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After Sandy’s wake-up on global warming, it’s time for a consumer-friendly carbon fee
If world leaders ever doubted the urgency of transitioning to a low-carbon energy economy, this year’s record high temperatures, extreme droughts and wild weather should give them pause. As leaders currently discuss the next phase of the Kyoto Protocal in Doha, Qatar, these extreme weather events stand as a stark reminder that global greenhouse gas emissions must peak by 2017, and that a credible plan to reduce emissions is urgently required.
Canada and the U.S. are reluctant to commit to science-based greenhouse gas emissions targets, but it is possible to drastically reduce emissions that are warming our planet without slowing economic recovery. Canada and the U.S. can do so by putting a steadily-rising fee on fossil fuels and returning the revenue to consumers to drive innovation in energy efficiencies and green energy development.
S
uperstorm Sandy is a sobering reminder of why it’s important to act now. With damage estimates in excess of $50 billion, and even its final sputter in Canada at more than $100 million, it is now the second costliest storm in U.S. history. Hurricane Katrina, the other “storm of the century” that struck the Gulf Coast seven years ago, caused $81 billion in damage. “Storms of the century” should happen every 100 years, not within a decade of each other. Global warming - particularly in the high Arctic, by increasing the likelihood of extreme weather, is forcing us to recalibrate our expectations of natural disasters.
Climate change is no longer just a menace looming in the distant future or a phenomenon that only affects people in distant lands. In 1996, the Saguenay flood cost $1.7 billion and the 1998 ice storm cost $5.4 billion. The Manitoba flood cost the province’s economy $1 billion in 2011. In the United States, 2011 saw 14 weather related disasters costing at least $1 billion dollars each, breaking the 2010 record and almost certain to be dwarfed by 2012. This year, before Sandy’s land-fall, North America experienced the disastrous and expensive effects of a warming planet in wildfires out West, crop-killing drought in Southern Ontario and America’s breadbasket, and biblical flooding and wind damage from storms on steroids.
In the case of Sandy, the fingerprints of global warming are all over the crime scene, contributing to its size, strength and the unusual path it took:

  • Warmer ocean temperatures, particularly off the Mid-Atlantic and New England coasts, helped Sandy develop into a strong storm late in the hurricane season that retained strength as it moved north.

  • Rising sea levels due to global warming increased the flooding and storm surge of Sandy.

  • A warming Arctic, punctuated with record sea ice loss this summer, created deep troughs in the jet stream that allowed a “blocking high” to steer Sandy west into New Jersey rather than east, where hurricanes normally track before reaching the NE United States. They rarely make it to Eastern Canada.

  • T
    Do The Math on Global Warming

    In his Rolling Stone article, “Global Warming’s Terrifying New Math,” climate activist Bill McKibben points to three numbers that sum up the urgency of the situation we find ourselves in:




    • Two degrees Celsius: the amount, according to international consensus, that we can raise the global average temperature above preindustrial levels and still maintain a so-called "safe" climate, beyond which all bets are off. "Safe," of course, depends on where you live. We've already raised it almost one degree, with disastrous results: if you live in Africa, or Kiribati, one degree is too much.

    • 565 gigatons: the amount of CO2 scientists agree we can still pump into the atmosphere and hope to remain below the two-degree threshold.

    • 2,795 gigatons: the amount of CO2 contained in the world's proven fossil-fuel reserves, which the fossil-fuel industry shows every intention of extracting and burning.



    he insurance industry, which has to pay the bill for Sandy’s rampage, is already calculating the cost of climate change. Weeks before Sandy struck, Munich Re, the world’s largest reinsurance firm, issued a report looking at the dramatic increase in weather-related disasters in North America during the past 30 years, citing climate change as a contributing factor in losses the industry has to cover.

Where climate change is concerned, Sandy has shifted the discussion. The question is no longer whether climate change is happening. In fact, a new study suggests that gloomier predictions on global warming are probably the most accurate. Average global temperatures have increased 0.8 degrees Celsius since 1880. Even if fossil fuel emissions were to end tomorrow, warming of the climate would continue for many years due to the greenhouse gases already added to the atmosphere and the heat that has been taken up by the oceans. On our current trajectory with greenhouse gas emissions, we could see more than 6 degrees Celsius of warming by 2100, according to a report from PricewaterhouseCoopers.


Climate change is our most pressing environmental issue, perhaps the defining issue of our generation. It will profoundly affect our economy, health, lifestyles and social well-being. It requires moral and intergenerational responsibility. How we respond will define the world in which our children and their descendants grow up. Global efforts to slow greenhouse gas emissions have been unsuccessful so far. The urgent question now is how we are going to reduce the emissions of greenhouse gases that, if unchecked, will render much of the Earth unlivable. To do this we must adapt to living without cheap fossil fuels.
We can convert to green energy throughout the world within 20 years

Mark Jacobson, Stanford University, and Mark Delucci, UC Davis, have developed a detailed plan to provide for the world’s energy needs by 2030 with electricity generated through wind, water, and solar technology already available in 2009. Their research takes into account that the world adds approximately 1 billion people every 12 years and that emerging economies aspire to our Western lifestyle with its high energy requirements.


Consumer-friendly carbon fees

Economists on both ends of the political spectrum – from Jeff Sachs and Rob Shapiro on the left to Art Laffer and Greg Mankiw on the right – contend that the most effective approach to deal with climate change is a revenue neutral fee or tax on carbon-based fuels that returns the proceeds to the public, either through direct payment or reductions in other taxes. The concept, they say, is rather simple: Tax the thing we want less of – carbon pollution – and reduce taxes on the thing we want more of – income.


The purpose of the carbon fee is past and future harm reduction by limiting fossil fuel emissions. The rationale is “polluter pay”. Carbon pollution of the atmosphere and oceans from the burning of fossil fuels carries significant and increasing “external” costs to society, including measurable damage caused by extreme weather events and much higher health care costs. Placing a direct fee on carbon – increasing the costs of coal, oil and gas – will send a price signal to the marketplace that makes energy efficiency and clean energy a more attractive investment. Billions of dollars in private sector money would shift away from fossil fuels and toward technologies like wind, solar, geothermal, water and other alternatives, creating the jobs of the future. A recent report by Blue Green Canada demonstrates that while $1.3 billion in annual federal subsidies to fossil fuel companies creates more than 2,800 jobs , the same level of investment in renewable energy would creates up 20,000 jobs. It would also provide the incentive for consumers and businesses to improve energy efficiency and make choices, like hybrid or electric vehicles, that have a lower carbon footprint.
A straightforward fee has many advantages over other means of carbon pricing. It is easy to understand and monitor, uncomplicated to set up and requires no additional bureaucracy. Its price can be set in function of carbon mitigation goals and would not be subject to market fluctuations, thus enabling businesses and consumers to plan their energy investments.
Other nations have adopted this model with success. Sweden imposed a carbon tax in 1990, which is now 100 Euros per ton, a hefty price. Since that time they have had a 7 percent reduction in emissions while GDP has risen 36 percent, demonstrating that a substantial fee is effective in reducing emissions without harming the economy. After three years of implementing BC’s consumer-friendly carbon tax, provincial sales of fuels subject to the tax have dropped by 15 percent since 2008, while the rest of Canada’s per capita sales have increased by 1.3 percent. Over the same period, economic growth per capita has been consistent with growth in the rest of Canada.
The argument against carbon pricing, whether through predictable fees or cap-and-trade, has been that it will raise energy costs. This is something our nation and many citizens may feel we cannot afford as we emerge from the recession. Higher energy costs could indeed be a concern if, for example, the fees were used to finance unrelated government priorities (e.g., paying down deficit, tax cuts). But the solution of returning all or most carbon fee revenue to consumers, however, negates that argument, as an estimated two-thirds of households will then have the additional income needed to cover higher energy costs and invest in energy efficiencies. Only households with very large carbon footprints will pay significantly more than they receive.
What about Canadian businesses? Won’t they be at a disadvantage with foreign competitors not subject to a carbon fee?
Yes they would, and that is why Citizens Climate Lobby recommends that any legislation to create a carbon fee also provide border tariffs on imports from nations that do not have equivalent carbon-pricing. Such tariffs would comply with World Trade Organization rules because they would only be for the purpose of maintaining a level playing field, not to give Canadian businesses a competitive advantage.
The question is no longer whether we can afford to stop burning fossil fuels. The question is how long we can afford to continue with business as usual:

  • More frequent and severe droughts will bring crop shortages and increase the price of food.

  • From heat stroke to mosquito-borne diseases to respiratory illness, climate change and fossil fuel emissions are having a detrimental impact on our nation’s health.

  • Insured losses from extreme-weather disasters will be covered by higher insurance premiums for everyone.

  • Irreparable damage to the ecosystems that support life on our planet, with severe acidification of the ocean already underway and a thawing Permafrost that could release hundreds of gigatonnes of carbon that will be disastrous to our way of life.


Attitudes on the carbon tax are shifting
Carbon tax and the U.S. fiscal cliff

U.S. Congressional leaders from both parties have been looking at a moderate carbon tax that could generate $1.25 trillion over the next decade and go a long way toward taming the deficit. The proposed tax would be $20 per ton of carbon dioxide, rising 6 percent a year according to some reports. If this is the case, will the Harper government make good on its promise to follow suit?


Public support for a revenue-neutral carbon tax

In BC, a recent poll from Environics Research Group shows that 57% of British Columbians are in support of the revenue neutral carbon tax. The same poll found the percentage of British Columbians strongly opposing the tax is at an all time low of 23%, compared to a peak of 38% in July 2008.


A recent article based on interviews with Alberta oil industry executives concludes that corporate support in their industry for a national carbon tax is high. It also reports that chief executives for more than 150 of Canada ’s largest corporations have likewise publicly urged the government to establish a price on carbon.
On December 4th, Ontario’s Environment Commissioner is expected to recommend a carbon tax in his assessment of the province’s climate strategy.

In the US, the Yale Project on Climate Change Communication data point to majority support across the American political and ideological spectrum for a carbon tax with revenue returned to citizens. A survey conducted in late 2011, found that 65 percent of Americans would support a revenue-neutral carbon tax that would “help create jobs and decrease pollution.” Support was also high for Presidential and Congressional prioritizing of global warming issues (70%) and the development of clean energy (90%). At the same time, Environmental Entrepreneurs (E2) conducted focus group research on the policy of “a rising fee on ‘carbon pollution’ with the money collected returned to citizens.” They found that every group from the Tea Party to environmental voters was very similar in their strong support. The main reasons given by participants for their support were:


• They believe we have a real energy problem that has been discussed but ignored by politicians since the 1970s.

• They mistrust and dislike big energy companies and believe they have enormous power and control over policymaking in Congress.

• They feel it is fair for energy companies to pay a fee for their pollution that would give them an economic reason to invest in less polluting energy sources, even if it means higher prices for consumers.

• They believe that Congress should not be allowed to spend the money.


E2 also reported: “The summary is that voters are looking for leadership on energy policy.”
If there was any hesitancy or doubt in the U.S. and Canada about the need to address climate change, much of it evaporated when Sandy flooded the New Jersey coast and New York City, and slammed into central and eastern Canada. For many North Americans, Sandy is the “Pearl Harbor moment” on climate change, and it’s time for the Harper government and Congress to take the lead in Doha, Qatar, and declare war on carbon.
RESOURCES
Charles Komanoff of the Carbon Tax Center can be reached at kea@igc.org
Scientific American 3-part series on extreme weather and climate change.

Part 1: "Storm Warnings: Extreme weather is a product of climate change."

Part 2: "Global warming and the science of extreme weather"

Part 3: "Our extreme future: Predicting and coping with the effects of a changing climate."





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