Carbon tax, clean energy

Moderated by Tom Sabulis

Georgia Power’s plan to increase the amount of solar-generated electricity it distributes is commendable, writes a local environmental group. But the utility can do more, and should be willing to accept a carbon tax that could return revenue to the public and improve its clean-energy portfolio. An industry spokesman counters that the tax is unfair to lower-income customers and would cost jobs.

Carbon tax can aid clean energy

By Steve Valk

My hat is off to Georgia Power following its recent announcement to significantly boost the amount of solar-generated electricity it distributes to customers, 10 times the amount it currently buys and sells.

Given what we’ve seen this year with corn-killing drought and record-setting temperatures, any efforts to shift toward clean energy and reduce greenhouse gas emissions is extremely welcome. Georgia could benefit from reduced air pollution, since there are about 10,000 hospitalizations for asthma yearly at a cost of more than $130 million. Less soot and other irritants from coal-fired power plants would help asthma sufferers — especially our kids — breathe easier and cut down on trips to the emergency room.

Failure to curtail carbon dioxide and other greenhouse gases could also cost Georgia dearly in the future from the effects of climate change:

A sea-level rise will inundate Georgia’s coastal communities as storm surges become increasingly destructive, causing billions of dollars in property damage. (Good-bye, Jekyll Island vacations.)

Hotter temperatures and prolonged droughts will damage the agricultural industry.

Remember the $500 million of flood damage in metro Atlanta from September 2009, when 10 inches of rain fell in less than two days? Expect more of that.

So, what will it take to avoid such a grim scenario? Simply put, we have to stop burning things that make the earth warmer. That’s why getting more electricity from solar energy is important. But as ambitious and laudable as Georgia Power’s solar plan is, it will still account for only 2 percent of the utility’s electrical output.

We can do much better. An Arizona State University study ranked Georgia third in potential to generate solar energy.

What’s holding us back? Georgia Power is justifiably concerned that producing more than 2 percent of its electricity from solar energy will mean having to boost rates for consumers. I share that concern. Georgia families shouldn’t bear the economic burden of our conversion to clean energy. Compared to coal — from which Georgia Power derives most of its generating capacity — solar power is more expensive. Rates will have to increase to make the switch.

But the only reason coal is cheaper than solar is because the hidden costs of its use — health, effects of climate change — are not included in its price. Conservative economist Art Laffer, adviser to President Reagan, makes the case that the federal government should tax the things we want less of — such as carbon pollution — and cut taxes on the things we want more of — income.

A consumer-friendly carbon tax, with revenue returned to the public, would allow Georgia Power to significantly increase its clean-energy portfolio without sticking customers with the bill. Consumers would have the additional income, either through tax cuts or direct payments, to cover the increased costs of clean energy.

With Georgia’s potential to produce energy from the sun, a price signal on carbon would spur job creation in the solar sector and speed the state’s economic recovery.

Steve Valk is communications director for the Citizens Climate Lobby.

 Levy would cost jobs and hurt the climate

By Scott Segal

The campaign season has featured a complex debate between those who oppose new taxes that dampen growth and those who support new sources of revenue in order to fund critical priorities.

Those of us in the energy sector knew it was only a matter of time before taxing energy was again put on the table. If you tax the carbon content of fuel, so goes the reasoning, you will discourage emissions and collect revenues — advancing both environmental and fiscal goals. Unfortunately, as H.L. Mencken famously quipped, “For every complex problem there is an answer that is clear, simple and wrong.” In the current state of the economy, the carbon tax is today’s wrong answer.

First, the economy is still reeling with only the most minimal signs of improvement in job creation. Our ability to produce affordable and reliable electricity and fuels is a source of comparative advantage for the 20 million workers in our manufacturing sectors. Nine million Americans work in the oil and natural gas sector, with another half-million in coal mining. In short, whatever the long-range considerations may be, now is precisely the wrong time to implement a proposal designed to increase energy prices, reduce international competitiveness, and undermine job-creating powerhouses in the energy business.

Second, the frequent claims of environmental benefits are dubious. It is not likely that other nations will follow our lead in setting up a carbon tax, meaning the price of doing business here will increase, and powerful incentives therefore will be created to move operations overseas — a phenomenon some economists call “leakage.” Then, additional carbon will be emitted in shipping goods back to the United States to be sold. A unilateral carbon tax might make it tougher to reduce greenhouse gas emissions.

Third, carbon taxes aren’t fair; in fact, they are regressive. Those living at or near the poverty level, or on fixed incomes, tend to pay the largest share of their monthly incomes for energy. Therefore, an energy tax — which a carbon tax most certainly is — makes those in society least able to afford it pay the most. While some argue that a portion of the carbon tax could be rebated to offset this impact, don’t bet on it. Conservatives who allegedly support carbon taxes insist on revenue neutrality, meaning cutting corporate rates to offset the revenue raised by the carbon tax. That means no money for rebates. Or for deficit reduction, for that matter.

Last, no carbon tax should even be contemplated before serious regulatory reform is undertaken. Officials at the Environmental Protection Agency itself have admitted that old-fashioned command-and-control regulation is not the preferred way to address carbon. And yet, the EPA has pressed forward with a suite of energy-sector regulations under multiple statutes designed to do just that despite the great cost, likely ineffectiveness, and lack of congressional mandate. Supporters of carbon taxes would have to first clear away the underbrush of the these regulations before layering a new tax on top of it.

Scott Segal is director of the Electric Reliability Coordinating Council in Washington, D.C.

15 comments Add your comment

Andre Jackson, Editorial Editor

October 22nd, 2012
11:34 am

Dear Mike C:
Good question, but we’re copying nothing of the sort. We’ve been using the phrase “Atlanta Forward” since 2009. President Obama’s team began using the word “Forward” last spring.
And as far as my sources of inspiration for the name, one of them was the “Forward Atlanta” campaign begun by the Metro Atlanta Chamber decades ago. They recently began using the name again to describe a business development initiative.
And, as a longtime business journalist, I can assure you I’ve read far more of Adam Smith and his ilk than of Karl Marx.

Brandon Sutton

October 20th, 2012
2:40 pm

It’s interesting that the word tax sends many with conservative views into orbit seemingly before the actual proposal is fully considered. Each of us pays hidden costs of the fossil fuel economy, whether we drive an SUV or a Prius, or even if we ride a bike. Whether we live in a huge energy-intensive house or a Platinum LEED development with a focus on resource efficiency. We pay these costs in many ways, including insurance premiums and other taxes that go to mitigate the harm that is done by the pollution and public health impacts of burning fossil fuels.

The proposed consumer-friendly carbon tax addresses these hidden costs, and acknowledges that rates will certainly go up in the future (as the market corrects the long-held distortion that has kept fossil fuel costs falsely ‘cheap’). The principle is simple – we discourage the things we don’t want (fuel sources that pollute the air, water, and land we depend on and that contribute to climate instability) and level the playing field so the things we do want (zero-emission renewable energy that’s clean and sustainable and doesn’t pollute the environment that we live in) have a chance to succeed.

Cost of renewables have already come down and in some cases are already competing with fossil fuels. If we correct the long-standing market failure by accounting for the true cost of carbon by taxing carbon-based fuels and give the money right back to US citizens to cover any increase in costs, the pace of innovation, job creation and the move toward a healthier environment for everyone will increase dramatically.

Why don’t we let the market do what it does best by correcting the long-standing, yet perverse incentives for fossil fuel-based energy production and see just how profitable the system can be for everyone involved, including ordinary citizens like you and me?

Jay Hakes

October 20th, 2012
10:08 am

The debate over energy taxes is one we need to have. However, the critics of the idea have not paid close attention to what is actually being proposed. Mr. Valk and many others are suggesting that we tax energy (something we waste a lot of) and REDUCE taxes on income (lowering disincentives for employment). Studies suggest the best approach is to rebate the money split between the employers’ and employees’ contributions to Social Security. It’s the tax swap that makes this approach attractive. It won’t hurt the general economy or raise the overall tax burden and addresses a major national chalenge.

Burroughston Broch

October 20th, 2012
3:38 am

Georgia Power has not had a Road to Emmaus experience about solar electricity, despite what Mr. Valk and his friends want you to believe. It’s profit and loss for Georgia Power, and playing a role out of an Uncle Remus story.
Georgia Power will make more profit by selling solar energy. It will cost them more per kWH than other purchased energy; they will buy it with the PSC’s blessing, role it into the rate base, add their 10% or 11% profit on top, and send the bill to all of their ratepayers (spell as you and me). They don’t care how much more it costs because, the more it costs, the more profit they make.
This entire charade of solar electricity has been a cooperative effort between Georgia Power and the PSC. It’s straight out of Uncle Remus. Brer Fox and Brer Bear (the PSC) have captured Brer Rabbit and want to skin and eat him, but Brer Rabbit outsmarts them. He says go ahead and skin me and eat me but, whatever you do, don’t throw me into that brier patch (don’t make me buy solar electricity). Of course, he wants them to throw him into the brier patch. And they do. Just like the PSC is now providing political cover for increased Georgia Power profit by ordering them to purchase more solar electricity.

Mike C.

October 20th, 2012
2:06 am

How is it that the Atlanta Journal is copying the campaign slogan of the Obama re-election slogan??

“Forward”? This slogan was originally used by the Socialist European Marxism campaigns.

Even disregarding that, why does the Atlanta Journal feel the need to be a mouth piece for the Obama campaign??