Pennies Per Pound to Save the Economy and the Planet

19 pennies for the 19.4 lbs of CO2 from a gallon of gasoline
19 pennies for the 19.4 lbs of CO2 from a gallon of gasoline

If you have read my posts before, you probably know that I am a proponent of implementing some sort of energy tax to drive behavior toward energy conservation, energy efficiency and renewable energy. I have finally connected the various threads in my head and am now working to build grass roots support for the idea I call “Pennies Per Pound (PPP).”

I believe enacting a Pennies Per Pound (PPP) CO2 Stamp & Tax Program on fossil fuels would create green jobs, decrease dependence on foreign oil, raise revenues, lower the nation’s debt and lead to a healthier planet with lower healthcare costs. Said differently, Pennies Per Pound would save our economy and the planet. Read More >>

Previous legislative attempts[i] to enact cap and trade or other carbon taxes have met with significant resistance from both parties. The introduction of a consumption based energy tax with a food stamps like energy stamp program is easier to understand and has a chance now. With the recent financial crisis and debt ceiling legislation, there is more willingness on both sides of the aisle to explore this possibility. Now is the time to put forward this legislation, in advance of the November deadline for debt changes.

I propose phasing in a tax on carbon emissions produced by the consumption of fossil fuels. Such a tax is a simpler approach than cap and trade. A tax that starts as low as 1¢/lb of CO2 and increases to 10¢/lb over ten years will generate significant revenue and create demand for new technologies to reduce energy consumption. This demand will in turn result in the creation of thousands of new jobs across multiple sectors, including home improvement and research and development. As consumers and industry use less energy through efficiency improvements and conservation, overall demand will decrease, reducing both our energy imports and the trade deficit. In 2007, the US spent $1.23 trillion dollars[ii] on energy of which a significant portion was imported. In 2009, the US spent an estimated $218 billion dollars[iii] on imported oil alone.

Fossil Fuel Energy Consumption
Quads
10^15
BTU
Pounds CO2 per Billion BTU
Tax Rate per Pound CO2
Annual Revenue Estimates
Petroleum
35.27
164,000
1¢/lb
 $        58 billion
Coal
19.76
208,000
1¢/lb
 $        41 billion
Natural Gas
23.37
117,000
1¢/lb
 $        27 billion
Totals
78.4
 $      126 billion

Even at the lowest proposed rate of a penny per pound, this energy tax will generate over $126 billion in revenues for the federal government (based on US Energy Consumption from 2009[iv]), and produce significant demand for green jobs across America. Any increase in the cost of living or operations will present a challenge, particularly in tough economic times, but with the following approaches, the impact of the change can be mitigated.

An Energy Stamp program would need to be implemented to mitigate the regressive nature of a consumption based tax. The program would be completely funded by the revenue generated by the Pennies Per Pound Tax. A stamp program with debit cards similar to the current food stamps (SNAP) would still encourage energy efficiency and conservation while not unfairly burdening those already struggling.

Eventually, as revenues from the Pennies Per Pound Program increase we should shift some of the Federal Government’s revenue dependency away from an income based system to a consumption based system, thus cutting income taxes. Revenue increases beyond year five could be applied to reducing income taxes.

Finally, some of the revenue should fund federal incentives for energy efficiency renovations of residential and commercial spaces further reducing the overall consumption of energy and saving even more energy and money going forward. These types of renovations support the American workers as they must be done locally using local contractors therefore adding numerous green jobs every year. Building insulation is widely regarded as the most cost effective way to reduce energy consumption [v].

The impact to an individual family from the tax would be small. A person could expect to only pay $115 more for the first year for driving a passenger vehicle based on the EPA’s averages of 12,000 miles/year and 20.3 mpg, which is only a 5% increase over fuel costs without PPP. The owner of a typical residence could expect annually to pay an additional $95 in the first year if heating with natural gas, or $114 if heating with oil [vi]. The PPP tax on household electricity would equate to about $148 for the first year based on the average consumption of 900 kWh per month.

A consumption tax on energy with its small annual impact, will increase demand for efficiency measures at all levels which in turn will help spawn new companies forming around things like SmartGrids, highly efficient transportation, energy efficient homes and more. Rather than picking specific technologies or solutions we should be unleashing market forces to find the best and most cost effective solutions to savings energy, improving our economy, adding jobs and making the planet healthier for generations to come.

I have met with my Congressman’s staff to discuss this idea.  I have contacted both of my Unites States Senators.  Now I need your help!

Petition Congress

Please sign the petition which will walk you through emailing it to your member of Congress and US Senators.  If you do not agree, please add a comment below or contact me at ecodad@greenlifestyleconsulting.com explaining what would need to change in your view.

Please spread the word about http://penniesperpound.org.  I’m working on printable cards you can hand out, putting together a presentation to walk people through the Pennies Per Pound idea and setup up a separate cleaner website from the blog.

Consider volunteering to help.  I’m looking for folks to further develop the idea, discuss strategy, research the details of the impact, speak to business and community leaders, design the website and more.  Contact me at ecodad@greenlifestyleconsulting.com if you are interested in getting involved.

Thank You!
Jon

PenniesPerPound.org
PenniesPerPound.org

More details and answers to some frequently asked questions can be found on the main Pennies Per Pound Page or http://penniesperpound.org.


[i] Clinton Btu tax in 1993 – http://www.nytimes.com/1993/06/09/news/09iht-plan_1.html
McCain-Lieberman S.139 Climate Stewardship Act of 2003” http://www.gpo.gov/fdsys/pkg/BILLS-108s139is/pdf/BILLS-108s139is.pdf
Waxman-Markey H.R. 2454: American Clean Energy and Security Act of 2009 http://www.govtrack.us/congress/bill.xpd?bill=h111-2454
[ii] Table 1.5 Energy Consumption, Expenditures, and Emissions Indicators, 1949-2009 http://www.eia.gov/emeu/aer/txt/ptb0105.html
[iii] Estimated based on $61.65/barrel average and 9.667 million barrels per day for 2009 net imports from EIA sources
[v] Per-Anders Enkvist, Tomas Naucler, Jerker Rosander, “A cost curve for greenhouse gas reduction“, McKinsey Quarterly 2007, Number 1
[vi] Based on annual household CO2 emissions of 9,500 lbs for Natural Gas or 11,400 lbs for fuel oil and 14,796 lbs for electricity from EPA’s Household Emissions Calculator Assumptions and References http://www.epa.gov/climatechange/emissions/ind_assumptions.html



Comments

  1. Saving our planet is very important question, especially when we are talking about industrial countries! They should be all members of Kyoto treaty!

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