Pace

Editor’s note: This is the second in a series of four columns over the next two months on climate change and potential legislation that may give readers information they can take action on in the effort to meet carbon emission reduction goals.

Our last column reported CO2 at 416 ppm, a level not seen for 2.6 million years and a change of over 3% in just the last five years. (NASA Climate Vital Signs, February 2021) Nearly simultaneously, during 2020, climate events cost $119 billion in the US alone. (NOAA.gov/billions).

Though the number is huge for a single year, it is nevertheless an underestimate that neglects the human cost of worry, work and fear of losing your home, livelihood or a person you love. Ultimately, we need action, but what government action will be the most effective?

Currently, the federal government has multiple legislative alternatives generally organized around three ideas: government expenditure, emission regulation and a carbon price. Let’s look at some examples with the caveat that none of these bills are finalized.

A clear example of a government expenditure effort is President Biden’s American Jobs Plan which is a wide-ranging spending plan requiring $2.6 trillion. Of that, $174 billion will support a network of charging stations and electric vehicle subsidies plus another $126 billion will provide energy efficient housing units. Since 33% of our emissions (EPA) are from transport and housing, these expenditures are relevant.

Another $100 billion is directed to the electrical grid which will hopefully enable it to cope with increasing amounts of renewable electricity. Finally, $62 billion will go to research and development in climate change science and technological innovation. (Committee for a Responsible Federal Budget reporting April 2, 2021) The climate change expenditures total about $462 billion.

Emission regulation is illustrated by Corporate Average Fuel Economy (CAFÉ) standards, which have set minimums on the fuel economy for a manufacturer’s fleet.

More recently, utility emissions regulations were ordered by the Obama administration to be enforced by the EPA. Former President Donald Trump overruled these, however, the federal appeals court reversed again opening the way for updated rules. (KPMG Potential Legislation and Policy Changes.) A similar reinstatement for methane releases has passed the senate. GovTrack.com currently lists 124 bills that regulate emissions.

A Carbon Pricing Bill Tracker (Resources for the Future) lists 12 bills introduced in the 116th and 117th Congresses. Nearly all have set an initial price for carbon and other greenhouse gas emissions of $15 to $52 per metric ton and most increase that price by $10 plus inflation per year though some rise more slowly.

The big difference among these plans is how the revenue is used. One, the Energy Innovation and Carbon Dividend Act, sends all but administrative costs equally and directly to all households. Other plans pay a smaller percentage to households or restrict the payment to income tax filers (albeit lower tax brackets) and use the remainder for a variety of purposes including worker and rural assistance, research and development, infrastructure spending, payroll tax reductions and some low-income support.

Though all these efforts will help reduce emissions, effectiveness, which means ease of implementation and results, should be our focus. The following barely skims the surface.

The American Jobs Plan is largely directed to overcoming problems created by inequity, social infrastructure and the pandemic while only about 18% of the price tag is specifically intended to cope with carbon emissions. That $462 billion, large as it is, is a carrot designed to enhance renewable fuel use but may not necessarily push the economy away from fossil fuels and the growth of emissions at the rate needed.

Regulations can be a spotty process targeting an industry or fuel, technology or product without fully understanding their impacts. As applied to energy producers, regulations often result in a kind of cap and trade where one company exceeding the standard can sell that benefit to others who are failing the standard.

Energy production by itself affects only about 25% of emissions without altering those created by industrial processes or design of consumer goods.

Watching CAFÉ standards over the years exposed the degree of enforcement required for regulatory administration and the resistance from lawsuits, lobbyist activity and downright cheating. On the scale between the carrot and the stick, regulations tend toward the stick.

A price on carbon is essentially different because it uses dollars rather than rules to reach deeply into the linkages throughout the economy. Though the fee is applied only to the producers of fossil fuel at their source, the effect on price seeps through every exchange of every product that is bought or sold. Then, the only escape from the gradually rising price of carbon, is for all economic entities to compete for new products and services that use less.

Lucky for us, the U.S. excels at competition and innovation. Fortunate too, carbon pricing cause little governmental administrative fuss because revenues only involve producers and expenditures only involve households.

Is there a blend that would be the most effective in our situation?

Ideally, each method would be designed to perform what it does best. After all, we don’t have time to waste on imperfect decision making. The Mauna Loa Global Monitoring Laboratory just reported a preliminary finding of 419 ppm for April, a bit higher than the February NASA estimate. More about decision-making in the next column.