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Saving The Earth Sensibly With A Carbon Tax

By: Matt Rosenberg
Cascadia Prospectus
April 12, 2007


Original blog post.

In "Go Green? Go West," Los Angeles Times opinion columnist Ronald Brownstein writes that the Western U.S. is poised to lead on alternative energy. The "sagebrush rebellion" resource extraction push of decades past has given way to "a renewable revolution" bearing both real promise and all the expected consumer cost caveats, Brownstein posits.

Across the West, governors from both parties are advancing the nation's most ambitious policies to promote clean energy, encourage conservation and reduce emissions of greenhouse gases...leaders in the West are...drawing support from ideologically diverse local coalitions that include new residents concerned about preserving an attractive environment and agricultural and tourism interests fearful that global warming may undermine their industries. Even major utilities across the West have enlisted.

...The West's new energy axis rests on a deepening partnership between...Democratic governors and California Gov. Arnold Schwarzenegger, a centrist Republican....last fall....Schwarzenegger signed a law barring state utilities from entering long-term contracts to import electricity from power plants that emit more carbon dioxide than the cleanest natural gas facilities — a standard that excludes conventional coal-fired plants. That decision already is sending ripples through the region as governors from energy-exporting states use it to build support for cleaner alternatives to conventional coal.

...Six of the 11 states...have approved "renewable portfolio standards" that require utilities to generate a fixed percentage of electricity from renewable power sources such as wind, solar and geothermal; Oregon is on track to join them this year......In February, Schwarzenegger and the Democratic governors of Arizona, New Mexico, Washington and Oregon agreed to devise a regional plan for mandatory reductions in greenhouse gas emissions, most likely through a cap-and-trade system....The participating states have agreed to devise a market-based regulation system by fall 2008, and sources involved in the design say they hope to entice into the plan not only other Western states but the Canadian province of British Columbia.


Washington voters last November approved I-937, requiring large utilities to get 15 percent of their electricity from new renewable sources such as solar and wind by 2020, and undertake cost-effective energy conservation. The measure excluded hydropower as a renewable, and had its critics, who argued government mandates aren't how to develop cleaner and more secure energy sources.

The Oregonian reports today that Washington ranks fifth nationwide and Oregon eighth in installed megawatts of wind power, according to 2006 year-end rankings by the American Wind Energy Association. The article also highlights several new wind power projects in Oregon, and gives a sense of some of the big business interests involved in the wind power industry, along with mid-sized and utility players.

Several large projects are under construction, including Portland-based PPM Energy's 221-megawatt Klondike III and Portland General Electric's 125-megawatt Biglow Canyon, both in Sherman County. Also, Horizon Wind Energy, which Portuguese power provider Energias de Portugal recently agreed to buy from Goldman Sachs for $2.15 billion, has a 101-megawatt project in the works in Union County. The state's newest player is Massachusetts-based UPC Wind, which has 35 wind projects under development in North America. UPC Wind on Wednesday applied with the state to build an $80 million, 60-megawatt wind farm about five miles west of The Dalles in Wasco County. The Cascade Wind Project would involve 40 turbines stretching six miles along an exposed ridgeline.


In Washington state the Energy Facilities Siting Council recently okayed Horizon's Kittitas Valley Wind Power Project; final approval by the governor is still required. The editorial board of the Tacoma New Tribune lauds the council's decision.

The current contribution of wind power to the nation's energy mix is relatively scant and its economics are far from proven. One consideration: The wind lobby says long-term extension of the renewable energy production tax credit is essential for the industry. In a column titled "Saving The Earth Sensibly," the Chicago Tribune's incisive opinionator Steve Chapman favors a carbon tax rather than special dispensations for renewables.

Reducing the output of carbon dioxide and other substances that trap the Earth's heat is not cheap. But there are expensive solutions, and there are astronomical ones. Any new policy should aim at getting the greatest reductions for the least money....The free market is the best system ever created for providing what we want at the lowest possible cost....we...need to make energy prices reflect the potential harm done by greenhouse gases...with a carbon tax that assesses fuels according to how much they pollute. Coal, having the highest carbon content, would be taxed the most, followed by oil and natural gas. The higher prices for the most damaging fuels would encourage people and companies to use them less and more of other types of energy, including nuclear, solar, wind and biofuels.

....Government programs to reduce greenhouse gases are a recipe for waste and abuse. Federal "investment" in alternative fuels? That idea got a full tryout during the energy crisis of the 1970s, with meager results. Tax breaks for ethanol? Largely self-defeating, because they encourage farmers to burn fossil fuels to expand production of corn.


Corn-based ethanol does not pencil out, as The Economist argues in an editorial reprinted in the Seattle Post-Intelliegencer. Better alternatives are ethanol from Brazilian sugar cane, and cellulosic ethanol dervided from wood, grasses, shrubs and agricultural detritus.

These sorts of distinctions are important as the push for cleaner energy intensifies. A new reckoning of nuclear power seems likely in time, too. While part of the mix in the U.S. and Europe, it still faces great mistrust from the public. The APEC Energy Overview 2006 notes (p. 157) that in 2004, 41 percent of our nation's energy came from crude oil and petroleum products; 23 percent from coal; 22 percent from natural gas; and 14 percent from nuclear, hydro, geothermal and other fuels.

The APEC report (p. 163) also reminds that the U.S. Energy Policy Act Of 2005 outlines a long-term strategy for a diversified energy supply, modernization of the nation's energy infrastructure, increased energy efficiency and conservation and better vehicle fuel efficiency. Our Cascadia Center For Regional Development and special guests will highlight conservation and fuel efficiency in the "May 7 Jump Start To A Secure, Clean Energy Future" symposium on plug-in hybrid electric vehicles, at the Microsoft Conference Center in Redmond, WA.

One objective in the '05 energy legislation, as the APEC document notes, is "creating an adequate Liquified Natural Gas infrastructure: streamlining the regulatory review process is underway to expedite the siting on new LNG import terminals." In California, the first of five expected proposals for liquified natural gas terminals is provoking a controversy that will put Gov. Schwarzenegger front and center next month. Recent articles from the San Francisco Chronicle and The Los Angeles Times detail the saga of the proposed Cabrillo Port liquified natural gas plant off the Ventura County coast between Malibu and Port Hueneme.

The State Lands Commision has voted not to accept an environmental impact study on the project, and that the State Coastal Commission - which votes on the project today - is reportedly also opposed. However, Gov. Schwarzenegger, who has until May 21 to decide, could still approve the project, with or without some amendments to the plan.






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