Why it’s time for Houston to Implement a Carbon Fee and How to do it.
Before Hurricane Harvey, Houston was gaining national notoriety for its phenomenal food scene, diversity and robust economic growth. Then Harvey struck. In the wake of the tragedy, non-Houstonians and Houstonians alike have watched the news in horror at the sheer scope of the human suffering. As a lifelong Houstonian, I love my city. Throughout the storm and its immediate aftermath, Houston’s citizens have demonstrated the pragmatic, friendly, and resilient spirit that those of us who live have always been most proud of.
Make no mistake, Houston will rebuild. It is the world’s energy capital, has the world’s largest medical complex, and is the number one U.S. port in foreign tonnage[1][2]. But equally true, Houston will flood again. In 2015, 2016, and now 2017 the city of Houston has experienced three “500-year” floods[3]. Cities like Houston need to become more resilient if they want to thrive, or indeed to survive, in the future.
Since the storm, I have read editorial after hand-wringing editorial, placing the blame for the scope of the disaster squarely at Texas’ door. Personally, I find this discussion counterproductive. First, a storm of Harvey’s magnitude would have devastated any city in the world, irrespective of their land-use policies, industrial focus, or political bent. But more importantly, by focusing on the choices Houston has made in the past, the discussion misses the larger question — what resources can Houston and cities like it harness to build the infrastructure the nation needs to see it into the future.
To me, the answer to this question must inevitably involve, not only Texas’ people and politicians, but also the much-derided oil industry. ExxonMobil, BP, Total, and Shell — all companies with strong Houston ties — are part of growing movement supporting a carbon fee and dividend plan. The Climate Leadership Council, which boasts all four companies as founding members, advocates for placing a fee on carbon $40 and then distributing the proceeds to consumers[4]. It seems very unlikely that the federal, or even the state, government will impose such legislation. So it falls to counties and municipalities to give the businesses what they want.
I propose that counties affected by Hurricane Harvey should band together to create a county carbon fee on large emitters. The funds collected would first help reconstruction efforts by seeding a “Rebuild Texas Gulf Coast Fund,” that would be used for rebuilding Texas’ existing infrastructure, for building a new combination of gray and green infrastructure to assist in resilience in the face of future storms, and for experimentation with other climate solutions. After the first three years, participating counties could revert to Climate Leadership Counsel’s proposal, and distribute additional funds as a carbon dividend to citizens.
The EPA Facility Level Information on Greenhouse Gases Tool (FLIGHT) maintains data of Greenhouse Gas (GHG) Emissions Data from large facilities across the nation[5]. Based on the 2015 figures for Harris County, where Houston is located, this proposal would result in nearly $2 billion of revenue each year[6] — or roughly $6 billion over the three years in which the carbon fee benefitted the Fund — after which it would result in a household dividend of roughly $1300 per year.[7] It would be slightly higher if you include, as I believe you should, all greenhouse emissions. If the city of Houston acted alone it would collect roughly $4.2B over three years and be able to deliver an approximate annual household dividend of $1,700.
In addition to providing the Gulf Coast with much needed funds for rebuilding, and experimenting with climate solutions, this would also give the companies involved the opportunity to test their climate fee proposal on a small scale, thus minimizing any system shock. Calculating emissions across an entire corporate footprint would be labor intensive and potentially disruptive. But the large emitting facilities included in this proposal already report emissions, and thus would allow firms the opportunity to experiment on a smaller scale without having to figure out emissions across their entire operation. The emissions information is also public, which would make the process more transparent.
Investing in climate resiliency would ultimately benefit the corporations involved, as well as the Gulf Coast. When it comes down to it, large emitting facilities typically have large sunk cost making it difficult for firms to just pick up and move. Consequently, the health and welfare of the communities in which these facilities are located is vitally important to the health and welfare of the corporations. The projects financed by the carbon fee would encourage innovation in an increasingly resource constrained future, and would ultimately assist in protecting the corporations’ facilities for the long-term.
In respect to politics, if there is lack of political will to move forward with such a plan, then interested groups on the Gulf Coast should organize around and emphasize the dividend aspect. Receiving $1,300 or $1,700 a year can be quite galvanizing for votes.
If a compulsory carbon fee is still unachievable, then make it a voluntary system. In a world where an estimated 2/3 of a company’s valuation are intangible assets emphasize the positive branding opportunities and let forward thinking corporate citizens receive the goodwill that goes along with doing the right thing, and shame those that don’t participate[8]. At the very least it will act as a strong signal about values.
You can’t achieve climate resiliency on the cheap. And the money has to come from somewhere. This proposal is one component of a multiple point framework that gets every stakeholder to put a little skin in the game. Everything is bigger in Texas, including the ideas. I believe that Houston has all the ingredients to innovate and lead the world in climate resiliency.
As a lifelong Houstonian, I have a passion for this wonderful city and believe that we can rebuild it to be even better. In a time where new ideas should strongly be considered I think this idea helps getter closer to a more prosperous and sustainable future.
#HoustonStrong
By Mike Menendez
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[1] “Facts and Figures.” Texas Medical Center, Texas Medical Center, http://www.tmc.edu/wp-content/uploads/2016/08/TMC_FactsFiguresOnePager_0307162.pdf. Accessed 4 Sept. 2017.
[2] HOUSTON REGION ECONOMIC DEVELOPMENT PROFILE.” HOUSTON REGION ECONOMIC DEVELOPMENT PROFILE, Greater Houston Partnership, HOUSTON REGION ECONOMIC DEVELOPMENT PROFILE. Accessed 4 Sept. 2017.http://www.houston.org/assets/pdf/business/HoustonRegionEconomicProfile.pdf
[3] Ingraham, Christopher. “Analysis | Houston is experiencing its third ‘500-Year’ flood in 3 years. How is that possible?” The Washington Post, WP Company, 29 Aug. 2017, http://www.washingtonpost.com/news/wonk/wp/2017/08/29/houston-is-experiencing-its-third-500-year-flood-in-3-years-how-is-that-possible/?utm_term=.9678f211380e. Accessed 4 Sept. 2017.
[4]THE CONSERVATIVE CASE FOR CARBON DIVIDENDS. Climate Leadership Council, Feb. 2017, http://www.clcouncil.org/wp-content/uploads/2017/02/TheConservativeCaseforCarbonDividends.pdf. Accessed 4 Sept. 2017.
[5]EPA Facility Level Information on Greenhouse Gases Tool (FLIGHT) , https://ghgdata.epa.gov/ghgp/main.do# . Accessed 4 Sept. 2017. 2015 Greenhouse Gas Emissions from Large Facilities
[7] “QuickFacts.” U.S. Census Bureau QuickFacts selected: Harris County, Texas, http://www.census.gov/quickfacts/fact/table/harriscountytexas/PST045216. Accessed 4 Sept. 2017.
[8] Shaikh, Junaid M., ‘Measuring and Reporting of Intellectual Capital Performance Analysis’ (2004) (4) (March 2004) The Journal of American Academy of Business 439, 439.
Calculation Notes:
City of Houston
1) Population of Houston derived from the US Census 2016 population estimate: 814,599 Households
2) Total Carbon Emissions (Metric Tons CO2) for Houston 2015 was reported as: 35,604,351.00
3) Dividend calculation: 35,604,351.00 Tons of CO2 / 814,599 Number of Households = Dividend Per Household of $1,748.31
Harris County
1) Population of Harris County derived from the US Census 2016 population estimate: 1,499,528 Households
2) Total Carbon Emissions (Metric Tons CO2) for Harris County 2015 was reported as: 49,744,958.00
3) Dividend calculation: 49,744,958.00 Tons of CO2 / 1,499,528 Number of Households = Dividend Per Household of $1,326.95
