Marc Hafstead of the nonpartisan think tank Resources for the Future, along with Lawrence Goulder of Stanford University, have come up with an idea that could potentially address two important problems in one broad policy action. The first, which is where they’ll likely began, is the problem of corporate inversions. No, that’s not corporations standing on their heads; it’s when they buy another company in a country with a lower tax rate so that they can begin paying taxes there instead of here in the U.S., where they receive the most government services. The other problem is climate change.
The two did an analysis of the gross domestic product (GDP) impact of a revenue-neutral carbon tax, under three scenarios. In the first scenario, revenues are returned directly to Americans in a lump sum. The second uses the revenue to pay for tax cuts on individuals, while the third did the same, except that the tax cuts would go to corporations.
In all three cases the impact was small. Based on a carbon tax beginning at $10 per ton, and then increasing each year by 5 percent, they found that the GDP impact by 2040 would range from 0.24 to 0.56 percent of GDP, with the lowest stemming from the proceeds being used to reduce corporate taxes, while the highest came from the lump sum rebates to individuals.
The reasoning behind their paper goes something like this: There is a perception that U.S. corporate tax rates are too high, making it difficult for American companies to compete. Indeed, nominal U.S. corporate tax rates are among the highest in the world. But that is not what most companies pay. Indeed, the U.S. corporate tax rates are a bit like the MSRP on new cars. Nobody actually pays that amount. U.S. tax laws are filled with loopholes that companies routinely take advantage of. According to Edward Kleinbard at USC, even though the nominal tax rate in 2010 was 35 percent, in fact, companies paid an average of only 12.6 percent. Most people remember the headline that GE paid zero taxes a few years back. According to Citizens for Tax Justice, 26 companies including GE, Boeing and Verizon paid no taxes at all during the period from 2008-2012. All were presumably playing by the rules, using legitimate deductions that are part of the federal tax code. Some companies are better at playing this game than others.
With another school year about to start, it’s a good time to reflect on the basic sciences: physics, chemistry and biology, and how important our understanding of them can be in dealing with what have become substantial threats to our existence.
A relatively small change in the mixture of gases that constitute our upper atmosphere has altered an obscure physical property known as its radiative transmissivity. The additional gases are the byproduct of the fossil fuel energy sources that have made our modern way of life possible. The result is that heat emanating from our planet that formerly passed into space is now being reflected back to Earth, resulting in a warmer planet. While this might sound benign, it’s is causing massive melting of polar ice, releasing tremendous amounts of moisture into the ocean and atmosphere, and dramatically altering our climate. That’s physics.
Synthetic fertilizers containing nitrogen, phosphorus and potassium, primarily produced from natural gas and ammonia, have powerfully enhanced our ability to grow food to feed our ever-increasing population. However, as soils have changed their composition in response this modified diet, their ability to hold moisture has lessened. This means that heavy rains produce runoff, allowing large amounts of these chemicals to be washed into streams, rivers and lakes, altering their composition and, in some cases, making the water unfit to drink. That’s chemistry.
Micro-organisms that survive by invading animal hosts in the wild sometimes evolve to live on human hosts as well. These new diseases can appear suddenly, as in the most recent Ebola outbreak, and given the speed and intensity which we now travel and interact, can also spread rapidly before any treatment or cure can be developed. Massive epidemics that can threaten the existence of entire populations are now increasingly possible. That’s biology.
These existential threats underscore the need for increased emphasis on the STEM (science, technology, engineering and math) disciplines that have been in decline here in the U.S. in recent decades.
Public relations (PR) is a powerful but unseen force in our society. Companies hire PR firms to make them look as good as possible. When the companies do something they are proud of, they do everything they can to make sure everyone hears about it (including, sometimes contacting reporters like us). When the companies do things that are not so great, they “spin” the news to make it sound harmless. PR firms make their money from fees paid by their clients and have typically been value-neutral, meaning that they promote whatever their clients want them to promote.
So it’s a pretty big deal when a number of the largest PR firms come out, in response to surveys administered by the Guardian and the Climate Investigations Centre, and collectively announce that they will no longer represent firms that want to spread messages denying the reality of man’s role in climate disruption. Among these firms are: WPP, Waggener Edstrom (WE) Worldwide, Weber Shandwick, Text100 and Finn Partners.
Weber Shandwick spokeswoman Michelle Selesky told the Guardian that, “We would not support a campaign that denies the existence and the threat posed by climate change, or efforts to obstruct regulations cutting greenhouse gas emissions and/or renewable energy standards.”
Likewise, Rhian Rotz, speaking for WE said, “We would not knowingly partner with a client who denies the existence of climate change.”
WPP, based in the U.K., is the world’s largest advertising firm by revenue. They commented that, “We ensure that our own work complies with local laws, marketing codes and our own code of business conduct. These prevent advertising that is intended to mislead and the denial of climate change would fall into this category,”
However, a spokesperson noted that individual entities within the organizations remain free to make their own client decisions, which could include “campaigns opposing regulations to cut greenhouse gas emissions.”
Notably absent from this group was the U.S.-based Edelman, the largest, independently-owned PR firm in the world. Edelman’s sizable client roster includes the American Petroleum Institute, a group that actively campaigns against climate regulations, as well as Shell and Chevron. The firm took the position that it evaluates clients on a case-by-case basis. Spokesman Michael Bush politely dodged the question, stating only that, “Expanding the dialogue in a constructive manner, and driving productive outcomes to solve energy challenges are the key criteria for evaluating client engagements.”
We write a lot of stories these days about the remarkable growth of solar and wind power and how they are truly transforming the energy landscape. Another important component of this sea change is energy efficiency (EE), though we haven’t been writing as much about that, perhaps because it’s not as sexy and exciting as shiny new solar panels or towering wind turbines. But there is another reason: Investment in energy efficiency projects has been in a long-term decline, going back to a peak of about $2 billion annually in 1992, which has drifted down to about $1.2 billion in recent years.
Last year, utilities in Indiana were ordered to refund $32 million to ratepayers. Those funds represented the balance of $74 million that was collected for energy efficiency projects, many of which were never implemented.
In Nevada, EE savings declined 61 percent last year, compared to those realized four years earlier. Reports blamed a lack of state policies and incentives for the decline. This seems apparent when comparing Nevada with neighboring Arizona where utility customers saved three times as much due to efficiency measures, despite the similar climate.
State incentives constitute one factor in the decline; financing is another. A program called PACE had been quite popular until 2010, when it ran into trouble. PACE, which stands for Property-Assessed Clean Energy Financing, essentially allowed homeowners to borrow money from the city for clean energy and energy efficient upgrades, and then repay the loans through annual property tax assessments. Complex financing rules made it impossible for the loans to be sold to Fannie Mae and Freddie Mac for consolidation, which really put a damper on things.
Chris Hummel, chief marketing officer of Schneider Electric, thinks that all of that is about to change. After ticking off some $7 billion in new financing going into efficiency from state banks in Europe and the U.S., he told the Guardian the reasons why energy efficiency is about to come roaring back.
There has been a well-documented trend over the past 50 years to tweak the rules of the economic game to favor those at the top. The movement has been called “trickle-down economics,” among other things. Though it was mostly perpetuated by greed, it was consistently justified as being good medicine for the economy, even if it tasted bitter to those at the bottom, or even to those in the middle who found themselves drifting in that direction.
Now, a new report, issued by mainstream economic authority Standard & Poor’s (S&P), acknowledges, perhaps for the first time, that the extreme level of income inequality in this country is actually hurting the economy. In fact, the revered oracle has actually cut its forecast for economic growth (from 2.8 percent to 2.5 percent) based on these conditions.
The rationale behind this is simple. Consumer spending is responsible for 70 percent of GDP. Poor people don’t have much to spend, but they tend to spend every bit of it. Wealthy people tend to spend a smaller proportion of their incomes. So, as more and more wealth is concentrated in the hands of the very rich, less of it is circulated through the economy. That’s exactly what has been happening. Between 2009-2010, for example, income growth of the top 1 percent was 15 times higher than everyone else. Setting policy that gives those at the bottom more, by adjusting tax rates or increasing wages, will provide more direct benefit to the overall economy than piling ever more into the bulging bank accounts of those at the top.
This has been the subject of some controversy, with those in the investment community claiming that investment, not consumer spending, is the major driver. That idea is now being debunked by S&P, which acknowledges that “changes in federal tax policy over the years has exacerbated inequality, as tax rates for top earners have fallen faster than rates for average Americans.”
It may come as a surprise to learn that much of the coal that is mined in this country is mined under lease arrangement on federal land. The Bureau of Land Management (BLM) maintains coal leases, primarily in the West, on 570 million acres of land. If that sounds like a lot, it is. That constitutes an area larger than Alaska, California and Georgia combined, or about a quarter of the entire country
That includes, among other things, most of the Powder River Basin in Wyoming and Montana, which currently supplies 40 percent of all the coal produced in this country. Because this land belongs to the American people, its commercial uses should be generating revenue to help offset taxes, in the form of rents and royalties.
It does indeed do so, though some have questioned whether the amounts collected represent the true market value of the coal, or if, in fact, artificially low prices are not only depriving the American people of fair revenues, but also encouraging more coal mining and coal burning than might otherwise occur if the coal were priced fairly.
A report produced by Sightline Institute, entitled Unfair Market Value, alleges that the BLM does not include the substantial markup that coal companies receive when they sell coal overseas, in assessing the value upon which royalties are based. This, they claim, leads to millions of dollars of lost taxpayer revenue each year.
Even as the U.S. is moving away from coal, both in response to the increased availability of domestic natural gas, as well as the call to reduce carbon emissions, exports of coal, particularly Western, coal have soared from 7.6 million tons per year during 2006-2009, to 19 million tons per year in 2010-2012.
A friend and I happened to be traveling through the far reaches of Western New York this weekend, and the weather was getting hot. So, we took a little detour to a park with a beach that fronted on Lake Erie. The place was pretty deserted except for a family who were picking up rocks and an old man looking for sea glass. The water was green with large sections that were brown. A couple of the kids were ankle-deep in the water. Hoping for a swim, my friend asked the mother if anyone swam around there. She made a face and said, “I wouldn’t.”
We didn’t and that was probably a good thing. On our way out we saw a sign that said, “No Swimming by Order of the Health Department.” When we got home we heard the news about Toledo, Ohio, which lies along the western edge of Lake Erie, where health officials had advised residents not to drink the water coming out of their faucets. The order also said not to use it for brushing teeth or give it to pets. Children and the elderly were also advised not to bathe or swim in it.
This may confirm suspicions that many of us have already had. Besides leading the world in consumer debt and military spending, the U.S. can now add climate denial to that list. That is, according to a Global Trends survey by the U.K.-based market research firm Ipsos MORI. The study polled 16,000 people in 20 leading countries on eight different topics, including the environment.
Not only was the U.S. last, but it was last by a considerable margin. Consider the following question: “To what extent do you agree or disagree, the climate change we are currently seeing is largely the result of human activity?” A mere 54 percent of respondents from the U.S. agreed. Compare that with 93 percent from China and 84 percent from both Argentina and Italy. India, France, Turkey, Spain, Brazil, Belgium, South Korea and South Africa all scored 75 percent or higher. Other similar questions yielded similar results. These results were in alignment was data compiled by Pew Research a year ago, which examined the issues that people in various countries considered the greatest threats.
Tied for second-to-last with 64 percent were Great Britain and Australia. What do these three English-speaking countries have in common? Among other things, global media holding company News Corporation, the world’s second-largest media conglomerate, owned by Rupert Murdoch. Canada, which is also blessed with Murdoch’s version of the news, was only slightly better, with 71 percent agreeing.
Last month, we discussed the implications of indoor air quality (IAQ). We asked why you should care, and came up with a number of answers focused on health. If that weren’t reason enough, there is another reason that IAQ should be of particular interest to business owners: employee productivity.
A number of credible studies have shown that indoor air quality can have a significant effect on employee productivity. And we’re not just talking about air that’s so bad that you can’t see or breathe. Generally speaking, OSHA takes cares of those (though I could tell you a story about an agricultural processing job I once worked in Arkansas). What we’re talking about here is much more subtle than that.
For example, a series of laboratory studies at Lawrence Berkeley Laboratory (LBL) examined typing speed and accuracy, as well as addition and proofreading error rate, with and without a section of 20-year-old carpet present in the room. The carpet, which was known to emit volatile organic compounds (VOCs), was hidden from the subjects. (VOC s are used and produced in the manufacture of paints, adhesives, petroleum products, pharmaceuticals, dry cleaning agents and refrigerants.) Results found a 4 percent improvement in speed and accuracy when the carpet was absent. The amount of ventilation used also had a significant impact. Results above were achieved with 20 cubic feet per minute (CFM) per person being blown into the room. Dropping that down to 6 CFM per person led to an additional 4 percent decrease in performance. Increasing the ventilation to 60 CFM per person achieved the same result as removing the carpet.
Another study found the presence of CRT monitors led to a 16 percent increase in typing error rate. A similar study found a 10 percent improvement in call center talk times when additional fresh air ventilation was provided. In many of these studies, the inhabitants made no complaints and were unaware of any issue with respect to the air quality.
People rarely use the expression “ignorance is bliss” when referring to themselves. To do so would be to suggest that they at least know that there is something that they don’t know, even if they don’t know what that is.
When it comes to climate change, there is a lot of ignorance being bandied about — both about the weight of scientific understanding and evidence that exists underscoring the role of human activity, and the economic and social impact of dealing with the crisis in a meaningful way.
Despite the efforts of a regiment of doubtmongers, assigned to keep the debate going, most Americans have heard enough of the science and understand that the crisis is real. And even among those who are skeptical, many understand that making this country more efficient in every major aspect of the economy would be a good thing, even if were undertaken on the basis of a miscalculation.
Given the inability of Congress to act effectively, the president has given executive orders to the Environmental Protection Agency to reduce power plant carbon emissions, which will be achieved through the Clean Power Plan (CPP).
But there are still a number of holdouts, in a position to make a difference, who continue to gum up the works. Among them are Sen. James Inhofe of Oklahoma and Gov. Rick Perry of Texas. Both of these men insist not only that the science establishing human’s role in climate change must be wrong, but also that doing anything about it would represent economic disaster. I won’t take the time here to recount the volumes of data refuting their first point. Instead I’d prefer to focus on a new report issued by the Center for Strategic and International Studies and the Rhodium Group, which looks at “The Economic and Energy Impacts of Power Plant Emissions Standards.” This report sheds some light on the distinguished gentlemen’s second point: The study finds that both of the states these avid deniers and obstructers represent and vow to protect, Oklahoma and Texas, would, in fact, benefit by following the EPA rules rather than resisting them.
Elon Musk continues to defy the conventional wisdom of the armchair pundits, who claim that widespread adoption of electric cars is still decades away. They claim electric vehicles (EVs) are impractical, unappealing, too expensive, with no charging infrastructure, plus they take too long to charge. One by one he has removed these barriers with his Tesla cars.
His first two models are selling well, despite efforts on the part of several states to block the company’s direct-sale model. Despite this, and the lofty price tag, Teslas are consistently the top-selling electric cars on the market. (We’ll come back to that price issue in a minute.)
Tesla has set up a supercharger network across the U.S. that will allow transcontinental drives (as long as you follow certain routes). The supercharger technology is exclusive to Tesla cars which are configured to accept higher current levels, allowing them to charge relatively quickly, at least compared to other EVs.
Still, it can take an hour or more to charge up, more time than most people want to spend at a gas station. Sure, you can stop for lunch, if that fits into your schedule, but we Americans tend to be busy people who are in a hurry as often as not. Tesla has an answer to that, too.
Will we ever be able to get all of our energy from renewable sources? There is certainly enough supply available. Enough sunlight hits the Earth every hour to power the entire human world for a year. But right now, it would take a 310,000-square-mile solar farm (about twice the size of Oregon), or 6 million wind turbines to capture enough sunshine or wind to provide all of the world’s electrical power.
If that sounds like a lot, it is– which is why we will continue to use a mix of sources including natural gas and coal to meet our electrical demand for some time to come. The renewable numbers will continue to shrink as long as the technology and our efficiency improves faster than the population grows. In the mean time, coal, despite being the dirtiest fuel available, is still abundant and still produces 30 percent of the world’s energy. In 2012, the U.S. used coal to produce 43 percent of our electricity, while in China coal produced 81 percent. In other places, like South Africa, it contributed over 90 percent.
While there are a number of problems associated with burning coal, the biggest is the amount of carbon dioxide it produces: Coal combustion generates anywhere between 200 and 230 pounds of CO2 for every million BTUs of heat produced. That is roughly twice the amount emitted by natural gas.
The new EPA Clean Power Plant rule will put pressure on utilities to either clean up their coal plants or switch to a cleaner fuel. Many are already switching to natural gas, but another approach that has been talked about for a long time, carbon sequestration, is finally getting a chance to demonstrate its capabilities in a full-scale commercial operation.
Just this week, NRG announced the Petra Nova Carbon Capture Project, the world’s largest post-combustion carbon capture power generation plant. The project will be a joint venture between NRG’s wholly-owned subsidiary Petra Nova Holdings, and JX Nippon Oil & Gas Exploration Corp.
According to the press release, this commercial-scale carbon capture and storage (CCS) system will utilize existing technology to capture 90 percent of the carbon dioxide (CO2) in the processed flue gas from an existing coal plant in Fort Bend County, southwest of Houston. Construction on the project has already begun.
As we push towards a radical overhaul of the world economy, with the goal of establishing a sustainable human presence on the planet, it is important to manage our progress. As quality expert Edward Deming once said, “You can’t manage what you can’t measure.” It’s a good thing, then, that we have organizations like Clean Edge to provide extensive benchmarking services in the clean technology and sustainability area.
This week the organization released its 2014 Clean Tech Leadership Index. The report tracks clean technology progress in all 50 states, as well as the top 50 metropolitan areas in the U.S.
So this is what American politics have come to in 2014. New Jersey Gov. Chris Christie appears on NBC’s Meet the Press, then quietly jets out to Vail, Colorado to appear at an exclusive and secretive Koch Brothers strategy meeting. Not a word of this was spoken to his constituents back home. He spoke to an audience of some of the wealthiest people in the country, who have become considerably wealthier over the past decade, about how “America is careening into an economic crisis.” He boasted to the ultra-conservative crowd that “the governorship in New Jersey is the most powerful constitutional governorship in America.” I take that to mean he has extraordinary executive powers to do his and their political bidding.
One step that he has just recently taken is to withdraw New Jersey from the Regional Greenhouse Gas Initiative (RGGI), something he has been threatening to do for several years.
RGGI is a voluntary alliance between nine mid-Atlantic and New England States, which have agreed to work cooperatively to reduce carbon emissions through the use of emission credits that could be traded within the cooperative. RGGI states have reduced their emissions at a higher rate than their non-RGGI counterparts. The price of carbon credits has climbed to $4/ton, another sign that the program is working. If there is a problem with the system, it is that it hasn’t been aggressive enough in locking in reductions. Christie claimed, wrongly, that participation would make the state less competitive. Numerous studies and analyses have shown that sustainable enterprises do better, by reducing costs, avoiding penalties and attracting the best talent.
The governor was praised for his move by David Koch, who described it as a “commitment to the free enterprise system.” This commitment to free enterprise apparently lapsed when Christie banned EV maker Tesla from selling its cars in the Garden State. Tesla’s direct-to-consumer marketing poses a threat to the politically-connected car dealer networks, long known for their campaign support, which hold a monopoly in the state. Such contradictions are nothing new for the governor, who said back in 2011, that “the future for New Jersey is in green energy.” Of course that was before he became involved with the Koch brothers and their extensive oil and gas interests. Since 2011, he has scaled back renewable energy goals and rebates for residential solar, as well as vetoing a bill that would have banned the disposal of fracking waste.
This is a little ironic; no, it’s more than a little ironic. Congress won’t act on climate change for fear of adversely impacting businesses. So, cities and states are picking up the slack, taking aggressive action, in order to protect their… wait for it…businesses.
A new report entitled Protecting Our Capital, released by the CDP, claims most cities recognize that climate change poses a considerable risk to their local businesses and therefore their economy and well-being. Of course, it’s only a small fraction of businesses that are actively lobbying against climate action — mostly those in the fossil fuel industries who have the most to lose. Most of them now acknowledge the problem and, even as they hope to slow government action, are moving to address the challenges.
The report, which is based on responses from 207 cities, documents the recognition of the interdependence between cities and businesses. Of those surveyed, 76 percent of cities said that climate change could impact business, while businesses said that 75 percent of their biggest climate-related risks could also be seen as threats to their respective cities.
What kinds of risks are they talking about? These could include rising insurance costs, loss of tourism, supply chain issues and a lack of raw materials. Drivers of these costs will stem from storms and flooding, sea level rise, temperature increases, drought, and other weather-related disruptions and destructions.
A total of 757 carbon reduction drivers were reported.