THE ENVIRONMENTAL CLIMATE STORM: Transportation, GHG Emissions, and a Carbon Tax

The headlines this winter are all about the Establishment’s loss of control over our political process.  But there’s another form of chaos lurking outside.  As rising seas jeopardize coastal areas, drought forces rural families to migrate, and severe storms threaten regional destruction, we need to get serious about preventing what we can by reducing emissions and increasing our resiliency for what are already inescapable conditions.  It will take both market-wide changes that internalize the cost of greenhouse gas emissions by putting an increasing price on carbon pollution and transportation-specific policies that directly lower vehicular discharge.  These are only marginally technical problems.  The real struggle is political and unless there is a “bottom-up” movement to demand equitable as well as effective action the price of both the inevitably coming damage and the (hopefully) implemented preventative and mitigatory solutions will fall primarily on those outside the ranks of the rich and powerful.

MARKET FAILURES AND DIRECT ACTIONS

Industrialization and improved living standards are not the problem.  It’s the wasteful, inefficient, and short-sighted way we’ve achieved them.  Our transportation system is part of the problem: particularly our dependence on low-efficiency fossil fuel engines in Single-Occupancy-Vehicles (SOVs), combined with sprawling land use patterns.  As a result, transportation creates about 27% of total US greenhouse gas (GHG) emissions, mostly CO2 plus some methane and nitrous oxide (not even counting the effect of  health-damaging combustion-related particulates).  In Massachusetts, with relatively low levels of manufacturing and energy-production, the transportation sector contributes over 40% of GHG emissions.  Nation-wide, transportation-related greenhouse gas emissions have increased more over the past 23 years than in any other sector– including electricity production, manufacturing, agriculture, residential, or commercial.   Over half of transportation GHG emissions come from passenger cars, SUVs, pickup trucks, and minivans with the rest divided among freight trucks, commercial aircraft, ships, boats, and trains.

From a systemic perspective, carbon emissions can be reduced either through regulatory prohibitions or market mechanisms such as cap-and-trade or a direct GHG-emission tax  (with regularly decreasing allowed levels of discharge or increasing fees or both).  All these approaches are undercut by the seeming ease and frequency with which businesses are able to hide their dirt (thank you Volkswagen), coupled with the tendency for governments to cave to business pressure and issue so many “permission to pollute” permits that the effect is negligible.  Still, most economists favor the market strategies as less expensive and less disruptive, and point out that increased consumer costs can be offset by tax rebates, including preferential treatment of lower income or rural families.  (See here for details about a proposed carbon tax for Massachusetts. 

However, it is likely that market strategies will reduce emissions in transportation much less than in other sectors. Other than in specific niches, such as long-haul airplanes, the price of fuel is a very small and much-subdivided component of the overall cost of buying and using vehicles. Compared with factors such as distance to suppliers and markets, the fuel efficiency of a vehicle has a relatively small impact on the method and distance that people travel or ship goods.  In most situations the “pricing message” of economy-wide general emission-reduction strategies is real but relatively weak or “undervalued” by transportation consumers – a form of “market failure”.  There is also the “chicken-and-egg” problem that few people are willing to buy new-fuel vehicles until a significant servicing infrastructure exists and few businesses are willing to pay for the infrastructure until a large number of vehicles are there to use it.  A 2012 modeling study found that setting the cap-and-trade price at $20/ton and then raising it to $65 over the next 18 years would reduce electricity sector emissions by 60% but transportation’s by only 5%.  (Another complication:  in New England the major use of fossil fuels is for home heating, not car travel – the opposite of the situation in places like Texas.)

As a result, significantly reducing transportation emissions will require more direct interventions: 

  • Regulatory - mandating fuel efficiency and lower emissions (preferably in the manufacture and maintenance of vehicles, fuel, and infrastructure as well as their use).
  •  Market-based - providing incentives to use the better new equipment and to drive fewer miles. 
  • Infrastructural - providing alternatives to SOV driving. 
  • Land-use - policies and practices need to be transformed to encourage smart growth and transportation-oriented development. 

Obviously, making these changes will be disruptive, destructive of many powerful interests, and expensive.   However, the cost and danger of not making these changes is even greater,   As public health professionals keep pointing out, the costs of prevention are immediate and apparent, while the benefits are more hidden – no one sees what you didn’t have to spend on a problem that didn’t occur (which also makes people doubt that it would have happened at all).  But the oil and coal industries, as well as the automobile industry and its suppliers, have been receiving massive direct and indirect government subsidies for nearly a century – as well as being allowed to dump the cost of their disastrous externalities on the taxpaying public.   Why not redirect some of these billions into investments that benefit personal and public health?   And while you are reading this the Antarctic and Greenland ice-sheets are melting.  The average global temperature is rising.  The tides are rolling in.  At some point we’ll have no choice.

 

SHAPING THE MARKET

Free-marketers believe that consumers should have the freedom and liberty to buy what they want.  However, all but the most extreme Libertarians and pro-business zealots admit that market failures are possible, including when people aren’t told about something that’s dangerous – hence the requirement for labeling of content and hazards.  More Liberal perspectives point out that humans inherently value short-term personal impacts over long-term societal effects.  Individual purchasing decisions may lead to extremely negative population-level results – hence the push to make it harder and more expensive to buy “bad” things, preferably using the resulting tax or other related revenues for preventive education and mitigation of negative impacts.   At the next level, if something is extremely bad for society, a command-and-control framework kicks in to ensure that it simply isn’t allowed.  It turns out that there are many things that appropriately fit that niche – producing unsafe foods, cars, or other products, exposing workers and the public to deadly toxins, and more.

Regulatory strategies meet market dynamics in cap-and-trade and emission-tax programs.   Nearly 40 countries, including the entire European Union and possibly soon including China, as well as many Canadian provinces, several US States, and the Northeast Region have all implemented some type of carbon-pricing program.   The majority of these are cap-and-trade programs, all derived to some degree from the successful sulfur dioxide emissions trading system set up in 1990 through amendments to the Clean Air Act that has virtually eliminated the acid rain that was wiping out forests and killing life in ponds across the Northeast US.

The Regional Greenhouse Gas Initiative (RGGI), in which Massachusetts participates, binds each of the nine signatory states and (through separate agreements) several Canadian provinces to a variety of GHG emission reductions.  In addition to seeking less-polluting alternatives to coal (alternatives which can have other negative impacts: the Baker Administration has been criticized for relying too much on importing natural-area-destroying Canadian hydropower and ignoring the negative effects of the new natural gas pipelines power producers want customers to pay for), the RGGI also has a cap-and-trade program.  States sell three-year “permits” for specified amounts of emissions.  If the permit costs more than eliminating or offsetting the “allowed” amount of emissions, the purchaser can sell the permit (for a profit) to another business whose cost of clean-up is greater and can use the permit to put off that expense, at least for a while.   (This delaying effect is augmented through organizations’ ability to “bank” unused permits for future use).  At the end of each three-year cycle the total “cap” and/or the number of permits is reduced, raising the price and incrementally making it less profitable to delay action.  In the meantime, at least 25% of the permit revenues are distributed “for a consumer benefit or strategic energy purpose.”

A direct carbon tax is simpler to explain and administer.  British Columbia started charging for carbon in 2008 and now has the highest price for emissions of any location in North America (about $21US per ton of Carbon versus $7.50-per-ton in the RGGI), a policy pushed through by conservatives and opposed by the left – an amazing contrast with the political dynamics in the US.  As New York Times columnist Eduardo Porter recently wrote, the carbon tax tripled in 4 years, reduced emissions by somewhere between 5 and 15 percent, and “had ‘negligible effects on aggregate economic performance,’ according to a study last year by economists at Duke University and the University of Ottawa.”  British Columbia has proven that implementing a carbon tax in one state need not hurt local economic wellbeing – the usual argument against such efforts.  

But even British Columbia is beginning to hit a wall.  Carbon emissions have begun rising again.  The biggest reason is the dramatic collapse of fossil fuel prices which diminishes the impact of the carbon tax.  And the impact on transportation is approaching negligible.  Wrote Porter:   “A study by Michael Greenstone and Thomas Covert of the University of Chicago and Professor Knittel concluded that at current battery prices, for an electric vehicle to be cheaper to run than a gas-power car, oil would have to cost $350 a barrel.  [It is currently around $30.] To make up the difference [even from last year’s average of $50 a barrel] would require a carbon tax of $700 a ton of carbon dioxide….[Even to hit the Province’s much more modest emission reduction goals,] the tax must start increasing again in 2018, at a rate of 10 Canadian dollars a ton a year, perhaps all the way to midcentury.”   Unilaterally raising the cost of fossil fuels this much would be economically disastrous – it requires national or even hemispheric action, which the newly elected Canadian Liberals may contemplate but the US’s Republican Congress is unlikely to do.

 

CHANGING VEHICLES, FUELS, AND MODE

In 2012, just before oil prices began dropping, the Obama Administration raised manufacturers’ fleet-average MPG requirements (the CAFE standards) to 54.5MPG by 2025 which will reduce annual U.S. oil consumption by an estimated 12 billion barrels.  But recent revelations about Volkswagen and other firms, as well as inadequacies in compliance testing, raise doubts about the willingness of manufacturers to comply.  Republicans have already pledged to roll back these regulations if they take the White House this year.

Consumers also need to be encouraged to trade in their old, less efficient cars for the new ones.  Programs that provide “cash-for-clunkers” and rebates for the lowest-emission cars have been shown to have immediate impact and are politically popular.   Less popular, but just as important, are “pay-at-the-pump” car insurance programs, setting an emissions-based sliding scale for registration and inspects fees, raising the gas tax (with rebates to low-income drivers), and other methods of increasing drivers’ awareness that using a car is costly.

The most crucial component is giving people viable alternatives.  We have to massively expand our public transportation system both in our urban areas and beyond – trains, busses, trolleys, light rail, and everything else.  We have to encourage car sharing methods of every type, from taxis and app-call to car-share and carpools (although self-proclaimed “pirates” like Uber’s CEO should be treated in accordance with their self-description).  We also have to take bicycling and walking more seriously.  Cycling will never be the primary mode of transportation and walking will never serve for more than short trips, but as the national Complete Streets/Smart Growth Coalition points out, “nearly fifty percent of all trips in metropolitan areas are three miles or less and 28 percent are one mile or less -- distances easily covered by foot or bicycle. According to multiple analyses, if each day Americans substituted driving with walking or cycling for the distance recommended for daily exercise, the United States could reduce oil consumption by between 35 and 38 percent.”

Spurred by the requirements of Massachusetts’ 2008 Global Warming Solutions Act, MassDOT created the GreenDOT program to increasing its internal efficiency and adopted a Mode Change goal of tripling the share of travel made by transit, bike, and foot by 2020.   While the language has changed with the transition from the Patrick to the Baker Administrations, and the MBTA financial and operational crises have taken center stage, MassDOT still seems to be moving in a positive direction.    Although Governor Baker has not provided for a cabinet-level position to oversee the agencies of Transportation, Housing, Environment, and Energy, which existed under former Governor Weld, there are some signs that inter-Secretariat communication has increased and transportation-oriented development is a priority.

 

GETTING SERIOUS

Despite the refusal of most US Republicans to admit that global climate change is real, or is happening as the result of human activity, pushing for prevention and mitigation policies and programs on the national level is a survival imperative.   But while we work through that effort, we need to also take action at the state level.  In Massachusetts, there are two pending carbon tax bills in the Senate submitted by Senator Michael Barrett (S.1717) and Senator Marc Pacheco (S.1786).  According to 350.org Massachusetts for a Better Future, “Senator Barrett’s bill rebates all the revenue, and gives extra money to groups like rural drivers who have to travel longer distances and use more gas. Senator Pacheco’s bill rebates 80% of the revenue and spends the rest on clean energy and public transportation. Both of these bills have their strengths…”

At the transportation-specific level we also need to continue ramping up our MPG requirements for new cars (perhaps also raising the initial sales tax and annual excise tax for lower MPG vehicles) and lowering our allowable emission levels at the annual inspections.  We need to raise our gas tax – especially now that the market price is so low.  We need to encourage new technologies and markets in shared transportation services.   We need to use these revenues – and more – to reverse the current trend of raising fares and reducing service on our mass transit systems; instead, we should be radically upgrading and expanding non-SOV infrastructure, including pedestrian and bicycling facilities, in every part of the state, and particularly in our urban areas.

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Thanks to Erica Mattison, Gabby Gabrielle, and Larry Rosenberg for comments on previous drafts.  All remaining errors and opinions are my responsibility.

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Related previous posts include:

>TRAFFIC CONGESTION: WHY IT’S INCREASING AND HOW TO REDUCE IT

>MOVING BEYOND CAR LEVEL OF SERVICE (LOS): Measurable and Meaningful Criteria for Transportation Investments, Project Designs, and Development Mitigation

>DANGER FROM BELOW: Our Leaky Gas Pipe Infrastructure

>The Three Legs of a Healthy Built Environment: Smart Growth, Active Transportation, Human-Scale Architecture

>ZONING REFORM: Unlocking Investment in Transportation, Health, and Livable Communities

>LEVERAGING PUBLIC SPENDING FOR MAXIMUM IMPACT: Do Multiple Goals Make Projects Better — or Unmanageable?

>BUS SYSTEM IMPROVEMENT IS KEY TO TRANSIT: Local, Improved, Express, and Bus Rapid Transit

 

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  • commented 2016-04-03 10:58:44 -0400
    Terry Dangel pointed out that I’ve created an incorrect perception by describing the Massachusetts carbon-pricing proposal (as well as many of the others) as a “tax”. He wrote me to say: “the bill is being considered as a fee, not a cabon tax, because all of the revenue collected is returned to the people: it is revenue neutral and not a tax.” He’s politically right, although I think legally the fact that it is redistributed in some way doesn’t make the program any different than the taxes government raises to give back in the form of social services. Still, language counts (“death panels” anyone?) and we do ourselves no benefit by allowing the anti-tax climate to shape the way we talk about things.
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