Tuesday, November 3, 2015

Reject a “Dividend” Tax on Climate Safety

There are many statist tools that “clean energy,” fossil fuel-hating environmentalists advocate as a means to compel a transition away from “dirty” energy to the allegedly cleaner “renewable” alternatives. The Citizens Climate Lobby has been beating the drum for its pet scheme—a redistributionist tax on carbon-emitting fuels.  

Bob Narus, the New Jersey Issues Coordinator of Citizens' Climate Lobby, continued that drumbeat in a guest column for the New Jersey Star-Ledger. In A better way for N.J. to cut greenhouse gas emissions, Narus complains that New Jersey is failing in its supposed political commitment “to cutting greenhouse gas emissions 80 percent by the year 2050.” Narus asks, “Why the backsliding and lack of progress?” And thinks he has the answer:

Some blame politics, and particularly Gov. Christie's national ambitions. But a deeper problem is economics. The state's primary tool for reducing our fossil fuel use is to subsidize efficiency and renewable energy, but somebody has to pay for those subsidies, and politicians don't like asking their constituents (meaning you, Dear Ratepayer) to pay for things.

Narus acknowledges that state-imposed efficiency and solar and wind energy are not economically viable. So he details a solution:

There's a more effective, more economical and fairer way to promote clean energy: Don't subsidize the good stuff. Raise the price on the bad stuff. And that's where we're going to need some help from the Feds.

Imagine we assessed a fee on every ton of carbon the fossil fuel companies pulled out of the ground. That would raise their prices and move the whole market away from the fuels producing all that carbon dioxide. New Jersey cannot impose a stiff price increase itself without jeopardizing our economic competitiveness. But the federal government could implement one nationally, and protect domestic manufacturers by slapping an equivalent tariff on imported goods.

A steadily rising price on carbon would avoid the seesaw we experienced with solar subsidies. It would make the payback period for investments in efficiency and renewables much shorter. And our utilities, which buy their power at auction, would use more clean energy and less carbon-based power.

But wait. Didn’t he just argue that we constituents don’t like paying for the subsidies for the “good stuff?” Why would we want to pay extra for the “bad stuff?” Narus has the answer:

But wouldn't that carbon price trickle down to price increases for everything in our economy? Yes. And wouldn't that hurt all of us, just the way state subsidies for clean energy fall on the backs of all ratepayers? That depends on what you do with the money.

The best thing to do with the money is give it all back--return 100 percent of the proceeds of the carbon fee to all American households in the form of equal monthly dividend checks. Most households would get back at least as much in dividends as they pay in higher prices. Even those with larger carbon footprints (who tend to be the wealthy, because they spend more) would get a substantial dividend. And everyone would have an incentive to reduce their carbon footprint further and "cut their taxes."
Put a noose around the neck of our primary energy source, and pull it tighter and tighter. As this crushing economic burden escalates, what will happen to our “dividend” checks? Won’t the fact that a monthly carbon “dividend” will give us all an incentive not to cut fossil fuel use, lest those “dividends” shrink? But if our carbon taxes really are cut due to due to less demand across the economy arising from the higher prices for everything we buy, won’t that save us money? No. The shrinking share of our income that goes to carbon taxes resulting from a shrinking fossil fuel industry will just be shifted to the higher costs for the uneconomical “renewable” energy, which Narus acknowledges is not economically competitive with cheaper fossil fuels. So we’ll be stuck with shrinking “dividend” checks and higher prices across the board due to a higher-priced energy infrastructure.

This is to say nothing about the unreliability and unscalability of solar and wind. The detrimental effects on our standard of living of a government-imposed “steadily rising price on carbon” would be catastrophic, if the quasi-religious hope of the anti-fossil fuel crowd that unforeseen technological breakthroughs will enable renewables to somehow take up the slack doesn’t pan out. Narus might counter that, if renewables don’t live up to the task, fossils will still be available. There would be no forced shutdown of fossil fuels. But then what’s the point? Narus’s answer is, then we continue to receive our “dividend” checks. But the “dividends” would be skewed toward low-income folks, which means we all get higher prices for everything that uses energy—which is virtually everything—and another immoral tax-and-redistribution scheme.

Then there is the matter of assuming that the “dividend” checks will continue for any length of time. In New Jersey, the state raised taxes to fund annual property tax rebates to offset NJ’s high local levies, only to see the rebates disappear for most of us and the taxes stay in place. We’re supposed to trust the politicians to keep their promises? That’s a laugh.

This “dividend” tax idea is immoral and rooted in faulty premises. I left these comments:

“Don't subsidize the good stuff. Raise the price on the bad stuff.”

This begs the question: Are fossil fuels “bad stuff?” The answer is an emphatic NO! Fossil fuels are a human-life serving benefit—and the facts back it up. Fossil fuels are by far the best energy technology mankind has today. Cheap, reliable, plentiful energy is vital, and has made our lives longer, healthier, cleaner, safer, and more pleasurable than ever before—and fossil fuels are the main source of that energy. Fossil fuels have not been a detriment. They have enabled man to transform an inherently dangerous natural environment into a much more livable one for humans.

This includes climate. For most of human history, man faced a real climate crisis. Earth’s climate has always been full of dangers—droughts, storms, heat waves, cold waves, floods. Today, thanks to plentiful energy, of which 87% comes from fossil fuels, the climate crisis for man is over. Everywhere fossil fuel use is plentiful, life keeps getting better, cleaner, and safer. This is backed up by every measure of human well-being, from rising life expectancies, to steadily expanding access to clean water, to rising per-capita income, to transportation safety, to shelter from heat and cold, to a better fed world. Weather extremes have by and large been reduced from life-threatening to nuisances. Tellingly, given the mission of the Citizens Climate Lobby and its ilk, climate-related deaths have plunged 98% worldwide in the last century, the very era of fossil fuel use and global warming that’s supposed to be bad.  Everywhere in the world where fossil fuel use is on the rise, life is getting better for people. To maintain that virtuous trend, we need more, not less, fossil fuel use.

Given these facts, it is downright cruel to make this life-giving, vital energy more expensive. Whatever the effects of man-made greenhouse gases on climate—and the effects are moderate and often good, such as higher crop yields because of more atmospheric co2—the war against fossil fuels is demonstrably bad for man. Regardless of climate change or global warming or whatever—and so far, all of the computer model predictions of climate catastrophe have been dead wrong—one thing is certain: Without reliable energy on demand, life in any climate is miserable and deadly to man. Imagine no regular source of clean water; no safe human and industrial waste disposal facilities; no clean indoor central heating and cooling; no electricity; no safe means of transportation to move people and goods over short or long distances; no modern medicine; no modern agriculture; no modern communications; no sturdy structures; no ability to quickly remediate disaster consequences; and none of the myriad other aspects of safe, clean, and prosperous modern living that we take for granted.

Our modern, life-giving industrial society requires monumental amounts of reliable energy, most of which is currently provided by fossil fuels. Nowhere on Earth has anyone yet proved that so-called “renewable” energy can be the primary source of energy. It would be cruel, immoral, and downright insane to suppress and block fossil fuel development, by imposing a carbon tax or by any other method, merely on the quasi-religious hope that something will come along to replace it.

At least the author acknowledges that wind and solar are uneconomical (not to mention unreliable). But that’s no reason to impose yet another tax-and-redistribution scheme that transfers money forcibly taken from those who earned it to those who didn’t. That won’t make wind or solar any more economical. If that is ever to happen, it’ll only happen in free and open market competition. A carbon tax will just make energy more expensive and life for average Americans harder. And it’s dumb even by the intended goal of reducing fossil fuel use, as the recipients of the “dividend” will get a vested interest in more, not less, fossil fuel use.

Anyway, it’s dishonest to call the proposed carbon tax a “fee,” and dishonest to call the carbon-tax handouts a “dividend.” If you want a real dividend, buy stock in a great company that makes its money by making its customers’ lives better—e.g., ExxonMobil.

Related Reading:

The Secret History of Fossil Fuels—Chapter One, The Moral Case for Fossil Fuels by Alex Epstein

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