Is a carbon tax really the answer

The old notion that we can negotiate our way out of the climate crisis without drawing a line in the sand, persists like the undead through eternity.  It is routinely resurrected to make a goodwill appearance on behalf of one pol or another, in the form of vehicles such as carbon credits and carbon taxes.

This time, the well-meaning sponsor of the idea is our own Bernie Sanders, who, together with California’s Barbara Boxer, has once again proposed carbon taxes as a way to offset the trade advantage enjoyed by countries whose cheap products come from industries operated in environmentally dirty ways.  The idea is to leave it to the market to bring about an international diminution of fossil fuel use.

On the surface, it is a nice idea; but in reality, it does nothing to directly curb polluting industries and establish timetables for ending our dependence on fossil fuels.  And…just wait until the speculators get their hooks into the fine print!

There is a collateral affect from such a taxation system, which has the potential to unleash even more harmful material on the environment.

Creation of a carbon tax scheme such as the senators propose would significantly bolster the prospects of nuclear energy investors to keep that particular zombie alive; an unfortunate development,  just as the world begins to get wise to the twin economic and scientific illusions that have been perpetuated to paint nuclear an “affordable,” “clean” alternative energy source.

Taxing carbon emissions without establishing any timetable for eliminating them altogether could have the effect of legitimizing them into a tolerable vice, like smoking or alcohol consumption; one that will ultimately choke the entire planet rather than just the indulging individual.

Furthermore, establishing taxes has a way of making the state reluctant to eliminate the source of revenue. The state would become sort of a junior partner in pollution-enabling rather than reduction.

I’m all for making the fossil fuel industry pony up, but not if it grants them carte blanche to continue polluting indefinitely, so long as they contribute to the tax base; and not when it reanimates the creaking and corrupt nuclear industry, just as we might see it finally succumb to its own folly.

One can’t help but wonder if news of the carbon tax effort might have encouraged Entergy.  Just days ago, it sounded like they might be forced to close Yankee due to non-confidence from the investment community.  Now suddenly, they’re planning on refueling next month.

I commend both Senators Sanders and Boxer for their good intentions.  It’s tough enough to get anything going on climate change in the United States of Anti-Science.  But is this really the best we can do on climate legislation?  

Anything short of a timeline to eliminate carbon emissions, reinforced by a program of bold investment in clean technology,  will be limited in its impact and could unexpectedly serve as an enabling rationalization.

I would love to hear what other GMD folks are thinking on this.

About Sue Prent

Artist/Writer/Activist living in St. Albans, Vermont with my husband since 1983. I was born in Chicago; moved to Montreal in 1969; lived there and in Berlin, W. Germany until we finally settled in St. Albans.

7 thoughts on “Is a carbon tax really the answer

  1. Sue.

    NEC members, among others have have stated that the deferred maintenance practiced by Entergy Louisiana will undoubtedly catch up with them & they will be forced to shutter their dilapidated dirty bomb & nuclear waste dump on the banks of the Conn River at some point as it will not be economically feasable to continue. The heavily cracked steam dryer (unsure of the cost but can’t be cheap) plus condenser, (previous estimates at $100 million but expected to be much higher due to copper prices going through the roof)must be replaced at some point.

    Condenser Leaks Plague Vermont Yankee Plant

    Wednesday, 04/11/12 5:31pm

    And so, their continuing game of chance to appear viable to investors, as with the leaking is ongoing.

    Two stories with competing conclusions are presently & oddly headlined together in the annals of nuclear news

    Vermont Yankee plansto refuel in spring  

    Feb 23, 2012, By Bob Audette Brattleboro Reformer


    UBS downgrades Entergy Corporation stock, urges investors to sell. -emphasis added  

    February 20, 2013, by Andrew Stein, and Vt Journalism Trust  

    Swiss financial services firm UBS Securities downgraded Entergy Corporation’s stock from “neutral” to “sell”

    as well as troubles at other plants around the country including your story:

    More nuclear follies (+)

    by: Sue Prent

    Tue Feb 19, 2013 at 02:13:07 AM EST


    More troubles at nationwide nuclear plants:


  2. Sue:

    I think you’ve oversimplified a complicated subject.  Let me try to disentangle some of the pieces.

    First, you conflate carbon taxes with cap and trade.  They’re two different approaches.  For example, your comment — “just wait until the speculators get their hooks into the fine print!” – applies to carbon credits (or whatever is to be traded in the cap and trade market, but it has no applicability to a carbon tax, which is a straightforward levy, no different from, e,g,, gasoline taxes.

    Nor is it really true that “it does nothing to directly curb polluting industries.”  It does something pretty important: it raises their costs, and therefore the price of their product.  Consider what happened a few years ago when all of a sudden the price of gasoline exceeded $4.  That, of course, was due to a market spike, but the effect would have been the same had it been caused by a $1 per gallon tax.

    Unless you believe people’s behavior is completely independent of prices, the fact of the matter is that a properly imposed carbon tax would internalize the costs of what is now a market externality: namely the costs of polluting the atmosphere with greenhouse gases.  It is reasonable to expect that, as a result of such a tax, people will use fossil fuels with more caution and greater efficiency, and that they will find other ways of doing what they used to do with oil.

    You are correct to point out that, like cigarette and other “sin” taxes, there is a central paradox to be addressed.  Raising price discourages use, which eventually lowers tax revenues.  Policy makers then need to decide whether to raise the tax further, to collect the same amount of revenue from a lower base, or look for revenues elsewhere to make up the shortfall.  We’re having this very debate right now in Vermont about the gasoline tax, because people are driving more efficient vehicles.

    Your comments about aiming towards the elimination of fossil fuel use are well intentioned, but miss the point: “Taxing carbon emissions without establishing any timetable for eliminating them altogether could have the effect of legitimizing them into a tolerable vice, like smoking or alcohol consumption; one that will ultimately choke the entire planet rather than just the indulging individual.” What about NOT taxing them?  They’re ALREADY legitimate and there is no incentive whatever to diminish their use.  How does a tax make this worse?

    Your observation about nukes is correct: raising the price of carbon – especially if it’s done in such a way as to have little or no effect on the front end of the nuclear fuel cycle (e.g. by imposing the tax only on utility-produced carbon) would do the nuclear industry a favor by raising the cost of its competitors.  Exelon has been begging for a carbon tax for several years for just this reason.  But you fail to note, however, that it would do the SAME favor to the burgeoning renewables industries.  

    It’s worth noting that, absent the tax, the cost of nukes, especially new ones, is rising rapidly whereas the costs of renewables are steadily falling.  It’s not an accident that the US and the world are both adding renewable energy faster than nuclear already.  

    In sum, while I agree that there are some unintended downsides to carbon taxes, I believe they would be a major – and highly desirable – step forward and have advocated for them for several years now.

    As to VY, I have been trying to figure out Entergy’s economic motivation (or, for that matter, any OTHER motivation) for keeping the plant running for quite some time.  Indeed, I keep wondering why there hasn’t been a shareholder suit to shut the plant down.  To review quickly, here’s what I think I know:

    — by the admission of their 2 last CEOs, the plant has been breaking even or losing money since sometime around 2008.  In the most recent years, it’s actually been losing money, until a few months ago when natural gas pipeline shortages combined with cold weather made natural gas prices and therefore electricity prices spike.  That brief respite is not likely to last long, in my opinion.

    — Entergy spent $4.5 million in legal fees to win the Murtha case.  That amount does NOT include the expenses of running back to Murtha for new injunctions, or the cost of the appeal.  In addition and in the meanwhile, they’ve also contested and lost a tax case in federal court and are now appealing it.  If they lose that appeal, they will almost certainly go through the Vermont appellate process on the merits of their case.  

    Meanwhile, they’re defending a suit by the NEC which asks the SCOV to shut the plant down since it is operating illegally according to the PSB’s interpretation of Vermont law on a number of different points. They’ve also brought their own SCOV suit alleging that the PSB erred by closing Docket 7440 without granting them a CPG (despite the fact that the record there was tainted by their own false testimony).  And, in yet further addition, they’re spending massive amounts on lawyers and witnesses (one of whom was paid $700 per hour, for example) in the ongoing Docket 7862.  I’m intentionally leaving out other more minor legal expenses, like the diesel generator docket, etc.

    — They now face growing skepticism in the investment community, thanks to the UBS analyst you cite.

    — None of the parties in Docket 7440 supported granting them a CPG.  That INCLUDES Jim Douglas’s DPS and GMP.  Shumlin’s DPS is far more aggressively opposed.  That doesn’t mean that the PSB  will ultimately deny their permit, but it certainly isn’t grounds for optimism if you’re a VY fan.

    — They face numerous massive expenses due to aging (condenser, transformer @ roughly $100 million each) and others due to potential post-Fukushima regulation (e.g. filtered venting).

    Given this, for them, bleak picture, the question I keep asking myself is why continue?  The answer, I believe, is that Entergy has consistently over-estimated the future market prices for electricity in New England, and therefore has consistently believed that its revenues were going to be higher than so far, at least, they have been.  That’s at the core of their failure to negotiate a PPA with Vermont’s utilities; it’s why they were about $300-600 million (comparing ONLY their own new estimate in Docket 7862 to their old estimate in Docket 7440) off in estimating the value of the Revenue Sharing Agreement, etc.  And just for the record, it’s perfectly obvious that their new estimate is STILL too high, and that the RSA has value only as an insurance policy.

    So my answer, for what it’s worth, is that they continue to operate because they are arrogant and stubborn, and in particular, because they stubbornly persist in overestimating potential revenues in the face of known rising costs.  Would it really surprise anyone to consider the notion that they’re no better at the business of running a nuke than they are at the maintenance of said nuke?

    Finally, as to the impact of carbon tax on the continuation of VY, it’s certainly true that IF a carbon tax were to be imposed and IF it were  to be significant, it would be helpful to existing nukes.  But those are pretty big “ifs” (especially while Rs control the House of Representatives) to hang your hat on in the face of everything else I’ve just enumerated.

  3. The refueling may be nothing more than a bluff to enlist investors for a little bit longer until they can slip the reigns of responsibility entirely.  There is a whole lot more money at stake than the cost of one refueling.

  4. from “neutral” to “sell” on the heels of the previous story in which UBS spoke of their dubious investment status is a pretty clear warning imo.  

  5. Although I am not yet convinced that this is a good idea, there certainly is a lot to think about.

    I’ll admit I let my imagination run a little wild when I mentioned speculators; but it seems as though the financial sector always figures out how to game the system in order to profit from government initiatives which translate to dollars and cents.

  6. your ability to surgically dissect the many layers of these vastly complicated issues, while unravelling & untangling the seemingly endless details & minutae. My head hurts just thinking about it.


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