Feb 4, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

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My latest Harder Line column goes deep on one of the most important tussles over climate and energy policy. I'll share a glimpse of that and then Ben Geman will get you up to speed on the rest. 

Oh and one more thing: I'm going on NPR's 1A program today to talk about climate politics. For more information and to tune in, click here.

1 big thing: A taxing money problem

Illustration: Rebecca Zisser/Axios

What to do with the money raised from a carbon tax looms as the biggest sticking point to the policy as it slowly emerges from political purgatory in Washington.

The big picture: I know, we're talking about a fantasy here because Republicans controlling most of Washington right now, including President Trump, categorically oppose carbon taxes.

But the policy is slowly gaining support in pockets across the political spectrum, which could pick up momentum after the 2020 elections. So let's suspend our disbelief and look at this tussle over the cash, which is central to everything.

Driving the news: After a decade of stasis, some lawmakers, think tanks and advocacy groups are beginning to push policies with various prices per ton of carbon dioxide emissions, as well as different uses for the money.

  • One proposal pushed by oil companies and former GOP politicians that starts at $40 a ton of carbon dioxide emitted would raise $200 billion a year. A $20 per ton tax would raise more than a trillion dollars over about a decade. 
  • Putting aside conservative opposition to creating any new taxes, divisions are emerging over how to use carbon-tax revenue, like sending it back to consumers or investing in renewable energy.
  • This tension gets at the heart of the challenge of addressing climate change: Make fossil fuels more expensive without hitting pocketbooks too much, and/or make cleaner energy technologies cheaper.  

Here's a glimpse of the money options — and the fault lines....

1. Among the public, the most popular use of money raised from a carbon tax is to restore the environment, according to a recent poll by the University of Chicago's Energy Policy Institute and the AP–NORC Center for Public Affairs Research.

2. The most high-profile proposal at the moment, and the one that has the most support among economists, is to rebate most or all of the money back to consumers in dividend checks.

3. Former GOP Rep. Carlos Curbelo of Florida, who just lost a re-election, introduced carbon tax legislation last summer that would have repealed the federal gasoline tax and used the money mainly to fund infrastructure. 

  • Rep. Francis Rooney (R.-Fla.), who is the only sitting Republican supporting recently introduced carbon tax legislation rebating the money, prefers using it to either reduce the payroll tax or replace the gas tax.

4. Some conservatives say a carbon tax should be used to address fiscal woes, like looming insolvent funds.

Go deeper: Click here to read the whole column.

2. Busy week: climate, EPA, SOTU, earnings
Giphy

House: Newly empowered Democrats' will begin their promised work on climate change with multiple hearings this week.

  • What's happening: An Energy and Commerce subcommittee and the full Natural Resources Committee will hold separate sessions Wednesday morning. Click here and here for more info. Also, per E&E News ($), Democratic leaders might name the members of the new Select Committee on the Climate Crisis this week.
  • What to watch: On the Democratic side, look for hints of where various members want the party to go on policy, including the number of members who name-check the idea of a Green New Deal (GND).
  • On the GOP side: I'll be watching for how members position themselves — whether lawmakers question the scientific consensus on human-induced warming or prefer to debate policy as Democrats attack White House moves to roll back regulations.
  • One more thing: The high-profile progressive Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey are planning to unveil a proposal that puts more meat on the bones of the GND concept as soon as this week. A suite of activist groups are holding a "week of action" with events nationwide to promote their goals for the policy.

Senate: The Environment and Public Works Committee will vote tomorrow on the nomination of acting EPA Administrator Andrew Wheeler to formally get the top job, likely paving the way for a full Senate vote.

  • Plus: The Energy and Natural Resources has a pair of hearings this week. On Tuesday they'll hear from witnesses including Energy Information Administration chief Linda Capuano in a session on energy markets, while Thursday the focus turns to innovation. Click here and here for more.
  • What to watch: I'll be curious to see how new Democratic ranking member Joe Manchin positions himself on climate change. Some environmental activists opposed his elevation to the ranking slot due to his support for coal and contributions from fossil fuel interests.

White House: Trump delivers his State of the Union speech Tuesday night. Let's see if any signs emerge of stalled plans to support economically ailing coal-fired and nuclear power plants emerging from their deep freeze.

Earnings: More global giants report this week, including BP's Q4 profits tomorrow and Equinor's tally Wednesday.

3. PG&E and the bankruptcy dodge

Illustration: Aïda Amer/Axios

Axios' Felix Salmon writes ... If you're an executive who doesn't feel like making tough decisions about corporate priorities — like PG&E's potential climate liabilities or Citgo's Venezuela ties — there's always an alternative: file for bankruptcy.

Felix's thought bubble: These problems are not what America's bankruptcy regime was designed to solve. Bankruptcy is messy and expensive, and judges don't tend to make great corporate executives. But it's easy to see why an executive holding a hot potato might be tempted to pass it on to someone — anyone — else.

PG&E, the solvent California utility, filed for Chapter 11 protection this week, citing assets of $71.4 billion and liabilities of $51.7 billion.

  • PG&E no longer needs to pay out money to the victims of the devastating Camp Fire. Instead, it gets to punt all decisions about how much those individuals will receive to the bankruptcy judge.

Citgo, the oil refiner owned by Venezuela, is also reportedly considering bankruptcy, even though it's so valuable that it's the crown jewel of Venezuela's foreign assets. (Citgo denies the report.)

  • Filing for bankruptcy would stop the refiner's executives from having to choose which Venezuelan president they are loyal to. A judge, instead, would need to make all ownership determinations.

Go deeper: PG&E employees are bracing for bankruptcy fallout

4. How to make big cars green

Tesla showroom and service center in Brooklyn, N.Y. Photo: Spencer Platt via Getty Images

Axios Expert Voices contributor David Friedman explores how U.S. EV sales — which rose over 80% last year — can spread faster to the popular crossover and SUV markets.

Why it matters: Automakers may claim they’ve embarked on an electric revolution, but most have been slow to actually deliver on some fronts.

  • While crossovers, the modern marriage between a car and an SUV, now make up the largest segment of the U.S. car market — nearly 40%, per DOE very few all-electric crossovers, SUVs or pickups exist.

Where it stands: The federal electric vehicle tax credit has been helping to lower the cost of EVs for hundreds of thousands of consumers in recent years. But that program needs to change to better incentivize EV purchases...

  • A simpler discount process that gives consumers their rebate savings at the time of purchase.
  • Expanded consumer choice, through reforms of company-specific caps that currently cut off the tax credit for the EVs most consumers are buying.
  • A limit on the vehicle price rebates can be applied toward, reserving valuable discount dollars for people who might not otherwise be able to afford an electric vehicle, instead of using them on luxury vehicles.
  • An increased discount for larger batteries, so drivers wouldn't have to choose between getting an all-electric vehicle and getting the vehicle size or range they want.

What to watch: So far 10 states have adopted zero emission vehicle standards, requiring automakers to sell a growing percentage of EVs in participating states.

  • As more states adopt these standards, EVs could become increasingly common on dealer lots across the country, and automakers increasingly likely to develop high-quality EVs of all types.

Friedman is VP of advocacy at Consumer Reports.

5. Quote of the day
"The strategies that we’ve used up until now just haven’t been effective."

Who said it: California Air Resources Board chairwoman Mary Nichols, chatting with Reuters.

Context: She's discussing why carbon emissions from transportation in the state are rising, even though overall emissions have fallen substantially over the last decade or so, thanks largely to making electricity production greener.

Why it matters: The quote and the story get to the difficulty of wringing carbon out of transportation, which is now the largest source of CO2 emissions in the U.S. and by far the biggest in the Golden State.

The big picture: "That failure has less to do with energy or environmental policies and more with decades-old urban planning decisions that made California — and especially Los Angeles — a haven for sprawling development of single-family homes and long commutes, according to state officials," Reuters explains.

On a related note, this tweet is very clever.

Go deeper: California's transportation challenge

Ben GemanAmy Harder