The major premise of the International Monetary Fund’s carbon tax proposal is the concept of social cost. According to the IMF, fossil-fuel consumers do not pay for all the harm they do to public health and the environment. Hence, the IMF reasons, fossil energy is under-priced, society consumes too much of it, and corrective (“Pigouvian”) taxes are needed to achieve “efficient” energy markets.
The IMF acknowledges that social cost of carbon (SCC) “estimates in the literature have varied considerably, ranging from $12 per ton (Nordhaus, 2011) to $85 per ton (Stern, 2006).” The IMF’s “estimates assume damages from global warming of $25 per ton of CO2 emissions, following the United States Interagency Working Group on Social Cost of Carbon (2010), an extensive and widely reviewed study.”
Actually, the Interagency Working Group recommends that agencies use four SCC estimates to calculate the per-ton benefits of CO2 reductions: $5, $21, $35, and $65.…
Continue ReadingThe International Monetary Fund (IMF) recently published a report urging the world’s governments to “reform” energy subsidies estimated at $1.9 trillion in 2011. Eliminating government policies designed to rig markets in favor of particular energy companies or industries is a worthy goal. Unfortunately, that’s not the agenda the IMF is pushing.
The IMF seeks to shame U.S. policymakers into enacting a carbon tax. Assuming $25 per ton as the “social cost of carbon” (SCC), the IMF claims the U.S. massively subsidizes coal, gas, and oil — simply by not taxing the carbon content of fuels. Our total energy subsidy is estimated to be $502 billion a year, making America the world’s biggest energy subsidizer!
Not Taxing = Subsidizing?
Some may find the IMF’s terminology counter-intuitive, even Orwellian — as if not taxing carbon is a subsidy on a par with cash payments to politically-preferred companies or industries funded at direct taxpayer or ratepayer expense.…
Continue Reading“Regular people only need to understand that this is likely the most progressive clean energy action the federal government will take this year.” – Center for American Progress
The Federal Energy Regulatory Commission (FERC) is capable of making bold moves under the radar. Last year it imposed a $245 million sanction on a major utility without too much fuss. Beginning this year, as part of a landmark rulemaking called Order No. 1000, FERC will be lending a multi-billion-dollar hand to large wind developers.
Overview
According to FERC, “Order No. 1000 is a Final Rule that reforms the Commission’s electric transmission planning and cost allocation requirements for public utility transmission providers.”
At the risk of oversimplifying a 600+ page document, Order No. 1000 essentially adds a requirement that (1) transmission providers consider new projects driven by state and federal “public policy,” and (2) planning regions do away with “participant funding,” at least at the regional and inter-regional level, which means that transmission costs must be allocated over a broad region.…
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