Carbon taxes, pricing sweep statehouses and foreign governments, even as u.s. resists – houston chronicle electricity 2014


The trend has large implications for Houston, which could see consumers and businesses turn away from the product that drives the local economy for cleaner and less costly energy sources, as well as the companies with headquarters and large operations in the region. Oil companies such as Exxon and BP have said they would support a national carbon tax, viewed as the most efficient among several difficult scenarios, with the idea they would only have to comply with a single system that theoretically would add costs to products across the economy.

Instead, they face what they had hoped to avoid: a patchwork system requiring compliance across multiple jurisdictions with unique regulations, forcing the hiring of additional lawyers, engineers and staff. Beyond the United States, energy companies already are contending with differing systems.

Some Canadian provinces, for example, have imposed carbon taxes while Mexico is set to launch a cap and trade system later this year. That means a significant portion of North America will soon be under a carbon pricing scheme in one form or another.

The epicenter of the U.S. carbon market is California, which passed a law creating a cap and trade system in 2006. Under cap and trade, which is also used in Europe, limits are set on greenhouse gas emissions, requiring large polluters like oil refineries and cement plants to obtain credits, which are handed out by the government and traded, as well as sold at regular auctions.

It took seven years to launch the system, but today companies operating everything from oil refineries to power plants to factories pays roughly $15 per ton of carbon dioxide they emit – enough for Governor Jerry Brown to announce this year a plan to spend $1.3 billion from cap and trade revenues on clean energy and electric car initiatives.

And those sums will rise steadily in the decades ahead, with an annual 5 percent increase in California’s minimum carbon price written into law. Along with emissions restrictions and energy efficiency rules, the state’s power sector has cuts emissions by almost half since 2000, according to the California Energy Commission. Coal plants, one of the greatest producers of greenhouse gases, account for less than 5 percent of the state’s electricity generation in 2016, down from 16 percent a decade earlier .

A report by Columbia University’s Center on Global Energy Policy earlier this year found that a carbon price of $73 per ton, a level close to what many oil companies require new projects to account for before authorizing them, would raise gasoline prices by 64 cents a gallon – 22 percent more than the average motorist in Houston pays.

Behind the momentum for carbon pricing in state houses is a growing consciousness around the damage caused by greenhouse gas emissions. Nearly 60 percent of Americans believe that human activity — the burning of fossil fuels — is mostly behind climate change, according to a survey by the Yale Program on Climate Communications.

Four years ago Bill Bray, a retired project manager from Exxon Mobil who lives in the Woodlands, launched a local chapter of the Citzens Climate Lobby, which campaigns for a national carbon tax – though they like to refer to it as a "fee." He has since signed up more than 700 members, enough to land a meeting with Rep. Kevin Brady, R-Woodlands, the powerful chairman of the tax-writing House Ways and Means Committee.

"He said he was a tough sell on this issue, but he was very interested," Bray said. "I was scheduled for half an hour and we met for almost an hour. I asked him if he needed to go, and he said, ‘No, I’m learning stuff.’ He was especially interested in the Yale opinion survey."

With President Donald Trump in the White House, Republicans controlling both houses of Congress, and even Democrats showing little interest, the chances for any deal on carbon taxes or other pricing mechanisms, is slim, said Jerry Taylor, president of the libertarian think tank Niskanen Center, said at an event in Washington earlier this month.