Taxing Coal - It's Electric!
It has been a long time since I published but here is a new wrinkle on an old problem.
Taxing gasoline or oil and rebating the tax back to the consumer has the advantage that it immediately incents people to save energy as well as give them the opportunity to purchase energy or its utilization in a way that is most economical for them. They can choose plug in hybrids or biofuels or public transportation based on how it suits their demands and the cost of the supply. However, when it comes to electric generation the purchase and utilization is collective. The consumer doesn’t have control over the source of the energy generation. Higher energy taxes would promote conservation but the end consumer would have no power to decide how the power he uses is generated.
To solve this problem I would propose the following. This solution would use energy taxes to increase the cost of fossil fuels and return every penny back to the consumer in a way that promoted conservation as well as provide funds to develop alternative energy sources quickly and efficiently.
1. Tax electric generation based on the carbon emissions of the fuel used. Coal goes from least expensive to most expensive. Renewables are the cheapest.
2. Rebate half the tax to all consumers at a flat rate no matter how much energy they use. People get a break on their bill with the biggest breaks going to the most conservative.
3. The other half of the tax is invested in renewable or non-carbon producing energy generation by the energy companies. The consumer gets stock in the company equal to his or her energy rebate. Interest and dividends can be use to further decrease their energy bills or the stock can be sold, traded, given away, or inherited.
All the tax reverts to the consumer. Half comes back in a flat rebate; the other half comes back as a real asset in a conservative investment vehicle. Energy companies have large sums of money and mandates to invest in non-polluting energy sources. Another benefit might be less NIMBYism. The windmill in your harbor is a lot better looking when it is YOUR windmill.
This plan would probably best be suited for residential electric customers. An alternative tax structure or Cap and Trade might be a more suitable model for industrial energy consumption.
Taxing gasoline or oil and rebating the tax back to the consumer has the advantage that it immediately incents people to save energy as well as give them the opportunity to purchase energy or its utilization in a way that is most economical for them. They can choose plug in hybrids or biofuels or public transportation based on how it suits their demands and the cost of the supply. However, when it comes to electric generation the purchase and utilization is collective. The consumer doesn’t have control over the source of the energy generation. Higher energy taxes would promote conservation but the end consumer would have no power to decide how the power he uses is generated.
To solve this problem I would propose the following. This solution would use energy taxes to increase the cost of fossil fuels and return every penny back to the consumer in a way that promoted conservation as well as provide funds to develop alternative energy sources quickly and efficiently.
1. Tax electric generation based on the carbon emissions of the fuel used. Coal goes from least expensive to most expensive. Renewables are the cheapest.
2. Rebate half the tax to all consumers at a flat rate no matter how much energy they use. People get a break on their bill with the biggest breaks going to the most conservative.
3. The other half of the tax is invested in renewable or non-carbon producing energy generation by the energy companies. The consumer gets stock in the company equal to his or her energy rebate. Interest and dividends can be use to further decrease their energy bills or the stock can be sold, traded, given away, or inherited.
All the tax reverts to the consumer. Half comes back in a flat rebate; the other half comes back as a real asset in a conservative investment vehicle. Energy companies have large sums of money and mandates to invest in non-polluting energy sources. Another benefit might be less NIMBYism. The windmill in your harbor is a lot better looking when it is YOUR windmill.
This plan would probably best be suited for residential electric customers. An alternative tax structure or Cap and Trade might be a more suitable model for industrial energy consumption.
posted by Geoff Berg | 6:35 PM
1 Comments:
Geoff,
A long time indeed. Nice to hear from you.
I think taxation based on emissions is the only way. It allows consumers and the market to decide which providers to patronize. And, more importantly, it make conservation an ECONOMIC choice instead of just being a MORAL choice the way it is today.
More. Tell us more.
stefano
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