Coming soon: City of Portland carbon tax
Here's a sleeper that the Daily Journal of Commerce slipped in yesterday. One of the City of Portland's sustainability people, profiled on this blog a week ago, is putting together a plan that would impose a carbon emissions tax on residents' utility bills and have the city take over "greening" of entire neighborhoods, including both private homes and businesses. It's not entirely clear from his planner-speak, but it sounds as though the "greening" part may not be voluntary. Certainly the carbon tax wouldn't be.
The headline and lead on the DJC story make it sound like it's some sort of benign grant program he's proposing, but when you read down into the interview, the facts become much more interesting:
Osdoba: In order to have any hope of meeting greenhouse gas reduction targets, we would need to increase energy efficiency work in this city by a factor of 10 immediately and we’d need to do it for 20 years. We’re not even having that conversation right now. It’s been about how we make our existing incentives more attractive, which is important, but we shouldn’t do that to the exclusion of saying (that) maybe we shouldn’t be talking about incentives at all. Maybe we need to be talking about creating an investment fund that will pay for energy-efficiency improvements for all.Mr. Vancouver, B.C. 's latest import is likely to provoke quite a bit of conversation -- as soon as the average person around here gets wind of what he's up to.DJC: So what’s your strategy?
Osdoba: The best corollary I could give is there are energy service companies who do energy-efficiency work on big campuses and industrial facilities that use a lot of energy. They say we’ll guarantee energy savings and we’ll help work with you to finance those capital investments, which will be paid for off the savings.
That same model needs to be brought… to thinking about neighborhoods because we can’t go building by building -- it will simply take too long. We have too many barriers to making good investments in energy efficiency. Not only do people not have time, they don’t have access to that kind of capital. So we should be helping them because they’re just going to be burdened with ever more increasing energy prices. Incentives don’t quite get them over the hump.
So that’s a question we’re asking: What if we take that responsibility off them and say "we’ll do it for you?" Missoula, Montana, has a program where if a neighborhood can self-organize and get 90 percent of homeowners to sign up they’ll do it for free.
DJC: The city should be the investor in this case?
Osdoba: The city is the only entity that can draw lines on a map and say we want to do it here as a single investment for all these buildings....
DJC: So what’s the city’s role?
Osdoba: It’s going to be two things. To attract this kind of investment we need to reduce the risk to investors. And we need to build certainty that these investments are going to happen.
So having an aggressive policy that ensures we’re going to do this over the next 20 years is one step. Being able to create the institutional mechanism for financing improvements in private buildings is another step.
DJC: How would that work?
Osdoba: Hypothetically, consider what they have in British Columbia, where they have a carbon tax that goes into effect July 1 and it’s equivalent to $10 a ton (of carbon emissions), and it’s on your utility bill and has very little impact on your price, really. But in the aggregate, it raises a lot of money, and at the provincial level it’s $400 million. What the province is choosing to do is rebate that out. But if hypothetically, Vancouver, B.C., was told by the province we’re going to give you all the money that would be allocated on a per-capita basis to the city, (then) what would the city do? If you can show a return on investment of 4 (percent) to 5 percent, it wouldn’t be inappropriate for the city to use that revenue to issue bonds. And a 20-year based revenue bond would essentially give you leverage of 10 to one.
There’s still a lot of questions about that model… We haven’t really thought through all that yet, but what we can say is that’s a lot of new economic activity and it would create a lot of new jobs....
And one of the things that’s interesting is if you’re going to do that approach for energy efficiency, you can do the same thing for solar and the same thing for district heating and cooling infrastructures. So arguably you could be looking at districts or neighborhoods and saying let’s do it all....
DJC: Why should builders and buildings be the ones to shoulder the burden of [emissions] reductions?
Osdoba: What burden are they shouldering if someone else is paying for it? They get the benefit of a more efficient building that’s going to be more valuable in the marketplace, and it’s going to shield its occupants and owners from future energy increases. We will only see more policy activity around greenhouse gas emissions.
Comments (22)
Gee, what a surprise - The solution to our problems is just a new kind of tax.
Posted by Steve | July 8, 2008 7:38 AM
But in the aggregate, it raises a lot of money, and at the provincial level it’s $400 million. What the province is choosing to do is rebate that out.
When I was in ECON 101 that was called income redistribution.
It moves money from one pocket to other (while dropping some coins in the gutter along the way), but adds nothing to the economy.
Hey Mr. Osdoba, St. John's University called. They want your econ degree back.
Posted by Garage Wine | July 8, 2008 7:54 AM
There are at least 106 estimates in the literature of the appropriate “price” for a ton of CO2. The mode of those estimates is $2 and the mean is $14; why choose $10?
More importantly, since global climate is a random, non-linear system there is no way to know what changes in human activity would affect climate (if at all);
Water vapor is the most dominant GHG, not CO2, so a tax on CO2 is, by definition, a low-leverage policy that might be irrelevant;
Even assuming that CO2 regulation is meaningful relative to water vapor, roughly 97.1% of worldwide CO2 is emitted from natural sources, while 2.9% are anthropogenic; and
Of the 2.9% that is human related, Portland's net emissions amount to so close to nothing is is probably not calculable.
So, another arbitrary tax is all this is.
Will they really use the money for offsetting "investments"? Did the state use tobacco settlement money for tobacco related expenses? NO
Posted by John | July 8, 2008 9:47 AM
We already have a carbon like tax on our utility bills. It's called the Public Purpose Tax/Fee, and has just gone up from 3% to 4% for PGE customers. It funds "energy efficient" appliances for new homes, school building conservation audits and measures, home energy saving retrofits, and uneconomical small wind and solar projects. There's also a small fraction funding affordable housing for low income folks. How the latter got in there shows you how a behavioral modification tax can actually end up be corrupted for other purposes. What's even more laughable is some of the funds generated by this Public Purpose tax are used by PGE to promote things like electric heat pumps (direct natural gas heating is actually more efficient).
Other things about the public purpose tax which I find appalling is some of the funds find their way into the building of new high end homes ($600k plus) as part of Energy Star program advertised by builders and realtors. Moreover, large industrial users can self direct their public purpose taxes, meaning they can avoid the tax by investing in their own industrial plant conservation measures. This same ability should be allowed home owners I believe. I would even go a step further and allow individuals to self direct their public purpose tax funds to purchasing high mileage cars including electric vehicles in place of their existing low mileage cars if they so have them. I don't buy the Carbon dioxide concern but I do see the possibility of knocking down our dependence on oil imports from places like the Middle East.
Posted by Bob Clark | July 8, 2008 9:57 AM
In order to have any hope of meeting greenhouse gas reduction targets, we would need to increase energy efficiency work in this city by a factor of 10 immediately and we’d need to do it for 20 years. We’re not even having that conversation right now.
he's absolutely right on this part.
but--better living through corporations?
when will we come to terms with the idea that corporations are not going to save us? that the "economy" is not going to save us? that no environmentalists, or scientists, or transportation engineers (or in fact *any* specialist) are going to save us?
and then, oh, i don't know:
take responsibility for our own actions and stop living like crazed, overfed, egomaniacal hogs?
nah. instead, i propose we build bigger bridges, wider highways, taller and denser buildings, more paved land, the Big Pipe, more nodes and monuments and eco-narcissistic "parkways" between those structures.
tell me--how can we possibly be "stewards of the land" when we can't even understand or control our own selves?
Posted by ecohuman.com | July 8, 2008 12:59 PM
So ecohuman - the government is going to save us?
Like public housing? And medicare have been doing?
Corporations are individuals.
Posted by D | July 8, 2008 5:14 PM
Osdoba: In order to have any hope of meeting greenhouse gas reduction targets, ...
JK: Before we start increasing taxes (yes they are all taxes) and causing financial hardships on people shouldn’t we be sure we are on the right path?
As a public employee, formulating public policy, Osdoba has a duty to get it right He has failed the first step in that duty by not realizing that the whole greenhouse gas thing is wrong and in fact the Earth is on a decade long cooling trend that some solar scientists predict will continue for another 20 years:
1. Twenty years ago NASA’s Jim Hansen presented a projection to the congress. It included a graph of three future temperature “sceneros”. His Fig 3 shows projected warming of 0.6 degree if we do nothing,0.4 degree if we hold emissions steady and about 0.3 degree increase if we drastically cut emissions. (see: STATEMENT OF Janes E. Hansen, PRESENTED TO: United States Senate Committee on Energy and Natural Resources, June 23, 1988)
The test of a theory is successful predictions, so how did Hansen do? How does today’s temperature compare with his propjection of an increase of 0.3 degree if we drastically cut CO2? Current temperature is about 0.1 degree LOWER than when Hansen predicted a rise of 0.3 to 0.6 degree. His prediction failed. His theory is DISPROVEN. PERIOD. END OF DEBATE.
2. As far as I can tell, no one has ever shown that CO2 causes dangerous warming from today’s levels. However a numbe rof peer reviewed papers show just the opposite - that CO2 levels LAG temperature changes. Even the web site set up to defend AL Gore’s hockey stick shaped temperature projection and run by a Hansen associate admits this:
At least three careful ice core studies have shown that CO2 starts to rise about 800 years (600-1000 years) after Antarctic temperature during glacial terminations. (realclimate.org/index.php?p=13; bold added) (they then go on to explain how CO2 could cause further warming after, something unknown started the warming. Of course the original, something unknown could merely continue!)
Also see:
NATURE . VOL—343 '7 22 FEBRUARY 1990, pg 709
NATURE • VOL 375, 666
Quaternary Science Reviews 20 (2001) 583 -589
3. The third telling item is that several vocal advocates of global warming have openly stated that they are exaggerating:
I believe it is appropriate to have an over-representation of factual presentations on how dangerous it is,
(Al Gore in Grist, 09 May 2006, grist.org/news/maindish/2006/05/09/roberts/ bold added)
So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might. have. (Steven Schneider, Editor of Climate Change in DISCOVER OCTOBER 1989, Page 47)
Emphasis on extreme scenarios may have been appropriate at one time (Jim Hansen, the NASA guy that keeps an official temperature record, in naturalscience.com/ns/articles/01-16/ns_jeh6.html)
BTW, a British court found a bunch of inaccuracies in Gore’s film (“over-representation of factual presentations”?)
See: newparty.co.uk/articles/inaccuracies-gore.html
4. According to the best available historical temperature records, the USHCN, 1998 was the warmest year on record tied with 1934. That means we have been cooling since.
5. Two recent papers, from supporters of the global warming postulate, have announced that warming will take a break for ten years. (Remind anyone of the end of the world cults - when the world didn’t end, they just announce a new date!)
See: In a New Climate Model, Short-Term Cooling in a Warmer World: nytimes.com/2008/05/01/science/earth/01climate.html?_r=1&em&ex=1209787200&en=ddd0094cc411eb2f&ei=5087%0A&oref=slogin
Improved Surface Temperature Prediction for the Coming Decade From a Global Climate Model, Science, 317, 796
Advanced decadal-scale climate prediction in the North Atlantic sector, Nature 453,84, doi:10.1038
Osdoba and other city officials have failed in their duty to find out what the heck they are doing before implementing a bunch of new regulations that will hurt a lot of people. They are not fit for public service.
Thanks
JK
Posted by jim karlock | July 8, 2008 6:11 PM
"We haven’t really thought through all that yet, but what we can say is that’s a lot of new economic activity and it would create a lot of new jobs...."
Cough, cough, excuse me - what jobs? The creation of yet another government bureaucracy?
Just another tax with the funds going to whatever pet project Sam, Randy and the rest of the-usual-suspects come up with. I can only hope this ONLY applies to Portland, because I don't live within those boundaries anymore.
Posted by native oregonian | July 8, 2008 6:40 PM
Under the Almighty Vancouver B.C. model, it would be a statewide tax, I think.
Posted by Jack Bog | July 8, 2008 6:54 PM
Better social modalities via carbon taxation.
..................or
Tax Peter's car to pay for Paul's bus pass.
Posted by Mister Tee | July 8, 2008 8:24 PM
Gosh, Osdoba's treatise made be choke on my homegrown radish-just trying to help his hypothetical cause.
Posted by lw | July 8, 2008 9:26 PM
So ecohuman - the government is going to save us?
maybe my post was too long, let me repost the part you overlooked:
"...take responsibility for our own actions and stop living like crazed, overfed, egomaniacal hogs?"
corporations are individuals.
only legally. and that legal insanity, my friend, is one of the worst mistakes made in history.
Posted by ecohuman.com | July 8, 2008 9:37 PM
"when will we come to terms with the idea that corporations are not going to save us? "
Probably as soon as we come to the conclusion that a lot of govt won't save us either.
Posted by Steve | July 8, 2008 10:13 PM
"corporations are individuals.
only legally. and that legal insanity, my friend, is one of the worst mistakes made in history."
Then why not throw a corporation in jail instead of people? Face it, when we solve our porblems by raising taxes, gets who gets to pay this penalty - people.
Posted by Steve | July 8, 2008 10:14 PM
"We have too many barriers to making good investments in energy efficiency...so we should be helping them because they're just going to be burdened with ever more increasing energy prices. Incentives don't quite get them over the hump."
We have these things called markets that give us signals as to when investments in energy efficiency become "good" investments.
If most people honestly believe energy prices will increase sharply in the future, they will make investments in more energy-efficient technologies (appliances, vehicles, etc.) with the expectation of substantial savings.
These are the kinds of incentives that even the most well-meaning bureaucrats cannot provide.
Posted by MJ | July 9, 2008 12:27 AM
If most people honestly believe energy prices will increase sharply in the future, they will make investments in more energy-efficient technologies (appliances, vehicles, etc.) with the expectation of substantial savings.
energy prices have already increased sharply in the past 30 years. people have made only a token, incidental investment in energy-efficient appliances and vehicles. they have not received substantial savings, and pollution continues to rise sharply worldwide.
and in my opinion, those "market signals" are broken. the market's exceeded it's useful (and intended) limits.
Posted by ecohuman.com | July 9, 2008 9:59 AM
Then why not throw a corporation in jail instead of people? Face it, when we solve our porblems by raising taxes, gets who gets to pay this penalty - people.
not long ago, corporate hegemony was what leaders feared and saw coming. now, corporate "citizens" (a genuine perversity of the word) are largely untouchable.
Posted by ecohuman.com | July 9, 2008 10:03 AM
and in my opinion, those "market signals" are broken. the market's exceeded it's useful (and intended) limits.
I agree - that's your opinion.
Remind me of your educational qualifications for such pronouncements. Also, clarify, if you will, who has set the "limits" you mention.
Posted by cc | July 9, 2008 11:59 AM
Remind me of your educational qualifications for such pronouncements.
i'm an adult human. they're called "opinions." this is a "blog".
Also, clarify, if you will, who has set the "limits" you mention.
Adam Smith. but he didn't "set" them--he generally defined them.
Posted by ecohuman.com | July 9, 2008 12:48 PM
No matter how hard government tries, it is impossible to tax corporations. Sure they write checks but the real burden is still borne by people. They may be shareholders whose 401K's don't grow as fast as they might, employees who earn less or customers who pay more, but these "taxpayers" are still us. Corporations are simply groups of people producing goods and services for other people.
Corporate taxes like ecohuman want just attempt to tax certain people (usually rich owners or employees or customers) but instead might affect a poor single mother trying to buy formula, a minimum wage worker or some grandmother on a fixed income.
Posted by John | July 9, 2008 3:41 PM
Oh, yes, the market for oil works just swell, doesn't it? How do we factor into our gasoline bill the cost of the Iraq war in lives and debt? How is that a "market" action?
Posted by Allan L. | July 9, 2008 4:37 PM
"not long ago, corporate hegemony was what leaders feared and saw coming."
Perhaps, but what about govt hegemony? If you really think govt is looking out for the good of the common man, you are naive. At least with corporations and some competition you have some choice not to pay them.
Anymore, I am beginning to think the divide is not between liberal/conservative, but rather those who work for govt and those who don't.
Posted by Steve | July 9, 2008 4:52 PM