I wrote a while back about how the Obama administration was advocating for some policies that are typically included in proposals for a carbon tax as part of their cap and trade plan. Specifically, the idea of using revenues raised as a tax refund to offset increased costs to end-users.
It turns out, it’s not the only part of the proposed legislation that merges aspects from two policy ideas. The National Journal has a very well-written piece that examines how some of the details of the carbon legislation floating around the Hill actually take the best aspects of the cap and trade and carbon tax ideas. Here’s an excerpt:
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Last week, the House Committee on Energy and Commerce released a discussion draft of the American Clean Energy and Security Act of 2009. The bill, sponsored by Representatives Waxman and Markey, represents a substantial step forward for those eager to see the development of a clean technology economy here in the US. From a clean energy standpoint alone the proposed legislation calls for a package that includes a federal RPS (requiring 6% renewable power by 2012 and 25% by 2025), carbon capture and sequestration, clean fuels and vehicles, and smart grid and electricity transmission deployment. But the bill (nice summary found here) is about more than just clean energy, as it includes title provisions on energy efficiency, global warming pollution, and economic transition. In short, the bill contemplates not only our fuel sources, but the manner in which we deliver and consume fuel, how we manage the associated greenhouse gas emissions, and the necessary economic and trade steps to ensure a successful transition.
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As many news outlets are reporting, the Obama administration’s proposed budget presumes about $75 billion in annual revenue from the sale of carbon allowances (even though a cap-and-trade bill has yet to be implemented). While this is certainly an interesting move, and perhaps a way to exert pressure on Congress to move forward with cap-and-trade legislation, what caught my eye is what Obama is proposing to do with the majority of the revenue from auctioning the permits to pollute - give it back to Americans in a tax cut that will help offset the increase in energy costs that will result under such legislation. The remainder of the funds, about $15 billion a year, will go towards energy R&D.
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I was recently in Washington DC for the National Association of Regulatory Utility Commissioners (NARUC) Conference. At both the conference, and in the halls of Congress nearby, there was much discussion about the need to create policy “on-ramps” to eventual climate change legislation. The thinking appeared to be that putting a price on carbon is so politically untenable that we should work in the interim on piecemeal approaches, like a federal Renewable Energy Standard. I’m not convinced this is a good approach however. There are plenty of signs that carbon legislation is indeed politically possible, and there are good arguments against interim solutions.
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We need more wind power - that’s why we should electrify the transportation sector, not power it off natural gas.
T. Boone Pickens and the national energy plan he’s evangelizing are receiving significant media attention. His plan contains two main proposals – the expansion of wind power throughout the US, and the use of natural gas as a transportation fuel. Despite the wonderful media story this oil-turned-wind baron represents, the truth of the matter is his plan is well-intentioned but misguided. Wind power capacity should surely be expanded, but increasing natural gas demand is the last thing we need. Pickens is overlooking a clear alternative, and one that will help deploy even more wind-powered generation – the electrification of the transportation sector.
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Critics have labeled clean coal an ever-elusive goal that is perpetually over the next horizon, kind of like the hydrogen-powered car. “Clean coal” typically refers to two types of technologies, coal gasification and carbon capture and storage. The former turns coal into a synthetic gas which is then burned in an efficient combined cycle turbine (IGCC). The latter, often discussed in conjunction with gasification, involves capturing carbon dioxide emissions from power plants, and sequestering the gas underground (CCS). While a number of IGCC projects are being pursued, there isn’t a single one in commercial operation – same is true for carbon sequestration, despite a number of small pilot projects. Cost is the main culprit.
But India and China may have identified an approach that brings clean coal closer to reality – underground coal gasification, which sources say can be done at a significant reduction in cost compared to IGCC:
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