Carbon Tax Would Benefit Manufacturers

A recent report on how a carbon tax would affect our economy ignores the effects of climate change and benefits of clean energy, leading the writers to inaccurately conclude that a carbon tax would depress manufacturing and employment.  The report was written by NERA for the National Association of Manufacturers.  Interestingly, a previous report written by NERA admits that a carbon tax could be efficient in reducing greenhouse gas emissions.

However, for the Manufacturers, the NERA analysts omit consideration of the huge drain on the economy from climate related extreme weather damages to infrastructure and businesses and natural resources. They omit, as well, the benefits of expanding American clean energy and efficiency industries.  

With a carbon tax raising the cost of the carbon fuels, oil, coal and natural gas, people would buy more clean energy and also invest in technologies that reduce their energy use. Increases in American manufacturing of clean energy would lower power costs, inspire growth in other industries, and raise employment. 

If the revenues from the carbon tax are mostly returned to the public instead of used to reduce the deficit, as suggested by the study, there would be a buffer for individuals and a bonus for the American economy.

A comparison of the costs of damages from emissions in a continued fossil fuel economy versus the cost of ramping up clean energy, efficiency and conservation to create a clean energy economy was done by DARA Climate Vulnerability Monitor, finding that “Economic losses dwarf the modest costs of tackling climate change.”

In addition to the $1.2 trillion loss in forgone prosperity by our failure to act on climate change, there is also the risk of unimaginable catastrophe.

A recent report for the World Bank details the costs and risks of continuing climate disruption.  The carbon fuel economy is propelling us toward : “shock to agricultural production…and pressure on water resources which would cascade into effects on economic development by reducing a population’s work capacity …and risk crossing critical social system thresholds..[where] adaptation actions would likely become much less effective or even collapse.”

A carbon tax that encourages competitive growth in American industry would benefit all manufacturers and consumers.

 

http://daraint.org/climate-vulnerability-monitor/cvm-press-releases/

http://daraint.org/wp-content/uploads/2012/09/CVM_RELEASE_FINAL_ENGLISH.pdf

http://www.nam.org/~/media/ECF11DF347094E0DA8AF7BD9A696ABDB.ashx

http://climatechange.worldbank.org/sites/default/files/Turn_Down_the_heat_Why_a_4_degree_centrigrade_warmer_world_must_be_avoided.pdf

http://www.nytimes.com/2012/07/05/opinion/a-carbon-tax-sensible-for-all.html?_r=0

 

 

Gasoline Costs

The average US household spent nearly $3,000 or 4% of yearly income on gasoline in 2012, according to a WSJ report on new government data.
Response:
Well worth it! We certainly wouldn’t want to mingle with people who ride trains and buses, or heaven forbid, bicycles.
It’s worth the time spent in exhaust-belching traffic jams and searching for pricey parking spaces, worth the money shelled out for car payments and maintenance and insurance.
It’s worth sending 20 more pounds of warming carbon dioxide into the air with each gallon of gasololine burned. Before too long, we will have Bahama-like weather in New York, be able to dive out of office windows directly into the ocean, and get no sand between our toes.
It’s worth spending up to 15 times more on transportation to have our own, personal, greenhouse gas dispenser.

Wind power costs less than nuclear

Wind generation costs $0.10 per kWh now in France.  After 10 years, at windiest sites, it’s expected to drop to $0.03 per kWh.

Cost of nuclear energy varies from $0.15 to $0.24 per kWh.  Construction of nuclear in France and Finland have been plagued by delays and doubling of costs. France is planning to reduce nuclear from 75% to 50% of energy used by 2050.

Does American business want to manufacture and export nuclear components or solar and wind???

http://www.renewableenergyworld.com/rea/news/article/2012/12/french-reactor-cost-rises-dramatically-wind-energy-now-cheaper-than-new-nuclear#readercomments

Investment in solar energy

A Wall Street Journal editorial criticizes a new Interior Department plan to make it easier for utilities to get permits to build solar electric plants on public land and help them link up with transmission lines.

Response:

Investments in solar and wind electricity make sense. Some government encouragement for clean energy will help the industries mature, compete, and provide us with many benefits. Most people, whether or not they are concerned about global warming, want to see clean energy developed.

The solar and wind industries are growing, costs for consumers are dropping, and design discoveries are increasing their potential.  The export potential is large and we can produce this technology in the U.S.

Renewable energy grew even in 2009 when many other businesses were shrinking, according to  Renewable Energy Policy Network’s 2011 report.  By early 2011, one quarter of global power capacity came from renewables.  During 2011, half the new electricity generation capacity added in the world was renewable.

In the U.S., photovoltaic projects have grown by 58% a year since 2004, according to a Bloomberg New Energy Finance report. Now, new financing mechanisms are being developed, including third party financing structures, solar-backed securities, master limited partnerships, investment trusts, and publicly listed ownership funds.

Another Bloomberg paper, Re-considering the Economics of Photovoltaic Power, explains reasons for the recent rapid drops in the cost of photovoltaics (PVs). Renewables have demonstrated that they can work, that manufacturing materials are available, that the industries can expand, and that they can provide fair returns on the high initial installation costs.

Feed-in tariffs, and concern about energy security and climate change stimulated PV production between 2004 and 2008 in Germany and Spain, but shortages of the raw material for PVs, polysilicon,  held it in check. Then polysilicon manufacturing expanded, and although incentives for PV production in Spain ended in 2008,  prices for PVs fell from $4.00/W to $2.00/W, with investors still making profits.

The cost of the raw material, silicon, which is about 20% of the cost of modules, has dropped from $450/kg in 2008 to less $27/kg.

There are export opportunities now in many areas. Solar PVs are a clearly a cheaper alternative where diesel generators provide electricity, as in parts of Africa, the Persian Gulf area, and India. In many other areas, solar and wind can provide electricity at the same price as electricity from coal or natural gas fired plants.

Right now, there is no uniform way of measuring all the costs that go into producing power.  Analysts use, and sometimes confuse, price-per-watt, levelized cost of energy (LCOE), and grid parity. Better metrics will help investors see even more opportunities in these alternative technologies.

Tax credits for wind production

In the middle of a drought that has affected half the country, the worst since the 1930s, with scientists saying that the likelihood of drought is greatly increased by warming emissions from fossil fuels, oil, coal and natural gas, the Republican presidential candidate is supporting continued tax breaks for these fossil fuels, but opposing tax incentives to help the developing wind power industry.

Response:

It appears that some Republican Senators disagree with candidate Romney and several of them joined Democrats in a 19-5 vote in the Senate Finance Committee to renew tax credits for wind power. 81% of  installed wind power plants are in Congressional districts that are represented by Republicans, such as Iowa and South Dakota.

A one year extension of a production tax credit for wind would be a step in the right direction if Congress approves it, even though it is tentative, tiny, and late. According to testimony before a Subcommittee last December by a Congressional economic analyst,  tax incentives for wind energy has been mostly temporary, extended 7 times since 1992, and allowed to lapse three times. The uncertainty of these provisions discourages investors. There is usually a 3 to 4 year period of planning, siting and permitting before wind equipment is ordered. A tax credit that may expire before it can be used is marginally useful.    The credit should be extended for at least 5 years to allow investors and producers some consistent support as the industry scales up.

Wind energy has huge potential for growth and is growing fast, – over 31% last year, providing over a third of all new power generating facilities. Analysts believe that the US can increase the share of electric power coming from wind from 3% now to 20% in 18 years. South Dakota and Iowa are already at about 20% each. Germany now gets 25% of its electricity from renewables.

Consumers will see the cost of solar and wind technology drop as research improves them and increased production reduces prices.  Bloomberg analysts estimate that the cost drops 7% for each doubling of wind energy installation.

Oil, coal and natural gas are mature industries that have become powerful with the help of subsidies which have been permanent features of the tax code for over 50 years and have been much larger than the subsidies to renewables according to congressional testimony.  Exploration credits, depletion credits, and royalty relief reduce costs and raise profits for the petroleum industry.  The Congressional Joint Committee on Taxation has estimated continued direct subsidies for oil and gas or $74 billion over the next couple years unless Congress changes these laws. $75 billion is the average yearly profit of Exxon-Mobil between 2008 and 2011.

It is time for consumers to get some government help for the development of competitive energy production without fossil fuels.

Cheaper energy is in the wind

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Wind energy will sweep us off our feet

A WSJ commenter uses small scale solar and wind in remote sites in the mountains of Arizona, but is not convinced of the viability of wind on a large scale.

Our response:

The U.S. could save $83 billion over the next 40 years by changing to a clean energy future according to a report by Synapse/CSI, “Toward a Sustainable Future for the U.S. Power Sector: Beyond Business as Usual 2011,”

According to Bloomberg analysts, “The world’s wind-power capacity increased 113-fold over the past 20 years.” “The improved efficiencies of technology and scale — the industry’s learning curve — reduce wind-power prices by 7 percent every time installed capacity doubles. The price for a megawatt of wind power dropped by almost half since 1991”

“ Countries with high power prices and strong winds are already past parity: Brazil, Italy, Argentina, Canada, the U.K. and Portugal.” “However in the best locations onshore wind is already competitive with fossil fuel electricity, and most wind farms in fair resource areas will be at parity by 2016.”
http://www.civilsocietyinstitute.org/synapsereport/
http://go.bloomberg.com/multimedia/wind-innovations-drive-down-costs-stock-prices/