Sunday, September 22, 2013

Climate, Keystone and the problem of fossil fuel demand

American political conservatives like to say that their strategy of tax cuts all the time is designed to "starve the beast." The "beast," of course, refers to government, and "starving" it means reducing its revenues through tax cuts in order to spur corresponding cuts in spending. They liken their strategy to reining in a profligate child by reducing his or her allowance.

Whatever one believes about the efficacy of this strategy, it is now being employed in surprising ways in a new field by unexpected people. The brilliant symbolism of opposing the Keystone XL pipeline is intended to highlight the need to address the causes of climate change by reducing our use of carbon-based fuels. The reasoning in this case is that stopping the pipeline would prevent the increased exploitation of what opponents call the "carbon bomb" of the Alberta tar sands. Stopping the Keystone XL would supposedly prevent the companies controlling the tar sands from having access to oil markets. In effect, activists are trying to starve the fossil-fuel-consuming beast that is the global economy.

If this is the goal, then this strategy must be labeled an instant failure. The tar sands oil companies are already exploring alternate routes for shipping synthetic crude derived from tar sands via other proposed pipelines. One such pipeline, Energy East, would move oil from western Canada to eastern Canada, finally ending the bizarre situation in which Canada, one of the world's largest oil exporters, must import close to 40 percent of its oil needs. The country currently lacks sufficient pipeline capacity to bring oil from western Canada where it's found to eastern Canada where it's mostly consumed.

These developments take nothing away from what has been a very successful strategy by climate change activists to rally people behind fighting against something concrete as a way of advancing political awareness and action on climate policy. But this does point up a problem with attempts to reduce fossil fuel consumption by organizing people to oppose specific distribution projects.

Attempts in my own newly adopted home of Oregon to stop the construction of coal export terminals are understandable given the foreseeable problems of such terminals. The transport of coal through the area is not without environmental consequences. And, having visited friends who live near train tracks on the upper Mississippi River, a key conduit for coal trains, it is no picnic to have scores of such trains passing through town each week. They back up traffic and shake nearby homes at their very foundations each time they pass.

But once again, if these coal export terminals aren't built, coal producers will find other ways to transport their coal to market.

The only case in which production might be reined in by such tactics is natural gas. Natural gas cannot be easily transported by means other than pipeline. It cannot, for instance, be loaded on trucks or trains economically. To send natural gas overseas by ship, it must first be turned into liquid form and then transferred to pressurized tanks on specially outfitted carriers.

Activists in the United States who have opposed these liquefied natural gas export facilities are losing the battle as the federal government continues to approve new facilities, believing (wrongly) that U.S. production of natural gas is in a long-term upswing.

Just as the "starve the beast" strategy has failed to bring down government spending--politicians have found out that they actually have to vote for cuts in specific programs to do that--so, too, the strategy to reduce production of fossil fuels by stopping the construction of specific distribution facilities is bound to fail.

If reducing consumption of fossil fuels is the goal, what we actually need to do is strike at demand. The simplest and most effective way to do this is to levy high and rising taxes on fossil-fuel-based energy. The Europeans have done this for a long time, and their per capita energy consumption is half that of Americans.

Those who advocate market-based approaches to constructing our energy future ought to be clamoring for a high and rising carbon tax. Such a tax doesn't tell industry or individuals specifically how to move from carbon-based fuels to something else. It just tells them that they need to. As such, it would be one of the most effective measures we could take to spur innovation in energy efficiency and renewable energy production.

(Beyond this are more direct measures such as applying passive house standards to new construction and retrofits for both residential and commercial buildings, standards that reduce heating and cooling energy use by 80 to 90 percent. High fees or taxes for driving a personal automobile and appropriate infrastructure changes would incentivize people to shift to car pooling, car sharing, bicycling and mass transit. Even appeals for civic responsibility designed to make it "cool" to be energy efficient need to be deployed.)

Stopping dirty coal export facilities or tar sands pipelines is actually a much easier sell than getting people to embrace voluntarily much higher energy prices (even if the rise occurs gradually as energy taxes are increased incrementally each year). And yet, such a strategy would go far in eliminating the incentive to build the very facilities which protesters are currently trying to stop.

Logic is on the side of higher energy taxes. But can logic prevail when we are so fearful as a society of a future without fossil fuels that we won't implement the one simple measure that would speed the inevitable energy transition--and thereby avert a climate change or energy supply catastrophe that would force our hand anyway?

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

3 comments:

Rob Ryan said...

Generally I agree,particularly with respect to the taxation of carbon. But I will say (despite being in favor of Keystone) that removal of a desired distribution facility likely has the effect of increasing carbon prices. Producers will (like drillers) go after the most economically effective method first. Failing that, they'll turn to the next most economically effective and so on. This will raise the end user price, though in a much less transparent way than a simple tax.

Do you propose permitting such facilities but trying to make them economically ineffective through taxation?

Anonymous said...

Wait, isn't the reason natural gas is so inexpensive in the US compared to other countries due to the fact that we can't currently export it very easily? And the reason oil is the same price in the US even with production up is because we can export it easy and therefore pay global prices? Then stopping the export of coal will just keep the price down and encourage use right? And won't a tax on energy just hurt poor people? The rich will continue to drive their cars. And the added cost of energy on industry will hurt the poor by forcing jobs overseas to where energy is cheaper. But the rich will continue to profit from the work down overseas. Have you thought of this?

Kurt Cobb said...

Rob Ryan is partially correct. If a fossil fuel distribution facility doesn't get built, the price of fossil fuels to those it would serve will be higher than it otherwise would be. But, of course, if the fossil fuels are stuck close to their area of extraction, the price there will tend to be lower than it otherwise would have been with the new distribution facility. Price is relative to your location with respect to the resources in question.

Facilities built elsewhere as a result of a successful protest are not necessarily going to be less efficient. They might be and they might not be. So, it's not always clear whether preventing the building of some facilities will lead to the building of less efficient, more expensive facilities elsewhere.

As for the permitting of specific facilities, I take no position other than the one in the piece. If we have a high enough carbon tax, they won't get built.

Anonymous merely repeats conclusions stated in my piece and states obvious, but irrelevant facts as if that challenges my premise, namely that protests of specific fossil fuel distribution facilities are unlikely to put any significant dent in fossil fuel consumption.

But, then he goes on to shed crocodile tears over the plight of the poor under my proposed carbon tax. It is my experience that climate change deniers are concerned about the poor in exactly this one instance and on no other occasion.

And, of course, they forget to mention the obvious fix which I favor and have discussed elsewhere, namely, a rebate to taxpayers based on their income to mitigate the outsized effects of a carbon tax on those with lower incomes who spend a higher percentage of their incomes on necessities. The rebate is large for small incomes (in some cases fully offsetting the tax) and tapers to nonexistent for high incomes.

It would help, of course, if all nations adopted a comparable carbon tax, or if this tax where administered by an international body to make sure it is collected and enforced everywhere.

But, the cost advantage enjoyed by countries which choose to put all of humanity in peril could be erased by a import tariff (based on the carbon tax) that would tend to equalize prices of goods, say, made in China, with similar ones made in the United States (or which could be made here) were in not for the carbon tax.