In 1902 John Muir, founder of the Sierra Club and my favorite environmentalist wrote:
“Fortunately, nature has a few big places beyond man’s power to spoil–the ocean, the two icy ends of the globe, and the Grand Cañon.”
The great conservationist was wrong. Our increasing demand for power, water storage and combustion of fossil fuels threatens the ocean, the ends of the earth and the Grand Canyon.
I am not renewing my membership of 49 years in the Sierra Club. Since I last renewed the Sierra Club became instrumental in the defeat of what would have been the most significant effort to reduce greenhouse gases (GHG) in the United States. Specifically in November of last year the Sierra Club adopted a “do not support” position concerning Washington State’s initiative 732 which was defeated 59% to 41% and which would have imposed a revenue neutral carbon fee on fossil fuel consumption.
If the initiative had passed, and there is good reason to believe that without the opposition of the Sierra Club and some other environmental groups it would have passed, the policy debate about how best to reduce our GHG impact in this country would have been transformed. If passed the “Washington” model would have presented an alternative to California’s politically correct but expensive, flawed and inefficient GHG reduction policies and would have introduced to the country the only realistic way to control GHG without harming our economy.
The winner of the initiative’s defeat was Jerry Brown and the California state legislature who have relentlessly implemented “green” policies which attempt to expensively bribe us to do the “right” things (such as purchase electric vehicles) and which through the cap and trade program have created an enormous slush fund providing the legislature and governor the ability to pick their favorite technologies, labor unions and corporations to which to dole out public money. In doing so, our elected officials create loyal constituencies which happily fund their electoral campaigns.
The key issue surrounding the Washington ballot was the “revenue neutrality” of the proposal, meaning that the increased cost of the carbon fee would be used to reduce existing taxes. The Sierra Club and some other environmental groups opposed neutrality on the grounds that it does not increase “investment in green jobs, energy efficiency, transit, housing and renewable energy.” Aside from the fact that a nationwide carbon fee is not politically possible unless it is revenue neutral, this “investment in green energy” position versus “putting a price” on carbon consumption highlights the fundamental difference in how two camps, both desiring GHG reductions, would go about motivating our society to reduce GHG.
One group favors a “bribery” and “subsidize your favorite technology” approach and support carbon-reducing policies based on the premise that governments should use taxpayer money to legally bribe (subsidize) people to change their carbon-consuming behavior (i.e. installing solar panels) and on the premise that elected officials have the wisdom to select the most efficient technologies to reduce greenhouse gases. The other group favors carbon-reducing policies based on “personal accountability” and policies based on the premise that such policies should hold us individually responsible for the costs we inflict on others. In other words, if I consume carbon I should reimburse the planet Earth for my indiscretion.
These are two fundamentally different ways of attempting to achieve the same goal. The first school of thought leads to cap and trade policies which transform a carbon fee into a tax to be spent as the legislature desires; to subsidies flowing primarily to the more affluent through electric car and solar panel rebates; to electrical rates based on net metering which leaves an ever shrinking (and increasingly less affluent) base of utility customers having to pay for costs inflicted on the grid by largely more affluent rooftop solar owners; to spending far more per ton to reduce GHG than necessary because the “good ideas” of elected officials are rarely tested for cost-effectiveness and the real costs per ton of such policies are not transparent.
I support a revenue neutral carbon fee because it is based on a more ethical and efficient premise. If I sin I should pay; to keep me from sinning I should not be subsidized by other taxpayers. This policy approach recognizes that there is not enough taxpayer money to bribe all of us; that when carbon consumers do not pay for the full cost of what is consumed that the most affluent become the most highly “subsidized” by virtue of not paying the full cost, because the most affluent quartile consume far more of polluting products than the least affluent quartile by ratios approaching five to one; that many of our existing “green” policies impose economic burdens (as in the form of higher gas prices and electrical costs) which disproportionately impact the less-affluent and are a drag on the economy; that the increased cost of the carbon fee should be allocated to reduce taxes on everyone and should be done in a way making sure that equity is achieved by allocating tax reductions proportionately more to the less-affluent; that by creating a level playing field (a per ton carbon fee) no matter what you produce you will be incentivized to produce your product with less carbon than your competitor.
Shifting from a “bribery-based” policy spectrum to an “accountability-based” policy spectrum will not be easy. The political right will have to give up the view that a carbon fee is a tax and recognize that imposing an honest user fee is always better than imposing a tax. After all, a carbon fee is an “atmospheric using-up fee” with no generic difference from the user fees which I pay for my consumption of electricity and water. The right will need to support the concept that the tax rebates should be targeted proportionally more to the less affluent. The right, which claims to support a market approach, will have to understand that when the cost of the externality is not internalized in the market price of products that it is a “dishonest” market and thus individuals will make “good” decisions for themselves but which will be “bad” for society. And will need recognize that correcting these prices to be “honest” prices can only be done by government intervention.
The political left will have to give up the notion that a political body is best equipped to determine the most cost-efficient carbon reducing technology (why am I thinking of high speed rail?) or that they have the knowledge to impose behavior changes on me which I do not see to be in my best interest. For instance, the left will need to back off the mantra that we must coerce people out of our cars into traditional transit and face the reality that transit ridership continues to decline in spite of vastly increased spending and that the cost per ton of inducing a new transit rider is astronomical compared to cheaper alternatives. In fact given the increasing mileage per gallon achieved by new sedans the average commute trip, per passenger mile, for a single driver consumes less energy than the average transit commute trip and the difference is growing. The left will need to support a carbon fee rebate policy which addresses social equity issues rather than using carbon fees as if they were taxes to subsidize social equity programs. The left will be more inclined to trust the market to achieve environmental objectives once the costs of carbon externalities are internalized in the price of goods.
Both the right and the left will have to understand that a carbon fee will be far more efficient than most existing green regulations which often regulate only a portion of a product’s carbon imprint. For instance, regulations which focus on operational energy efficiency, such as tailpipe efficiency (miles per gallon), have motivated manufacturers to increase the amount of carbon (Tesla batteries, aluminum and composite plastics) in the production phase with the result that carbon reductions on the production side cancel out – or more than cancel out – carbon increase on the operation side.
Both right and the left will need to recognize that anytime a particular technology receives special treatment through subsides, regulation or taxes that this puts a potentially superior (but not politically favored technology) technology at a competitive disadvantage and suppresses the introduction of new and possibly better technologies.
Whether one agrees or disagrees that humans are a factor in climate change is irrelevant. If you do not agree, a revenue neutral carbon fee is still a cheaper way than present policies to implement something you don’t agree with. If you do agree that humans are a factor in climate change then the irrefutable goal should be to enact public policies which result in the greatest GHG reduction per dollar spent.
It all comes down to who is most qualified to figure out what is the best technology to reduce
GHG and who will invest whose money. Should it be inventors and corporations using their own funds to drive down the cost of reducing the carbon content of their product so that they can sell their widget cheaper than their competitor? Or should it be elected officials using tax payer funds with no financial risk to themselves?
There will be winners and losers. If carbon reduction competition is favored the winners will be those who can figure out how to reduce the carbon content of their product at cheaper cost than their competition. Losers will be those who don’t and it is likely that some of them will be the now heavily subsidized green industries whose technology may not stand up to competition based on a level playing field. Some jobs will be affected but overall employment will not be decreased as other “green” jobs will be created and the increased efficiency of carbon reduction spending will translate into a stronger economy.
With a revenue neutral carbon fee we do not know which technologies will be the winners and losers. But we do know that the biggest winner of all will be present and future human beings who will be much more likely to live on and inherit a greener planet than is possible under our existing bribery-based, inequitable and inefficient carbon reduction policies.
So long Sierra Club. I am sorry to go. But I know that John Muir would understand.