I don’t know if this has been proposed before, but I was inspired to write this diary by A Siegel’s diary last night entitled "Health Care Series: Six Degrees of Intertwining" on the relationship between health care reform and energy reform, as well as by riding by a few hundred wind turbines in Wyoming today while on the train. This isn’t meant to be a silver bullet solution, but I think it could help deal with both health care reform and the climate crisis/clean energy. I’ve been worried, however, that health care has forced the extremely urgent climate situation to the backburner, and this is a way to work on both at the same time.
In the health care reform debate, many Americans have expressed concern over how the government can pay for the reform. While this reform would help bring down costs, and the administration hopes to pay for it with increased taxes on the super wealthy, many people remain unconvinced that it really will be "budget neutral." I think this is a valid concern, so it’s always good to find additional ways to pay for it.
With clean energy, many renewables and other cleaner energy sources have struggled to compete with coal for cost-effectiveness. That is to say, the end-user pays less per kilowatt-hour for electricity from coal than from sources such as wind. This is a big reason why 50% of American electricity comes from coal. However, the reason for this is that coal gets a free pass that keeps costs down: coal companies don’t have to factor into the price costs for much of the environmental damage they cause and for the respiratory illnesses and the greenhouse gases and the many health-related problems from accidents like coal ash spills that are radioactive and contain high concentrations of dangerous metals. These are referred to in economics as "externalities." They’re costs that are borne by somebody not responsible for producing the damage. In many cases, as A Siegel and others noted, the health care system bears the brunt of the health problems created from dirty energy sources like coal.
Even with this free pass for coal, the costs for renewables are falling closer and closer to competitiveness with coal as technology improves. According to The Economist last year, the price for a kWh of wind-generated electricity was down to 8 cents and falling, compared to 5 cents a kWh for coal-powered electricity. (I don’t want to get into a big argument over which clean energy source is best, so I’m just using wind as a good example for this diary). The Economist argued that if the real costs of coal (local damage, climate change, health problems) were included in the price, coal would be competing evenly (or at a disadvantage) with renewable clean sources of energy. Which is not to say I’m advocating killing the coal industry at a single blow, as much as I might like to, especially since we can get more and better jobs without coal than with it in coal areas of the nation.
My proposal is fairly simple: Add a federal tax of about 3 cents per kWh onto coal-fired electricity (no exemptions, unless they somehow become totally clean and store their carbon) and use that tax to help pay for health care reform.
I use that figure because an MIT study cited in the Economist feature (mentioned above) estimated the price would rise to 8 cents per kWh if coal companies had to store their carbon dioxide or pay a $30/ton carbon tax. That doesn't even cover the non-CO2 issues, of course.
This has several advantages in my view:
- It helps pay for health care reform, like cigarette taxes for SCHIP.
- Coal is directly responsible for many health problems that drive up costs for Americans (asthma, cancer, etc.). This would help pay for that and (we hope) reduce the costs by reducing coal usage. Much of the health problems are borne by people in coaling regions, so this would help even more there.
- It would help level the playing field for cleaner energy sources by forcing coal companies to price their product at the real price, by reducing the free pass.
- This would spur more private investment in clean energy sooner because it would be competitive.
- It would discourage coal (especially construction of new plants) and encourage development of domestic, clean energy sources to replace coal. If you want to reduce something, tax it.
- It would help mitigate the climate crisis sooner.
- It would promote clean energy job creation indirectly. Good for the economy in the short term and for jobs once beyond the recession, too.
There’s one more angle to consider here. Many economists and environmentalists have argued that a carbon tax would be far stronger than cap & trade in handling the climate crisis. I firmly believe that. However, a carbon tax was seen as political anathema in the US, and thus we ended up with an increasingly weaker and weaker cap & trade bill in Congress. It’s not even clear that the energy bill will make it out of the Senate at this point. My proposal would provide a limited carbon tax on a big source, which wouldn’t affect the energy bill for the average American by too much, and it would be put through as part of health care reform, which might make it palatable to Congress. I know a carbon tax financing clean energy would be preferable, but I think this might have a better chance.
Now, it’s all fine and good to write a detailed policy diary on Daily Kos, but it’s no good if it doesn’t get fleshed out and sent somewhere where it can be useful and not just philosophical. I don’t have much experience with trying to get policy ideas to Congress, but I’m sure there are some people here who could help. Maybe get some Congressional staffers to read it? Please suggest some ideas in the comments. I just thought of the idea a couple hours ago, and I’d really like to see it end up somewhere useful.
And if you know more about this field than I do and can help refine the idea, I’d be grateful to all of you for suggestions. I will try to respond to comments, but I have an intermittent internet connection riding the train across Wyoming, so it may go dead suddenly. And I apologize if the Economist articles are behind a pay wall, since it's hard to tell after you sign into the site as a whole.
Thanks for reading!