Calculating the cost of carbon pollution

Can economists calculate the cost of carbon pollution?


The prices of gasoline and natural gas and coal set  do not include the costs of damages caused by emissions from burning those fossil fuels, such as polluted shorelines, flooded towns, ruined crops, burned homes, damages to health and livelihood. These damages cost the world more than $1.2 trillion a year now, reducing world income and production by 1.6% now, and by 3.2% by 2030, according to a report by the DARA group.

President Obama appointed  in 2010 a government  Working Group on the Social Cost of Carbon to estimate the social benefits and costs of marginal reductions in carbon dioxide (CO2) emissions, including damages to property, agriculture, health, and ecosystem services. This study is an important step toward shifting costs of climate damages onto the industry responsible for them.

More governments are now taking action to shift those costs onto the fossil fuel industry.  China announced  a plan to set up a carbon trading system with the help of the European Union. Australia, New Zealand and South Korea are in the process of putting prices on carbon.

The Working Group study was done so that agencies can do cost-benefit analyses of regulatory actions that change CO2 emissions. The Group calculated the mid range value of carbon reductions at $21 per Ton, with a range of alternatives from $5 to $35. The figure of $21 is now being used to calculate greenhouse gas reduction benefits in regulatory impact analyses (RIAs).

A study by economists at Natural Resource Defense Council claims that the carbon value should be 2.6 to 12 times larger. They fault the Group for not giving added weight to higher damages suffered in low income communities, and for too high an expectation of economic growth.

The Group emphasized the many uncertainties involved in the calculation, their inability to calculate some factors like ocean acidification,  and the need for regular updating with new research.


Electric vehicle plug in

  Nissan Leaf

50 electric vehicles parked around the fountain at Seattle center this weekend. Some owners displayed cost charts showing their savings.  Avoiding the purchase of  gasoline, with the federal tax credit and state sales tax exemption, added up to more than the additional cost of buying electric after a few years.

Comparing  expenses  of driving an electric Leaf to driving a gas burning 24 mpg car on a daily 32 mile commute, an owner could save $100/month on weekdays, and more on weekends.

18 fast charge stations allowing the Leaf and I MiEV to charge in 30 minutes or less are now available on the I-5 corridor in Washington and Oregon and more are on the way. Soon the West Coast Electric Highway will have fast charging stations every 25 to 60 miles from Canada to the California border by the end of 2012. . The number of charging stations increased by over 500% over the last year.

Electric motors are more efficient, they do not need cooling systems, or as much maintenance. A Smithsonian article reports that  in Kansas City, Missouri, the Smith Company is turning out 390 electric delivery vans this year and planning more factories around the country,. betting on a hot market for replacing the 3.3 million vans bringing socks and cheese to our neighborhood stores.

Pricing carbon for market freedom

Blog comments about California’s cap and trade law:  “If you live in California, leave now if you can. Don’t allow yourself to be purposely robbed by marxist politicians…”


Cap and trade or carbon tax and rebate are basic market mechanisms to restore freedom in the energy industry.

Our freedom to choose cheaper electricity, on an open market, and profit from investments in American clean energy industry is being blocked. The fossil fuel industry now has control of 85% of our energy and 95% of our transportation. Their billions in profits are paying for political support for  government favoritism and media   campaign of misinformation in a fight against development of green technology.

Isn’t it time for an end to that energy monopoly?  If oil, coal and natural gas companies have to pay the government for what it spends cleaning up their spills, air pollution, and for damages to our economy and health damages, then clean energy would be more than competitive, it would be much cheaper.

George Schultz explains how clean energy is already getting to be a real bargain!

Sunbelt clean energy industry

Industries left the sunbelt for cheaper hires abroad, so workers should get more skills training, according to a WSJ writer.


Support for clean energy manufacturing would help the sunbelt.

There are already some bright spots.  In Georgia, for example, there are 20 wind energy companies and solar industries are hiring, providing thousands of jobs and growing.

Bloomberg analysts point to signs that clean energy is on its way to provide some serious competition to fossil fuel and some freedom for consumers to choose cheaper alternatives.

There is new investment in wind projects in Brazil, Chile, Mexico and Spain with no  dependence on subsidies.

Small-scale residential PVs are increasingly popular because they can meet partial electric needs at lower prices.

In areas where wind power is proliferating, like Texas and Colorado, it is exerting downward pressure on the prices of conventional electricity

A few major industrials are now producing clean technology.

Every car company is instituting some electric models.

Demand for clean energy technology is  which was mainly in Europe, Brazil and North America, is now growing in China, Korea, Chile, Mexico, Nicaragua, Panama, India, Japan and Africa.

For American jobs, exports and profits, we should incentivize the energy companies to switch their investment from developing more and more expensive fossil fuel to setting up factories, in the US to manufacture clean energy.

Who Says Humans Caused Climate Change?

Nearly all climate scientists who have published in peer-reviewed  mainstream  science journals), and all national science academies of industrialized countries agree that the warming of the Earth over the last 50 years is mostly caused by emissions of carbon dioxide from burning fossil fuels, oil, coal and natural gas.

There are scientists in other fields like physics, geography, and meteorology, who have said they are skeptical. Richard A Muller, a physicist at Berkeley said, “It’s a scientist’s duty to be properly skeptical.”

Muller considered himself a skeptic and accepted funding from the Koch brothers, (who helped fund the Tea Party) and other sources, to work with a team of scientists  at the Berkeley Earth Surface Temperature project on the evidence of human-caused climate change.

In an op-ed entitled The Conversion of a Climate-Change Skeptic  Muller explains their  conclusion that the average temperature of the Earth has risen 1.5oF over the last 50 years and “it appears likely that essentially all of this increase results from the human emission of greenhouse gases.”

They examined issues raised by skeptics, such as heat from cities, selection of data, quality of measurements, human error, solar variability, volcanic eruptions, and El Nino and they found that none of these things correlated with the pattern of rising temperatures and must be eliminated as causes of the warming climate.

Looking to the future, the Muller team predicted that Earth’s temperature will continue to rise by 1.5oF over the next 50 or even 20 years, depending on how much fossil fuel is burned.

Solar and Wind Power Subsidies

Wall Street Journal Discussion question Sept 4, 2012:  Should Solar and Wind Power be Subsidized?


Yes.  It is in our national interest to produce power in America from many different sources, power that will get cheaper, and be better for our health.

The reliance on oil for nearly all our transportation needs leaves our military vulnerable to pressure from other countries, to price spikes, and to high costs of protecting foreign sources and shipments. In addition, foreign purchases pull money out of our economy.   Electric vehicle batteries, solar, wind and geothermal  technology are alternatives that American workers can produce, export, and afford to use.

The cost of oil, coal, and natural gas has not included the losses to infrastructure, communities and corporations related to the recovery of fossil fuels and the warming climate resulting from burning them.

We taxpayers pick up the tab for disaster recovery, flood insurance, higher health premiums, and food prices, lost tourism and other disrupted business. If these costs were included in the fuel costs, clean energy would be by far the cheaper option.

In addition, we have responsibility. Nearly half of the excess warming carbon dioxide in the atmosphere was released from the US.  It is time for us to strike a new course. The age of fossil fuels needs to be brought to an honorable conclusion. The profits from the fossil fuel industry, the money we send abroad to buy fuel, corporate savings, and government purchase orders would be available with  subsidies to help start up a prosperous new American clean energy economy.

Bipartisan Support for Carbon Tax

Bob Inglis, Former Republican Congressman from South Carolina, and Art Laffer, formerly an economic adviser to President Reagan are promoting a revenue neutral tax swap. Through the Energy and Enterprise Initiative, they are calling for an end to subsidies on all fuels, attachment of full  accountability including health, productivity and environmental costs to all fuels, and revenue neutrality. They see this as a campaign to unleash the power of free enterprise to deliver the fuels of the future and to mitigate the risks of a changing climate.

George Shultz, Secretary of State for President Reagan, has expressed confidence that conservatives will support a carbon tax, because all forms of energy should bear their full costs, and not make society bear the burden of their side effects. . He is leading a group studying  threats to national security and how our energy use affects the climate.

Shultz enjoys driving an electric car powered on sunlight from the solar panels on his house that have long since paid for themselves. In an interview,  he quips, “Take that, Ahmadinejad.” He says, “It’s not a matter of opinion, it’s a matter of fact that the globe warming. That’s why we should be looking at ways to lessen our dependence on oil at all.” “I have three great-grandchildren, and I have to do what I can to see they have a decent future. If we let this go on and on.. they’re not going to have one. “