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November 2016

The Case for a Carbon Tax

As climate change becomes an accepted notion, how will Americans decide what uses of energy are acceptable? A carbon tax can providce the answer.

Written by Allen Best | 0 comment

Boreal Mountain Resort’s adventure in snowmaking last summer, using technology that can produce snow at 90 degrees, provoked a sharp response from Chris Steinkamp, director of Protect our Winters. It “seems like a middle finger to everybody that’s trying to fight climate change,” he told Freeskier Magazine in June. Just because the ski season can be extended to July with artificial means, he said, doesn’t mean places like Boreal should.

But to that, I would add: who decides? Who makes these great decisions about what is and what is not an appropriate use of energy?

Energy use is at the core of snowmaking. But unlike conventional snowmaking, the Snowfactory technology tested at Boreal for the first time in North America—and the first time ever in summer—is not limited by temperature thresholds. Snow, or at least white flakes suitable for sliding, was being manufactured when the temperature topped out at 91 degrees in July.

Snowfactory uses as much energy as four conventional snowmaking guns, but without the same productivity, says Robin Smith, the North American sales director for TechnoAlpin, the company that created the technology. He sees Snowfactory as suitable for only special applications. The Woodward Ski and Snowboard Camp held at Boreal would fall under that heading. In Europe, the technology had previously been used to prepare Nordic courses for early-season training. At least one entrepreneur has pondered its use to ensure winter cross-country skiing in New York City’s Central Park.

Are these reasonable uses? Perhaps instead of wagging fingers and making moral judgments, there’s a different and more practical way to crack this tough nut of global warming.

The Science of Climate Change

The science of climate change, if still unsettled (as all science ultimately is), points to a worrisome and even scary trend. During roughly the first two centuries of the industrial era, greenhouse gas emissions grew slowly. In the 1950s, we got serious about burning fossil fuels. Atmospheric concentrations of carbon dioxide have hurtled from 315 parts per million past 400 ppm. At this rate, about 2 ppm per year increase, we’ll shoot past 450 ppm in just 25 years.

Climate scientists have long warned that 450 ppm represents a threshold at which the global climate will likely do some weird things. Drought in California? Hot December in New York? We can argue whether human fingerprints can be detected on these recent weather events. At 450 ppm, though, the human impact will be much more obvious, not to mention troubling. Some climate scientists argue that we must dial back—quickly—the amount of carbon dioxide in the atmosphere to about 350 ppm.

Doing so could well require some difficult lifestyle changes. Our modern existence consumes a lot of resources. Mountain, beach-front and city homes, sometimes on different continents. Private jets. But even those of us of more modest means live in ways our ancestors could only imagine. Cleopatra enjoyed unrivaled luxury in her time, a retinue of slaves at her bidding to paddle her up and down the Nile. Now, every suburban mom driving an SUV has a far greater army at her fingertips.

In this context, snowmaking in summer heat doesn’t seem at all bizarre.

Changing Social Norms

So where do you draw the line? And does finger pointing serve any useful purpose?

Some people answer yes, because it helps society adopt new social norms. Look at Charlotte, N.C., caught in one of the great political crossfires of our time. The National Basketball Association had scheduled its 2017 All-Star game there. But then North Carolina’s legislators passed a law seen as being unfriendly to the rights of transgender people. The NBA finally announced in July that the All-Star game would be held elsewhere.

“If anybody thinks climate is far behind marriage equality and gay rights, they are mistaken,” says Auden Schendler of Aspen Skiing Co.

Will energy-hogging activities become the next pariahs? Who decides what is acceptable? No summer snowmaking? No snowmaking before Thanksgiving? No destination travel? Speedy travel, even in planes packed like sardines, does not translate into a low-carbon footprint. From New York to Denver, the carbon footprint is the same whether you drive or fly. Should all skiing and riding be local?

These questions are too complex for easy answers. We need broad policy mechanisms to address them. We need a way to harness the power of the market to innovate a low-carbon future.

We need a carbon tax.

Tax Carbon?

A carbon tax is a fee intended to make users of fossil fuels pay for the release of carbon dioxide into the atmosphere. It seeks to motivate changes in the technologies of how we produce and consume energy, and thus modify business models and alter individual behavior decisions. It tells the private sector: Here is the problem and here is the cost, now you figure out the solutions.

Economists have long touted the efficiency of a carbon tax compared to other, top-down mechanisms to abate carbon emissions. Several countries have already adopted carbon taxes for this purpose: Ireland, Sweden, Finland, and Australia (although the latter rescinded it after two years). British Columbia adopted a carbon tax in 2008, and has since elevated it to $30 per metric ton. This is scheduled to rise to $40 a ton in 2018. Alberta also has a small and narrow application of a carbon tax—yes, even on the oil/tar sands production—but a new government proposes a more sweeping carbon tax.

Where does the money go? British Columbia collects more than $1 billion, which is used to cut individual and business taxes. Overall, the tax is revenue neutral. In Alberta, the money gets diverted into energy research —including how we might use carbon fuels without damaging the atmosphere.

How much tax does it take to influence carbon users? Economists think it needs to be at least $50 a ton; some say $75 or even $150 per ton. They urge that this be phased in, as in B.C., to avoid drastic market disruption.

Some also argue for diverting a portion of the tax revenues to research and development. Bill Gates, a carbon tax proponent, makes the case for a fast-track Manhattan Project-style development program. He sees the emergency as being that great.

Gates is backing one experiment—in ski country, no less—aimed at reducing carbon dioxide in the air. Carbon Engineering in Squamish, British Columbia, between Whistler and Vancouver, is exploring whether carbon dioxide can be extracted from the atmosphere, to temper the greenhouse effect. The amounts here are tiny, so the technology would have to be deployed at scale. Gates, with a net worth around $70 billion, can do things at scale.

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Consider the alternatives to a carbon tax. Grassroots action can be valuable—and cumulatively is becoming powerful—but it’s not enough, by itself. For example, if every ski area were 100 percent reliant on renewable energy, that still wouldn’t address a global problem.

Regulation has value. The Clean Power Plan is important in tightening the vise on emissions from coal-fired power generation, reducing carbon dioxide emissions while also helping reduce regional haze and ozone formation. But electrical production was responsible for only 30 percent of U.S. greenhouse gas emissions in 2014, according to the Environmental Protection Agency. We need an even broader policy that gives the market incentive to innovate a low-carbon future.

Jim MacInnes, Crystal Mountain (Mich.) president and chief executive, advocates a carbon tax. An electrical engineer by training, he worked in California in the power sector in the late 1960s and 1970s. Now, in Michigan, he is deeply engaged in energy issues, both those involving his resort as well as state energy policies.

Distressed by the risk of global greenhouse gas emissions, he has taken action at his ski area. “We use a lot of energy here at Crystal Mountain,” he says. “We have our own 12,000-volt distribution system.” The resort uses 6 million kilowatt hours per year.

To dampen energy use, he has installed a ground-source heat pump system, which taps the earth to provide heat in winter and cooling in summer. It cost $200,000, and the payback on it is long. But over the long term, it is a very good investment, he says.

MacInnes sees the need for both increased regulation and a carbon tax. He supports mandatory renewable portfolio standards for electrical utilities; 29 states have adopted these. He also sees regulation driving innovation in transportation. New federal standards will step up fuel efficiency in cars and trucks. A carbon tax would be good, says MacInnes, “but we probably need $75 a ton, or more, to make the difference that we need to make.”

The National Ski Areas Association also advocates for a multi-pronged approach. Ski area operators need to take action on their own, but also advocate for broader action. “NSAA has supported both regulatory and market-based solutions to climate change,” says Geraldine Link, director of public policy for NSAA. “We will continue to support macro-level solutions to climate change in Washington, as that is the only way to address the problem.”

For now, a carbon tax seems unlikely in Washington. It’s a measure of the growing conversation about a carbon tax that Republicans in Congress this year passed a resolution stating their opposition.

That said, many carbon tax proponents maintain that any powerful climate solution must come from the Republican Party. Among Republicans making the case for a carbon tax is Bob Inglis, who once represented a district in South Carolina that he claims was the second most conservative in the nation. A born-again Christian, he has also become a born-again climate crusader. He’s made the case at NSAA conferences and elsewhere for a carbon tax. In April, at an appearance in Colorado, he expressed confidence that Paul Ryan, the House majority leader, knows “to the tip of his toes” the seriousness of the climate situation.

We need a big fix to our climate problem. We need an answer that doesn’t involve wagging fingers at summer snowmakers in California, or skiers flying from summer in Australia to winter in Colorado. It needs to be very soon, not later, when the serious problems of climate change begin to manifest themselves.

A carbon tax, priced appropriately, designed in a way to grow solutions and not government, can be a big part of the solution in the U.S.—and yes, under U.S. leadership, exported to the global marketplace.