Sunday, August 27, 2006

NREL Scientist Promotes Green Tax Plan

Over the years writing sustainablog, I've made innumerable references to idea of "green fees," or taxing products and services based on their environmental impact. My own ideas on the subject are nearly all based in Paul Hawken's discussions of the subject in The Ecology of Commerce and Natural Capitalism. This weekend, I discovered another voice and set of ideas on this subject: Chaz Teplin, a materials scientist at the National Renewable Energy Laboratory in Colorado, emailed me about his website, On the site, Chaz presents his ideas for a two new fees on energy that he would combine with a rebate program:
The first part of the plan is very simple. Two new fees, a security fee and a carbon fee, would be added to each energy purchase by consumers and businesses. Energy purchases would include gasoline, natural gas, and electricity. The security fee would be directly related to how that fuel or source of energy compromises our national security. Thus, for electricity produced from coal, which is produced domestically, there would be no security fee at all, while for gasoline and electricity produced from nuclear power plants, the fee would be quite high. The carbon fee would be similar -- there would be high carbon fees for energy sources that contribute large amounts of greenhouse gases or are dangerous to extract (e.g., coal, oil, natural gas), while cleaner technologies (e.g., nuclear, wind, and solar) would have no carbon fees at all.

The second part of the plan is to return all of the fees back to United States taxpayers. Every taxpayer who files an income tax return would receive an "“fee return"” equal to the total fees collected for the entire country during the year divided by the total number of US taxpayers. Thus, every individual US taxpayer would receive an equally-sized return. Corporations would not receive a fee return. In this way, individuals that use less energy than average, would pay less in fees than they get back in their fee return. Those who use more energy, however, would pay more into the system than they would get back.
The rebate portion is designed to address one of the biggest drawbacks to most "green fees" proposals: they'd hit the poor the hardest (as any kind of sales tax does). Chaz argues that since poorer people use less energy, they'd actually end up making money on this program. Additionally, this program would have the effect of raising the prices of products and services that consume more polluting fuels from unstable regions of the world -- essentially, manufacturers and service providers must internalize those costs that they've successfully externalized for decades. Consumers would have a double incentive to purchase the most efficient and/or cleanest products: 1) they'd cost less, and 2) less spent on the carbon and security taxes up front means a greater "return" on an individual's rebate (note: corporations wouldn't be eligible for the rebate).

I suppose the only thing I might question here would be the element of revenue neutrality, which most supporters of green taxes have included in their plans. That is, any implementing or raising of green taxes would be offset by a reduction in income and/or payroll taxes. Without that, any politician supporting such a concept opens themselves up to the charge of wanting to raise taxes. Revenue neutrality could certainly be incorporated into this plan, but I'm guessing that would have to mean a reduction of the rebate portion -- and I'm not sure this will fly without that element. Still, I think this is a really innovative idea that deserves attention. With more people becoming aware of both the environmental and security costs of our current energy supply, there's simply no better time to start a discussion like this. Take a look at Chaz's site, read through it (it's very concise), and sound off. Many of our leaders love to talk about harnessing the market to address environmental concerns, but Chaz has presented an idea for doing just that. Do any of our representatives have the guts to walk the talk and actually get behind a plan like this one?

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