Adventures in carbon pricing

California continues to innovate on the climate front, but still gets smoked by perky B.C.

Posted by Adam Stein (Guest Contributor) at 10:08 AM on 21 Feb 2008

A national carbon tax in the U.S. appears increasingly unlikely, but all sorts of interesting experiments in emissions pricing are underway regionally.

First: the California Assembly this week votes on the California Clean Car Discount Act, a "feebate" system that imposes a direct charge on sales of gas guzzlers and uses the funds to reward buyers of fuel sippers. The way it works it pretty simple. If you buy a Chevy Tahoe, you'll have to pony up a $2,500 fee, which will then go straight to all the folks buying Honda Civics. Fees and rebates are determined on a sliding scale based on the fuel efficiency of the vehicle in question.

Although not quite a carbon tax, the system does establish clear price signals for energy efficiency, and such feebate systems are an improvement over CAFE. Unfortunately, some members of the assembly are still sitting on the fence:

"What if some poor guy in Watts retires and says, 'I want an SUV,'" Dymally said. "Do you punish him for that?"

Feel free to email Assemblyman Dymally to explain respectfully that no one wants to punish, um, poor, inner city ... retiree SUV drivers. We just want them to shoulder the full cost of their choices, so that the rest of don't have to. (You might also point out that some of the cleaner SUVs won't be subject to any charges under the bill.)

Further north, Bay Area regulators are mulling a straight-up carbon tax of 4.2 cents per metric ton. This is, by any measure, a pittance, but environmentalists are nevertheless ecstatic about the possible precedent. Indeed, the move would represent the flexing of newfound regulatory muscles, as air quality boards begin treating CO2 as a regular old pollutant.

Stories like this always come with the obligatory unintentionally amusing quotes:

Once a carbon fee is in place, critics worry, it could easily increase.

Yes, I suppose that is a worry. Pass the smelling salts. I feel faint.

Moving still farther north: British Columbia just enacted an honest-to-goodness carbon tax, effective July 1. The tax will start at about $10 per metric ton, rising to about $30 per ton in 2012. This is a tax shift, meaning that all revenue will be returned to tax payers through offsetting tax cuts and credits.

What makes this news particularly intriguing is that British Columbia is also part of the Western Climate Initiative, a collaboration between B.C., California, Washington, Oregon, New Mexico, and Arizona. So soon enough, B.C. could be operating under both a carbon tax and a cap-and-trade system. Despite what you may have heard, there's no particular reason the two carbon pricing mechanisms can't shake hands and be friends. This will be worth watching.

For story: Adventures in carbon pricing
6 Comments | Post a Comment

What about used

Shouldn't a used green car get a bigger rebate? How about a used economy car converted to plugin hybrid?

How about a plugin bike?

This cash goes to people who can afford a new car, or worse, it helps someone who doesn't have the income to afford a new car to use the rebate to buy one anyway. Record car loans failures are following the mortgage crisis. Detroit pushed gas guzzlers with rebates, now look at what happened.

I say reward conservation. For each gallon of gas not burned. There has to be a way to make that work.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 10:32 AM on 21 Feb 2008

Well, since you asked, no

Let's set aside the unhelpful notion that we should forgo good legislation so that we can hold out for fantasy legislation. The bigger issue here is that such a scheme wouldn't work. You'd immediately smack into both an additionality problem and a verification problem with the plug-in bike guy (these issues don't just apply to carbon offsets, wouldn't you know).

Sure, you could just slap an enormous gas guzzler tax on SUVs and skip the rebate altogether. But that bill won't pass, so we might as well add a free pony proviso on there as well, skip the entire debate, and go out for beer.

www.terrapass.com/blog

by Adam Stein at 11:08 AM on 21 Feb 2008

6kwh=1 gallon

So give a 5 cent per kwh subsidy to everyone charging up their plugin hybrid. Those kwh are saving gas. 30 cents per gallon equivalent in clean electricity.

Metering devices on plugin hybrids can keep track of the commerce and subsidy. And even the accounts online, just as credit/debit cards work now. I'm sure paypal would be glad to handle it all, hehey.

As for helping consumers afford plugin hybrids, the government ought to put in million unit multiple year orders to impell cost savings from mass production.

Auto companies could be pushed on price and quality with government contracts as incentive. make them do it right, just as in wW 2 war production. Replace state owned gas guzzlers with tax saving plugin hybrids for government employee work vehicles.

Pay for it with cuts in subsidies to big oil, coal, and nuke corprs.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 11:54 AM on 21 Feb 2008

Interesting ideas

But let's consider. 1.8 million new cars are sold in California every year. To a first approximation, roughly zero of them are plug-in hybrids. So what's wrong with the feebate system again?

I'm really not suggesting there aren't all sorts of other cool things we could be doing to encourage plug-ins, electric bikes, etc. I just don't really what they have to do with this perfectly helpful piece of legislation.

www.terrapass.com/blog

by Adam Stein at 12:21 PM on 21 Feb 2008

Misplaced target

You put the X right on the reduction you want to occur. And bombard it with cash. Pennies per kwh is a safe bet when it goes to stimulate the local economy.

The rebate and tax system targets the well off only, who can afford new vehicles. And encourages consumption.

While at the same time enraging republican hummer buyers (who are taxed on their hummer)against everything green. thus boosting fund raising for the GOP. Hehey.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 12:50 PM on 21 Feb 2008

Too True

Adam Stein is sadly correct. There is no way the American bourgeoisie is going to support a program that puts money in the hands of the poor. Any such program to transfer money must keep it in the hands of the wealthy and the middle class to succeed.

patrick in Beijing

by bookerly at 4:22 PM on 21 Feb 2008

ADVERTISING POLICY

You are not logged in. Thus, you cannot post a comment. If you have an account, log in. If you don't have an account, well, by all means go make one! Meet you back here in five.