The two immediate imperatives: carbon-fee-and-dividend and rethinking nuclear

by Mike Shatzkin

If you are convinced that the need to decarbonize our energy systems and our ecosystems is, literally, existential, there are two urgent items worthy of ongoing political attention.

One is that we must institute carbon-fee-and-dividend, with 100 percent of the proceeds being distributed back to each of us in equal shares. Not only is that the tax on carbon that we can institute most quickly, given political reality, it also solves the problem of not punishing the poor and assures ongoing political acceptance.

And the other is that we must sustain existing nuclear plants until we can replace each one with non-polluting power. The tradeoff of burning more fossil fuels to substitute for shut down nuclear power is one we can no longer afford to make.

The carbon-fee-and-dividend concept is to levy a tax on fossil fuels — oil, gas, or coal — when they enter the US economy, at the wellhead or the port. The tax is based on how much CO2 will result from burning the taxed fuel. In the supply chain this is simply recognized as an increase in the cost of the raw material and passed along to the ultimate consumer.

Because that means that energy will cost more, proponents of taxing carbon in any form recognize the need to cushion poorer people from the consequences. There is a humanitarian and socially responsible component to that point of view. What has been happening in France lately in protest to petrol taxes demonstrates that there is a dose of political realism that supports that idea as well.

Energy consumption isn’t a perfect index of financial means, but it is a pretty good proxy. People who heat or cool bigger spaces, or more spaces, deliver a lot more CO2. People who fly in airplanes a lot will be paying for a lot more CO2. But people who drive long distances should be driven to electric cars, and targeting some help with that would make a lot more sense than letting long commutes by middle class people be a determining factor on whether we tax fossil fuels.

The current bill (HR 763, “the Energy Innovation and Carbon Dividend Act”) is so sensitive to cushioning the blow for people that it proposes making the first monthly payment to people the month before the tax takes effect so you can bank your dividend before you see the extra 15 cents at the pump. (The initial tax in the bill before Congress is fifteen dollars a ton, which translates to about 15 cents a gallon for gas.)

But here’s the important thing to understand about why carbon-fee-and-dividend is essential, rather than spending the money any other way. Protecting poor people is a great feature, but it goes much further than that.

The carbon fee will be paid for all consumers of carbon-based energy. That includes corporations and governments as well as just plain people. But the refunds (the “dividends”) go to just plain people. In equal shares. That means, according to most of the estimates I’ve seen, that about 70 percent of the people get more money back than the fee costs them in additional energy costs. Of course, people who switch away from fossil fuels, or who already have a small carbon footprint, benefit even more.

The various proposals for taxing carbon, and they have come from across the spectrum, have proposed starting at anywhere from $15 to $40, with built-in increases that range from ambitious to very restrained. That’s 15 cents to 40 cents a gallon. But if you’re a real pessimist, like I am, and you think that decarbonizing is beyond urgent, you might believe we need the tax to be $200 or $300 a ton, or $2 or $3 a gallon.

And the way we’ll get there — the only way we’ll get there — is with a carbon fee that results in 70 percent of the people making money on it. People seeing that a tax profits them personally will be easier to persuade to raise it as we all see the growing environmental evidence that it is necessary. So carbon-fee-and-dividend is the easiest carbon tax to pass, protects poor people from increased energy costs, and is the smartest politics. Oh, and it actually gets us started on a Guaranteed Annual Income.

So, let’s stop arguing about how to spend the carbon tax money, which is the fight which has divided the good guys in this debate, and pass the Energy Innovation and Carbon Dividend Act right now.

I urge EVERY Member of Congress to look at how a carbon-fee-and-dividend law would affect your constituents. I think you’ll see it is a winning issue.

As for nuclear…

Opposition to nuclear power is a very emotional subject. It has the “we have never figured out what to do with the waste” component and the “connection to nuclear weapons” component to fuel righteous indignation, quite aside from rational concerns about current safety or potential catastrophe.

But, putting aside for the moment the question of developing “next-gen” nuclear, the power we get from today’s plants is pretty much (not completely) carbon-free. Knowing what we know now about the urgency of decarbonizing, it is really irresponsible — or the result of a really faulty calculation — to shut any operating nuclear plant that we can’t replace immediately with a carbon-free substitute.

Anti-nuclear activists will raise the point that the owners of the plants are abandoning them because they are not profitable. That’s true. And that’s one of the reasons that a high carbon tax is so desirable; it will allow nuclear to raise its prices and be commercially viable. But quite aside from that, we’re already beginning to pay the out-of-pocket costs of climate change — California fires, Texas floods, the Puerto Rican hurricane — and keeping nuclear open to burn less fossil fuel is probably a good deal, even financially.

In fact, we will apparently recover from all three of those recent climate catastrophes less completely and less quickly than Japan has recovered from Fukashima.

Rethinking nuclear doesn’t have the same immediate “action step” as the imperative of passing the Energy Innovation and Carbon Dividend Act. There’s no Common Sense on Nuclear Act to pass right now. But it should make all activists rethink their opposition to local nuclear plants. We are about to see the closure of the Indian Point nuclear facilities outside New York City, a probably irreversible decision by a Governor who might then have been thinking about running for President. We will burn more fossil fuel as a result. The air in the Hudson Valley will be less clean and we will contribute to global warming.

But 20 percent of the US electrical supply is from nuclear power and, to date, we have a perfect record. Every time a nuclear plant closes, the immediate effect is that we burn more fossil fuel. We simply can’t afford to make that deal anymore and we really should stop.

Of course, both of these ideas have pedigree and credible supporters. Citizens’ Climate Lobby, a non-partisan organization, has been advocating carbon-fee-and-dividend for more than a decade. George Schultz, who was on their board, teamed with James Baker to form Climate Leadership Council, advocating another version of the idea. Then a bipartisan group called Americans for Carbon Dividends, chaired by former Senators Breaux (D) and Lott (R), chimed in with their version. Schultz and Baker claim adamantly that this is a “Republican idea”. I’m a very active Democrat but that’s fine with me; it puts a price on carbon and creates a guaranteed annual income.

The fight for reason on nuclear has come largely from James Hansen, the single person most responsible for starting the conversation about global warming with his testimony before Congress over 30 years ago. But the most responsible environmental organizations, including the Union of Concerned Scientists and the Environmental Defense Fund, have also recently adjusted their positions to recognize that nuclear helps us decarbonize and, in the world as we now understand it, decarbonizing is our most urgent priority.