Financial incentives help push greener technologies

We are using conservation and new cleaner technologies to reduce emissions, but we also need financial incentives to accelerate efforts. Photo: AP

WASHINGTON, DC, March 4, 2013 - There are numerous ways to slow climate change before it causes further damage to our economy, health, children’s future, and the well-being of people and species across the planet.

First, we must reduce green house emissions that cause climate change. As a nation, we are using conservation and new cleaner technologies to reduce emissions, but we also need financial incentives to accelerate efforts.

Source: EPA (2010) analysis of total greenhouse gas emissions by economic sector.

Conservation and new technology in transportation

TheEPAreports 27% of greenhouse gases arise from transportation. Reducing the amount people drive reduces those greenhouse gasses.  However, people need realistic alternative options to driving that provide the convenience of cars without harming the environment.  The White House took crucial action issuing higher fuel efficiency standards for manufacturers of automobiles, light trucks and heavy commercial vehicles which are valuable, but inadequate by themselves. New vehicles with new technology will double miles per gallon rates but are more expensive to purchase than inefficient polluting vehicles. Most consumers and businesses will only buy these vehicles if rising fuel prices offset the initial investment to buy a car.

Conservation and new technology in commercial and residential building use

According to the EPA, 11% of greenhouse gases pertain to buildings. Adding insulation to residential and commercial buildings, installing new energy-efficient windows, planting trees as wind shields, and setting indoor winter temperatures lower will help reduce those negative gases. Many statescitiesutilities sponsor free energy audits with upgrade rebates to help people reduce energy consumption. Yet consumers are more likely to undertake these expensive upgrades  if oil and natural gas prices rise.

Conservation and clean technologies for electricity 

The EPA says 1/3 of our greenhouse gases are emitted during the production of electricity from coal and methane. Emissions would drop if we use less electricity by implementing changes such as raising air conditioning temperature settings, using fans, and buying energy efficient bulbs and appliances.  

In the short term, conservation methods are all we can do to reduce electricity emissions. Long term, a better way to reduce these emissions is generating electricity without fossil fuels. Many states require utilities produce some electricity from clean energy, such as , wind, solar, geothermal, and some biomass. Such efforts could be accelerated, but retirement of coal plants and their replacement with new facilities is expensive. States and utilities worry about consumer responses to higher electricity prices. However, if fossil fuels cost more, utilities will obtain more electricity from clean energy sources.

Not all states require utilities to get a percentage of their electricity from clean energy sources. Does yours?
Source: Center for Climate and Energy Solutions
http://www.c2es.org/us-states-regions/policy-maps/renewable-energy-standards

Unfortunately, not only are old coal plants still in operation, some states such as Virginia, Mississippi and Texas, and nations, such as China, are even building more coal-powered electricity plants, because coal is cheap. Some of the new coal plants are billed as “clean coal,” but there are serious doubts that their technology is clean, that it will work, or that true clean coal is even possible.

Economic motivation to clean up our act

What would motivate people to invest in fuel-efficient vehicles and home improvements, or switch to electricity from clean energy sources? If fossil fuel prices were scheduled to increase a small amount every year for the next 10, 15 or 20 years, people would have a price signal encouraging them to invest in conservation. A Federal carbon tax starting at $15/ton of carbon dioxide equivalent emissionswhich would  translate into roughly 15 cents/gallon of gasoline at the pump is low enough to give individuals and businesses time to invest in low carbon systems of transportation, heating and electricity. Increasing the tax another $15/ton every year would encourage everyone to eventually conserve energy or switch to clean energy sources.

How does a carbon tax work?

Carbon taxes are paid by energy companies upon extraction at coal mines, oil/gas wells, or ports if imported. A gradually increasing tax leads to steady price increases for oil and gas, electricity from fossil fuels, and products that require these inputs. Gently increasing prices gives utility companies, industries, vehicle owners and consumers incentives to switch from energy that pollutes to clean energy, and to invest in conservation. 

 

A carbon tax also encourages investors to invest in clean energy companies and new technologies because they see the prospect of many new customers and profits. This new private investment would stimulate growth throughout our economy.

Easing the start of a carbon tax

 

Carbon taxes push people to conserve or switch to clean energy. However, the transition period during the switch could challenge people living on a budget unable to afford new cars, home insulation, or relocation to reduce commuting. Therefore, carbon tax proposals usually include tax rebates to help people cope with rising prices and the costs of conservation.  Areduction in payroll taxes or a monthly carbon tax “dividend” check would help offset the burden of a carbon tax.

Structuring a carbon tax right

Although carbon taxes are the best solution to climate change, analysts worry about getting it right. The most common concern is that carbon taxes are regressive, meaning they take aking a higher percentage of poorer families’ household income. However, carbon taxes are not regressive if offset with payroll tax reductions. Another objection is the tax disadvantages U.S. manufacturers when competing against products made in countries without a carbon tax. Applying borders adjustments to products coming from countries that do not charge carbon taxes would help protect U.S. manufacturers. Government can rebate the revenues from these border fees to U.S. companies exporting goods to countries without carbon taxes, allowing domestic businesses to remain competitive abroad.

Finally, some analysts worry carbon taxes will slow our economy.  However, the opposite is true. Climate change hurts our economy, while carbon taxes can spur investment in new technologies and in businesses creating millions of new jobs.

 


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Judy Weiss

Born in NYC, raised in Cleveland, OH, I lived with my husband and our two children in NJ for 25 years. As empty-nesters, my husband and I relocated to Boston. I worked for many years as a CPA (MBA, 1980 NYU), but eventually went back to school to become a rabbi (ordained 2000), and then earned a Ph.D. in Bible (2009 JTSA). I now teach Adult Education classes in biblical topics in Boston. My husband and I have long been concerned with environmental issues and in the last two years I have been volunteering with Citizens Climate Lobby.

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