Comments in support of a carbon fee
Delivered to the Colorado Association of Ski Towns
(To understand these remarks, you must understand that I was speaking at more than 8,000 feet in elevation and had an oxygen bottle at my side and cannulas in my nose).
by Allen Best
It’s wonderful to be in the San Juan Mountains again. I have so many fond memories from this area. I first visited Ouray 50 years ago this summer. It was a family vacation, six of us crammed into a Chevrolet Biscayne. It probably got 10 mpg and it had fins that looked like giant sharks were being hauled down the road. It’s a wonder there was any space for a trunk.
What I most remembered about that trip was the Million Dollar Highway. A million dollars! I couldn’t imagine that much money. Only later did I learn about Otto Mears, who built much of this road from Ouray. Today, his image is in the Colorado Senate Chambers. And some of you know his great-grandson, Davey Picher, who runs the Wolf Creek ski area. He was at your annual dinner in Denver a few years ago.
After I got to Vail, I used to come skiing here during May. One Memorial Day a buddy and I skied to Hope Pass. Another year, we skied up and down California Mountain. It’s 8 miles as the crow flies from here, near what is now Silverton Mountain Ski Area. And the hiking trips: Sneffels, Peak TO, Uncompahgre. I also tried twice unsuccessfully to climate Dallas Peak, one of the more difficult peaks in Colorado.
Obviously, I won’t get up Dallas Peak now. Age is part of the story for all of us, but more important in my particular story is my smoking habit of about 23 years. I knew of the dangers of smoking. Even in the 1960s, before I actually started smoking, the Surgeon General had warned of the risk. Like Mark Twain, I quit a great many times.
When I finally quit for good, in 1997, I thought I was OK. I was still climbing 14ers, still marching up Vail Mountain, Peak 8 and Keystone under the stars. But every year it got harder and harder. Finally the doctors did the tests that showed that I was not a hypochondriac, but hypoxic. The problem was not in my head, but rather, in my lungs.
What you do TODAY can have consequences that don’t show up until 20, 30 or even 50 years later.
You know this. Mayors and managers and public works directors are always under intense pressure to deal with today’s problems while thinking decades down the road. If you’ve done that well, you may not even get any recognition whatsoever. But it is your duty.
Human-caused climate change is problematic because, like smoking, the consequences of action or in-action may not become evident for decades. The science is robust and compelling. Climates are always changing. But our climate may lurch crazily in decades ahead because of greenhouse gases that we have already put in the atmosphere and continue to put into the atmosphere. Carbon dioxide can linger in the atmosphere for hundreds of years.
Accelerating our emissions
We’ve accelerated our emissions. In the first two centuries of the Industrial Revolution, until about the time I first visited the San Juans, the atmospheric concentration of carbon dioxide rose by about 35 parts per million. Then, in my lifetime and that of most of you, we’ve added another 85 ppm.
We’re now at 400 ppm. Many climate scientists say that 450 ppm enters risky and unstable territory. At our current rate of emissions, we’re likely to hit that point in 15 to 25 years.
I read the Wall Street Journal’s editorial section, and if there’s any dissent to climate change theory, you’re certain to see it flagged there. However, if climate change theory is correct, we’ve got big troubles. And so far, the bulk of evidence suggests that the mainstream of climate change theory has been, if anything, too conservative. Changes are happening more rapidly than were predicted. The Arctic is melting before our eyes.
Changes in our energy foundation are occurring. Our building codes have improved dramatically, the lowest bar for energy efficiency now 50 percent higher than 15 years ago, and some of you have stepped forward even more ambitiously. Mountain Village, Telluride, Breckenridge and others have invested in solar farms. In Jackson Hole, Ketchum and many of your towns, things are getting done.
It’s a lot—but it’s not enough. It can never be enough. You can show your visitors what you’ve done, but all these goods will never be enough because there’s one fundamental global problem. Right now, it’s free to pollute the atmosphere with carbon dioxide. There is no cost or charge to the polluter. You can’t see it, you can’t smell it. And its It’s free, absolutely free.
If you take old stoves and tires to a landfill, you are assessed a dumping fee. But with greenhouse gases, it’s like the folks that take their old appliances out to some BLM road and shove it off the embankment. The sky is one giant dumping ground. We need a mechanism that recognizes the risk posed to civilization of this atmospheric dumping.
With a fee proportionate to the risk, we create an incentive for the marketplace to begin creating cleaner ways to generate our electricity, to heat our buildings and to power our transportation.
Right now, carbon fuels enjoy an advantage because it’s free to use the atmosphere as a dumping ground for CO2. We need a carbon fee that recognizes the cost.
True cost of carbon emissions
A collection of federal agencies called “The Interagency Working Group” has tried to assign a cost to carbon, to be used in federal decisions about coal mines. It’s routine to calculate the jobs generated, but not the adverse consequences. This methodology finds that the Social Cost of Carbon would add roughly 4.2 cents per kilowatt-hour to coal-fired generation. About two-thirds of Colorado’s electricity was produced by coal. In July, the average price of residential electricity in Colorado was 13.9 cents per kilowatt-hour. Using this methodology, the real price of that electricity should be about 17 cents/kwh.
I brought along a wonderful book called “The Case for a Carbon Tax” was written by Shi-Ling Hsu. Like a lot of Chinese-Americans, he’s an over-achiever. He’s a lawyer, an electrical engineer and an economist. He makes the point that the effects of carbon emissions are hidden. We don’t know the carbon intensity of the products we consume. But a carbon tax has a simple genius in that it transmits this information about carbon intensity via a price signal at every stage of the process.
A carbon tax is essentially a consumption tax or a user fee and would be collected at the point of production. It would be, I must emphasize, national and, we would hope, international.
Change must start in places like Mountain Village and Mt. Crested Butte, Durango, Avon and Steamboat Springs. It begins here at the grassroots.
That’s the way that some of our most important progress has been achieved. It doesn’t start in Washington. It starts here, in town halls and county courthouses, libraries and oin the Wright Opera House in Ouray, Colorado.
In the 1950s, segregation was the law of the land. In Montgomery, Alabama, black women were required to give up their bus seats to white men. Today we know that wasn’t right, and so did Rosa Parks way back in 1955. She went to jail for refusing to go with the flow of her times.
When change came, it did not start in Washington D.C. It came at the grassroots. That’s been true of all of our landmark federal legislation from the Civil Rights Act to the Clean Water Act. It starts at the grassroots until finally—finally—Congress reacts.
Why ski towns should care
Once again, why CAST? Because you have direct interest in the outcome of this story. The sky won’t fall tomorrow. Mountain towns will keep getting snow, and maybe more of it. It will sometimes get cold, maybe even bitterly so, even if winters become somewhat shorter and more frequently rainy. Mountain summers will still be wonderful. You and your successors will figure out better ways to monetize summer. Many of you already have.
But having snow is not enough. You also need customers, and climate change is almost sure to shake up the global economic order. Do you remember 2009? A good snow or bad snow year? I honestly can’t remember.
I do remember the economic turmoil in your towns when real estate offices got quiet and airplane seats sat empty.
The economies of Crested Butte, Telluride, and Vail are only as good as those of Houston and Miami and New York. You know this already. Now consider the effect of rising sea level in Miami or Manhattan, the effect of more intense hurricanes in Houston. That has to leave less money for week-long vacations at Christmas. It’s not enough to have snow. Your economies are only as good as the regional, national and global economies. Wealthy people will not be immune from the effects.
CAST has a second reason to support a revenue-neutral carbon tax: it’s the right thing to do. We can see in retrospect how utterly wrong segregation was in the 1950s just as I can see how mistaken it was for me to keep on smoking. Climate change is murkier, but potentially much, MUCH bigger.
Economists like a carbon tax because they believe it is the most efficient, most effective way to provide incentives for change. Instead of subsidies and instead of saying thou-shalt-not, it tells the marketplace: Here is the cost, now YOU figure out the solutions. It creates the incentive for change.
Will it produce more wind and solar? Quite possibly, because of a more levelized playing field. But maybe subsidies could end.
Again referring to Hsu, he makes the argument that government should not be in the business of picking winners in energy. If should be in the business of recognizing risk and costs and assigning a fee based on that recognition,
Some key former federal officials have endorsed a carbon tax. In June, former Treasury Secretary Henry Paulson endorsed a carbon tax. So has George Shultz, the secretary of state under Reagan. Now in his 90s, he has been the single biggest attraction during hte last year at the Vail Global Energy Forum.
Does a carbon tax have a chance in Congress? In March I heard former U.S. Senator Tim Wirth speak. As those of your from Crested Butte know, he’s happy to share opinions. In Boulder he said we might just see a carbon tax sooner than you might think. This summer in Aspen, at the Aspen Renewable Energy Day conference, I cornered him and asked him the cause for his optimism. Politics is not linear, he told me. It zigs and zags—and you have to be ready for the opportunities.
Earlier this year, I became aware of a relatively new group called the Citizens’ Climate Lobby. The national director of this organization was in Aspen in August, and I heard him speak twice. Their strategy strikes me as eminently sensible. First, they are strictly bipartisan. They do not support one candidate over another. Instead, they reach out to existing members of Congress and their aides.
In your case, you would reach out to Scott Tipton and, depending upon the election, either Cory Gardner or Mark Udall. If Congress is to adopt a carbon tax, it must have both Republicans and Democrats.
Why would these members of Congress vote for a carbon tax? One, a lot of these guys are smart enough to know that climate change poses a substantial risk to the United States. For example, the Pentagon for a long time has identified it as a major security risk. Defense Secretary Chuck Hagel said the same thing just a few weeks ago.
But these congressmen need political cover. On the campaign trails, whether you’re a Democrat or a Republican, it’s all about jobs. A study commissioned by the Citizens’ Climate Lobby finds that a carbon tax would be a net generator of jobs in the United States except in a few states of the South. That’s a second reason to like this tax. It creates jobs.
But here’s another way this can be sold. If the money collected from a carbon tax is used to reduce the income tax, then most everybody gains. They might lose at the gas pump. But there’s also a gain in reduced income rates. And with this, you effectively nullify the argument that this is just another grow-government initiative.
Let the market figure out solutions
It’s also important to note that the carbon tax would not necessarily mean the end of carbon. Power plants at Craig and Pueblo and Rock Springs might continue to burn coal. They’d just have to pay the price for emitting carbon dioxide into the atmosphere. And with that incentive, perhaps the utilities here in the Rocky Mountains, those in the East and those in China and India could eventually figure out a cost-effective method of carbon capture and sequestration. Or maybe not.
Am I being wishy-washy? No, that’s the point of a carbon tax. It does not attempt to figure out every little thing. It doesn’t say that coal is toast and we’ll all wear solar beanies to work. It merely provides the marketplace with a clear price signals.
The carbon tax spurs creativity, adds jobs, and it does so without necessarily creating a larger government. That sounds like efficient public policy to me.
We have to end this free dumping into the atmosphere like refrigerators heaved down hillsides from dusty BLM road. We need to move more briskly. We need to be ready when the political opportunity avails itself.
Local efforts like what many of you are doing are admirable, but they’re not enough. We need national action and then, once we’ve taken national action, use that as leverage toward international agreement. It all starts in places like Ouray.
I urge CAST to spread its wings, to engage in this vital issue. A carbon fee, starting low and growing in increments, such as has been done in British Columbia, is a modest proposal. One, it will provide a broad response to the climate threat. Second it will create jobs. Third, it can be structured to result in reduced income or other federal taxes. Fourth, it will give the marketplace clear price signals and help spur creativity.
Your role is to start engaging with congressional representatives, to begin this dialogue. Let them know that you have an economic interest in buffering dramatic climate change impacts. Let them know you think it’s the right thing to do. Let them know that doing nothing is radical and irresponsible.
We should not tarry. Twenty-five years ago this September I stood atop of Mt. Sneffels one wonderful day. It seems like yesterday. I probably told myself I would quit smoking at New Year’s or maybe the end of the next ski season. It took me nine more years.
Today, we’re at 400 ppm of atmospheric concentrations of CO2 and rushing toward 450 ppm. We cannot wait for nine years to take action. We can’t wait for the link tiny bit of uncertainty about climate change to be resolved. We need to take action now.