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.

Response to fuel-efficient super trucks

(Image Source: February 2014 Truck report)

Energy conservation is a really, really good and absolutely necessary idea. And it’s an idea that Americans need to spend more time getting used to. That being said, it’s not an idea that can be brought about by focusing so heavily on its cost savings. The fact is that conserving energy is a change in lifestyle that will in the short-term raise costs in some cases, and require adjustments to ways of life.

The retrieval, transport, delivery, and consumption of energy is a very large and complex process involving thousands of interactions and touch points. Any change we make in one of these touch points will have an impact on the machinations in another. Adding to the complexity, it is a system that is not closed. That is, it is beholden to influences outside of itself. The diagram above oversimplifies this situation. In reality, the calculation of the depicted numbers involves multiple moving pieces: truck owners, shipping companies, fuel prices, fuel company profits, truck manufacturing profits, engine manufacturing, metals industry, just to name a few of the more obvious ones. Unfortunately, the associate report does not go into detail about how the numbers are derived.

Given the complexity, it is entirely possible that if all long-haul truckers drove these trucks, then profit margins for fuel companies would go down due to the reduction in fuel purchasing frequency. Dropping profit margins are anathema to publicly-traded companies, so fuel prices would likely rise to offset the change in the purchase frequency. Also, any savings would likely take years to materialize given the nature of ownership of these trucks and the initial costs to own them. It is entirely likely that private contractors would not be able to afford the short-term costs and be driven out of business (not dissimilar to smaller fishing concerns in Gloucester, MA have been due to increased restrictions and fuel costs), thus paving the way for larger conglomerate companies who can afford the short-term cost increase.

So yes, we will see a reduction in fuel use and an increase in distance between fill-ups, but at a cost that is perhaps not sustainable in our current system of business ownership and relationships.

A better long-term solution is to drastically alter our reliance on fuel of this kind. To take a look at those things outside this system and see how changes there could have an affect on what we do. Simply using less fuel in a more efficient way will not — in a long-term view — get us where we need to be. At least until our current concepts of business and profit get in the way of true, unadulterated, energy advances.

How about long-haul trucks that are powered by the same kind of solar technology that goes into the pan-Australian race? The fastest car (from the Netherlands) had an average speed of just over 55 MPH. With further research, this can only get better. With better advances in wind power technology, perhaps a solution could be offered that provides on-the-go reserve batter charging for when the sun is down or clouds are above. Perhaps more research into long-distance maglev trains for shipping.

My point is that no matter what solution we propose, there are countless impacts on the existing system that have to be accounted for. A simple poster does not provide an accurate view of what will happen if we enact such things.

This comparison chart from Consumer Reports shows the vast range of differences in cost of ownership across hybrid, standard-, and deisel-fueled models. It’s too long to show here, so I’ll wait. I’m not going anywhere.

As you — hopefully — have seen, the chart shows that the impact of fuel-type on cost is not always positive. There are definitely benefits that owners can realize (financial, environmental, etc.), but it’s disingenuous to say that there will always be a cost benefit. That being the case, I submit that it is just as disingenuous to say the same for owning a hybrid truck.

The argument for hybrid engines — regardless of vehicle type — needs to go beyond cost. There are too many variables to make clear predictions and the historical results are too varied to make a broad statement that it is cost-efficient to own and drive hybrid. Much better arguments are that we are looking to have cleaner air, increase distance between refueling, or use fewer fossil fuels in cars. And if we begin to use these arguments for reasons to own hybrids, it opens up the discussion for other alternative fuels and vehicles such as solar, or mass transit solutions.