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In the Beginning there was the Carbon Tax, and it was Good

Daniel Englander: May 22, 2008, 8:43 AM
Evolution, for the 62 percent of us who believe in it, happened incrementally, over millions of years, and involved a few missteps here and there. Grover Norquist is a good example. It is often said progressive policy changes happen in the same way. Yesterday, the Bay Area Quality Management District came out as the nematode of the climate policy world, voting 15-1 in favor of a carbon tax for the nine counties in the Bay Area. The legislation imposes a $0.044 tax per ton of carbon dioxide and will target close to 2,500 Bay Area businesses, if the plan gains approval from the California Air Resources Board. Unsurprisingly, the Bay Area business community is up in arms over the proposed legislation, though not because of the program's cost. The carbon tax would raise close to $1.1 million in its first year, enough to cover the program's operating expenses, while drawing the majority of its revenue from seven refineries and power plants . The remaining businesses would pay about $1 per year. Groups like the Western States Petroleum Association and the AB32 Implementation Group, a climated-minded business group, worry that balkanizing greenhouse gas legislation within the state will lead to inconsistencies in implementation of statewide policies. Another problem is that added levels of regulation will increase transaction costs for companies operating in the Bay Area, which may lead to a kind of localized outsourcing pattern. This is the same kind of effect national business groups expect when California moves ahead with some of its own stringent climate policies. It's possible the carbon tax is aimed more at stirring the pot for state-wide action, as it seems localized impacts will be limited. Still, it's an effective way of getting companies to think about potential carbon-based impacts on their bottom line. Berkeley professor Dan Kammen said the carbon tax is "not enough of a cost to change behavior, but it tells us where things are headed. You have to think not just in financial terms, but in carbon terms." In other words, us Darwinians may have to borrow something from the freaky Creationists - effective climate policy can't evolve slowly, it just needs to happen.

The (Late) Morning Feedstock

Daniel Englander: May 22, 2008, 5:08 AM
Evergreen Solar announced yesterday the company has signed two panel supply deals with a combined value of $1 billion. The first deal for the Massachusetts-based company involves a five year, $750 million contract with Germany's Ralos Vertriebs GmbH, while the second agreement was undisclosed. After Massachusetts Governor Deval Patrick practically begged Evergreen Solar to stay in the Commonwealth, handing the company a proxy bonus in the form of the Commonwealth Solar Initiative, Evergreen has largely disappointed. The company posted a net loss of $16.6 million on revenues of $69.9 million. News of the $1 billion deal sent the company's stock up 30 percent in early trading, before settling at $9.10 at Wednesday's close. The stock is down 47 percent year to date. Congress - it has good days and bad days. Sometimes those happen at the same time. The House of Representatives passed a $57 billion renewable energy incentive package yesterday on a 263-160 margin. The bill extends production and investment tax credits for six years, and approves $19 billion in energy production incentives. But where, pray tell, is the money coming from? As part of the bill, the House would have rescinded the ability of hedge fund managers to defer offshore income taxes, a windfall that would raise $24 billion over 10 years, while also rescinding the rules for allocating interest expense from U.S. offshore business, raising an additional $30 billion over the same 10 year period. Well played, House. Well played. As expected, President Bush has vetoed the $290 billion farm bill sent to him by the House of Representatives on Wednesday. The bill, which would cut the corn-based ethanol tax credit 12 percent to $0.45 a gallon and transfer the windfall to a $1.01 a gallon tax credit for cellulosic ethanol production, also provides loan guarantees for cellulosic refinery construction and subsidies for farmers to grow switchgrass! The White House has described the farm bill as "bloated" and fiscally irresponsible. Kettle! Oh hey, it's Black! It emerged this morning that there may be larger constitutional issues at play for bill that passed both the House and Senate with veto-proof majorities. The version of the bill the President received from the House was missing 34 pages, meaning the President vetoed a different bill than was actually passed by the House. Senate Majority Leader Harry Reid (D-NV) thinks this won't be a problem - "We have, under good legal precedent, going back to a case I understand in 1892 where something like this happened before." He heard about it from John McCain, who is old.