Tag: Energy Policy

We Have Revised Our Climate Change Policy

Wind, solar, natural gas, and nuclear energy representing a market-based, all-of-the-above climate policy.

CIVPAC has published a substantially revised version of our Climate Change policy.

The basic position has not changed. We continue to support a $100-per-metric-ton carbon tax, comparable carbon charges on imports from countries that do not adopt similar policies, and a market-based approach that allows competing technologies to determine the least expensive ways to reduce greenhouse-gas emissions.

What has changed is the depth of the analysis.

As we have continued to think through the proposal, several questions deserved more explicit answers: What would a $100 carbon tax actually do to household energy bills? How should carbon capture be treated? What happens to existing coal and natural-gas power plants? Who really bears the economic burden of the tax? And what should we do with what could initially be several hundred billion dollars a year in revenue?

Being More Explicit About the Costs

The revised policy now says much more clearly what a $100 carbon tax would mean for consumers.

If fully reflected in retail prices, it would mechanically add about 89 cents per gallon to gasoline. At today’s generating mix, it could initially raise the average residential electricity bill by roughly 20 percent, although the effect would vary enormously depending on how electricity is generated. Residential natural-gas bills could initially rise by roughly 35 to 40 percent.

Those numbers are not forecasts of permanent prices. Consumers, utilities and producers would respond. Demand for fossil fuels would fall, generating systems would change, and some of the economic burden would be reflected in lower prices for fossil fuels and lower values for fossil-fuel reserves and carbon-intensive assets rather than simply higher consumer prices.

But a serious climate policy should not hide the central point: changing relative prices is how a carbon tax reduces emissions.

Carbon Capture and an All-of-the-Above Strategy

The revised policy also makes our treatment of carbon capture much clearer.

Carbon that has already been taxed and is later captured and permanently stored should receive a credit equal to the carbon tax previously imposed. That is not an additional subsidy. It simply means the tax ultimately applies to carbon released into the atmosphere.

Direct removal of carbon that is already in the atmosphere is different and may justify separate public support for research and deployment and ultimately a payment or credit reflecting the value of the carbon removed from the atmosphere.

We also expanded the discussion of existing power plants. A carbon tax does not order a coal or natural-gas plant to close. It gives the owner choices: pay the higher fuel price resulting from the tax, capture the carbon, operate less often, or retire the plant.

That is what we mean by an all-of-the-above energy policy. Government should price the environmental harm and allow coal, natural gas, nuclear, solar, wind, hydro, geothermal, storage and technologies not yet developed to compete.

Using the Revenue

Another revision of the policy from its original form, which was mentioned in our last iteration, was to use most of the remaining carbon-tax revenue to help finance Social Security rather than create a large new stream of revenue that might be viewed as justification for permanently higher federal spending.

That approach is now developed much more fully.

A successful carbon tax should produce declining revenue over time as emissions fall. That makes it poorly suited to financing any permanent spending program, but potentially well suited to providing transitional financing for Social Security while longer-term reforms are phased in.

In practical terms, carbon-tax revenue could reduce federal borrowing and reduce or delay the need for future increases in payroll taxes or reductions in benefits.

We would still devote a portion of the revenue to basic research in low-carbon energy, direct atmospheric carbon removal and potentially useful geo-engineering.

The Principle Has Not Changed

The revision also expands our discussion of carbon tariffs, the distribution of the tax burden, carbon taxes versus cap-and-trade, the developing world, nuclear power and the economics of coal and natural gas.

But the central principle remains simple:

Price the environmental harm, allow markets to search for the least-cost response, encourage the rest of the world to do the same, and use government research dollars where private markets are least able to capture the benefits.

A $100 carbon tax would not painlessly solve climate change. Some energy prices would rise. Some existing assets would lose value. Coal use would probably decline substantially. Other technologies would gain.

Those are not unintended consequences. They are the means by which the policy works.

You can read the full revised Climate Change policy position and review our other public policy positions.

Centrist Independent Voter Endorses Eric Barlow for Wyoming Governor

Wyoming landscape featuring mountains, open plains and ranch coun

Centrist Independent Voter has endorsed Eric Barlow in Wyoming’s August 18 Republican primary for governor.

Barlow is a conservative Republican, and we disagree with him on important issues, particularly abortion. He supported Wyoming’s near-total abortion prohibition and its ban on medication abortion in 2023.

But primary elections require voters to choose among the candidates actually running. In this field, Barlow offers the strongest combination of governing experience, institutional temperament and practical conservatism.

A veterinarian, rancher, Marine veteran and former speaker of the Wyoming House, Barlow has emphasized health care, water, public lands, education, economic opportunity and the future of Wyoming’s smaller communities. His energy policy is notably pragmatic: he supports the state’s traditional industries while remaining open to nuclear power and other sources, arguing that growing electricity demand means “every electron matters.”

Barlow has also resisted the factional politics that increasingly dominate the Wyoming Republican Party. His principal opponent, state Superintendent Megan Degenfelder, has built much of her campaign around President Trump’s endorsement and alignment with his political movement.

We still have unanswered questions about Barlow’s views on the 2020 election, Trump’s efforts to overturn it and the proper limits of presidential power. Voters should continue looking for clear answers before casting their ballots.

On balance, however, Barlow offers Wyoming Republicans the better choice: experienced, serious and more interested in governing than ideological performance.

Read our full endorsement of Eric Barlow.

See all Centrist Independent Voter 2026 endorsements.

Why Second Best Climate Solutions are Counterproductive.

U.S. Capital

Doing Something is Not Always Better than Doing Nothing

I came across an opinion piece in the Wall Street Journal this weekend that reminded me about why a carbon tax is not only the best solution, but it may be the only solution. Specifically, the author of the piece, Holman W. Jenkins, pointed out that subsidies for electric vehicles will lower the demand for oil and therefore oil prices. Lower oil prices mean that the owners of gasoline powered vehicles, in the U.S. and elsewhere, will drive those cars more and that purchasers of new gas powered vehicles will buy larger and less fuel efficient vehicles. In the short run this effect may be small, but in the long run it may wipe out much of the benefit of subsidizing electric vehicles. It is unlikely that the subsidies will entirely wipe out the carbon benefits, but these subsidies are not free. It is easy to imagine that the net benefit could be negative.

The Centrist Independent Voter makes the same point in the Energy Policy section as a reason for opposing Corporate Average Fuel Economy (CAFE) Standards. CAFE standards, by forcing some cars to be more efficient, lower the demand for gasoline and therefore gas prices, which encourages drivers to drive more. This problem is well documented.

Taxing carbon does not have this shortcoming. Carbon taxes raise the cost of all fossil fuels, which not only provides an incentive for buying electric vehicles, it also encourages consumers to drive less and buy smaller cars.

Why Not a Carbon Tax?

The most common argument against a carbon tax is that it will only discourage fossil fuel use in the U.S., make American manufacturers less competitive, and encourage fossil fuel use in other countries like China and India.

Those are good arguments, but the solution is to match the tax with a comparable tariff on the carbon content of imported goods. A few countries in Europe are experimenting with just such a tax and tariff scheme. Imports from countries that impose the same tax and tariff scheme on themselves would be exempt from the tariff. When you think about it, why would any country allow its exports to be taxed by a foreign government when it could avoid the tariff and capture the tax revenues for itself by imposing its own carbon tax? It is easy to see how such a scheme could rapidly result in a virtuous cycle leading to a nearly universal global carbon tax.

Another argument against a carbon tax is that it is a political impossibility. To this I have to ask, what is the politically palatable action that will actually solve the problem? The carbon tax has something for everyone. It would actually work to address climate change and it would produce a revenue stream that could be used to reduce the deficit. It works, politically, precisely because it asks everyone to bear at least some of the cost of dealing with the problem.

Is Climate Change an Existential Problem?

If you think climate change is an existential problem, I would think that you might be willing to accept that the most, perhaps the only, effective way to deal with it is a carbon tax. Progressives seem to shy away from this solution because they like to pretend that the problem can be solved by taxing the rich to subsidize low-carbon technologies. As the analysis above suggests, these subsidies may not be capable of solving the problem.

What should be done with the revenues collected from a carbon tax? The left would like to see them redistributed. That could be done and it would be better than not having a carbon tax at all. However, if the left expects to get centrists and moderate Republicans to buy into a carbon tax, it might help if the revenues were used to offset the deficit.

In addition, it would be helpful if the left would get out of the way with respect to the use of nuclear power. In the presence of a significant carbon tax, nuclear power could be scaled up far more quickly than solar and wind power. Are there risks? Sure, but I thought we were talking about an existential problem.

For more on Climate Change and Energy Policy visit the Centrist Independent Voter’s Policy Positions.

Inflation, Gas Taxes, and Ukraine

A number of states and the federal government are, or are considering, lowering gasoline taxes to offset the impact of inflation on consumers. Assuming that the gas taxes made sense in the first place, and that this is intended to be temporary, this is bad public policy.

What Causes Inflation?

Supply chain problems, surging demand as the global economy recovers from Covid and the impact of the war in Ukraine are all causes of relative price increases. As some commodities become harder to obtain, the price of the affected goods can be expected to rise relative to the price of other goods. These things are not in themselves the root causes of inflation. Absent accommodating monetary policies from central banks, like the Federal Reserve Bank (Fed) in the U.S., these price shocks would be accompanied by declines in the prices of other goods or an overall reduction in economic activity, rather than inflation.

Doesn’t Lowering Gas Taxes Reduce the Pain of Inflation?

Ok, you say, lowering gas taxes may not address the root causes of inflation, but doesn’t it reduce the pain to consumers?

Lower gas taxes can be thought of in two ways.

One, absent an increase in other forms of taxation, it is an economic stimulus payment, the exact opposite of what is needed in a period of escalating inflation.

Two, it is a relative price subsidy. If you subsidize the consumption of a commodity you get greater demand for it. One of the problems in persuading European countries to boycott Russian oil and gas exports is that the global demand and supply of oil and gas are highly inelastic, in the short run. That means that the quantity of oil and gas demanded and supplied does not change very quickly in response to price changes. As a result, even small changes in supply (or demand) result in very large changes in price, in the short run. By lowering gas taxes, the United States is subsidizing the purchase of oil and making the global demand for oil even more inelastic than it would otherwise be. That will mean that the pain of boycotting Russian oil and gas will be even higher in Europe than it would otherwise be.

Impact on OPEC Incentives.

A variable tax on oil imports was considered, in the 1970’s, but was rejected because, by reducing the elasticity of demand, a variable tax actually increases the incentive for OPEC to reduce supplies to drive up oil prices.

So What Should We Do?

What we should be doing, to lower inflation, is what we should have been doing for months. The Fed needs to end its open market purchases of bonds and begin raising interest rates. How far should this go? At least far enough that short and long-term interest rates meaningfully exceed the expected rate of inflation.