America’s first carbon tax

Via Terrapass:

It’s finally here. The first overt economic deterrent aimed at US consumers for their emissions of greenhouse gases has arrived on our shores. Figuratively, at least.

This past week, most major US airlines levied a $3 ticket surcharge on all flights to and from European Union (EU) nations after a European court determined that the “EU Aviation Directive” can and should apply to them. This means that US-based airlines will need to acquire and submit carbon emission permits in line with their emissions, consistent with the EU emissions trading scheme.

Boulder has actually had a carbon tax since 2007, but the airline fee is the first with a national impact.

Australian carbon tax set to pass

Lake Hume at 4% - 6531

Australia will soon pass a nation-wide carbon tax.

Under the legislation, about 500 of the biggest carbon-emitting companies in Australia will pay a price for each tonne of carbon. Most of the biggest emitters are electricity generating firms, mining companies and heavy industry manufacturers.

To compensate households, the government is cutting income taxes and boosting payments such as pensions and other benefits, as well as offering various lump sum payments.

The average household is expected to pay about $9.90 a week in extra living costs, including $3.30 on electricity.

However this will be offset by an estimated $10.10 in extra benefits and tax breaks. The Australian scheme will cover about 60 per cent of Australia’s emissions, making it the most broad-based in the world.

John Quiggin, via Matt Yglesias, has some analysis.

While the proposal is far from perfect, there’s a lot to like about it. The price of $A23/tonne is comparable to that in the EU, and should be enough to promote a wide range of reductions inCO2 emissions. Importantly in the Australian context, it should (with the support of some addition funds to allow the closure of existing power stations) end the use of brown coal (lignite) as a fuel. Brown coal produces about 50 per cent more emissions per unit of energy than anthracite (black coal), and Australia has lots of it. There will also be an incentive to continue the shift away from black coal in electricity generation and towards a combination of gas and renewables. Equally important, in the long run, will be improvements in energy efficiency. This is where price-based measures really shine, as compared to purely regulatory interventions – there are all kinds of ways to save energy and it is hard to predict, in general, which will be best.[3]

The other side of the proposal is what to do with the revenue, and in this respect the current measure is a big improvement on the emissions trading scheme that failed to get through in 2009. That scheme gave greatly excessive compensation to large emitters in a way that encouraged them to stay in operation. While the business compensation in the current scheme is still excessive in economic terms, it’s a sensible compromise politically. More important is the use of the bulk of the proceeds to raise the income tax threshold from (around) $6000 to $20000, thereby taking a million or so people out of the income tax system[4]. That’s a measure that will be hard to reverse, given that the Opposition has pledged “in blood” to repeal the tax if it win the next election.

This proposal seems, in basic terms, similar to the CLEAR act in the US.  No complex trading scheme, but a tax on polluters with a portion of the proceeds going back to the public to offset increased costs.  For a number of reasons, Australia is more vulnerable than other countries to the changing climate.  This Rolling Stone piece is an eye-opener.

With nine degrees of warming, computer models project that Australia will look like a disaster movie. Habitats for most vertebrates will vanish. Water supply to the Murray-Darling Basin will fall by half, severely curtailing food production. Rising sea levels will wipe out large parts of major cities and cause hundreds of billions of dollars worth of damage to coastal homes and roads. The Great Barrier Reef will be reduced to a pile of purple bacterial slime. Thousands of people will die from heat waves and other extreme weather events, as well as mosquito-borne infections like dengue fever. Depression and suicide will become even more common among displaced farmers and Aborigines. Dr. James Ross, medical director for Australia’s Remote Area Health Corps, calls climate change “the number-one challenge for human health in the 21st century.”

Should local transit just be built by the states?

One of my new favorite snarks, Lisa Schweitzer at Sustainable Cities and Transport, discusses whether local transit funding shouldn’t just “devolve” to the states.

Federal involvement in transit also has led to a heavy capital bias in transit investment, prompting local and regional agencies to build transit projects, again and again, that they can’t afford to run with any frequency. This leads to a wider geographic coverage for transit–which probably still isn’t wide enough to deal with spreading regions–and with lower frequencies than really make for high service quality. (And sprawl is bad, bad, bad, evil and terrible! The worst thing ever! There? Will that sentence keep some of you land-use people outta my grill for the purposes of this post? Can I talk about something else now? Thanks.)

Transit has been on the teeter-tottery edge of those issues and criticisms for a long time. Why can’t New York pay for its own subways? Or Los Angeles? Or anywhere? That’s why we have local taxes and general funds, right? If you want transit, don’t go holler at the feds. Make it happen if you want it. Perhaps there would be a greater chance of that self-helping if leaders know that the buck really began and stopped with them, and they might instead be much more careful to match investments to operations.

The US Congress is overly dominated by rural interests, and many of us for years have argued that this creates a hostile environment for transit funding in the first place, as many rural senators wonder: “what’s in it for my constituents?” and the ineffectual spreading of scarce resources around to systems that aren’t particularly viable or worth investing in. Porky McPorktown.

The key drawback to devolution? Locals might not have the stomach for a local gas tax to replace the federal one.

So if places like California, New York, Illinois, and Minnesota were running their own budgetary shop, they could keep the revenues they are currently sending to Portland and Memphis and Charlotte.

Here’s the glitch: these donor state are only fiscally better off with Federal gas tax elimination or erosion if those donor states prove capable of passing a gas tax on its residents equal to or better than the 18 cents a gallon [- whatever the Feds give away to other jurisdictions]. And I’m not seeing that happen, at least not in California. Maybe in Minnesota. Maybe in New York, or Massachusetts. Maybe.

British Columbians are happy with their carbon tax

From the Vancouver Sun,

Residents of the sole North American jurisdiction with a carbon tax don’t seem to mind their singular tax status, a new poll suggests.

The Pembina Institute reported on Thursday that 74 per cent of residents of British Columbia, where the provincial carbon tax gets another uptick today, believe either that the tax has been positive for the environment, or feel neutral about it.

The poll was conducted in April by Strategic Communications with a sample of 830 British Columbians, and bears a margin of error of 3.4 per cent, 19 times out of 20.

“According to the poll, the majority of British Columbians (69 per cent) are worried about climate change and most (70 per cent) want the province to continue showing leadership on the issue without waiting for other jurisdictions to take similar steps,” says a news release accompanying the poll.

By 2012, a typical motorist would pay about $140 (Canadian) more annually with the tax.

Mileage fees could strengthen the effect of land use policies on travel

The Mineta Transportation Institute recently released a report with some fascinating findings on how land use patterns and mileage fees are mutually supportive.  The results aren’t terribly surprising when you think about it, but provide some interesting nuance to the transportation-land use interaction.

The report is based on findings from the Oregon’s exploration of mileage fees, called the Oregon Road User Fee Pilot Program.  In this program, participants paid a per-mile fee rather than the state gas tax.  Half of the participants paid a per-mile fee that increased during rush hour in congested areas, while the other half paid a flat amount per mile at all times.

The Oregon program, along with many other recent forays into alternative funding mechanisms for transportation, is a response to the fact that the gas tax is becoming less and less dependable as a funding source for transportation because it hasn’t risen in decades, VMT has peaked and vehicles are becoming more fuel efficient.  Mileage (or user) fees are one way to bring the costs of building and maintaining the system back in line with revenue from actual users.

More on the results below the break.

Continue reading

Alternative transportation funding mechanisms gaining traction

CC licensed by flickr user Caveman 92223

Mission, Kansas and the State of Rhode Island are both exploring alternative methods for funding road construction, maintenance and transit.  The Rhode Island Senate will be studying how a mileage tax, or VMT tax would work in the state.  A VMT tax isn’t new in concept, Oregon has studied it, and the Dutch are doing it, this would add another US state to the list.  Rhode Island is apparently feeling the effects of falling gas tax revenue, and searching for a better funding mechanism.

In Kansas, the city of Mission is considering a new fee based on the trips assumed to be generated by your specific property.  Single-family properties generate on average fewer trips than a big box store, and thus are taxed less.  This type of trip-generation model is the basis for how engineers currently develop city and regional traffic models.  This is similar to a mileage tax, but using a slightly different (less accurate) method of estimating how much individuals are using the roads.  In Mission, a single-family residence would pay $72 per year of this tax.  The City figures that this new tax would bring in about $800,000 per year.

Using 2008 Census estimates, a similar tax on Twin Cities-area single-family homes only would net the region over $62.8 million per year, or over $100 million if you extended the same tax to all units.  Keep in mind that in Mission they believe the burden will actually fall more heavily on commercial properties than residential, so this amount is probably less than half of what a hypothetical Twin Cities program might net.  For some reference, spending in the state on roads and bridges in 2007 was over $2 billion.

These use-based fees may becoming more common as it becomes more obvious that road users are not paying their way (and haven’t for a while).  In addition, as we switch from gasoline to other fuels, funding sources based on one particular fuel will be less and less useful.

Dutch Cabinet Approves Kilometer Tax

The Dutch Cabinet approved legislation Friday that would tax drivers per kilometer driven.  Parliament still needs to pass it before it can become law.  Ownership and sales taxes on autos would be abolished.  The cost per kilometer will vary depending on the size of the car and the engine.  By 2018, the average cost will be 6.7 Euro-cents per kilometer.  Gas tax will still be collected.

Mileage will be calculated by a GPS system made mandatory in each car, initially paid for by the government.  The Transport Ministry says this move could cut carbon dioxide emissions by 10 percent, and reduce congestion.

This system is similar to something being tested in Oregon with a small group of volunteers.  According to ODOT’s report, the system is largely successful, despite privacy concerns.

From Autopia, The Truth About Cars.