Sunday, June 22, 2014

Point of the Spear: Climate challenge from the left

The most vibrant young political movement to hit Seattle in years, the one that pushed the $15/hour minimum wage to the top of the agenda in Seattle and cities around the country, is making a bid in the local politics of global warming.

Jess Spear, a climate scientist active in the 2013 campaign that elected Kshama Sawant to Seattle City Council is a 2014 election candidate for Washington House Speaker Frank Chopp’s 43rd Legislative District seat.  Like Sawant she is running on the Socialist Alternative ticket. 

Socialist.  Now there’s a word that raises red flags.  But maybe not so alarming in a city that just elected its first socialist city councilmember in a century. Personally I’m not so hung up on labels but instead judge candidates on the quality of their ideas.  I sat down to talk with Jess lately, and took away three key ideas that ground her campaign.

First, the climate crisis demands urgent action. We need a crash program to convert to 100 percent clean, renewable energy, starting in Washington state.  Market-based solutions such as carbon cap and trade or carbon taxes simply will not work fast enough to accomplish the mission.  It will require active public policy and major public investment.

Second, ordinary people pressed by increasingly stressful economic conditions will not have time or energy to focus on climate and environment unless their own personal environments are secured.  That means good jobs and affordable housing.  Climate must be embedded in a broader effort to meet people’s needs.  For example by creating large numbers of green jobs to work on wind turbines, solar panels, smart grids, energy efficiency and mass transit.

Third, these victories can only be achieved by mobilizing people who are angry with politicians and turned off by politics as usual. Especially young people.  The way to bring people into politics is by offering real solutions to real life problems, such as Seattle’s exploding rents.  One of Spear’s top campaign planks is a bill that would allow local governments to impose rent control, forbidden by state law now.

We’ll dig in to Spear’s positions in a bit.  First, a little about Jess. The 32-year-old Virginia native took a graduate degree in marine science from University of South Florida in 2008.  She studied tiny ocean fossils of past eras for vital clues about how climate changes.  Such studies help forecast future climate.

Jess was deeply concerned about global warming and hoped to contribute to solutions with her science. In 2011 she moved to Seattle. Her oceanographer husband came to work with the National Oceanic and Atmospheric Administration. She worked as a micropaleontologist at the Burke Museum under a U.S. Geological Service contract until she became another cut under the federal budget sequester.

Jess was not feeling hopeful about climate or politics.  But later that year events stirred her optimism. Arab Spring, labor occupation of the Wisconsin Statehouse, and then the Occupy movement. 

“I saw young people stepping in at that point to take on war, debt, all the problems young people are told are normal.”

She visited the downtown Seattle Occupy camp and began talking with the Socialist Alternative folks about economic democracy.  It made sense. She has been working as an activist in the group since.  Jess was volunteer coordinator of the Sawant Council campaign and continues as the organizing director of 15 Now.  The $15 minimum wage is now law in Seattle, close to passage in San Francisco, seriously on the table in New York and Chicago and has chapters in 17 cities around the country. 

That is a stunning example of grassroots democracy at work, a radiant beam of hope in a political system tied up in special interest money and interminable gridlock.  Sawant clearly dominated the 2013 city election debate.  The mayoral candidates were stumbling over each other trying to demonstrate who was more for $15/hour. 

Could this election change the dialogue on climate and clean energy in the same way?  Could Jess be the point of the spear to move the climate debate beyond market-based solutions into proactive public policies that scale to the immense global warming challenge?

Much depends on how successfully she runs in the 43rd.  The district spans some of Seattle’s most progressive neighborhoods including Wallingford, University District, Capitol Hill, Eastlake, Montlake and pieces of Greenlake, Fremont and downtown.  If there’s anyplace a socialist candidate can do well it’s here. Sawant  took 29 percent in her 2012 run against Chopp, a record for any of his election opponents.  She won a majority of the area in her Council bid.   

Spear plans a campaign heavy on doorbelling, aiming at 1,000 volunteers.  The campaign also has a goal of raising $150,000 in individual donations. Chopp wants to raise $300,000, substantially more than the $40,000 he spent in 2012, an indication he takes the Spear challenge seriously. 

Now let’s delve into the ideas.

“In my campaign environmental activists will see a voice for addressing climate change from the standpoint that bold change is necessary,” Jess, says. “I am disappointed with Jay Inslee for setting up another task force to design a set of market-based solutions.  Do we need another task force? Carbon cap and trade and carbon taxes aren’t good enough and they won’t work fast enough.  We have to be honest and say that is not going to work.  We have to look at the energy needed to pass these measures.  Instead consider focusing that energy on funding renewable energy infrastructure, creating thousands of jobs and putting us on a pathway to a sustainable future.”

So what should the governor do?

“I would immediately call for 100 percent renewable energy and for a way to invest in it.  I would get out there and build support for it.  Get communities involved.  Build the kind of grassroots movement that is necessary.  I would do exactly what I am doing with my campaign. I would put forward a bold vision of what society should look like. If he did that he would really rally people behind him.”

Notes Spear, “The environmental movement has failed to connect with working people and the need for jobs.  We need to connect the labor movement and the environmental movement.”

“This is a very weak recovery,” she says.  “There is so much work that needs to be done, especially with renewable energy.  We can create jobs with 100 percent renewable energy.”

The 100 percent concept is feasible. A team led by Stanford scientist Mark Jacobsen earlier this year released a 100 percent renewables plan for Washington state.  It is part of a 50-state effort on which I will soon blog. 

So where is the money in a tight state budget?

“There are 500 corporate loopholes that starve the state treasury of $6 billion each year.  Close corporate loopholes. That creates plenty of money to invest in transit and renewable energy . . . We need massive expansion in transit and renewable energy.  We need to connect expansion and funding with corporate handouts.  It’s one or the other.” 

“We would not call for working people to pay for this. That is a mistake of the environmental community.  All taxes working people have to pay pit them against the policy and the environment. We have to refocus the attention on corporations.  Focusing on consumers really pits people against each other.” 

Carbon cap and trade (CCAT) and carbon tax proposals generally include a rebate of carbon revenues to avoid impacts on low-and middle-income people.  A substantial majority of the population could receive checks that exceed increased energy costs.  That actually represents a redistribution of income.  Jess has some concerns though.  

“People are struggling to meet bills.  They can’t wait to the end of year for a check.” 

Another problem is public skepticism that the money will actually come to them. 

“They don’t trust the Democratic Party not to impose taxes on them,” Jess says. “When they had a supermajority in 2007 they passed regressive taxes.  It’s not surprising that working people don’t trust government.  The Democrats point to the Republicans and say we’re keeping them out. That’s not true. The policies they pass drive people to the Republican party.” 

Instead Jess suggests not allowing electric utilities to pass added carbon costs on to customers.  In my view, that is an interesting concept that would have two effects.  First, if additional fuel costs ate directly into utility bottom lines it would supercharge a rapid move to renewables. But leaving customers unaffected would also eliminate the incentive for investments in energy efficiency.  This is one of the prime benefits of pricing carbon.   There is another option.  When carbon is priced it creates a new pool of public money that could be directed to grants and low-cost loans for efficiency projects.

So if Jess is elected and a cap and trade bill comes up for a vote, what will she do?

“We would look at it very closely. If it’s a step forward, an inch or two toward where we need to go, we would vote for that.  But, we would work to really make sure it had sharp teeth.”

Jess's climate agenda - eliminating corporate loopholes to invest in 100 percent renewable energy - is indeed bold.  People who grapple with the convoluted politics of Olympia might question the practicality.  One of the state environmental community’s 2014 priorities was closing a $59 million oil industry tax loophole to invest in education.  Big oil pushed that one back. 

Jess’s answer to “political practicality” arguments is that it is the political system itself that is failing – Stirring a bottom-up grassroots movement is the imperative.  It’s about bringing in “people that don’t look to political system for change,” Jess says, people who now feel that, “Politics is not for me.  None of these representatives really fight for the issues that affect me.  This campaign is about reaching out to them and providing a voice for them.”

That is a key reason the Spear campaign is focusing on Seattle’s stratospheric rise in rents, highest in the country.  At Saturday’s Fremont Solstice Parade poles all along the route were decorated with Spear posters declaring, “Rents are too damned high.  We need rent control now.”  Allowing cities to pass rent control ordinances is one of those basic, practical measures that appeal to people’s real concerns, much like $15/hour.  

“People are upset at corporate politicians who ignore everyday issues.  As a socialist those come first for me. I am a climate scientist and environmental activist.  But it was after years of activism and not seeing us get anywhere that I came to understand it’s about mass movements. People demanding change.  We are focused on people’s deep anger at the political system.”  

Jess calls out the recent election takedown of House Majority Leader Eric Cantor as evidence that anger toward politics as usual prevails across the spectrum.  She hopes to tap into that sentiment in her race against Chopp.

“Frank Chopp personifies everything that is wrong in the state legislature,” Jess says. “As speaker of house he is far to the right of his district.”   She calls out “criminally underfunded education,” social services cuts, corporate welfare and “the most regressive taxation in the country.” “If you’re happy with the status quo, then vote for Frank Chopp.” 

Chopp certainly does not represent his district on climate, one of the hotbeds of climate action in Washington state. I can personally testify to that.  In 2008 I worked for one of the groups leading the charge for that year’s state climate bill.  Everyone wanted to pass a meaningful carbon cap.  But the speaker was in the way. 

I recall conversations around the office conference table in which the politics were discussed.  Chopp was most concerned with maintaining a large House Democratic majority, and thus did not want to offend suburban and rural representatives and districts.  He was coddling the conservative Democrats.  So the 2008 climate bill enacted a carbon reduction goal without legal teeth to it, which is why we are back to the issue now.

“We are not going to get anywhere on environmental policy and the economic crisis with politicians straddling both sides,” Jess says. 

When Richard Nixon created the Environmental Protection Administration seven months after the first Earth Day it was not because he was an environmentalist, Jess notes. It was because millions of people were in the streets demanding change.

“We need to apply that lesson to today. The reason for the focus on market-based solutions and lobbying is because a lot of people have forgotten that lesson about how radical change happens.  Environmental groups focus too much on what is politically possible, which is inherently tied to what corporations are willing to accept.”

Jess Spear reflects a new generation that is not buying the deal. She is looking to young folks to drive change.

“When it comes to young people the problem feels so incredibly big.  Where do you start?   In history classes they are taught it’s all about one great person like MLK, not the millions who caused the change.  They don’t know that history is made by everyday people like themselves.  When they do learn that, people get excited about what is possible.”

The election of Kshama Sawant to Seattle City Council demonstrates possibility. People will look beyond labels to vote for a candidate whose ideas make sense.  Lots of non-socialists voted for Sawant, and Spear’s ideas are compelling across a broad spectrum.

Global warming and climate impacts are intensifying across the world.  It is clear we need a point of the spear movement to thrust the climate debate to a new level of urgency.  We need a movement which forwards climate solutions that scale to the immensity of the global warming threat.  In her call for a crash program to bring on 100 percent renewable energy and a massive grassroots upsurge to make it happen, Jess Spear has hit the mark. 

Tuesday, June 17, 2014

BC’s carbon tax: Moving emissions rather than reducing them?

Does putting a cost on carbon emissions displace the emissions to places without a carbon price?

This is the dilemma of carbon policy, and one that appears to be taking place in British Columbia. 

Before the carbon tax was enacted BC only imported four percent of its cement.  Those were generally specialized products with limited supply from the province.  By 2011, after three years of the tax, imports had climbed to 23 percent of market share.

“Why?  Because imported cement is not subject to the BC carbon tax.  Foreign cement powder comes into BC tax free,” said Cement Association of Canada President Michael McSweeney.
“Not surprisingly, since the BC government allows foreign made products into the BC market tax free, there is now less demand for our local fully-taxed cement,” McSweeney continued in testimony to the BC Select Standing Committee on Finance and Government.
As a result, in 2011, BC’s cement kilns are running at about 50 to 70 percent capacity, which has meant rotating layoffs for hundreds of employees and termination or layoff notices for contractors.  Local mines, trucking lines and railways serving the kilns are also hurt.  The negative provincial economic impact runs in the tens of millions of dollars.  But most of all the impact of this is on BC families - as they are the ones that have to bear the brunt of unemployment, while others are employed making cement elsewhere in the world.”
Okay.  That’s the cement industry guy.  But so far I have been unable to get a response from carbon tax advocates on why it isn’t the tax doing this.  I would appreciate a counterargument.  At this point it appears to be the same displacement effect I wrote about here, reporting on a UK study that found that Britain’s domestic carbon emissions reductions are cancelled out by increasing imports. 
That has an unintended consequence, as McSweeney reported, increased net carbon emissions from hauling cement from out of province.
It also spells net revenue loss, McSweeney noted, “because 23 percent of the cement used in BC now doesn’t pay the carbon tax, this system is actually costing the government direct revenue.  The trend lines show that as the carbon tax increases, the tax base it applies to will continue to decrease.  It’s a money-losing proposition for all involved.”
Again, carbon pricing proponents, I want to hear why this is not true, because I would like to see an effective price put on carbon to discourage emissions. 
Interestingly, McSweeney does not call for repeal of the carbon tax, but for changing it to capture consumption-based emissions.
“We have been recommending for a few years now that the BC government should apply the carbon tax at the point of sale, where cement is transferred to the concrete industry.  This way all the cement used in BC will pay the carbon tax.  It will be fair, because every cement producer in BC, Alberta, Washington and China will pay the same BC carbon taxes.”
Could this fix work in the US?  Could a tax on carbon intensity of products be applied by a state and get around Constitutional bars on state trade barriers? This would provide an incentive to achieve lower carbon ratings up the supply chain. It would be impractical to do this at a retail level, a different sales tax on everything.  So assess the tax at the wholesale level, much as you would in a value-added tax system.  Then rebate wholesale carbon tax revenues to offset the retail sales tax – the part you are going to rebate.  A large share of carbon revenues must be invested in clean energy and land-based carbon storage. 

BC’s carbon tax is apparently moving a major emissions source to other jurisdictions.  This displacement effect must be taken into account by people designing state climate policies.  We need to figure out ways to tax carbon emissions based on consumption rather than production, or we will only be moving deck chairs around on the Titanic. 

p.s.  My "Stormy Weather" co-author Guy Dauncey posted this to the BC Solar Energy Association list and generated a lively discussion. It follows:

Blaise Salmon - I think this problem can be addressed with a "border adjustment", as outlined in the detailed report below (page17). This US study shows a well-designed carbon tax would both reduce emissions and create jobs.

A "border adjustment" is in the carbon "fee and dividend" bill being promoted by Citizens Climate Lobby in the US. I will be among the 600 citizen advocates converging on Washington DC next week to push for this with Senators and Members of Congress. 

Patrick Mazza - This looks like a good system for national carbon pricing frameworks.  What about subnational systems like BC carbon tax or California Cap and Trade?  In the US California could not charge a border adjustment because it would violate the Interstate Commerce Clause of the Constitution, and probably NAFTA as well.  So until we have national systems is there any way to avoid displacement effects such as are apparently taking place with cement in BC? 

Blaise - I'll make enquiries.   And I plan to attend the session at the conference in DC next week "State carbon taxes".

Eric Doherty  - The border leakage problem is real, but multiple mechanisms for reducing the problem are available. One example is cross-border shopping for gas, it would be better to have similar carbon taxes on both sides of the border. But Singapore just has a requirement that gas tanks be 3/4 full when leaving, with fines for violations (and bigger ones for fixing gas gauges to evade the system). I proposed a toll on (gas and diesel powered) vehicles leaving the lower mainland to Washington State This may not be the best way to deal with the issue, but it is one option.

Carbon taxes are more effective with mechanisms to deal with cross-border avoidance. But one problem is that some trade and investment agreements could be interpreted to prohibit such mechanisms; however the superpowers (US, China) or any significant block of countries have the de-facto power to sweep these agreements aside if needed.

Andy Skuce -  I wrote a long blog post on the cross-border shopping for gas problem. There is a small but real effect from this on BC fuel sales stats, but cross-border shopping trips have many motivations and the 7 cents per litre carbon tax on gasoline is just part of that. The idea that all of BC's fuel sales reductions are attributable to people filling up in the USA is a myth.

Yoram Bauman has written on this as well

I think that the problems faced by the cement industry provide much more serious limits on what any jurisdiction can do with a carbon tax in a free trade zone. I have heard different accounts of how far countries or provinces can go with things like border tariffs under agreements like the WTO and NAFTA. Whatever the reality, it won't be easy to impose them and any attempt won't go uncontested. 

Honestly, I don't think the BC carbon tax can be increased above $30/tonne before our trading partners impose one. Even at current levels, it may be necessary to provide ad hoc exemptions for affected industries, as has already been done for greenhouse growers (sic).