"Instead of reducing climate risks by pushing existing federal regulatory authority to its limits, ambitious and carefully designed carbon taxes will reduce climate risks and drive clean-energy innovation, without imposing unfair costs on American consumers."
Nuclear power will, of course, be one of the chief beneficiaries of a carbon tax.
Nuclear power will, of course, be one of the chief beneficiaries of a carbon tax.
Exactly. That is why carbon taxes have been resolutely opposed by "Greens", who have demanded things like pseudo-carbon taxes on nuclear too. Subsidizing "renewables" does not actually disadvantage fossil fuels as they provide the bulk of generation where the unreliables are promoted.
Germany imposed a stiff tax on fissile uranium in reactor fuel to avoid giving nuclear power any economic advantage in the emissions-trading system. It's blatant.
"Moreover, modest advances in lowering the cost of nuclear by about 2.5 cents per kilowatt hour [to 5 cents/kWh] create a substantial role for nuclear, and reduce the needed carbon price by two-thirds."
EP-- I have started a thread in the Energy section about the MIT study. To keep this Carbon Tax thread fairly simple, could I have your permission to move your last comment to the new thread, and then respond to you there? Thanks
"Stringent climate change mitigation policy is often criticized for placing burdensome costs on society for uncertain climate benefits in the future. However, a true cost-benefit analysis of climate related policies should consider the other benefits that come from actions aimed at reducing greenhouses gas emissions."
Added quotation, lightly corrected (Apr 17): "There are two separate co-benefits that the authors monetize: energy security, which relates to the avoided dependence on imported oil, and local pollution benefits that reflects the avoided health costs connected with the reduction of local air pollutants. The overall value of the co-benefits from reductions in NOx, PM2.5, and SO2 are $700 billion, $3,300 billion, and $4,400 [billion] respectively. These monetary benefits of air quality improvements alone significantly outweigh the welfare costs of the tax."
"Why carbon pricing is not enough to mitigate climate change"
Carbon pricing is only meaningful while fossil carbon continues to be emitted. Now that we know the lethal consequences of emissions, continuing to emit in full knowledge of the consequences is criminal. Allowing the emissions to continue when we could replace it with alternatives, is complicity in the act. By accepting money from carbon criminals we cripple our capacity to condemn, criminalise and eradicate.
The author of the linked article treats the word "decarbonisation" as if it can be qualified, as if partial reduction of emissions should suffice. The equivocation should make us suspect that the author represents interests that want to buy off the requirement for total eradication of fossil carbon.
From the third-to-last paragraph of the article: "To accelerate decline, policy also has a role to play in implementing phaseouts. Otherwise, problematic technologies can persist for decades. Phase-out policies have, for instance, targeted incandescent light bulbs, coal-fired power, and nuclear power."
Carbon taxes create a level playing field, where nuclear power can flourish. No wonder some groups want to deemphasize these taxes.
Carbon Tax and Revenue Recycling: Revenue, Economic, and Distributional Implications Kyle Pomerleau, Elke Asen 06 Nov 2019 Tax Foundation taxfoundation.org/carbon-tax/
" A carbon tax paired with a cut in the employee-side payroll tax increases progressivity, output, and employment." Key finding #5
So let's use most of the carbon tax revenue to lower the payroll tax, with minor portions going towards targeted dividends and clean-energy R&D. Such a use of the revenue would be economically benign--and perhaps politically attractive.
"Establishing a carbon price in the midst of an economic shock is counterintuitive, but committing to one would be wise. One option would be for Congress to pass legislation to levy a small and rising carbon tax that would take hold as the recovery proceeded. On the lee side of this crisis, a carbon tax which started low and increased over time would add pennies to the price of a gallon of gas and be no real impediment to economic growth. Even before it was collected, the expectation of the tax would affect how investors and firms went about financing the economic recovery."
Many investors and firms, seeing the writing on the wall, would take a long, hard look at advanced nuclear.
A few thoughts on the effect of a carbon tax on combined-cycle LCOE:
The US EIA estimates the levelized cost of electricity for a combined cycle gas turbine (CCGT) plant coming online in 2025 as $36.61 per MWh, or about 3.66 cents per kWh .
Engineer-Poet relates that a combined cycle plant running at peak efficiency emits about 330g CO2 per kilowatt-hour. Call it a third of a kg CO2 per kWh. (For comparison, coal emits around one kg CO2 per kWh).
A carbon tax of $10 per metric ton (1000 kg) of CO2 equals one cent per kg. Combined cycle's third of a kg, then, would cost .33 cents. So with a $10 CO2 tax the cost of electricity per kWh from a combined-cycle plant would be 3.66 cents + .33 cents = 3.99 cents, or about 4 cents.
Addition, July 9: Similarly, if the carbon price were $25 the cost of electricity would be around 4.5 cents per kWh, and with a $40 tax the cost would be about 5 cents.
huon's 4 cents per kWh is $40/MWh, certainly higher than solar when the sun shines or wind when it blows. So even a most modest so-called carbon tax ought to be enough to avoid running the CCGTs except when there is no choice.
"The message to governments is that carbon pricing almost certainly works, and typically to great effect.
"While a well-designed approach to reducing emissions would include other complementary policies such as regulations in some sectors and support for low-carbon research and development, carbon pricing should ideally be the centerpiece of the effort."
Addition Aug 14: Another sentence from the article:
"On average an extra euro per tonne of carbon dioxide price is associated with a lowering in the annual emissions growth in the sectors it covers of about 0.3 percentage points."
Accordingly, each (US) dollar increase in the CO2 price could cut emissions growth by about 0.25 percentage points, and each $4 could shave off about 1 percentage point.
Now if the baseline of average global emissions growth over the past three years* is about 1.5% per year, a $6 price could cut growth to near zero. A further $8 could produce negative emissions growth (reductions) of some 2% per year, and another $16 ($30 total) could get the rate down to around -6%/yr--a very respectable number.
These are, of course, back-of-the-envelope calculations, but they may be useful as a first approximation.
So, I take it, a CO2 price of $10 per ton would be an acceptable minimum target for 2021.
On the other hand, researchers from MIT report. "[...] modest advances in lowering the cost of nuclear by about 2.5 cents per kilowatt hour [to 5 cents/kWh] create a substantial role for nuclear, and reduce the needed carbon price by two-thirds." (See posts on March 22 and 23 above.) globalchange.mit.edu/publication/17323
Perhaps, then, we would be justified in dialing back the $10 carbon tax a little to, say, $8 the first year, with $8 annual increases until 2025. After that, the rate of increase could probably fall further.
I commented on this post by James Hansen nine months ago on the Hansen thread of the BNC Blog board. Because it seems as relevant today as it did back then, I am reproducing much of it here. For a quick summary, see pages 1, 45, and 46.
"Political compromise is still possible, as shown by the new NAFTA (North American Free Trade Agreement). Why not suggest what economists and conservatives agree is the fastest way to phase down emissions, carbon fee and dividend? Such a policy is no cure-all, but it can make the price of fossil fuels honest and spur innovations needed to move us to a clean energy future. [...]
"Large amounts of dispatchable (baseload) energy are needed, especially in countries such as China and India where energy use is still growing, but also in the West, where we want to electrify a larger fraction of our energy use. Renewables and energy storage will help, but we cannot phase out fossil fuels and 'fracking' without the help of modern nuclear power."
One of the leading proposals in the US for setting a carbon price is "Fee and Dividend", promoted by the group Citizens Climate Lobby. The fee would start at $15 per ton of CO2 and increase annually by $10 per ton. All revenue from the tax would be refunded to the public in equal shares.
In the following opinion piece, James Hansen and his co-author lend their support:
Another prominent carbon tax plan comes from the Climate Leadership Council, which is backed by Republicans from former administrations. This plan would start at $43 per ton of CO2 and rise 5% annually, with all revenue returned to the public. Its merits, both environmental and economic, are explored in the following op-ed:
"But the single biggest opportunity for Biden to advance his climate goals through Congress could be bipartisan legislation that creates a carbon tax to reduce US greenhouse-gas emissions--an idea that has backing among many conservatives and business leaders who are concerned about the climate."
Bob Inglis (see previous comment) is quoted at the end of this section, and at the end of the article.