Thursday, February 14, 2019

Eli Rabett's: Dividend and Fee Carbon Taxes


Eli has an idea.  Usual disclaimers.
Let's have a dividend and fee carbon tax. Let's pay the first year dividend and only start to collect the fee in the second, and let's even give bonus' for good deeds, like riding public transport, not using neonicotinoids, giving more carrots to the bunnies and your suggestion goes here.
The Overton window on this is being shoved too and fro.  On the one hand in the US there is a real shift in public opinion toward reality on climate change to it is real, and we must do something about it.  The Green New Deal has a bunch of momentum going for it.  On the other hand the French gilets jaunes have been raising holy hell in the streets of Paris. 

Thus Eli Rabett's simple plan: Pay the first year dividend without collecting the tax.  Institute the tax in the second year.  Where will the money come from the bunnies ask.  Well, think of it as the infrastructure week that the US did not have.  It's an investment, and more will be needed for supporting research and new infrastructure like new nuclear plants and electrical distribution networks.   

So back to the beginning.  Fee and dividend was an idea popularized by Jim Hansen, the idea being that there would be a revenue neutral carbon tax with the revenue being returned to citizens.  In the US this has been taken up by the Citizens Climate Lobby among others including a whole bunch of economists who argue for a carbon fee and dividend plan.  CCL calls for a 100% monthly per person dividend and a border adjustment which would cover the carbon generated in the production and transport of imports. (Eli notes he was one of the first bunnies to talk about the border adjustment feature in the 2007 Eli Rabett's Simple Plan to Save the World).

Now one can argue about the correct costing for a carbon tax, but the general idea is clear and the point of the dividend is to capture the advantages of eliminating CO2 emissions while returning the fee to the public.  Why return the fee, well, some high fees will be needed to get to zero emission, and people will not be happy with paying them (Pay no attention to the folks selling free beer).  Thus pay the dividend up front, tax the carbon later.  Everybody wins



42 comments:

Tom said...

Not a bad idea.

Canman said...

This is a Trumpian idea. Borrow and get a bunch of goodies today and pay it back tomorrow. That's what we've been doing for nearly half a century and Trump is no better than his predecessors. It's worked so far because wealth has been created through computing power and cheaper energy, mostly due to fracking. This soaring debt, when combined with making an essential element of everything we make and do, more expensive is not going to end well.

The best thing to do is listen to Bill Gates. Get some next gen nukes up and working so that there is a clean energy option.

Wombat said...

The problem with tax and dividend schemes is that the more successful the tax is in reducing emissions the less money it raises for dividends. You can overcome this initially by increasing the tax but, hopefully, eventually, the revenue raised will be zero. This doesn't mean that tax and dividend is not a good idea, but it does mean that expectations need to be managed

Dan Moutal said...

This is what the did in British Columbia. First everyone got $100 in then mail, then they introduced the carbon tax.

Our situation was slightly odd as the Carbon Tax was introduced by the right wing party and criticized by the left. At least at first. eventually they came around to support it, but only after they failed to win an election by criticizing the tax.

EliRabett said...

Since the point of a dividend and tax scheme is to drive the emissions to zero and the dividend is set to match the tax, getting to zero on the dividend is a feature not a bug, and it will take a fair amount of time to get there as the tax rate goes up to dry out the last emissions.

EliRabett said...

Dan, thanks for the information.

Bryson said...

The story in Alberta is similar, but the rebate is limited to low to middle income residents. There is a court case now underway challenging the Federal Government's imposition of a carbon tax or cap and trade system across all the provinces (New Brunswick, Saskatchewan and Manitoba are the plaintiffs). Most reasonable commentary seems to indicate they haven't a leg to stand on. I expect the Feds will have to extend their own tax & rebate plan to Alberta if Jason Kenney (a right-wing former cabinet minister under Stephen Harper) should win our spring provincial election. And the Federal Conservatives promise they will cancel the Federal plan if they're elected last fall (having claimed that the current federal plan is a 'cash grab,' not a carbon-reduction policy, their leader now says he doesn't need one of his own...) We're waiting to see how it all plays out (and campaigning for our local NDP representatives).

jrkrideau said...

@ Dan Moutal
Our situation was slightly odd....
Uh, we are talking about B.C here.

So far the cabon tax sounds good but I live in Ontario where our new Premier seems to be ready to return to open flame coal heating and travel by oxcart.

Barton Paul Levenson said...

C: Get some next gen nukes up and working so that there is a clean energy option.

BPL: There are many cleaner energy options than nuclear. Solar, wind, tidal, geothermal, ocean thermal, and biomass are all clean energy options. We don't need nuclear.

Russell Seitz said...

Thus Eli Rabett's simple plan:

There's another one on the loose viral geoengineering

https://vvattsupwiththat.blogspot.com/2019/02/they-arent-only-hackers-on-scene.html

John ONeill said...

'There are many cleaner energy options than nuclear. Solar, wind, tidal, geothermal, ocean thermal, and biomass are all clean energy options. We don't need nuclear.'
Ocean thermal doesn't exist, biomass as currently practised emits nearly as much CO2 per watt as gas, and raises food prices, geothermal is limited to places with active crustal folding, and solar is seasonal and unreliable. Tidal is expensive, stops four times a day, and can be environmentally destructive. ( Restricting outflow in Korean plants led to so much toxin build-up in the reservoir, that only the inflow was 'taxed'.) Here's the IPCC's evaluation of the CO2 emissions in grams per kwh for each technology -
Wind - 11
Nuclear 12
Hydro 24
Solar 28
Geothermal 38
Biomass 230
So only wind does better than nuclear, and that's if you ignore the majority of the time when it has to be 'firmed' with gas or coal.
https://www.electricitymap.org/?wind=false&solar=false&page=country&countryCode=US-CA&remote=true

Barton Paul Levenson said...

J O'N: Ocean thermal doesn't exist,

BPL: Doesn't mean it can't. Tests were first carried out in the 1960s.

J: biomass as currently practised emits nearly as much CO2 per watt as gas,

BPL: Which it first takes out of the air when it grows. Biomass is carbon neutral over the long run, which gas is not. This is biomass 101 and you could have looked it up.

J: geothermal is limited to places with active crustal folding,

BPL: You never heard of Hot Dry Rock geothermal, apparently.

J: and solar is seasonal and unreliable.

BPL: That's why God made batteries, flywheels, and pumped hydro.

Gingerbaker said...

Yes, let's propose something that seems like it might have a tiny benefit in reducing emissions through economic austerity. It'll make us feel like we are doing something, right? And, heck, it's not like we would be spending real money - we get it all back, right?

The fact that almost all previous carbon taxes have been outright failures should be firmly and indignantly ignored. The fact that all analyses of the efficacy of supposedly successful carbon taxes have atrocious design and don't even bother to check whether the carbon tax is responsible for any positive variable attributed to it is to be firmly and indignantly ignored.

And the fact not a single study assessing any carbon tax has even measured as an outcome the only thing that is meaningful for a carbon tax to accomplish - the deployment of new renewable energy infrastructure - is to be firmly and indignantly ignored.

Yes, by all means let us spend our political capital on a huge new bureaucracy for a program that does not guarantee a single penny will be spent on new RE. And let us not spend a minute talking about why it would be better to simply increase targeted RE subsidies enough to rapidly transform the carbon-burning sectors.

Canman said...

Even if it's possible to use solar, wind and storage without nuclear power, Is it really more desirable? Nuclear power's concentrated nature has a much smaller environmental footprint. the waste and hazards can be confined to smaller areas. One thing that's required for things like a wealthy society and going into space is lots of energy. If you want to make liquid fuels or hydrogen, you'll be lucky to get 20% round trip efficiency.

John McCormick said...

Here is my take on tax and dividend.

I will assume I use about 600 gallons of gas annually. That is about $1,500 and a 10% tax is $150 in the annual dividend.

No restrictions on how I spend the dividend. So, I buy a ticket to Cancun. No CO2 reduction and no price signal at the pump.

Take it from my left pocket and deposit it in my right pocket. No CO2 reductions.

EliRabett said...

John, you forgot to factor the additional tax on the fuel burnt going to Cancun, not on the ticket price.

EliRabett said...

Eli is quite happy to see all the libertarian bunnies leaping onto the nuclear wagon, which, of course, will require a load of government control and financing. Eli explained it all once upon a time

"Nuclear to start, comes in large lumps and has a long time between when you issue the bonds to build, spend the money to build and the plant comes on line and starts trading electrons for cash to pay the bonds. This can only be done by governments, or with guarantees from the government. The most successful example is France, which took a political decision in the 1960s/70s to go nuclear for electrical generation and provided the resources to do so to EDF which is 85% government owned.

Big hydro is pretty much the same story with the add on that the lake behind the dam covers a lot of ground which requires eminent domain seizures.

So it is pretty clear that nuclear/hydro build out is best suited to places with strong, stable (gotta last more than a decade, let's not talk about the proliferation risk) and well funded central governments, China, France, Russia, maybe India. The US could do it, but the free market folk and the NIMBYs would never allow it. (Caveat: Folk have been talking about small nukes for almost as long as fusion. Eli is a show me bunny)"

https://rabett.blogspot.com/2017/07/a-rumination-on-energy-costs.html

Canman said...

It might be helpful to look at what happened to micro computers in the 70's and 80's. The US government spent a lot of money developing computer chip technology for the military. Private companies then created the micro computer market. France nationalized a few computer companies. Does anyone use a french smart phone?

This is not what's happening with wind and solar. The government is directly propping them up with subsidies. W and S are hopelessly intermittent. No matter how cheap they get, they're useless after a market penetration of 30% or so. If government wants to help them, they should fund research into a storage solution and there's no guarantee one will be found.

I'd say the best prospects are for a 4rth gen nuclear solution.

David B Benson said...

BPL --- Please calculate the cost of batteries to allow for a 6 week lull in the wind, say once each 3 years. And no, there isn't enough suitable terrain for pumped hydro at that scale, except for the 3 or 4 spots found by Roger Andrews, with threads about these on Energy Matters.

David B Benson said...

Most of the nuclear power plants built in the USA did not have government financing. In those days the utilities could issue bonds.

Barton Paul Levenson said...

C: No matter how cheap they get, they're useless after a market penetration of 30% or so.

BPL: I remember when Denmark had 20% wind power and folks like Canman said they could never get more than 20% from wind. Now that they're at 50%, I'm sure there are folks saying they can never get more than 50% from wind. Und so weiter.

Barton Paul Levenson said...

DBB: Please calculate the cost of batteries to allow for a 6 week lull in the wind, say once each 3 years.

BPL: If you want to burn natural gas as a backup for 6 weeks every 3 years, I could allow that.

David B Benson said...

BPL --- That appears to be what many regions are going to do. South Australia already does so. As I mentioned before, South Australia has the highest electricity prices of any of the Australian states. But they might have the next-to-lowest carbon dioxide emissions, I don't know.

Phil Hays said...

BPL: There are many cleaner energy options than nuclear. Solar, wind, tidal, geothermal, ocean thermal, and biomass are all clean energy options. We don't need nuclear.

Nuclear can provide enough energy to power our current uses, and more. Both fission, requiring strong stable governments, and fusion which may or may not be practical.
Solar energy can provide enough energy to power our current uses, and more. Problem is mostly storage.
Wind energy changes the climate by removing energy from the winds. This is sometimes beneficial, as enough offshore wind will depower hurricanes approaching the coast.. But we probably can not power current energy use from wind without causing large climate change.
Tidal, geothermal are too small to matter.
OTEC or ocean thermal will pump CO2 out(or into) of the deep ocean until the atmosphere and deep ocean are in equilibrium, at about twice current CO2 levels. Might be an interesting way to reduce harm from CO2 levels more than about 4X current, even if doesn't produce net power.

DBB: Please calculate the cost of batteries to allow for a 6 week lull in the wind, say once each 3 years.

How far into the future? Price of batteries has been falling for the past few decades, and may continue to fall for at least decades into the future. A calculation based on 2010 prices (over a thousand dollars per kWh) would be very out of place today (about $150 per kWh). Daily and even weekly storage are probably going to be cost effective. Seasonal storage of ~6 months probably not.

As for lack of sites for pumped storage, build towers with cranes. Lift slabs of concrete to store electric energy. Lower slabs of concrete to produce electric energy. Lower in cost to pumped storage, no significant site requirements. A similar store has been built with rails and a hill with about a 7% slope. All of these might out compete batteries over the week range, but still not good enough for seasonal storage.

Hydrogen or various flow batteries might provide seasonal storage.

So without storage we might get to ~30% solar plus wind. With daily storage, we could get to ~70% solar. Perhaps around 80% to 90% with weekly storage. All at costs similar to current power sources. The last 20% or so? Perhaps nuclear, perhaps some sort of seasonal storage. The last 10% or 20% is a problem for decades into the future. Perhaps the year 2050 or so, if all goes well, we will need to be solving this problem.

Phil Hays said...

Oh and carbon tax.

A carbon tax is a good idea, but it is also too early for a carbon tax. Subsidies for alternatives is far cheaper in terms of side effects today. Consider an example:

To make an electric car more attractive than a gasoline car might take a subsidy of around the current US Federal $7500. This needs to be paid to the 2% of buyers that today choose an electric car. To provide the same incentive, you would need to make every gasoline car owner pay around $7500 over the life of the car in carbon taxes. There are currently 50 times more new car buyers that would be faced with the tax, and all past car buyers would also have to pay, and the lifetime of a car is over 20 years. So about 50x20 times more people would need to pay carbon taxes than would receive subsidies for the same impact. About 50 times more money would need to be collected by a carbon tax than would need to be paid as a subsidy. Note that most people have a car bought not expecting a carbon tax.

Note that as the life of a car is about 20 years, a tax at time of sale based on estimated MPG would also more more effective at a lower cost than a general carbon tax on fuel. By a factor of about the average life of a car, or 20 times.

To make a carbon tax with low costs and high effectiveness, pass a carbon tax into law now, but set the rate to zero for the next thirty years. Then have it adjust up based on how much the climate has warmed since the law was passed. And yes, rebate the proceeds.

The first impact would be on future car plans of automakers. Then new car buyers would start to notice. Then used car buyers. By the time the tax is being collected, the market for cars will have already almost completely taken it into account.

To go from today's roughly 2% electric cars to near 100% electric cars on the road will take many decades best case.

To get to near 100% electric cars as new car sales will take decades. Can't build an electric without a battery. Can't build a battery without a battery manufacturing plant. Can only build battery manufacturing plants so fast...Also training of people in new skills and so on.

Once you have near 100% of new cars as electric cars, then it will take around two decades for the older gasoline cars to reach the end of their life.

Canman said...

Phil Hayes, Willis Eschenbach has shown that the concrete block energy storage scheme is completely impractical, because of the friction in the pulleys.

https://wattsupwiththat.com/2018/11/16/stacking-concrete-blocks-is-a-surprisingly-efficient-way-to-store-energy/#comment-2520748

Phil Hays said...

I'm not impressed by non-engineers claiming to be engineers, and by people that can't bother to spell my name.

David B Benson said...

Phil Hays --- Learn to multiply. To store just one hour to compensate for most of the ERCOT wind generation requires 20,000,000 kWh of storage. At just $10/kWh that is already 200 billion dollars. A week requires almost 200 times as much so for 6 weeks multiply by 1,200. Texans are rich but...

John ONeill said...

To BPL- I have of course heard of hot dry rocks, I just haven't heard of any actual successful implementation of the idea. The Australian government punted a few million on it a decade or so back, with not a watt to show for it. The companies involved have gone off fracking instead, which gives better returns, or are trying to take their knowhow to places like Vanuatu, where the rocks are a lot hotter and shallower.
Ocean thermal is in the same boat - as are wave power, cold fusion, hot fusion, kite windpower, space solar power... You might respond that fourth generation nuclear is also vapourware. There is a difference. The former lot have not demonstrated reliable power producton on any scale, even from a pilot plant. Nuclear, in the form of light water and heavy water reactors, has been able to fill nearly half the power demand, or more, of nine countries, plus Ontario, reliably, for decades. Alternative reactor types, such as sodium cooled, lead cooled, and gas cooled, have not reached commercial maturity, but they have put out impressive amounts of power over long periods. In addition, abut two hundred naval submarines and aircraft carriers, plus a dozen icebreakers, show that small-scale nuclear is at least practicable. It just has to become affordable. It's much easier to take something that works and make it cheap, than to make something that has never worked cheap.

John ONeill said...

To BPL ' ..Denmark ..now they're at fifty percent..' At the moment Denmark is getting 34% from wind, plus one percent from solar. Just a few hours ago the figure was 54%. A few hours before that, it was only 17%. Most of the gaps have been filled with great wedges of German coal power. With that kind of power profile, they'll never be able to abandon fossils. To make it worse, thermal plants that have to cycle on and off a lot use significantly more fuel than those run at a steady rate - they waste a lot of energy bringing their boilers up to operating temperature. https://www.electricitymap.org/?wind=false&solar=false&page=country&countryCode=DK-DK1&remote=true

David B Benson said...

John ONeill, as best as I can determine the vast majority of the backup for wind is generated within Denmark.

Barton Paul Levenson said...

And Canman cites WUWT as a source. Self-refutation.

Jim Eager said...

"Most of the nuclear power plants built in the USA did not have government financing."

Not directly, but indirectly they got a HUGE government subsidy in the form of the government mandated cap on liability, meaning the government self-insured the plants that the private sector built.

Jim Eager

Phil Hays said...

DBB: Ask a meaningful question, get a meaningful result.

What is the cost per kWh stored?

Assumptions:

$10/kWh capital cost. (source DBB)
10% ROI
5% deprecation, or a 20 year lifetime.
Daily cycling (365 days, probably too high, feel free to update.)
Efficiency ~100% (will be closer to 85%, feel free to update.)

Capital * (ROI + deprecation) / days per year

Cost of energy from storage $0.004 per kWh.


Weekly cycling

Cost of energy from storage $0.03 per kWh

Current median cost of projects that are operational is rather higher: around $400 per kWh, however note the falling cost. Or around $0.16 per kWh, which better than many peaking power plants. And less than the demand charges for commercial power in many places.

Bid costs for future construction are rather less.
(Typo correction)

Canman said...

Phil Hays, sorry about the spelling. I really do try to get things like that right. I checked to make sure I got "Phil" right and missed "Hays". Now, about engineering expertise, An engineering degree certainly has value, but it's not the be all and end all. There are self taught engineers and Willis Eschenbach is clearly a very bright and technically capable guy. In his response to me, he provides a link to an industrial winch company that backs up what he says with some efficiency figures.

https://www.globalspec.com/learnmore/material_handling_packaging_equipment/material_handling_equipment/industrial_winches

Also, I found this in one of your above comments:

"Hydrogen or various flow batteries might provide seasonal storage."

Hydrogen is extremely unlikely to provide seasonal storage. It's notoriously leaky and you'll be lucky to get 20% efficiency. Check out Rud Istvan's post on grid level energy storage:

https://judithcurry.com/2015/07/01/intermittent-grid-storage/

Phil Hays said...

C: there is a funny thing about experiments. They can be like the tide going out. You find out who is wearing a bathing suit. And who isn't.

Get several pulleys, measure the frictional loss. I suggest a bicycle wheel as one of the pulleys.


Hydrogen. Your source says 30% efficiency: "Ballard’s real 1 MW ClearGen® is 40±2% efficient, with a lifetime of ~15 years (similar to NaS). The round trip efficiency of a hydrogen electricity storage system would be about (0.75 * 0.4) 30%."

30% is plenty good if the input power is free or low enough cost, and the output power would compete with high cost power. How low of efficiency would be needed to turn a profit if you buy energy at a negative price and sell it for $310/MWh? (hint Mid C Peak 5/24/2018
and Mid C Peak 8/3/2018)

Suppose my hydrogen store was near the Mid-Columbia hub. "Mid C Peak" Price data is at:

https://www.eia.gov/electricity/wholesale/xls/archive/ice_electric-2018final.xlsx

If I buy at $20 and sell at $100, can I make money even with 30% efficiency? Yes, the cost of tanks, the cost of conversion equipment and the cost of grid connections needs to be considered.

Selling days
7/20/2018
7/23/2018
7/24/2018
7/25/2018
7/27/2018
7/30/2018
8/3/2018
8/6/2018
8/7/2018
8/8/2018
8/23/2018
10/10/2018
11/1/2018
12/3/2018

Buying days:
2/1/2018
2/2/2018
2/7/2018
2/15/2018
4/19/2018
4/26/2018
4/27/2018
5/8/2018
5/9/2018
5/15/2018
5/16/2018
5/17/2018
5/18/2018
5/24/2018
5/25/2018
5/30/2018
5/31/2018
6/27/2018
6/28/2018

John ONeill said...

Scroll down to ' origin of electricity in last 24 hours '. It varies - yesterday the wind lull was met by German imports, today imports are mostly from Norway and Sweden. At peak they were getting ~20% from Danish coal, a third from wind, and a third from Norway and Sweden. Wind was 50 % when the consumption was lowest.
https://www.electricitymap.org/?wind=false&solar=false&page=country&countryCode=DK-DK1&remote=true

John ONeill said...

To David B Benson - sorry, last comment was for West Denmark. East Denmark had about twenty percent higher emissions; they use more power, and have less wind. Between the two halves of their grid, they were about on a par with the United Kingdom, and nearly three times worse than France.

David B Benson said...

Jim Eager --- For which they had to pay. The fee is sufficiently stiff that not all projects bought the protection.

David B Benson said...

Phil Hays --- The question was the cost of storing enough energy for 6 weeks without wind, once each 6 years. Calculate away!

Phil Hays said...

DBB, I've covered wind above:
"Wind energy changes the climate by removing energy from the winds. This is sometimes beneficial, as enough offshore wind will depower hurricanes approaching the coast.. But we probably can not power current energy use from wind without causing large climate change."

And storage:

"Hydrogen or various flow batteries might provide seasonal storage."

"So without storage we might get to ~30% solar plus wind. With daily storage, we could get to ~70% solar. Perhaps around 80% to 90% with weekly storage. All at costs similar to current power sources. The last 20% or so? Perhaps nuclear, perhaps some sort of seasonal storage. The last 10% or 20% is a problem for decades into the future. Perhaps the year 2050 or so, if all goes well, we will need to be solving this problem."

Canman said...

Phil Hays: "Get several pulleys, measure the frictional loss. I suggest a bicycle wheel as one of the pulleys."

The friction in several pulleys adds up, and a bicycle wheel is not an industrial winch. A bicycle wheel is delicately optimized to efficiently carry about two hundred pounds of human payload. A winch is designed to economically move a heavy load. Efficiency is only one of several important design criteria which compete with each other, such as cost of materials and ease of construction.