Thinking my way through a carbon tax

A few months ago, I posted here about sustainability. That is, the economic and environmental idea that one should attempt to maintain a level of living without relying on growth metrics. Sustainability is a key metric in understanding whether a socio-economic or environmental decision is likely to lead society to ruin, or give it a chance to breathe a little longer. Humans are in a position where we need to begin taking very seriously the signals we are receiving from nature and act accordingly. I think that the recent drive by Energy Independent Vermont towards a statewide carbon tax is a result of them taking the signals seriously. That’s the right thing for them to do, and I agree with their intent. The question I’m left with is whether it’s the right place to start.

What I’m concerned about is whether the carbon tax system being worked out in the state is the right way to go about moving Vermont towards a more sustainable relationship with fuel and energy. Certainly, I believe that something has to be done. According to Limits to Growth, published in 2004, economically viable oil and natural gas reserves will be mostly depleted by the middle of this century. Even if you happen to be a climate change denier (which you really shouldn’t be), reserves of fossil fuels are what they are. Somewhere between 35 and 50 years from now, we could be looking at a situation where there is a real shortage of oil as opposed to one driven by economic politics. When that happens, we are going to need to be ready to transition to some kind of alternative.

To me, there are two categories of energy needs we will need to account for. The first is for buildings. The second is for travel. For buildings, we need to supply the means to heat and cool them, which is fairly straightforward. It also happens to be where most of our energy goes: generally speaking, buildings use more energy than vehicles because of the constant regulation of temperature. For vehicles, we need to find a way to make them run without incurring an insurmountable expense to their operators and without relying on fossil fuels. I want to look at buildings first, because it’s the most straightforward.

There are industrial, commercial, and residential buildings. Each are perhaps constructed differently, but all need to be able to regulate the environment within them to make sure the people who are inside are safe and happy. This requires energy. For these buildings, there need to be efforts to make them energy efficient and eliminate fossil fuels from their heating and cooling methods. There are currently incentives in place for the energy efficiency, but with a two-year waitlist for homes, more needs to be done. As far as the elimination of fossil fuels, the only two reliable alternatives at this point (for Vermont) are electric heating/cooling systems or wood-based heat (either pellets or cord wood). From a carbon perspective, electrical systems powered by renewably-generated electricity would be the best: no carbon released into the air at the building, and fossil fuels are not required for the generation or maintenance of electricity. Pellets and cord wood are probably going to be more common in homes until weatherization can be completed. So for buildings, we have a path of migration away from fossil fuels and towards relatively sustainable alternatives. Vehicles are a little more difficult.

In order to make the shift away from something, there has to be something available to shift towards. In the case of vehicles, the only currently practical option for commuters in rural communities would be electric vehicles: either personal or mass transportation. Electric vehicles are getting better, but their range leaves much to be desired. If the only affordable model gets around 80 miles per charge, then rural communities need to look at methods by which the charge can be maintained. The range of electric vehicles will improve over time, but it may not be until we are already out of fossil fuels. Right now, however, shifting to an electric vehicle might be sustainable from an environmental perspective, but not from a personal economic one. The good ones are expensive, though the relative price — related to gasoline-powered vehicles — is going down. Still, in the near term, the entrance cost of an electric vehicle is larger than the perceived benefits of shifting away from fossil fuels, and my in fact be prohibitive to certain demographics.

Remember, the goal is to not only find away to migrate away from fossil fuels, but to do so in a proactive way that is socio-economically sustainable as well as environmentally sound. Certainly, a statewide tax on the consumption of fossil fuels will create a market-based incentive to shift away from them, but only in the structure segment is there something viable to shift towards. In terms of travel and farming and logging and landscaping, the carbon tax simply increases the cost of doing business and makes things more difficult for homeowners, commuters, and those who rely on fossil fuels for work. Yes, there is a money back component, but there is such a delay between the carbon tax cost and the refund that it doesn’t help in the day-to-day, and if a balance isn’t found it could lead to the collapse of a home, a farm, or even a rural community. Granted, that is likely to happen when fossil fuels are depleted anyhow.

While this is all just a thought exercise, I believe that there is a gap between the carbon tax and the shift away from fossil fuels that needs to be looked at. Market-based economic incentives work because there are alternatives already on the market place. In the case of fossil fuels, the alternatives are not mature enough to be equivalent and are likely to cause near-term sustainability problems as consumers work to incorporate higher cost travel and maintenance figures into their living budgets. Additionally, people who have chosen to live remotely in more rural areas may be beyond the range of the available vehicles.

Possible remedies to this include the following:

  1. Ensure people have access to public transportation options that fit their employment needs and are cost-effective: provide funding for mass transit (rail, bus) on regular schedules to and from major employment centers
  2. Ensure the costs of more carbon-friendly vehicles/transport options are not prohibitive: tax breaks, refunds, deductions for purchasing vehicles; statutory pricing models; subsidized trade-in deals;
  3. Provide additional kick-backs or wage increases (above just income-based) to people whose employment relies on fuel and who have no other option (loggers, truck drivers, rural commuters, etc)
  4. Invest in infrastructure (fiber optic, roads, bridges) and economic incentives to ensure that there are jobs were people live; companies who allow people to work from home get more back from the carbon tax, perhaps; free Internet access for all VT citizens; remote office centers for larger employers (the state, insurance companies, etc)

Whatever we end up doing, we have to find a way to transition from fossil fuels to other energy sources for our buildings and our travel needs. It’s just a necessity at this point and there’s no arguing it. The method we choose to attempt that transition is what will make this successful or not, what will allow us to be ahead of the fossil depletion or fall victim to it. What we choose for a method should be able to meet our needs for the next decade, but also still be viable through the next 30 years.