about replacing it. That annual wind fraction may rise but the contribution from wind during on-peak is nearly zero.

    • tmac1


      NREL National Renewable Energy Labs and ERCOT the Texas grid did a study on just this intermittent issue you raise.

      With demand side management (smart grid) a combination of just solar and wind got them up to 90% in Texas. They are quite lucky to have both fantastic wind and solar resources. Not all states are as lucky.

      You are correct that wholesale prices are cheap at night due to supply demand. You are incorrect as the Peaking price for gas and coal is very very expensive and wind and solar are first in line for Utilities when they need peak electricity. Why? No fuel costs. Solar crushes peaking gas as does wind. Side benefit is ratepayers pay less money as utilities save money.

      You are correct that night early am is not ideal so storage would be ideal.
      All that cheap wind power is wasted if noone is around to run computers dryers washers etc. That is why Off Peak rates are so cheap.
      Many folks on this forum have EV and the extra energy could be stored in the car battery then pulled back later; this is concept only with I think just a few pilots seeing how this works. Here in Maine we have Ceramic heaters that take off peak electricity store it in bricks, then when we wake up the bricks are turned on and the “night wind” heats us during the day, pretty neat huh?

      You are correct of course the wind does not blow all the time. But generally on hot still day the sun is shining.
      Richard Perez from Albany NY area has also done studies showing that in every major US market Solar Resources and peak demand coincide. THat is the higher the electricity demand the brighter the sun is shining

    • Bob_Wallace

      Let’s look at some real world wind, solar and demand data. The graph is for four years of actual data from the largest grid in the US. The PJM grid serves all or part of 13 eastern states and Washington, DC.

      The top line is the amount of energy that was available from sunshine and wind. As you can see it rarely goes to zero.

      The second line is how often power would need to be pulled from storage to keep the grid going with no electricity shortages.

      The third line is the number of times is was most cost efficient to turn on some natural gas plants rather than using even more storage. (Five times in four years. Thirty-five hours over four years.)

      Texas. Sure, onshore wind slows down on hot afternoon. But solar is kickin’. And offshore wind is pumping. The trick is to bring lots of different sources on line and make your ‘collect and share’ area large.

      • Peter Gray

        Very interesting graph and conclusions. It must be hypothetical, though, right? Unless I’m misinterpreting, pretty sure that grid doesn’t actually sustain itself on renewables and storage 99.99% of the time.

        So what are the assumptions about the amount of wind and solar available? From a plausible array of wind and solar farms and rooftop solar? Are there any cost estimates to go with this, and what kind of storage are they talking about?
        (I.e., link, please)

        • A Real Libertarian



          Note they’re estimating the cost of solar as $4294/KW for 20 years in 2030.

        • Bob_Wallace

          The top line, the green one, is built from real world hour by hour wind and solar output. Four years worth. From the meteorological offices in the PJM grid area.

          Then the authors took minute to minute demand data from the grid for the four year period and calculated the best (in terms of cost) mixture of capacity, storage and deep backup based on what they assumed solar, wind and storage would cost in 2030.

          The mix is heavy on generation, with overproduction and curtailment at times, surprisingly light on storage and needed NG only 0.1% of the time to build a grid that cost the same as current electricity prices including the external cost of coal.

          Since this was published both wind and solar have already become cheaper than their 2030 assumptions.

          Also they did not include any other renewable inputs such as hydro, tidal or geothermal. They didn’t do any power trading with adjacent grids. They didn’t include any load-shifting. All of these would have made the cost even lower.

          Adding those other inputs and considering the rapidly dropping cost of wind and solar it’s easy to see that we could build a renewable grid using almost no fossil fuels and spend less money (full accounting) for our electricity.


          • Peter Gray

            Thanks. That’s impressive. And delicious that WV sits right on the centroid of the service region.
            Solar and wind are already cheaper than they projected 2 years ago for 2030? Maybe I’ll understand if I read it carefully, but that seems like a huge error.

          • Bob_Wallace

            Solar definitely is. They set the capital cost for solar in 2030 at $2,848/kW.

            We know that utility scale solar is being installed in the US for roughly $2,000/kW. That’s capital cost plus permitting cost, labor, and transmission. We’re on our way to $1,000/kW before 2020. (China is already there. Italy is under $1,500/kW.)

            So we’re already well under their projected 2030 cost for solar.

            I ran the numbers for wind some time back and remember that they were projecting wind higher than $50/MWh in 2030. That’s roughly the non-subsidized cost of wind now.

          • Peter Gray

            Thanks. I haven’t had a chance to more than skim it. So were they just being over-conservative? On the third page they mention using a 2008 baseline for projected capital costs in 2030. Then I see your numbers in Table 2. Not too important, always better to not leave yourself open to charges of exaggeration.

            Good find!

          • Bob_Wallace

            I don’t think I’m exaggerating. Do you think I used the wrong number from their paper for their 2030 solar capital cost projection?

            I’m very sure of the current numbers I used. The $2,000/kW current price if from GreenTech Media’s most recent solar report. That’s the prices the industry is reporting. Other solar research organizations have reported similar prices for US utility scale.

            Deutsche Bank reported $1,200/kW in southern Italy some months back.

            “Yingli chief strategy officer Yiyu Wang said that project costs for its current pipeline of 130MW in utility-scale solar projects in China are about $1.03-$1.05 a watt.”

            “Wang suggested that Yingli would generate a return in the “higher mid teens” for these projects. ”
            I think Budischak et al. were being conservative in their projections. I think not being so would have made it easy for some to wave it away.

          • Peter Gray

            Not at all. I was just poking around a bit and trying to get a better sense of their modeling and assumptions. I didn’t find a clear statement of their cost projection assumptions, but in any field, projecting recent trends 20 years into the future is asking for trouble. They said something about further installed cost declines, but they took “technological breakthroughs” off the table – as I think they should.

          • Bob_Wallace

            They aren’t clear, in that they don’t use the terms I’m used to. I wish they had used their assumptions and stated a clear LCOE for each. It would have made things a lot easier.

          • Peter Gray

            I had that feeling as well, but thought it was just my own inexpertise.

  • Rick Kargaard

    We will always need the gas. That is why we should not burn so much of it. So why is that the fault of the producers or fracking. Blame our own personal use and our demands on industry to provide us with mostly unneeded goods. Keep developing alternatives and we may be able to sustain a semblance of our lifestyles for awhile.

  • Sonya A. Willis

    What cute wishful thinking. Texas has an ‘all of the above’ energy policy. They don’t hamstring one energy source in favor of another. Make no mistakes though, oil & gas is what dominates in Texas and gave the state a $2.6 billion dollar surplus ending in 2013. Texas shale is driving global gas prices. Texas is producing 35% of US crude oil. Wages are up 3.7% all because of shale oil and gas.

    The shale giants aren’t the usual ‘Big Oil’ companies but companies such as Pioneer Natural Resources, Chesapeake Energy, EOG Resources to name a few.

    Until wind and solar can stand on their own feet without need of “fossil fuels” I’d hold the celebrations in check.

    • Bob_Wallace

      Wind and solar do a much better job of standing on their own feet than do fossil fuels. We’ve poured fortunes into subsidizing fossil fuels and we spend fortunes treating the health damage they cause.

      • Peter Gray

        Not to mention the much larger fortunes in implicit subsidies for negative externalities that are just now beginning to kick in.

  • TinaCasey

    Thanks as always guys for the lively discussion. As for the tone of the piece, the point is that fossil gas will be marginalized, not eliminated. Look at firewood, for example. It’s been in use for thousands of years and it’s still with us, even in industrialized nations. It’s a good bet that fossil gas (and petroleum and coal, for that matter) will also continue to be used or many years to come but in a much more limited and sustainable basis than they are now.

    • eveee

      Nice article, Tina. Agree on your comments. I note that tonight, March 31, 21:00 MISO is at 10,630 MW, just above ERCOT, 10,290 record. Hurray. The wonder is that ERCOT produces so much in a smaller geographical area. It speaks to the all out push behind wind power in Texas. There is still a vast amount of wind and solar energy in the Midwest.

    • Peter Gray

      Thanks for an informative, well-thought-out article, Tina, and for appearing in the comments section. I wish all CT writers would do that.

      I also have a hunch (and not much solid evidence) that the gas industry is frantically drilling, and lobbying and advertising, because it will soon be in the kind of decline you describe. It seems to me that they’re extracting at higher than the profit-maximizing rate would be if traditional demands would continue indefinitely. Maybe something to explore in more depth nationally? There must be some decent academic papers out there that have checked it out, but I haven’t searched for them.

      • Bob_Wallace

        Peter, why don’t you write up some articles and contribute them to the site? That would be one way of bringing things up to your standards, would it not?

        • Peter Gray

          Thanks for the idea, Bob. I’ll think about that. I might start with a distillation of the carbon policy article, assuming no copyright issues from the original publication. Maybe something from the current wood-to-biojet research I’m working on would also work.

          As a regular thing, I’m probably not in a good position right now – commenting now and then already consumes way more time than I should be spending.

  • jdeely

    Texas need to get moving on Solar. Hope to see it installing at least 1GW a year of solar within a few years.

  • Peebles Squire

    Wind power supplied well over one third of demand on the ERCOT grid one morning last week, an all-time record for Texas. Thanks to the newly constructed Competitive Renewable Energy Zone, designed to accommodate new wind power in the western part of the state, that record stands to be broken again with thousands more megawatts of new wind on the way.

    Texas supports more than 10,000 jobs through its wind power industry. Additionally, the state hosts 45 manufacturing facilities along the wind power supply chain, helping spur economic recovery and rebuild American manufacturing. When it comes to wind, Texas has made the right decision and is taking advantage of this immensely useful and abundant resource, to the benefit of ratepayers, employers, and the environment.

    But wind can’t continue to grow without the necessary policy certainty.

    The Production Tax Credit for wind power is a valuable market-based incentive that helps wind energy companies plan for the long term. In Texas, it means consumers can keep taking advantage of readily available wind power, diversifying the grid and enhancing our energy security, all while saving Texans more than 8 billion gallons of water a year.

    We should urge Congress to expedite the PTC’s renewal. With the help of this important incentive, costs in wind power have dropped in cost 43 percent in four years. The result is an energy source that is reliable, clean, and affordable – and the smart choice for our energy future.

    To learn more about wind power, visit http://www.awea.org

    Peebles Squire


    • A Real Libertarian

      If congress keeps jerking around the PTC the wind industry should start operating as if it doesn’t exist.

      If it’s not renewed then there’s no shock to the industry, if it is renewed then there’s a large amount of money available for investment.

  • JamesWimberley

    Texas rightly gets a lot of stick from progressives, but the law that liberalized the Texas electricity market, signed by one Governor George Bush, is pretty good. They drew the right lessons from Thatcher’s privatizaion of the British electricity market, not the wrong ones like California. The grid monopoly, ERCOT, is a neutral intermediary and market-maker, with a mandate to support diversity of supply. Texas SFIK does not offer significant financial incentives to renewables, beyond the federal ones, so their growth in the Lone Star State is pretty organic and immune to state-level political shocks.The much-delayed Tres Amigas interconnect will in a decade end Texas’ isolation from the other US regional grids, and allow power exports.

    I agree with other commenters that Tina’s triumphalism over the demise of gas is undocumented and premature – much as we would like her to be right. One thing to watch for is whether the various LNG terminals planned and approved are actually being built. The terminals and tankers are *very* expensive. They will only be built if investors are sure about supply, demand and prices in the medium term.

    • Bob_Wallace

      I think Texas/ERCOT is already attached a tiny bit to the grid just north in Oklahoma/SPP.

      Those two grids are tied together by the 30-year-old “Oklaunion” HVDC link power exchange facility. That connection is apparently in the process of being upgraded.

      “ABB says it has received a $60 million order from American Electric Power to replace a 30-year-old, high-voltage direct-current (HVDC) back-to-back converter station in Texas – a project that ABB says will enable more efficient power exchange, improve grid reliability and facilitate power flow control in the wind-energy-rich state.
      The project scope includes the engineering, supply, installation and commissioning of an HVDC back-to-back transmission system capable of delivering 220 MW of power in either direction. The new system will have black-start capability, which ABB says enables fast grid restoration in the event of a power outage, allowing power to be used from the other end of the link.

      This is an important feature, as the converter station is an integral part of the Oklaunion HVDC transmission link – an asynchronous interconnection between the Texas (ERCOT) and Oklahoma (SPP) power grids, ABB explains.
      “In addition to enhancing grid reliability and power stability, our HVDC solution will enable the efficient transmission of electricity across this important interconnection,” says Brice Koch, head of ABB’s Power Systems division.

      Other key components to be supplied include converter valves and ABB’s MACH2 advanced control and protection system.

      The existing converter station will remain in operation during the construction of the new station in order to minimize the impact of replacing the system. The new station is expected to be operational in 2014.”

  • Will E

    A mindset
    abundance of energy all over the USA. Wind turbines produce and keep producing.
    The wind will blow forever. Windturbines turn and turn up to 50 years easy.

    Wind and solar is the two quite complementary.

    new mindset is abundance of clean cheap easy energy.
    ban on oil coal nukes and gas. no more needed.

    Texas Wind Power proves it

  • Banned by Bob

    So why does a positive article about wind production have to include a gloating attack on shale gas? The two are quite complimentary. As renewables increase their presence, it means that we can conserve our fossil fuels longer. That should be good news, as we have healthy competition and potential abundance of energy.

    • Milo

      Exactly. There are now troubles with shale gas drilling as there were for wind turbines in early phase of development. As wind turbines technology evolved so will hydro-fracturing (along with horizontal drilling) bringing better environmental and economic solution.

    • Bob_Wallace

      Natural gas is like the chemo drugs we use to treat some cancers. They make you sick as hell but they give you a chance to live.

      Natural gas isn’t good. It’s just less bad than coal.

      • Banned by Bob

        Well, I’m glad that I’ve been the beneficiary of a comfortable home with reliable electricity for cleaning, lighting and entertainment for the past 50+ years of my life. Would say that has been a bit nicer than chemotherapy.

        • Bob_Wallace

          The decent thing to do would be to pay the full cost for the electricity you’ve used.

          You’re shoving your external costs onto coming generations.

          That would make you a “taker” would it not?

          • Banned by Bob

            So how would we calculate that? Even better, how would we know that any payments made would 1) be used to mitigate a supposed problem and 2) not be siphoned off for some unrelated govt expenses as happens to so many dedicated govt taxes like highway funds?

            And how would you incorporate the fact that we own property with thousands of trees that remove CO2 from the atmosphere every day? That’s an actual real life solution. How many trees do you own, Bob? Do we give credits to tree owners?

          • Bob_Wallace

            Do you want me to go out and count my trees? Pay me a decent hourly rate and I’ll do that for you. It might mean a lot of days, the number is likely well up into the tens of thousands.

            And I’ll expect hazardous duty pay for the time I’ll need to count where the bears sometimes hang out.

            Now how would we calculate the cost of climate change? That’s such an extremely high number that it would be extremely hard to estimate. We might take the cost of WWII, convert it into 2014 dollars, and multiply it by 100. Or 1,000.

          • Mary Sweeney

            Instead of continuing to extract fossil fuels and then relying on expensive mitigation efforts (which usually don’t work very well no matter who pays for them), what we should be doing is slapping a very hefty, revenue-neutral tax on fossil fuels, including shale gas. This would create a serious incentive for energy conservation, energy efficiency, and the use of renewable energy.

            Continued heavy reliance on fossil fuels will mean rising fuel costs (as fossil fuels become more and more difficult and expensive to extract), increased global warming and all of the costs associated with it, expensive environmental damage at the local level, and increased costs related to the many public health problems caused or exacerbated by fossil fuel use.

            (BTW, my husband and I are long-time residents of the Southern Tier of NY. We own forested land and would like it to remain forested. This is one of the reasons we have been fighting fracking.)

          • Banned by Bob

            I would agree with you Mary if I had any confidence that our leaders would actually use the $ for what it is intended for.

          • Mary Sweeney

            What I was suggesting, as I said above, is a revenue-neutral tax–i.e. a tax that is not used to create new gov’t programs, but rather is returned to the public. The purpose of the tax would be to make the price of fossil fuels more accurately reflect their ultimate cost. Once that happened, members of the public could then decide whether they wanted to pay the higher but more accurate cost of fossil fuels, or seek other alternatives. So, some people might decide to switch to renewable energy sources, some might decide it makes sense to get more energy-efficient appliances, some might opt for smaller homes closer to work, some might simply look around for ways to use less energy in their daily lives and then pocket the savings. Note that we are already paying high costs for fossil fuel (e.g. higher health costs due to air and water pollution), but those costs are often not transparent to the public. Over time, as fossil fuel use decreased, some of these other costs would decrease as well. And most importantly, by reducing dependence on fossil fuel, we would be avoiding the extremely high costs related to catastrophic global climate change.

          • Peter Gray

            Thanks for the patient, reasoned comments, Mary! As an economist who has studied and written on this topic for years, I’d say you’re on the right track. To take it further, I highly recommend reading The Climate Casino, by William Nordhaus. You might also get something out of the non-technical paper I co-wrote about carbon tax vs. cap/trade a few years ago: https://dl.dropboxusercontent.com/u/71714315/Ghosh-Gray-ScannedPaper-2.pdf Please ignore the awful, misleading, committee-written title…

          • Banned by Bob

            Mary, we don’t need the govt collecting and then redistributing taxes to do that. For example, I have already replaced all of our old light bulbs with LED bulls because they do all of the things you suggest. Perhaps a better system of educating consumers to their alternatives might work better?

          • Mary Sweeney

            Education is great and it’s working to a certain extent, but education alone does not seem to be changing the behavior of consumers at anything like the level or speed needed given the serious nature of global climate change (not to mention the increasingly serious local damage caused by increasingly extreme fossil fuel extraction methods). But if energy consumers could see something closer to the real cost of fossil fuel reflected in what they get charged for that fossil fuel, that would likely change their behavior a lot more rapidly than education alone. Once the fossil fuel prices were higher, you can bet more people would start paying attention to the education because they’d be constantly on the alert for ways to use less energy. Besides, what’s wrong with having the price of a commodity reflect its actual cost instead of hiding bits and pieces of that cost in expenses like health care, reduced residential property values (because who wants to live next to a gas well?), increased military costs, and expensive threats to the global and local environments which are, ultimately, the source of all wealth? When all of its costs are considered, fossil fuel is very, very, very expensive, and its price tag should reflect that.

          • Bob_Wallace

            Yes, put a carbon tax on either the extractors or burners. Take that revenue and reinsert it at the electricity end-user level in order to keep the cost of electricity stable.

            If the revenue is not quite enough then supplement it with some taxpayer funds. What we would spend on price support should be more than recovered with health care savings due to lower pollution levels.

          • Peter Gray

            C’mon, Banned, that old canard? Unless you’re way out there in Fox News land, you do understand that we’re still for the most part a nation of laws, right?
            Mary already explained it. We don’t need to trust our leaders, we only need to compel them to write a law that taxes the carbon content of fossil fuels, then divides the take by the population and sends equal checks to everyone. Done. Simple.
            If you agree with the concept, why not get out there and support it?

          • Banned by Bob

            Please give me an example of any tax in the US that works like that. All that I am aware of either are used to fund a govt program, or all unequally redistributed. Do you take taxes from people who drive long distances becuse they live in rural locales, and redistribute them to city dwellers who don’t have a car. The devil is always in the details.

          • Peter Gray

            In truth, I can’t think of a U.S. tax that is redistributed that way. BC, Canada does have a carbon tax that works that way, though, and it’s very successful and popular. One reason we haven’t done it before might be that we haven’t faced such a universal externality before. The fact that it hasn’t been done exactly this way before doesn’t mean it would be difficult. Excise taxes are easy and low-cost. Dividing one number is easy, and so is sending out a “green dividend.”

            Yes, you take more taxes from those who burn the most fossil carbon. Indirectly, by taxing the carbon content of fuels as they are extracted from the ground or pass through choke points. A rural person driving his F-350 50 miles each way to work would pay more than a city dweller who rides the subway. Under a pretty stiff carbon tax, that guy might pay an extra $800/year for fuel, before receiving his green dividend, which would likely be larger than $800. What’s unfair about that? Rich people in mansions who fly to Europe for vacation would pay a lot more, so the rural guy could still come out ahead on the deal, even before he started carpooling or moved closer to work or switched to a more efficient car or insulated his house.

            If you’re actually interested, please read this accessible, non-technical paper I co-wrote on this topic, and let me know what you think:

          • Banned by Bob

            I will take a look; thanks.

            If you are counting on the “rich” people to pay for all of the people driving pickups, I think you’ll be disappointed. There just aren’t enough of them. I think you’ll likely end up taxing your F350 driver.

          • Peter Gray

            No disrespect intended, but you seem to be missing the point. The idea is not to have rich people pay for the F350, but to have everyone pay in direct proportion to the damage they cause. I never said anything remotely like “we wouldn’t tax the F350 driver.” What I said was that even the poor rural guy you’re worried about would likely be responsible for less than the average per-capita amount of fossil carbon (or per-family, which is what often counts for a commuter). If so, he would pay a tax, but his refund would exceed his tax. I thought I explained this already.

            The broader point is not to punish anyone, but to give everyone incentives to change their behavior so they can avoid the tax. There’s nothing so special about refunding all the revenue – some of it could just as well be spent on other worthy endeavors, like reducing income taxes or paying down the national debt – without weakening the incentive effect. The beauty of rebating all of it is that it’s simple, direct, and doesn’t require adjusting other taxes and budgets when the tax rate is gradually increased, or as people adopt efficiency and renewables, and pay less tax.

            This is not an income tax, so it’s not applied to rich or poor based on their income or wealth. It IS an efficient way to reduce carbon emissions from all the fuel, electricity, and products we consume. It avoids the carbon footprint calculations, efficiency standards, subsidies, and other complicated, inefficient, often counterproductive workarounds we’ve been trying, just to avoid the supposed terror of the word “tax.” It’s more accurate, not a euphemistic dodge, to call it an “environment user’s fee,” but that’s another topic.

            In all this, I assume we agree on two basic principles:
            1) It’s fair and just to require people to pay for their consumption of common-access resources, such as a livable, productive environment, whenever practical;
            2) We face a very serious problem here, with global warming, sea level rise, ocean acidification, species extinction, etc., caused by humans burning fossil carbon.

            If you don’t agree on both of those, please say so; there would be no point in continuing this discussion.

          • Bob_Wallace

            The beauty of refunding the carbon tax revenue at the electricity customer level is that the overall economy wouldn’t be harmed by rising electricity prices.

            All the “social” engineering takes place on the utility side of the meter. On the customer/consumer level it’s business as usual.

          • Peter Gray

            I’m not quite sure what you mean by that, Bob. The one thing to carefully avoid is giving the revenue back in any way correlated with energy consumption – that would make the whole exercise pointless.
            We have a census, an income tax system, Social Security numbers… I can’t see why it would be difficult to send an equal check to every taxpayer or every traceable adult. You wouldn’t need to have an electric meter or a car or anything else but a mailing address.
            Utilities are a big part of it, but this would apply to everything, not just utilities. I’m not sure what you mean by the social engineering aspect, nor do I see any need for it. This takes advantage of what markets do at their best: efficiently allocate resources without micromanagement. Again, that’s why the coal and oil guys are so against it and telling so many lies about it.

          • Bob_Wallace

            Perhaps we aren’t looking at taxing carbon in the same way.

            Here’s my idea. If the coal plants sells a kWh of electricity to a utility then collect a nickle (something) in taxes on top of that sale. That drives up the cost of electricity from the coal plant and causes the utility to look to non-carbon providers.

            Use that collected nickle to lower the cost of electricity coming from the utility company along with a bit of taxpayer money to keep the price of end-user electricity flat.

            This isn’t a system designed to encourage less use. It’s aimed at changing sourcing away from fossil fuels.

            Remember, we’re spending about a billion dollars a day on coal’s external costs. Investing some taxpayer money up front to eliminate that third of a trillion dollars a year would be super wise.

          • Peter Gray

            That sounds like a complicated way of saying “subsidize renewables.” Along with taxing the coal, I think you’re saying. But why is it important to keep electricity rates and consumption flat?

            I think we agree on the basic principle of taxing activities with negative externalities (if politically feasible, blahblahblah…). The mirror image of that is that we should subsidize (and _only_ subsidize) activities that create positive externalities. Classic example: vaccinations.

            I’m not aware of any significant positive externalities that come from renewable energy. Instead, we can name quite a few negative ones: dams/salmon, turbines/birds, solar plants/tortoise habitat, etc..

            In a rational and just world we would tax fossil carbon heavily, and we’d tax renewables a lot less, but we’d still tax them according to whatever small harm they cause!
            You seem to imply that there’s something special or sacred about the untaxed (“implicitly subsidized”) energy prices we happen to pay right now.

            I say we’re consuming too much and paying too little, across the board. Paying directly, that is – as you’ve pointed out elsewhere, we can’t avoid the costs; we pay them somehow, through unnecessarily high losses and damages, and sometimes through taxes on other goods. Subsidizing energy and obscuring the costs might feel good for the moment, but it distorts the economy and wastes resources.

            Minor point: why tax the coal plant by the kwh? Just as easy, and more effective, to tax the coal going in. Steam plant technology is probably about maxed out, but they’d have an incentive to squeeze a bit more, as well as shifting to wood pellets or other lower-carbon fuels.

            There’s obviously some validity to the infant industry investment argument, as we’ve seen. But I think that’s a separate issue that should be understood separately. Wind and solar are no longer infant industries. By now, if we taxed carbon at even half the mid-range rates recommended by experts in gauging future costs (e.g. W. Nordhaus, N. Stern), we’d see a rapid shift away from coal.

            By the way, it’s only fair and efficient to tax all fossil carbon equally, plus a methane leakage tax on NG and some coal mines and oil wells. Coal-fired power would be the first to phase out, and jet fuel might be the last, but why should we worry about which sectors are affected exactly how? We don’t even know how innovative people will be when their $ depend on it.

          • Bob_Wallace

            It’s important to keep electricity rates flat because 1) increasing rates would be unpopular and 2) increasing rates would make us less competitive, potentially harming the economy.

            Cutting consumption is a different issue. An important one, but trying to do multiple things with one tool often makes a mess.

            It is a backhanded way of subsidizing renewables. But one that probably takes little out of the general fund.

            We just need to tip the balance a bit. Renewables are almost certainly going to take over anyway, but for the sake of the climate we need to speed things up a bit.

            Your list of negatives for renewables isn’t valid – ” dams/salmon, turbines/birds, solar plants/tortoise habitat, etc.. ” We’re not going to build many more, if any, dams. Any dams constructed would have to mitigate the fish migration issue. Wind turbines kill almost no birds, it’s a non-issue. Especially when one considers the high bird kill for coal. We’re not going to build a lot of solar in the desert but if we did we wouldn’t have any real impact on tortoises. Perhaps you ought to check the size of the American desert. Basically the SW quadrant of the nation along with a hunk of the NW.

            And you miss the really big negative-canceler. If we don’t get off fossil fuels we will screw over every single living thing on the planet.

            As I said, tax fossil fuels either at extraction or upon burning. Either would be fine. The idea is to put a thumb on the scale, a thumb acceptable to the greater voting public.

          • Peter Gray

            >> It’s important to keep electricity rates flat because 1) increasing rates would be unpopular <> and 2) increasing rates would make us less competitive, potentially harming the economy. <>Cutting consumption is a different issue. An important one, but trying to do multiple things with one tool often makes a mess. <> We just need to tip the balance a bit. Renewables are almost certainly going to take over anyway, but for the sake of the climate we need to speed things up a bit. <> We’re not going to build many more, if any, dams. <> Wind turbines kill almost no birds, it’s a non-issue. <> Especially when one considers the high bird kill for coal. <> We’re not going to build a lot of solar in the desert but if we did we wouldn’t have any real impact on tortoises. <> Perhaps you ought to check the size of the American desert. <> And you miss the really big negative-canceler. If we don’t get off fossil fuels we will screw over every single living thing on the planet. <> As I said, tax fossil fuels either at extraction or upon burning. Either would be fine. The idea is to put a thumb on the scale, a thumb acceptable to the greater voting public. <<

            You said a nickel per kilowatt-hour. Not to split hairs, but there is a difference. Exactly where the tax is applied won't affect the outcome, but the fuel carbon itself should be taxed, not the power or products that come from it. In the article I co-wrote, we describe the entities that would make most sense to tax, for admin reasons.

            I guess we differ here, but I think we need more than a thumb on the scale, and so far we've only put a fingernail clipping on it.

            Earlier you mentioned "we're spending about a billion dollars a day on coal's external costs." I'm not at all sure we're actually _spending_ that much, since a huge fraction of the ultimate costs are deferred and/or global, but that translates to some $350/ton of coal, or close to $1,300/ton CO2. That would be a steel-toed boot on the scale.

            You might want to look into this a bit more. Here's one good site: http://www.carbontax.org/blogarchives/2008/10/18/a-question-of-balance-finding-the-optimal-carbon-tax-rate/
            And a paper I'm somewhat partial to: https://dl.dropboxusercontent.com/u/71714315/Ghosh-Gray-ScannedPaper-2.pdf.

          • Bob_Wallace

            Peter, I’m not sure I’m interested in your opinion enough to wade through all that mess.

            First. My priority is to cut the use of fossil fuels and replace them with renewables. Conservation/demand decay is happening because we’ve given business and residential consumers the tools needed to cut their use.

            I’m in no way advocating for a go slower stance. Please don’t put words in my mouth.

            The dams we’ve built are built. To the extent that they have damaged fish, that damage is done. We’re pulling out some of the worst offenders.

            Bird kills are close to zero per turbine. I don’t think you do know that.
            If you’ve spent time in the SW and you think solar would use an appreciable amount of tortoise habitat there are some facts you are missing.

            “You said a nickel per kilowatt-hour.” That is not what I said.

            You can try to ride roughshod over the peasants if you like. But if things go a usual you’ll end up with no more than a pitchfork in your butt for your effort. We live in a very tax-averse time. Make it sweet or don’t offer it.

          • Peter Gray

            That’s fine, Bob, but it looks like when you run out of arguments, you dismiss what I say as a “mess.” Not much different from resorting to personal attacks. Let’s not forget that on the big issues and goals, we’re in close to total agreement. We can both learn something here. Keeping that in mind…

            Sorry, but letting economic nature take its course IS a go-slow approach. That’s why global carbon emissions are still going up. And renewables are still tiny compared to coal and oil. A few decades here or there in the trajectory can make a huge difference later on.

            The damage to fish is not done; it’s still happening. On balance I think hydro is a great thing, but it’s not zero-impact in operation. Why treat it as if it is?

            In no way did I rule out close to zero bird kills per turbine, but that’s still not zero.

            I should have been more explicit about using tortoises as a metaphorical stand-in for ecological impacts. I know they don’t live everywhere. I personally think the impacts of solar plants are worth it, but I don’t see why those small impacts shouldn’t be paid for by consumers.

            You wrote: “Here’s my idea. If the coal plants sells a kWh of electricity to a utility then collect a nickle (something) in taxes on top of that sale.”
            I admit it’s a confusing sentence, but how does that not translate to a nickel per kWh?

            It’s not a matter of riding roughshod if low-income people come out ahead, and that would be easy to arrange – and possibly easy to explain if someone with a powerful voice would only try to. Surely we’re both aware of the cynical propaganda that created this tax-averse time, and I’m not convinced that average people, as opposed to noisy right-wing pols and pundits, are as averse as we’ve been told. I’m also not ready to give up on efforts to change that mentality. Look at how rapidly the population changed its tune on gay marriage and marijuana legalization.
            Making the offer totally sweet, but still effective, is probably not possible. There will be costs for a not-too-late transition. Have you read The Climate Casino? It’s well reasoned, thoroughly sourced, beautifully written, and the best source on the policy side of the topic that I know of. Well worth the time.

          • Bob_Wallace

            Peter, I did not say we should build more dams. That putting word stuff in my mouth is the mess I dislike.

            “a nickle (something) ” Nickle is a placeholder. You do know what a placeholder is, don’t you? (Think of x in a formula.)

            Now, see that little green rectangle down around Arizona? That’s how much land area we’d use were we to produce all of US electricity with solar panels.

            Of course we won’t produce all our electricity with solar, perhaps 30%. So cut away two-thirds of the rectangle.

            Then consider that we’ll put most of our solar on existing rooftops, over parking lots, brownfields and landfills because it reduces transmission needs. Maybe 10% would be large plants in the desert. Now we’re down to about 3% of the original rectangle. Given the size of the American desert that’s a little bitty speck.

          • A Real Libertarian

            This would probably go a lot easier if you both laid out your solutions as a proposal:

            1. Step 1

            2. Step 2

            And so on…

          • Peter Gray


            I didn’t claim that you said we should build more dams. Anywhere. Here’s the only exchange about dams that you could be refering to:

            Bob: We’re not going to build many more, if any, dams.

            Peter: But the ones we have built are still killing fish. That’s the point.

            >>”a nickle (something) ” Nickle is a placeholder. You do know what a placeholder is, don’t you? (Think of x in a formula.) <<
            Whether it's a nickel or some other number is not the point. I objected to applying a tax at any rate to kWh instead of to the carbon, and I still do. Please read more carefully before getting angry.
            Likewise, the issue is not the total amount of land that might be occupied by solar, no matter how tiny it looks on a world map. The issue is the eco/enviro impacts on the land that IS used. I'm guessing that little green rectangle looks pretty big from a mile away. If the per-kWh impacts are small, or even zero, so much the better. The effect on price will also be small. That doesn't mean we should ignore the impacts, and local people are probably not going to.

          • A Real Libertarian

            “Whether it’s a nickel or some other number is not the point. I objected (explicitly) to applying a tax at any rate to kWh instead of to the carbon, and I still do. Please read more carefully before getting angry.”

            Bob means:

            1. Tax the carbon

            2. The tax on the carbon would add, say, $0.05 to the cost of a KWh of coal produced electricity.

          • Bob_Wallace

            Yes, here’s where I started –

            “Yes, put a carbon tax on either the extractors or burners. Take that revenue and reinsert it at the electricity end-user level in order to keep the cost of electricity stable.”

            If someone has a more elegant solution, then go for it.

          • Peter Gray

            I’ll give it a shot if you can first put up with a little of what might come across as putting words in your mouth. It might help if it put it as questions instead of statements.

            What do you mean by “reinserting the revenue at the electricity end-user level”? If that means returning the money based on electricity usage, it will erase the incentive effect, and there’s no point in going to all the trouble.

            Divvying up the revenue among everyone with an electric meter would be better, except that it hardly seems fair to those few hardy pioneers who are off the grid. Aren’t they the most deserving of a green dividend? Why not simplify it by distributing equally to the entire population?

            As stated several times in a messier form, my solution (heavily borrowed from Norhaus and Metcalf) is:

            1) Identify all the fossil fuels we can reasonably account for, as they’re extracted or at a convenient chokepoint.
            2) Tax every ton of carbon content equally, starting at about $7/tC.
            3) Count the cash every month or quarter.
            4) Divide by the entire adult population and send an equal check to every person (we could count kids and do it by family if you want).
            5) Increase the tax rate steadily, on a predictable annual schedule, so everyone knows what to expect.
            6) Level off the tax in 30 or 40 years, when it approximates the best consensus estimate of marginal discounted future damages from a ton of C=>CO2 at that time.

            Done. Simple, fair, enforceable, efficient. Elegant? That’s for you to judge.

            We can complicate it later if necessary by accounting for methane and CCS, if it ever happens. I think the above would take care of a solid 90% of the job, with a side benefit of letting us get rid of a myriad of bandaid workarounds like RFS and vehicle efficiency standards.

          • A Real Libertarian

            “What do you mean by ‘reinserting the revenue at the electricity end-user level’? If that means returning the money based on electricity usage, it will erase the incentive effect, and there’s no point in going to all the trouble.”

            I’m pretty sure Bob meant “give the refund to the end users (i.e. people)”.

            That is kind of an awkward sentence.

          • Peter Gray

            >> I’m pretty sure Bob meant “give the refund to the end users (i.e. people)”. <<

            Yes, but give it back to them how? On what basis? If we're extremely concerned about never inconvencing anyone, we could give it back in proportion to electricity consumption. Then there would be no incentive effect. But I repeat myself. What's so hard to understand?

            If Bob agrees that revenue should be given back on a per-capita basis, it's confusing at best to mention the electricity end-user level. Giving the petroleum fraction of the revenue back based on gasoline spending would be the same thing. You could say it's more fair for the rural guy with the F350, but it would defeat the purpose.

            It's weird to me how people become so concerned about absolute evenhanded fairness in this context, while we're already enduring, not to mention facing in the future, unfair distribution orders of magnitude greater. Look at what's happening to people in Bangladesh and Pacific islands and the Alaska coast. That we can tolerate, but if there's a slight risk that a few Americans will see a net income effect of a couple hundred $/year (mostly in a progressive direction), we just can't stand it.

            Nothing in life is perfectly fair for every single person. A revenue-neutral carbon tax, even in the short run, could make things quite a bit more fair. Instead of looking for excuses to avoid it, why not try to explain that and get people (aside from the Kochs and their hopeless little army of kooks) on board with it?

          • Peter Gray

            I saw it as a pretty minor issue to begin with, and I see where Bob mentioned carbon taxes in earlier posts. Still, I think it’s justifiable to read the following as meaning a tax based on kWh instead of on carbon in the fuel:

            ” If the coal plants sells a kWh of electricity to a utility then collect a nickle (something) in taxes on top of that sale.”

            Note that the issue I brought up was not about the tax rate, it was about the tax base (fuel in vs. power out). It’s an honest misunderstanding, and it’s easy enough to fix, but there’s a real difference in incentives.

            I’m quite familiar with the math and conversions, so that’s not news.

            Be aware that people constantly get tons of carbon mixed up with tons of CO2. The difference is a factor of 3.67. This happened even on the good website I linked to Bob (http://www.carbontax.org/blogarchives/2008/10/18/a-question-of-balance-finding-the-optimal-carbon-tax-rate/).

            For example, the article above says Nordhaus advocates starting at $7.4/tCO2. Assuming as I do that it really means $/tC, that converts to $27/tCO2, and in The Climate Casino, WM writes about a tax “that would start at about $25 per ton” of CO2 in 2015.

            The error is understandable, since it’s the CO2 we want to limit, but only the carbon we can feasibly tax (we’re not going to monitor emissions from every car, airplane, home furnace, and lawn mower). I wish we could all settle on a common standard. I’d prefer the carbon version, not just because it sounds smaller, but because that’s how a tax would be counted in practice – but wide agreement seems unlikely for now.

          • tmac1


            Not quite taxes but a few examples that this kind of thing has been done.

            Governor Palin collected Royalties from FF drilling on State lands and cut a check to every citizen in Alaska

            W. used Clinton’s surplus and cut a check to everyone. I recall getting a few hundred dollars, I think we all got the same exact amount.

            We do have the mechanics to do this.

            That is what Peter is suggesting: collect on the well heads or the pumps the extra money, then cut a check every quarter to everyone with the money.

            Those who conserve effectively or get off FF altogether get rewarded, those that waste cling to FF get punished.

            I would think CONSERVATIVES would love this?

            One final note, call it the Carbon Dividend as this emphasizes the quarterly check we all get. Carbon Tax sounds too scary

          • Banned by Bob

            Honestly, I would rather make it a temporary tax (10 years?) with real teeth to keep it such, and then use the $ to advance renewables in an effort to 1) conserve our fossil fuels 2) improve our energy security and 3) reduce our emissions. A combined appeal rather than the narrow pitch that renewables often get could gain widespread support.

            Collecting a tax and then simply redistributing it is too much of a temptation for political mischief at the Federal level.

          • Peter Gray

            Why temporary? I hope you don’t imagine that more than a small fraction of the problem will be solved in 10 years. It’s much longer-term than that. I (and Nordhaus) advocate pretty much the opposite: ramp the tax up steadily for 10-30 years, to avoid losses and reactions from a sudden shock. When the tax rate approaches a best guess for the marginal value of damages, which increases dramatically as CO2 in the atmosphere goes up, keep the tax rate quite high more or less forever (several centuries). When the transition to renewables is essentially complete, taxable carbon, and revenues, will become small and irrelevant to the economy. But that’s no reason to drop the guard and have people go back to burning coal. They’ll be suffering enough from flooded cities and destroyed ecosystems by then.
            Why are you so hung up on the political mischief about redistributing tax revenue? I asked for evidence on that earlier, but you haven’t offered any. Call me ignorant, but I’m just not aware that it’s a significant problem, except maybe for Glenn Beck & Co..

          • Banned by Bob

            I say temporary because that would serve us better if one looks at how subsidies have survived over time in the US. We started subsidizing farmers 100 years ago because we were worried about food supplies during WWI, and we are still subsidizing something that has adequate free markets.

            Also, look at the disaster that our Ethanol policy has become. We take over 40% of our corn! turn it into a fuel that produces only as much fuel as it consumed during its manufacture! and now it is a huge millstone of political influence.

            So to be consistent, I feel this way about ALL subsidies.

            As to Renewables, I think we can agree that the technical progress being made in improving the efficiencies of solar and even wind show that they should be fully competitive within a foreseeable future timeframe. Maybe the test is some level of competitiveness rather than purely time, but there should be a date certain where they fall off. Otherwise, the subsidies morph into something up recognizable from the initial motivation.

            You asked. Here is info on Airline fee abuse:

          • Banned by Bob
          • Peter Gray

            My first reaction was “Heritage? Is that the best you can do?” In my view, their credibility dropped from low-mediocre to rock-bottom on the day Jim DeMint took over. But this article was written 3 years earlier, so I wouldn’t dismiss it. And I don’t readily see anything wrong with it. It does look like federal highway and transit funds are allocated unfairly.

            The author doesn’t explain why this is happening. It’s possible there’s some defensible reason for it – after all, there’s some reason we even have federal highway programs rather than leaving it all to the states.
            But this is a small and fixable problem. With the exception of Alaska, the donor states in the SE happen to be net recipient states when we count all federal taxes, so we could see this as a partial balancing.

            Why are you so upset by this? Some people are arguably getting less back than they put into this particular fund – in dollars. So what? It’s not as if the cash is being dumped into the ocean or put into rich free-riders’ offshore accounts. And since roads are presumably (and demonstrably) worth more to people than what they pay for them, even the people in the biggest “loser” states could be coming out ahead.

          • Banned by Bob
          • Peter Gray

            This one is even more trivial than the gas tax revenue misallocation. To avoid the possibility of this kind of thing, you’re happy to risk global ecosystems and all of civilization? Wow – some priorities!

            BTW, you might want to get your economics information from other than the most extreme right-wing sources from time to time.

          • A Real Libertarian

            “Maybe the test is some level of competitiveness rather than purely time, but there should be a date certain where they fall off. Otherwise, the subsidies morph into something up recognizable from the initial motivation.”

            You’re confused.

            Carbon taxes aren’t subsidies, they’re revoking
            subsidies by making fossil fuels pay for the damage they cause.

          • Peter Gray

            Exactly. Though I’d say reversing subsidies…

          • Peter Gray

            Weren’t we discussing a tax? Why bring subsidies in and conflate the two?

            I teach my Econ 101 students that a subsidy is just a tax with a minus sign, and we treat them the same mathematically. But politically, in terms of creating entitlement constituencies, the two are polar opposites. Can you cite a single special interest lobby in favor of a particular tax? I doubt it.

            Everyone hates taxes and loves subsidies. That’s a deeply embedded feature (bug?) of the human OS. Fortunately we’ve managed to overcome that and impose taxes anyway, because without them we wouldn’t be able to have certain kinds of nice things. Like civilization.

            You’re right. Farm subsidies and similar programs are extremely difficult to eliminate even when they’re counterproductive. But I never mentioned a “carbon subsidy,” so that observation is worse than irrelevant.
            Worse yet, you fail to understand the story you just told. Farm subsidies, price supports, rent control in NYC, and many other examples started out as temporary, and became permanent when entitled groups became powerful. Making them temporary didn’t help.

            If we were rational, we’d devise stronger legal sunsetting for subsidies, and stronger guarantees for taxes, which are unpopular and always under political attack.

            In this special case, subsidies are vulnerable because a much stronger competing entitled interest, coal and oil, constantly works to destroy them.

            I don’t share your optimism about solar and wind being “fully competitive,” whatever that really means, within the “foreseeable future,” whatever you mean by that. If we leave it to markets to solve, we’re doing it wrong, because we’re not internalizing the (gigantic) externalities of fossil fuels. Instead, we’re subsidizing them in various ways.

            You can spin the renewables numbers to make them look optimistic, but the fact is that carbon emissions are still going up, rapidly. Proudly claiming that U.S. emissions have fallen a smidge misses the fact that it’s mainly because we’re outsourcing so much of our coal burning to China.
            Here’s an example. Let’s say renewables go from 10% of total energy consumption to 20% in the next 20 years a 100% increase. Quite rapid growth. Sounds good, huh? But if total energy consumption goes up by more than 13% in the same time, which is quite modest, we’re still going backward on emissions.

          • Peter Gray

            Thanks, tmac1. To elaborate slightly, the tax would be collected at each coalmine mouth, oil refinery, and gas processing plant. Some very reputable economists in this field estimated that more than 80% of CO2-e emissions could be covered by taxing < 3k of those entities. To put it mildly, we have the structures for this, and have had them for a centuries. Excise taxes entail very small bureaucratic losses. If we import from countries that do not tax their FF, we could tax oil as it crosses the border. Taxing embodied carbon in imported products would be more challenging, but a broader goal would be to harmonize carbon taxes across countries so that's not necessary.

            It's not euphemistic to call the tax an "environment user's fee," and Green or Carbon Dividend is accurate, too. As you said, those who invest more in avoiding FF will reap larger rewards.

            For more about this, I'd be happy if you read and comment on a co-written paper I published a few years ago: https://dl.dropboxusercontent.com/u/71714315/Ghosh-Gray-ScannedPaper-2.pdf
            Please ignore the editorial committee-written title.

          • Jim

            Come on peter,i could see your president sending you a check,bahahahahaha,are you in a mental institution????

          • Peter Gray

            The “we can’t precisely calculate the damages” and “tax money will be diverted for something else” are standard talking points by climate denialists. Neither has a shred of validity. Like it or not, we’re already using an implicit calculation of the external costs. It’s zero, which overwhelming evidence says is flat wrong. From there, any step in the right direction is an improvement.

            As noted in another reply, we can and do prevent that kind of siphoning off by writing clear laws against it. If someone uses the revenue for something else, they could be prosecuted.

            If you can demonstrate that your trees will store carbon for centuries at least, instead of eventually rotting or burning, then I’d be all for subsidizing you at the same per-ton rate as the carbon tax. Not a problem other than the verification. The same would go for CCS by coal-burning utilities – but I doubt that will ever be economical.

          • Banned by Bob

            Peter, all one has to do is look at the EU Carbon scheme to see how well intentioned programs go wrong. Billions of Euros were spent to buy allowances from China and Russia with the goal of shitting down dirty plants, and all that happened was subsidies flowed to areas where these plants were to be shut anywhere. Just a pure transfer of wealth with no economic benefit.

            And if you think that tax revenues cannot be subsequently be rerouted at no cost to a lawmaker, you haven’t been paying attention to how the Federal govt behaves. Just look at how the gasoline taxes and the taxes we pay for commercial air travel are treated. Convince me that wouldn’t happen here please.

          • Bob_Wallace

            Some programs don’t work. The exchange program worked extremely well for acid rain. The DOE program for bringing new energy technologies to market worked extremely well even though we mostly hear about the very small percentage of failures.

            Seems to me that right-wingers create an awful lot of myths by looking for failures rather than taking a more objective overview. By setting out to prove that government doesn’t work, listing the failures and ignoring the successes one end up living in a fantasy world.

          • Banned by Bob

            I would say that the failure of the largest Carbon trading scheme ever attempted is not something to be eàsily dismissed.

            And it continues to deliver disappointing results even after all of the tinkering that’s been done.

          • Bob_Wallace

            Don’t dismiss it. Learn from its problems and don’t repeat them.

          • Peter Gray

            Maybe you can guess why the coal and oil industries, whenever pushed to choose, want to emulate the EU system instead of using a carbon tax. It’s partly because they expect to receive tradable permits for free, but also because they _want_ the scheme to fail. Then, like you, they can point to it and say, “See? That was the best we could come up with, and it failed. Let’s give up on the whole thing.”

            You’re deeply naive if you don’t think that’s true.

          • Peter Gray

            I agree on all that. Cap/trade worked well on SO2 and NOx, but that’s a very different problem from CO2. We don’t know that an emissions tax wouldn’t have worked just as well, but I suspect cap/trade is better for that purpose (as we sketched in the paper).

            That campaign of denigrating government has been immensely harmful, and we could go on all day about that. How easy it is to take for granted the immense benefits we get every day from government policies! Not least the richest, most rabid right-wingers among us. I still say, if you hate Big Government, please move to someplace that doesn’t have a functional one, stay there a year, then come back and tell us how wonderful it was. Somalia? Afghanistan? Many lovely places fit the bill.

          • Bob_Wallace

            And before you move to a place that doesn’t have a functioning government, please refund the money the rest of us spent on you.

            Start with the money we spent educating the doctor who gave your’ mother prenatal care. The hospital you were born in. The road you rode home on. The electricity grid, water and sewage systems you used, the schools you attended, the police and military that kept you safe, the research that vaccinated you against things like smallpox and polio.

            The list is very long Mr. Freeloader. Please show your ‘paid up’ receipt at the exit….

          • Peter Gray

            Nothing to add. Couldn’t have written it better myself.

          • Peter Gray

            I have looked at the EU carbon scheme, and I agree that in many ways it’s dysfunctional and inefficient. That’s one reason I’ve argued for carbon taxes and against cap/trade.

            People who equate the two are missing the devilish details you alluded to elsewhere. Please read my paper about it.
            Please show us some evidence that fuel or air travel taxes have been systematically spent the wrong way, and explain what the bad consequences are. It seems that we still have highways and airports that work pretty well, even if some bridges are collapsing. What pays for all that?

            Nice that you bring up gas taxes, because that’s a good example of people paying in fairly close connection to the costs they create, with the benefits redistributed in the form of nice road surfaces and traffic lights, pretty evenly. You can focus on the flaws if you like, but it seems to me that the system mostly works quite well, at low admin. cost.

            No government solution is going to be perfect, because the government is made up of people like us. I wonder if you’re holding military spending to the same standards. Should we cut off _all_ Pentagon spending until the generals can perfectly predict the costs and benefits of all future wars (and avoided ones), and guarantee that $0 will be misspent on gold-plated weapons? I think the military budget is way too big, but I still wouldn’t go that far to fix it.

          • Bob_Wallace

            One major reason our bridges are failing is that we have allowed right-wingers to push their “shrink the government and drown it in the bathtub” agenda to the point that we haven’t adjusted fuel taxes. We’ve been deflating our highway funds by freezing the per gallon tax.

          • Peter Gray

            Exactly. That’s a crime and a tragedy, but at least the effects are fairly local and attributable. In response to the latest IPCC report, the right-wingers are now on a campaign to do the Three Monkeys thing by banning further climate research, at state and federal levels.

          • A Real Libertarian

            Convince me that wouldn’t happen here please.”

          • Peter Gray

            Good one, ARL! Nailed it in one.

            I have no reason to believe that Banned is a paid shill for coal and oil, but I’m always amazed at how easily regular people are taken in by the notion that it’s okay to keep dithering about climate for another few decades, but when it comes to the possibility that we might not get the tax or policy structure exactly right on the first try… … Oh, No! Don’t want to go there!

          • Bob_Wallace

            Banned has to go a step further. He has to show that he is adding trees or that his trees are increasing in mass as fast as he is burning fossil fuels.

            Furthermore, he’d have to demonstrate that his trees root systems are sequestering carbon at a high enough rate to cover his fuel extraction debt in order to account for long term sequestration.

          • Peter Gray

            Yep, that’s kind of what I said in another comment. Subsidizing carbon sequestration is much more problematic and subject to gaming and manipulation. That doesn’t mean we shouldn’t try to deal with it, but it wouldn’t be as easy as taxing the carbon at the start. Fortunately, sequestration is likely to be far less significant than cutting emisisons could be, if we even get that halfway close to right.

            However, I wouldn’t say that Banned would need to show that he’s storing more carbon than he’s burning. Those should be separate transactions.

          • Cmmdr Keen

            lol you weirdo, there wouldnt BE any future generations if it wasnt for fossil fuels!

            some people cant see the wood for the trees, liberals mostly

      • Peter Gray

        >> Natural gas isn’t good. It’s just less bad than coal. <<

        And possibly not by much. I don't have cites handy but a recent survey of leaks suggested that if you include all the methane, current gas production and transmission create close to the same warming potential as coal. It's still better on the mercury, particulates, and ocean acidification, but it's not the pure, clean wonderfuel portrayed in industry propaganda.

        • Bob_Wallace

          Let’s break things down a bit.

          First, we’re pretty sure that we can control leaks at the well. We’ve got one decent study that found well emissions were low for the wells studied.

          That does not mean that all wells are not leaking, but that with proper regulation and enforcement we can keep well leaking to a minimum.

          The big leak problem appears to our distribution system. Our urban, gas for cooking, heating and hot water distribution system.

          Remember the big explosion in CA in 2010? The recent explosion in Washington? Take a look at the image at the bottom and how badly the Boston gas system is leaking. It’s a friggin’ sieve.

          Now, let’s think about how much NG we will like use for electricity as time goes on.

          If we do a 100% coal -> NG exchange and control leaks we gen about half as much CO2.

          But if we do a 100% -> 40% wind, 30% solar and 30% NG exchange we gen about 15% as much CO2.

          The answer is to use NG as a wind/solar fill-in while we develop cheaper storage.

          It looks like battery storage may already be pricing out gas peakers. Peakers have a higher CO2 per MWh output than combined cycle plants so that helps cutting things faster.

          Screw the industry. Use the gas carefully. It’s a good tool for right now. We’ve got the capacity in place. We can install wind and solar and use what we’ve got.

        • A Real Libertarian

          “It’s still better on the mercury, particulates, and ocean acidification, but it’s not the pure, clean wonderfuel portrayed in industry propaganda.”

          Plus methane lasts decades instead of centuries in the atmosphere.

          But yeah, not worth it..

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