James Hansen and the Citizens’ Climate Lobby have attracted some heavy hitters from the Reagan Administration to the idea that the simplest, most elegant, most market-friendly and effective approach to reducing CO2 emissions is to apply a direct tax (fee) on all fuels in proportion to the amount of CO2 that they would release when burned.
To prevent such a tax from burdening society or growing government, they would accompany the tax with a 100% distribution of the money collected. The distribution would be exactly the same for each citizen of the United States. Each person would initially receive dividends of approximately $500 per year. A family of four would initially receive $500 every three months with the starting tax rate set at $40 per ton.
The price of a gallon of gas would initially increase by about 36 cents. That price change, while noticeable, pales in comparison to the kinds of changes in gas prices consumers experience with changes in crude oil prices. This change, however, would be in service of our long term interests and to our short term advantage in keeping dividend checks coming.
In contrast, American consumers and businesses have no means of controlling gas price changes as OPEC manipulates its quotas to adjust the world supply and demand balance in ways that its ministers feel are favorable to their own interests. Consumers can only react to changes and adjust driving habits or vehicle purchase decisions.
Since the price increases would not apply to fuels that do not produce CO2, electricity and heat generated by nuclear fission would see a small, but steadily rising cost advantage over competitive fuels. That compares favorably to the current case where nuclear generators pay for their waste storage while their competitors take the waste disposal service at the open end of their smokestacks without payments to anyone.
Veritable Who’s Who Of The Republican Establishment
George Shultz and James A. Baker III are stalwart members of the Republican establishment. Shultz first achieved national prominence as Treasury Secretary for Richard Nixon and later served Ronald Reagan as the Secretary of State. Baker served Ronald Reagan as the Treasury Secretary and George H. W. Bush as Secretary of State. They have joined the public discussion as advocates of the carbon fee and dividend model with an explanatory op-ed in the Feb 7 edition of the Wall Street Journal titled A Conservative Answer To Climate Change.
Baker and Shultz’s piece was matched by an opinion piece in the New York Times titled A Conservative Case For Climate Action. The names of the authors of that piece, Martin S. Feldstein, Ted Halstead and N. Gregory Mankiw are not as immediately recognizable as Shultz and Baker but they have been involved in national affairs almost as long in less public roles as advisors and thought leaders.
Both pieces were aimed at introducing and summarizing a report produced by the Climate Leadership Council (CLC) titled The Conservative Case For Climate Dividends. In addition to the editorial pieces, members of the CLC held a rollout press conference – launch event – that can be watched on YouTube.
Aside: It shouldn’t be a surprise to anyone that the self described “who’s who of the Republican establishment” have the capability to attract attention. End Aside.
But Isn’t Atomic Insights Critical Of The Establishment?
Atomic Insights generally takes the position that The Establishment hasn’t done a very good job in recent decades of leading our nation to the better distribution of prosperity and environmental cleanliness that would be achievable with more effective use of our systematic advantages. We have pointed out many instances in which the people who have already achieved wealth and power have erected barriers to beneficial technology developments in order to protect their own positions.
Often it seems that they overlook the enourmous benefits that modern nuclear energy technologies can provide to the rest of us.
However, we’ve been advocating for the CO2 fee and dividend plan for several years and are heartened by the fact that experienced, numerically inclined people who care deeply about our nation and its security have recognized the elegance and potential effectiveness of a tax and dividend approach.
Not surprisingly, the plan released by Republican Party stalwarts hasn’t been warmly received by all. People who have an ideological aversion to “new taxes” have raised a stink while people with an ingrained distrust of “the government” assert there is no way that bureaucrats will be able to resist grabbing some or all of the fee revenue for pet projects.
A piece from The Daily Signal titled This Republican Tax Proposal Is Anything But Conservative combines both fears and also points to a Heritage Foundation report that indicates numerous negative impacts on the economy as the result of adding costs to fuels that currently supply more than 80% of our foundational energy needs.
Those computed impacts are scary and discouraging, but they rest on a faulty set of assumptions. The most important of those assumptions is that the only nuclear option available through the period of analysis is “advanced” light water reactors costing somewhere between $5500 – $6500 per kilowatt of capacity, with that cost rising with inflation and requiring a decade or more to build.
The model Heritage uses includes factors for “learning” cost reductions for various technologies, but it assumes that advanced nuclear will improve at a rate equal to that for advanced combustion gas turbines and about 1/4th as rapidly as offshore wind, carbon capture and sequestration, or battery storage.
Because they are not yet commercially available Heritage Foundation and Energy Information Agency modeling ignores the efforts of companies like NuScale, Terrestrial Energy, ThorCon, Moltex, X-Energy, U-Battery, Flibe, Holtec, mPower, Elysium, LeadCold, Oklo, ARC, Westinghouse, Kepco, GE-Hitachi, Areva and Rosatom to continue improving their nuclear technology offerings.
Several of those names are unknown to most, but the teams working under their logos are led by people who know that nuclear energy can compete if, and only if, they find effective ways to make large, rapid strides towards simplicity and cost reductions.
If there is an established and predictably rising tax on the CO2 potential for competitive fuels, there will be greater interest in proving some of the modern designs and moving them from paper to full scale manufacturing and operations.
That’s the x-factor that many carbon fee and dividend critics overlook or purposely ignore.