Initiatives, Partners and Friends — Sep/Oct 2020
Bloomberg Green Newsletter
Oct 9, 2020
An increasing carbon tax—any carbon price, explicit or implicit—would lower emissions.
The principle is so well established that economists call it the Law of Demand: price goes up, quantity demanded goes down. Study after study shows how this and similar carbon tax plans would cut U.S. emissions over the current policy baseline by between 35% and 40% by 2030, more so than Obama-era commitments under the Paris climate agreement. All else equal, even a low carbon tax is good.
All else, of course, isn’t equal. One pillar of the Exxon-supported plan is “significant regulatory simplification.” In principle that, too, sounds good: Get rid of rules and regulations that are no longer necessary, as the carbon tax takes care of things.
Details matter. A carbon tax alone, after all, is not the solution to climate change. A tax high enough to effectively ban all fossil fuels? Perhaps. But, of course, that leaves out politics as well as the fact that most of us still rely on internal combustion engines.
“For more than a decade, ExxonMobil has supported an economy-wide price on CO₂ emissions as an efficient policy mechanism to address greenhouse gas emissions,” Exxon said in a statement. “An effective carbon policy should replace the patchwork of literally thousands of regulations, laws and mandates today that have the effect of putting a price on carbon in a costly, inefficient way.”
A closer look at the numbers reveals why Exxon and other fossil-fuel companies would support these kinds of bipartisan carbon tax proposals. Coal is already on its way out, but it’s not completely dead. Most baseline projections have coal providing somewhere between 15% and 20% of U.S. electricity by 2030. Almost any carbon tax prices coal out of the U.S. electricity system once and for all.
Katie Jordan, a doctoral student in engineering and public policy at Carnegie Mellon, has run the numbers on the $40-per-ton CO₂ tax supported by Exxon. It almost doesn’t matter if the tax grows at 5% per year or not—coal is so carbon-intensive that it’s gone by 2030. While natural gas is also projected to decrease, it still accounts for 30% of U.S. electricity generation by 2030, down from around 50% without a $40 CO₂ tax. A Rhodium Group analysis shows similar results for a $15 per ton tax, rising at between $10 and $15 per year.
The upshot for Exxon: Even a $40 CO₂ tax is barely noticeable for its oil business. It would translate to around 35 cents per gallon of gasoline at the pump. People will still drive.
Or maybe a better way to look at it is that, even with a $40 CO₂ tax, the future of internal combustion engines will depend on factors other than the tax, many linked precisely to the kinds of regulations that might be traded away in order to pass a tax. California Governor Gavin Newsom’s recent decision to phase out the sale of gasoline-powered cars after 2035 in the state, which alone accounts for around 15% of all gasoline sold in the U.S., might well foreshadow regulator actions at the federal level.
If coal gets priced out of the electricity system once and for all under a $40 CO₂ tax, the natural gas business could well be reenergized, increasing gas prices and profits—especially if it means fewer other regulations on the business. “Exxon knows that a carbon price that protects its business plan will not protect the climate,” says David Hawkins of the Natural Resources Defense Council. “No mystery that it is lobbying for the price that protects its business and damns the climate.”
Would a carbon tax alone be good for the climate? Yes, of course. But trading away an ambitious green investment and broader climate plan in favor of a “simple” carbon tax isn’t a trade worth taking. Exxon’s support for such a plan should tell us as much.
Gernot Wagner writes the Risky Climate column for Bloomberg Green. He teaches at New York University and is a co-author of Climate Shock. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Better Buildings Beat Blog | Oct 28, 2020
Over the last four years, DOE’s Smart Energy Analytics Campaign has gathered the most comprehensive dataset available on Energy Management Information Systems (EMIS) costs and benefits, working with more than 100 industry partners. In October 2020, the Campaign released its final report on the cost and energy savings possible through EMIS technologies. The report shows that energy information systems (EIS) and fault detection diagnostics (FDD) technology installations had a 2-year simple payback. The median energy saving for EIS was 3% and 9% for FDD. This significant, data-driven demonstration of cost and energy savings illustrates the impact of analytics and the possibilities of increased energy efficiency without significant investment in building upgrades.
The 104 commercial building owner participants total over half a billion square feet of gross floor area with 6,500 buildings. The campaign’s final report presents a characterization of EMIS products, monitoring-based commissioning (MBCx) services, and trends in the industry based on the data and experiences of campaign participants.
From 2016-2020, the Smart Energy Analytics Campaign brought together commercial building owners who were using EIS and FDD tools through a MBCx process. Exemplary participants received recognition each year for their achievements. The resources, guidance, and best practices have been collected in the Smart Energy Analytics Campaign Toolkit on the Better Buildings Solution Center.
Learn more about the final report and hear from Lawrence Berkeley National Laboratory staff about best practices and benefits at the “Final Results on Energy Savings, Costs, and Benefits From the Smart Energy Analytics Campaign” webinar that was hosted on October 28, 2020.
Click Here to view the recorded webinar and presentation slides.