Taxing U.S. carbon emissions with an escalating levy that starts as high as $73-per-ton would have a pretty small effect on carbon emissions from the transportation sector, a Rhodium Group analysis finds.

Why it matters: Transportation has overtaken electricity as the largest source of U.S. emissions. Wringing CO2 out of transportation is hard, in contrast to progress underway in electricity.

Screenshot of chart in the Rhodium Group report, "Energy and Environmental Implications of a Carbon Tax in the United States"

The details: The report shows that a $50-per-ton tax that climbs 2% annually would cut economy-wide CO2 emissions by 39% to 47% below 2005 levels by 2030. But the vast bulk of this occurs in power.

  • The report was among several released yesterday in conjunction with Columbia University's Center on Global Energy Policy.

Between the lines: It provides several reasons why transportation emissions are stubborn...

  • The relative lack of easy and low-carbon substitute fuels.
  • Cost has a limited effect on driving levels.
  • Fuel price increases from the taxes are within historic variability.
  • The vehicle fleet turns over slowly. People stick with what they've bought because purchase price far exceeds annual operating costs.
  • That's different from power, where generators compete on fuel costs.

The bottom line: "These results suggest that if achieving deep economy-wide GHG reductions is one of the policy goals for a carbon tax, then either a much higher carbon tax rate or policy interventions targeting transportation demand, vehicle technology, and decarbonization of fuels may be necessary."

Yes, but: Noah Kaufman, an economist with the Columbia group, says the "common perception" that CO2 taxes will do little to change drivers' behavior is questionable.

  • He said models assume that's the case because big gas price swings haven't historically had a big effect on driving.
"What you’ve seen out in real-world carbon pricing programs is something pretty different. If you look in British Columbia, the evidence suggests consumers are responding quite a bit more strongly than expected. ... The number you see from studies in BC and in Sweden, drivers are about three times more responsive to price changes when caused by carbon tax than by day-to-day price change."
— Kaufman

Stay tuned: Kaufman said he's soon releasing a short paper on vehicle emissions and carbon pricing.

Go deeper

27 mins ago - Podcasts

The fight over fracking

Fracking has become a flashpoint in the election's final week, particularly in Pennsylvania where both President Trump and Joe Biden made stops on Monday. But much of the political rhetoric has ignored that the industry has gone from boom to bust, beset by layoffs, bankruptcies and fire-sale mergers.

Axios Re:Cap digs into the state of fracking, and what it means for the future of American energy, with Bob McNally, president of Rapidan Energy Group.

Democrats sound alarm on mail-in votes

Photo: Mark Makela/Getty Images

Democrats are calling a last-minute audible on mail-in voting after last night's Supreme Court ruling on Wisconsin.

Driving the news: Wisconsin Democrats and the Democratic secretary of state of Michigan are urging voters to return absentee ballots to election clerks’ offices or drop boxes. They are warning that the USPS may not be able to deliver ballots by the Election Day deadline.

Nxivm cult leader Keith Raniere sentenced to life in prison

Carts full of court documents related to the U.S. v. Keith Raniere case arrive at the U.S. District Court for the Eastern District of New York in May 2019. Photo: Drew Angerer/Getty Images

Nxivm cult leader Keith Raniere, 60, was sentenced to 120 years in prison on Tuesday in federal court for sex trafficking among other crimes, the New York Times reports.

Catch up quick: Raniere was convicted last summer with sex trafficking, conspiracy, sexual exploitation of a child, racketeering, forced labor and possession of child pornography. His so-called self-improvement workshops, which disguised rampant sexual abuse, were popular among Hollywood and business circles.