What Would be an Effective Carbon Tax?

Carbon taxes could be effective if they are high enough. None are high enough now.

Look around, and you are struck by the myriad ways we use and waste fossil fuels. Live pigs are shipped by the airplane load from the US to China. Wildfires caused by global warming are fought with tanker airplanes. Plastic shopping bags by the trillion are churned out for single use followed by permanent entombment. Back-country hikers rely on helicopter rescues to get them out of jams. And of course we burn them with abandon for transport, heat, and electricity. Fossil fuels are far too cheap- from merely an efficient use perspective, quite apart from their disastrous role in climate heating, other forms of pollution, and overall sustainability.

The last decade has seen astonishing progress in renewable energy technologies, bringing them to par price with fossil fuels or even cheaper. But this price relationship is misleading, since it only reflects the low-hanging fruit of adding sporadic power to a grid that runs largely on fossil fuels with highly flexible dispatch characteristics. Making progress to a fully renewable and stable grid, and extending this to transportation, industrial processes, and chemicals will take vastly more work, including technologies not yet in hand.

We have such a long way to go to decarbonize.

The most  effective way to do this is to price the vice: price CO2 emissions. A uniform price will reach all the uses of fossil fuels, (I would add biomass as well, which generate CO2 emissions just the same), and harness the same capitalist motivation that has spent decades thoughtlessly expanding their destructive use. Government regulation can do a great deal, and is gradually driving coal to oblivion. But it will not be enough to drive the more complete transition that is needed, especially at the speed required. Climate heating is already rampant and highly destructive. 2040 is a mere 18 years away- nothing in infrastructure terms, and not much more in transport vehicle lifetimes. Natural gas remains the fuel of choice across the electric grid, residential, and industrial applications. Within twenty years, it needs to be demoted to minor status.

So what would be an effective carbon tax? One can take the baseline to be the carbon cap and trade system instituted by California, which ends up as an auction price for carbon emission credits. This is a very light tax with lots of exceptions, which has had a commensurately light effect. The price currently stands at ~$23 per ton of CO2 emitted. This is equivalent to about 22 cents per gallon of gasoline. This is not going to change many people's behavior, obviously. At ten percent or less of the retail price, this scale of tax is not going to drive a transition to electric vehicles. Overall in California, this tax brings in roughly a billion to two billion dollars per year, and is thought to be having a beneficial effect, but only as a fractional part of a much broader portfolio of regulations and policies.

In Sweden, the carbon tax is over $130 per ton. This is more significant, on the order of a dollar per gallon of gasoline. Again, there are so many exceptions, especially for heavy industry, that it touches only forty percent of emissions. Overall, it has caused only an eleven percent reduction in transport carbon emissions. Europeans pay much higher prices for motor fuels to start with, for many reasons beyond the carbon tax, so the relative effect of even such a larger tax is small. Europeans already use gasoline at a rate roughly one fifth that of the US, so are already very thrifty. We can expect in the US to have much greater elasticity to higher fuel prices, assuming a bit of political maturity instead of whining about our god-given right to cheap gasoline. 

At the same time, unless alternative fuels, forms of transport, or social behaviors appear, especially in the truck and other heavy vehicle segments, this kind of tax would still have limited effect and serious economic costs. So the modeler and prognosticator has to wonder where the response to carbon taxes will come from. The pandemic showed that we can telecommute very effectively, thereby saving prodigious amounts of fuel. Tesla has shown the way in electric vehicles- a segment that had previously been brutally decimated by GM in various bait-and-switch schemes. Hybrid technology is edging into in larger cars and transit. It will take a big price signal to switch these markets in a dramatic way. Even doubling the price of gasoline, which in the US would take a carbon tax on the order of $400 or more per ton of CO2 emitted, would only bring our fuel prices to those of Europe, which still drives, has traffic jams, and emits vast amounts of CO2 from the transport sector. Such a tax would bring in about $400 billion per year in the US, easily within the normal taxation and economic capacity of a $20 trillion economy.

Yet now there are replacement technologies, so a carbon tax will, in classic economic fashion, create change, not just disgruntlement and economic pain. It will also bring forth more replacements, while working at every margin to drive conservation. Do we need continued technology investment? Absolutely. Do we need more public policy and infrastructure investments, such as reducing give-aways to the fossil fuel industries, charging them for their many immediate as well as long-term harms, and reconfiguring electrical grids and natural gas grids? Yes. A carbon tax is an accellerant to save the biosphere from incalculable harm. Its revenue can be administered right back to citizens or into the government accounts, displacing other taxes. So its net economic effects could be minimal, even while its effects on economic reconfiguration and conservation would be strong. 

• All laws must be enforced, or what good are they?
• No wonder the internet has gone to the dogs.

Prospects for Hydrogen

What are the prospects for hydrogen as part of a sustainable, green economy?

Hydrogen is perennially spoken of as a fuel of the future- clean, renewable, light. It is particularly appealing in an environment (like that of California) where solar energy is having a huge impact on the grid and causing rising portions of solar production to be "curtailed". That is, turned off. But even in California, solar power has hardly scratched the surface. Only few roofs have solar and the potential for more power production is prodigious. Over time, as more renewable sources of energy come on line, the availability of excess power at peak times will rise dramatically, prompting a huge need for storage, or other ancillary uses for excess power. Many storage schemes exist or are under development, from traditional water pumping to batteries, flywheels, gravitational weights, etc. Hydrogen is one of them, spoken of as a versatile storage and fuel medium, which can be burned, or even more efficiently put through fuel cells, to return electrical power.

A typical day on California's electrical grid. The top teal line is total demand, and the purple zone is power not supplied by renewables like wind, hydropower, and solar. During the mid-day, most power now comes from solar, an amazing accomplishment. Roughly 2 GW are even turned off at the highest peak time, due to oversupply, either locally or regionally. How could that energy be put to use?

Unfortunately, as a fuel, hydrogen leaves much to be desired. We have flirted with hydrogen-powered cars over the last couple of decades, and they have been a disaster. Hydrogen is such an awkward fuel to store that battery-powered electric vehicles have completely taken over the green vehicle market, despite their slowness in refueling. The difficulties begin with hydrogen's ultra-low density. The Sun has the gravitational wherewithal to compress hydrogen to useful proportions, at the equivalent of 100,000 earth atmospheres and up. But we on Earth do not, and struggle with getting hydrogen in small enough packages to be useful for applications such as transport. The prospect of Hinden-cars is also unappealing. Lastly, hydrogen is corrosive, working its way into metals and weakening them. Transforming our natural gas system to use green hydrogen would require replacing it, essentially.

The awkwardness, yet usefulness, of (reduced) hydrogen as an energy currency in an oxygenated atmosphere is incidentally what led life during its early evolution to devise more compact storage forms, i.e. hydro-carbons like fats, starches and sugars. And these are what we dug up again from the earth to fuel our industrial, technological, and population revolutions.

But how useful is hydrogen for strictly in-place storage applications, like load balancing and temporary grid storage? Unfortunately, the news there is not good either. Physical storage remains an enormous problem, so unless you have a handy sealed underground cavern, storage at large scales is impractical. Second, the round-trip efficiency of making hydrogen from water by electrolysis and then getting electricity back by fuel cell (both rather expensive technologies) is roughly 35 to 40%. This compares unfavorably to the ~95% efficiency of electrical batteries like Li ion, and the 80% efficiency of pumped water/gravity systems. Hydrogen here is simply not a leading option.

Does that mean we are out of luck? Not quite. It turns out that there already is a hydrogen economy, as feedstock for key chemical processes, especially ammonia and fertilizer production, and fossil fuel cracking, among much else. Global demand is 80 million tons per year, which in electrical terms is 3-4 tera watt hours. That is a lot of energy, on the order of total demand on the US electric grid, and could easily keep excess power generator's hands full for the foreseeable future. Virtually all current hydrogen is made from natural gas or coal, so the green implications of reforming this sector are obvious. It already has storage and pipeline systems in place, though not necessarily at locations where green energy is available. So that seems to be the true future of hydrogen, not as a practical fuel for the economy in general, but as a central green commodity for a more sustainable chemical industry.

• Unions
• Afghanistan, inexorably going back to the Taliban.

The Silicon Age

This magical element brings us the modern age- in computation, and in power.

In geologic terms many regard the current epoch as the Anthropocene, based on our various far-reaching (and often obscene) effects on earth's biosphere and geology. But where are we in the sequence of cultural epochs, starting from the stone age, and continuing through the bronze and iron ages? This somewhat antiquated system of material culture-based divisions seems to have petered out with the iron age, about 500 BC. What came after? There was certainly a technological hiatus in the West (and perhaps elsewhere) around the dark ages, where iron remained the most advanced material, though one might make a case for concrete (a Roman invention, with extensive use in antiquity), glass, or porcelain as competitor, though the latter never had the broad impact of iron.  The industrial age was perhaps founded on steel- the new material that brought us well into the twentieth century, until we hit the atomic age, an age that did not age well, sadly, and seems to be headed for the scap heap- one that will be radioactive for eons.

Now we are clearly indebted to a new element- silicon. That it is the magic ingredient in computers goes without saying. But now it is also providing the power for all those computers, in its incarnation as solar cells, as well as light for our lives, as efficient LEDs. It is incidentally intriguing that silicon resides just one row down, and in the same column, from the central element of life- carbon. They have the same valence properties, and each have unusual electronic properties. For silicon, its magic comes from being a semiconductor- able to be manipulated, and in switchable fashion, from conducting to insulating, and back again. A magic that is conjured by doping- the peppering-in of elements that have either too many valence electrons (phosphorous; n for negative) or too few (boron; p for positive). Too many, and there are extra electons that can conduct. Too few, and there are positive charges (holes) that can conduct similarly.

Charge and electrochemistry across the p-n junction.

At the interface between n and p doped zones something amazing happens- a trapped electrical charge that forms the heart of both transisters and solar cells. The difference in composition between the two sides sets up conflicting forces of diffusion versus charge. Electrons try to diffuse over to the p doped side, but once they do, they set up an excess of electrons there that pushes them away again, by their negative charge. Holes from the p doped side likewise want to migrate over to the n doped side, but set up a similar zone of positive charge. This zone has a built-in electric field, but is also insulating, until a voltage going from p to n, which squeezes this zone to smaller and smaller size, making it so narrow that charge can flow freely- the diode effect. The reverse does not work the same way. Voltage going from n to p makes this boundary zone larger, and increases its insulating power. This, and related properties, gives rise to the incredibly wide variety of uses of silicon in electronics, so amplified by the ability to do all this chemistry on precisely designed, microscopic scales.

Solar cells also use a p-n doping regime, where the bulk of the silicon exposed to the sun is p-doped, and a small surface layer is n-doped. When a photon from the sun hits the bulk silicon, the photoelectric effect lets loose an electron, which wanders about and meets one of two fates. Either it recombines with a local atom and releases its photon energy as infrared radiation and heat. Or it finds the p-n junction zone, where it is quickly whisked off by the local electric field towards the positive pole, which is all the little wires on the surface of solar panels, taking electrons from the n-doped surface layer. The p-n interface has a natural field of about 0.6 volt, which, when ganged together and scaled up, is the foundation for all the photovoltaic installations which are taking over the electric grid, as a cheaper and cleaner source of electricity than any other. Silicon even plays a role in some battery technologies, helping make silicon-based solar power into a full grid power system.

Solar power is scaling to provide clean energy.

Silicon gives us so much that is essential to, and characteristic of, the modern world. Like carbon, it is very abundant, not generally regarded as rare or precious. But that doesn't mean it lacks interest, let alone importance.

• Green hydrogen- a way to use all that excess solar.
• Generic drugs from India and China: rampant fraud.
• Meanwhile, an outstanding article describes the slow destruction of US pharmaceutical and public health capabilities.

The Housing Crisis- or is it a Transportation Crisis?

Bustling areas of the US are in the grips of a housing, transportation, and homelessness crisis.

While tracts of empty houses remain from the recent near-depression in areas like Florida, Nevada, and Detroit, other areas suffer from the opposite problem. Average detached house prices are at a million dollars in the San Francisco Bay Area. While this number is proudly trumpeted by the local papers for their satisfied home-owning constituents, the news for others is not so good. Houses are priced far above construction cost, clearly unaffordable for average workers, and rents are rising to unaffordable levels as well. How did we get here?

One of the great ironies is that environmentalism has allied with other status quo forces to stall development for decades. Existing homeowners have little interest in transforming their sprawly neighborhoods into denser, more efficient urban centers. Then they pat themselves on the back for preserving open space and small-town ambiance, along with inflated property values. Public officials have been stymied by proposition 13 and other low-tax movements from funding infrastructure to keep up with population growth. Local roads are now frequently at a standstill, making zoning for more housing essentially unthinkable. Add in a drought, and the policy response to growth is to hide one's head in the sand.

Then ... a scene from Dark Passage.

There is a basic public policy failure to connect population and business growth with the necessary supporting structures- a failure of planning. No new highway has been built for decades, even as the population of the Bay Area has increased by 10% since just 2000, the number of cars increased even more, and the population of the state has doubled since 1970. How was that supposed to work?

Now ... at the bay bridge.

An alternative approach would have been to limit population growth directly, perhaps via national immigration restrictions or encouragement for industry to move elsewhere. But that doesn't seem attractive to our public officials either, nor is it very practical. In a tragedy of common action, people flock to an attractive area, but eventually end up being driven away based on how crowded and unbearable the area becomes. A Malthusian situatuion, not from lack of food, but of other necessities. But with modern urban design & planning, it doesn't have to be that way- just look at Singapore, Hong Kong, New York, and other metropolises.

In the post-war era, the US, and California in particular, built infrastructure ahead of growth, inviting businesses to a beautiful and well maintained state. But once one set of roads was built, and a great deal of settled activity accumulated around them, expansion became inceasingly difficult. Now that a critical mass of talent and commercial energy is entrenched and growing by network forces, the contribution from the state has descended to negligible, even negative levels, as maintenance is given short shrift, let alone construction of new capacity, for roads, housing development, water, and sewer infrastructure. Prop 13 was, in retrospect, the turning point.

It is in miniature the story of the rise, decline, and fall of civilization. For all the tech innovation, the Bay Area is showing sclerosis at the level of public policy- an inability to deal with its most basic problems. The major reason is that the status quo has all the power. Homeowners have a direct financial interest in preventing further development, at least until the difficulties become so extreme as to result in mass exodus. One hears frequently of trends of people getting out of the area, but it never seems to have much effect, due to the area's basic attractiveness. Those who can afford to be here are also the ones investing in and founding businesses that keep others coming in their wake.

The post-war era was characterized by far more business influence on government, (especially by developers, the ultimate bogey-men for the environmentalists and other suburban status-quo activists), even while the government taxed businesses and the wealthy at far higher levels. Would returning to that system be desirable? Only if our government bodies can't get their own policy acts together. The various bodies that plan our infrastructure (given that the price signal has been cancelled by public controls on development) have been far too underfunded and hemmed in by short-sighted status quo interests- to whom the business class, which is typically interested in growth and labor availability more than holding on to their precious property values, are important counter-weights.

The problem is that we desperately need more housing to keep up with population, to keep housing affordable, and ultimately also resolve the large fraction of homelessness that can be addressed by basic housing affordability. But housing alone, without a full package of more transportion and other services, makes no sense on its own. So local planning in areas like the Bay Area needs a fundamental reset, offering residents better services first (more transit, cleared up roads) before allowing more housing. Can we build more roads? Or a new transit system? We desperately need another bridge across the bay, for example, and a vastly expanded BART system, itself a child of the post-war building boom, now fifty years old.

BART system map, stuck in time.

Incidentally, one can wonder why telecommuting hasn't become more popular, but the fact that a region like the Bay Area has built up a concentration of talent that is so enduring and growing despite all the problems of cost, housing, and transportation speaks directly to the benefits of (or at least the corporate desire for) corporeal commuting. Indeed, it is common for multinational companies to set up branches in the area to take advantage of the labor pool willing to appear in person, rather than trying to lure talent to less-connected areas cybernetically or otherwise.

One countervailing argument to more transit and road development is that the housing crisis and existing road network has motivated commuters to live in ever farther-flung outlying areas, even to Stockton. Thus building more housing first, in dense, central areas, might actually reduce traffic, by bringing those commuters back to their work places. This does not seem realistic, unfortunately. One has to assume that any housing increment will lead to more people, cars, and traffic, not less. There is no way to channel housing units to only those people who will walk to work, or take transit, etc., especially in light of the poor options currently available. The only way to relieve the transportation gridlock is to make using it dramatically more costly, or to provide more transportation- especially, more attractive transit options.

Another argument is that building more roads just leads to more usage and sprawl. This is true to some extent, but the solution is not to make the entire system dysfunctional in hopes of pushing marginal drivers off the road or out of the area in dispair. A better solution, if building more capacity is out of the question, is to take aim directly at driving by raising its price. The gas tax is far too low, and the California carbon tax (we have one, thankfully!) is also too low. There is already talk of making electric vehicle drivers pay some kind of higher registration or per-mile fee to offset their lack of gas purchases, but that seems rather premature and counter-productive from a global warming perspective. To address local problems, tolls could be instituted, not just at bridges as they are now, but at other areas where congestion is a problem, to impose costs across the board on users, as well as to fund improvements. This would also address the coming wave of driverless cars, which threatens to multiply road usage yet further.

In the end, housing and transportation are clearly interlinked, on every level. Each of us lives on a street, after all. Solving one problem, such as homelessness and the stratospheric cost of housing, requires taking a step back, looking at the whole system, and addressing root causes, which come down to zoning, transportation, money, and the quality and ambition of our planning.

• Hey- how about those objective, absolutely true values?
• Bernie has some mojo, and doing some good with it.
• We know nothing ... at the State department.
• The Fed is getting ready to make another mistake.
• For the umpteenth time, we need more fiscal policy.
• Cheating on taxes, the Trump way.
• Yes, Trump is this stupid, and horrible.
• Another disaster from Hillary Clinton's career.
• Corporations are doing well the old-fashioned way, though corruption.
• What happens when labor is too cheap, and how trade is not so peaceful after all.

Do Bankrupt Companies Dream of Electric Cars?

The future of cars comes into electrifying focus, courtesy of Israel.

A recent NYTimes article outlined a way to make electric cars practical even at modest battery capacity- by replacing the battery as needed on the fly, rather than waiting around to recharge. I found it a very persuasive idea, clarifying the future of the automobile.

There have been several schemes floating around for this future:

• Renunciation- cars are bad and we should do without them, building transit for short and long distances that is more efficient than single cars.
• Virtual reality- we eventually plug into a Matrix-like virtual reality where it would make no difference where we are. Telecommuting is only the beginning!
• Hydrogen- a clean, light-weight fuel to replace gasoline, producing no CO2.
• Biofuels- gasoline made from recently deceased plants rather than long-deceased plants stored courtesy of earth's geology.
• Electric vehicles- Electricity is easy to use, and clean, like hydrogen. Whatever the fuel source, all cars are becoming electric cars for efficiency and usability reasons, as shown by today's hybrids, so there is an inherent advantage to also using electricity as the fueling medium.

I think that hydrogen is the most significant loser here, demanding a huge new infrastructure with few significant advantages over the other options. Hydrogen doesn't grow on trees- it has to be made from some other energy source. And on top of that, hydrogen is absurdly difficult to handle and transport safely and cheaply. Indeed, one suspects that hydrogen has been some kind of enormous car industry head-fake plus government boondoggle, based on a prejudice for liquid or quasi-liquid fuels.

Biofuels are impossible as far as large scale use goes, though they will be an important source of specialty chemicals and feedstocks. It is not clear that there are enough recently deceased plants to go around. Making fuel from corn that takes more petroleum to grow than it yields ... that has turned out to be a very bad idea. Shortages of arable land and water are bad enough for growing food- growing fuel is simply not possible or desirable on very large scales.

Renunciation is not going to happen if there is any technological means around it, with the developing world becomming as car-mad as the US (and rightly so, if not for the environmental costs). Virtual reality is sure to be a long-term winner, especially for long-range travel, but bodily travel will still be required for some decades at least. One problem to keep in mind, however, is that making cars themselves is energy and resource-intensive, so some amount of moderation in usage can not but be a good thing, from an environmental perspective.

Electricity, like hydrogen, has to be made somewhere else, and battery storage is not yet at the density of gasoline, making trip range small in current electric cars. It is amazing, really, how slow and painful progress has been in this field, similar to the difficulties in storing large amounts of hydrogen in adsorbed form, or making solar electric panels a few percent more efficient. Electricity storage seems likely to make significantly more progress once market incentives rise, but so far, batteries are not quite ready to substitute for gas tanks, as shown by the price of a truly practical vehicle based on the most advanced technology- the $100,000 Tesla.

The article cited above described an innovative way to deal with the problem of low battery storage capacity, which is to swap out batteries as needed, virtually on the go. A car could make a one-minute pit stop after going 50 miles, get a new battery, and be off in a jiffy with a full charge. While normal use would involve recharging one's own battery after a daily commute, the prospect of being able to swap out batteries on the fly during a long trip is enormously freeing, completing the set of basic conditions needed for an electric car future, even assuming no advances in battery performance at all. Then as battery technology slowly improves, swapping would become less frequent, batteries would weigh less, and the whole system would get increasingly efficient and convenient.

The article profiled the entrepreneur who has started operations in Israel, benefiting from key political support and a dense, small market that would benefit greatly by kicking its oil habit. They are partnering with Renault, which (alone among car companies) has promised to produce an electric vehicle with swap-able batteries. The Israeli company then would set up service stations with stocks of batteries, charging customers at profitable rates over very low cost of the electricity needed.

With peak oil, Middle East entanglement, and Climate change all looming to crisis proportions, transcending fossil fuels can not happen soon enough, and having a clear, practical path to the future of cars should have a galvanizing effect. All that is needed is one simple policy change: charge more money for fossil fuels, in accordance with their true holistic costs. But shamefully, Congress is eviscerating Obama's cap-and-trade program into a giveaway to big polluters.

This is the time to act. As the auto industry resets, we have a golden opportunity to reorient to the future, not with government regulation and meddling, but with simple, economy-wide incentives that will get us past these dirty, indeed lethal, fuels. If American car companies do not fall over each other setting up partnerships and standards to allow battery swapping in their future electric vehicles, the domestic car industry may never recover from its current insolvency, ever.

• The sorry story of the GM EV-1
• Tom Friedman chimes in on carbon pricing
• Ditto Paul Krugman