Renewable Energy Debate

March 15, 2019 – Volume 29, Issue 11
Can alternative sources replace fossil fuels? By Matt Mossman

Short Features

‘Carbon Dividends’ Plan Puts New Spin on Climate Debate
Use of Renewables Varies Widely Across World

“Americans would pay more for food, health care — you name it.”

Last October, ExxonMobil announced plans to donate to a cause that, at first glance, seems completely at odds with the company's interests.

The money — $1 million over the next two years — will go to Americans for Carbon Dividends, created last year to lobby Congress for what the group calls a “carbon dividends plan.” The plan would tax ExxonMobil and other fossil fuel companies for the carbon-based fuel they produce — starting at $40 a ton — as a way to lower greenhouse gas emissions and fight climate change.

Proceeds would go to consumers in the form of dividend checks, with a family of four receiving about $2,000 the first year, the group says. Proceeds from the tax would not be available for spending by the government.1

“Economists are nearly unanimous in their belief that a carbon fee is the most efficient and effective way to reduce carbon emissions,” the group says on its website. “The more the climate is protected, the greater the individual dividend payments to all Americans.”2

But the idea faces opposition from critics who say it would raise prices for goods and services well beyond the energy sector, weighing down the entire economy.

“Americans would pay more for food, health care, education, clothes, cleaning supplies — you name it,” said Bryan Cosby and Katie Tubb of the Heritage Foundation, a conservative think tank in Washington. Low-income Americans would be hurt the most, they and other critics say, because the dividends they would receive under the plan would not make up for their higher bills.3

The proposal faces an uphill battle in Congress, where most Republicans oppose any form of a carbon tax plan. Last year, Republicans then in control of the House won approval of a nonbinding measure denouncing a carbon tax.4

The tax-and-dividend plan is one of a number of approaches designed to give carbon-intensive businesses an incentive to lower emissions and give consumers a reason to use energy more efficiently. “Putting a price on carbon helps to incorporate climate risks into the cost of doing business,” said the Union of Concerned Scientists, an advocacy organization in Massachusetts that focuses on climate change and other issues.5

A monitor displays ExxonMobil's logo (Getty Images/Bloomberg/Micahel Nagle)
A monitor displays ExxonMobil's logo at the New York Stock Exchange on Sept. 10, 2018. The oil giant and some other energy companies are backing a proposal that would tax them for the carbon-based fuel they produce and send the proceeds to consumers. (Getty Images/Bloomberg/Micahel Nagle)

California uses a cap-and-trade system in which companies purchase emission “allowances” from the state, with the number of allowances gradually declining as a way to cap emissions. Companies can increase their emissions by buying allowances from other companies that pollute less. Nine New England and mid-Atlantic states have formed a Regional Greenhouse Gas Initiative that takes a similar approach. Other clean-energy advocates prefer lowering emissions through regulations.6

Energy industry experts say ExxonMobil and other oil companies — including ConocoPhillips, BP and Shell Oil — support the tax-and-dividend plan partly because it calls for shielding companies from federal and state lawsuits over carbon emissions. The plan also would eliminate most Environmental Protection Agency rules limiting carbon emissions, based on the theory that adopting the plan would make such regulations redundant by giving companies a reason to voluntarily lower emissions.

Carbon imports from countries without a comparable arrangement would be subject to the tax, with that money included in the dividends paid to U.S. consumers.7

Some environmental groups, including Conservation International and The Nature Conservancy, also support the proposal.

The tax-and-dividend idea was proposed in February 2017 by former Secretaries of State James Baker and George Shultz in collaboration with other former Republican officials. They published their idea in a report titled, “The Conservative Case for Carbon Dividends” and simultaneously formed a group called the Climate Leadership Council based on the proposal. Americans for Carbon Dividends is the council's lobbying arm.8

Supporters of the proposal say it would reduce U.S. carbon emissions by about 32 percent by 2025. That is a much deeper cut than the country had pledged to achieve under the 2015 Paris Agreement on Climate Change before President Trump announced in 2017 that the United States would withdraw from the accord.9

“The plan's effectiveness in reducing emissions substantially raises the environmental bar, while its reliance on a market-based carbon tax makes it — according to economists of all stripes — the most cost-effective climate solution,” the Climate Leadership Council said in a September 2018 report.10

But Benjamin Zycher, a resident scholar at the American Enterprise Institute, a conservative think tank in Washington, said virtually all of the Climate Leadership Council's claims about the tax plan's benefits “are incorrect or implausible,” including its assertion that a carbon tax is a more efficient method of reducing emissions than regulations.11

— Matt Mossman

[1] Steven Mufson, “ExxonMobil gives $1 million to promote a carbon tax-and-dividend plan,” The Washington Post, Oct. 9, 2018, https://tinyurl.com/yyg8a5oy; “The Solution,” Americans for Carbon Dividends, undated, https://tinyurl.com/y4gzwlqc.

[2] “The Solution,” ibid.

[3] Bryan Cosby and Katie Tubb, “Why the ‘Conservative’ Carbon Tax Is Still a Non-Starter,” The Heritage Foundation, July 17, 2018, http://tinyurl.com/y6cxueh2.

[4] Timothy Cama and Miranda Green, “Bipartisan group of lawmakers propose landmark carbon tax,” The Hill, Nov. 27, 2018, https://tinyurl.com/ybs9yt58; Timothy Cama and Juliegrace Brufke, “House votes to disavow carbon tax,” The Hill, July 19, 2018, https://tinyurl.com/yywq9sje.

[5] “What is carbon pricing?” Union of Concerned Scientists, undated, http://tinyurl.com/y2gjoykv.

[6] Amel Ahmed, “California cap-and-trade is working — for other states,” PBS, July 15, 2018, https://tinyurl.com/yd5murjv; “Welcome,” The Regional Greenhouse Gas Initiative, undated, https://tinyurl.com/y6k94zbd.

[7] “The Solution,” op. cit.

[8] “Mission,” Climate Leadership Council, undated, https://tinyurl.com/yxc54wpj.

[9] “Exceeding Paris: How The Baker-Shultz Carbon Dividends Plan Would Significantly Exceed the U.S. Paris Commitment,” Climate Leadership Council, September 2018, https://tinyurl.com/ybhgq7xk.

[10] Ibid.

[11] Benjamin Zycher, “The deeply flawed conservative case for a carbon tax,” American Enterprise Institute, March 7, 2017, https://tinyurl.com/y5emsf76.

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Overall, wind and solar power are growing at an ‘unprecedented’ rate.

Across the globe, local conditions and needs are shaping nations' efforts to find alternatives to fossil fuels.

Technologically advanced countries such as Denmark and Germany are focusing on wind power and energy efficiency, while Brazil is using its agricultural bounty to become a leader in cleaner fuels made from sugarcane. China, the world leader in greenhouse-gas emissions, also is the largest manufacturer and buyer of solar panels.12

Such efforts helped renewable energy sources achieve the fastest growth rate among all energy sources in 2017, according to the International Energy Agency (IEA), a nongovernmental organization in Paris that promotes energy reliability and security among its 30 member countries. The group said renewables now account for about 25 percent of global electricity generation.13

“The growth of wind power and solar … in 2017 was unprecedented,” the IEA said. Wind power accounted for 36 percent of the growth in renewable sources that year and solar power accounted for 27 percent.14

Despite that trend, the world as a whole is not meeting its goals for limiting carbon emissions in line with the objectives of the 2015 Paris Agreement on Climate Change, which aims to keep global temperatures from rising more than 1.5 degrees Celsius above preindustrial levels.

The sun sets behind wind turbines near Fjerritslev, Denmark (Getty Images/Bloomberg/Chris Ratcliffe)
The sun sets behind wind turbines near Fjerritslev, Denmark. The country aims to use wind power and other renewable sources to generate all its electricity by 2030. (Getty Images/Bloomberg/Chris Ratcliffe)

“We need to aggressively reduce carbon emissions as soon as possible, which is not impossible, but challenging,” said Luis Mundaca, a professor of industrial environmental economics at Lund University in Sweden. He was a lead author on a United Nations report released in October that said achieving the Paris Agreement's goals will require drastic action by countries throughout the world.15

Individual countries are charting very different courses in pursuit of those goals.

Denmark, a world leader in renewable energy technology and policy, set a national record for wind power in 2017, with wind turbines generating the equivalent of 44 percent of the country's total electricity consumption. Danish officials say the country is on track to generate all of its electricity from renewable sources by 2030 and to give up fossil fuels entirely by 2050.16

Germany, the largest economy in Europe, once shared Denmark's reputation as a climate action standout. Recently, however, Germany has failed to meet its targets for reducing greenhouse gas emissions. Coal still accounts for nearly 40 percent of the country's electricity generation.

Despite that, Germany has achieved some remarkable milestones in using renewable energy. For brief periods on two different days last year, January 1 and May 1, it relied completely on wind energy or a combination of wind and solar energy to meet total demand for electricity. Both days were public holidays in Germany, so lower energy demand was a factor.17

Last year, for the first time, combined power from solar arrays, wind turbines, hydroelectric plants and other renewable sources overtook coal as Germany's top source of energy. German officials said in January the country will close all 84 of its coal-fired power plants by 2038 to get its emissions plan back on track.18

RWE, the largest operator of coal-fired power plants in Germany, warned that the move will cost thousands of jobs. About 20,000 people work in the German coal industry. The closure plan includes a recommendation that the country spend about $45 billion to aid industry workers.19

Indonesia is headed in the opposite direction. Thirty-nine coal plants were under construction in February, with plans for another 68, and an Indonesian energy official said last year the country was tapping only 2 percent of its renewable energy potential. The country ranks as one of the world's biggest polluters, with farmers burning or cutting down massive swathes of carbon-rich rain forests that would otherwise absorb greenhouse gases.20

“It certainly makes it a lot harder to meet international climate goals if you have such a big emitter that [has] continued its big emissions,” said Jonah Busch, now chief economist at Earth Innovation Institute, an organization in San Francisco that works to reduce deforestation.21

Overall, however, Asia accounted for two-thirds of the global increase in renewable energy generating capacity in 2017, with China and India leading the way.22

China is a study in contrasts. The country burns half the world's coal but also owns half the world's electric vehicles and is adding solar capacity at a faster rate than any other major country. Choking air pollution in some cities, which has led to rising civil unrest, is one motivating factor.23

In September, the country announced plans to use renewables to meet at least 35 percent of its energy demands by 2030. An earlier plan had called for using “non-fossil fuels” to meet 20 percent of demand within the same period. China also is gradually implementing a program that essentially puts a price on carbon emissions, giving the power sector an incentive to use more energy from renewables.24

In India, new solar installations are expected to increase solar power capacity 50 percent this year, a national record. Coal still accounts for 60 percent of energy consumption, but India is adding renewable energy capacity faster than it is adding capacity from coal.25

“India is running one of the largest and most ambitious renewable capacity expansion programs in the world,” Deloitte, a global professional services firm based in London, reported last year.26

Historically, Brazil also has had ambitious plans to replace fossil fuels. The country depends more on renewable energy, including hydroelectric plants and biofuels made from sugarcane, than any other large energy consumer in the world, and it has made significant strides in curbing deforestation.

But it is not clear that renewables will be a priority for the country's newly elected right-wing president, Jair Bolsonaro, who has threatened to withdraw from the 2015 Paris Agreement on Climate Change.27

— Matt Mossman

[12] Jesper Berggreen, “44% Wind — Denmark Set New Wind Energy Record In 2017,” Clean Technica, Jan. 6, 2018, http://tinyurl.com/y6qpt4sr; Paul Hockenos, “Can Germany revive its stalled transition to clean energy?” WETA, Dec. 20, 2018, http://tinyurl.com/y2unffsw; Tim Albrecht, “All Eyes On Ethanol,” Ethanol Producer Magazine, May 30, 2018, http://tinyurl.com/y2htracg; Chris Martin and Brian Eckhouse, “Solar Power Buyers Loved 2018, But Panel Makers Loathed It,” Bloomberg, Dec. 18, 2018, http://tinyurl.com/yc8zow5u.

[13] “Global Energy & CO2 Status Report: Latest trends in renewables,” International Energy Agency, March 2018, http://tinyurl.com/y3nvoq8u.

[14] Ibid.

[15] “Can we limit global warming to 1.5 degrees C?” Phys.org, Oct. 25, 2018, https://tinyurl.com/y4sakt4z; “Summary for Policymakers of IPCC Special Report on Global Warming or 1.5° approved by governments,” International Panel on Climate Change, United Nations, Oct. 8, 2018, https://tinyurl.com/y9jxdc39.

[16] “New Danish energy agreement secured: 50 per cent of Denmark's energy needs to be met by renewable energy in 2030,” State of Green, July 2, 2018, http://tinyurl.com/y3l6qpjd.

[17] Benjamin Wehrmann, “Renewables briefly cover 100% of Germany's power demand for 2nd time,” Clean Energy Wire, May 2, 2018, http://tinyurl.com/y3clouvo; Giles Parkinson, “Germany reaches 100% renewables for a few hours, 42% so far this year,” Renew Economy, May 4, 2018, http://tinyurl.com/y6pmaj9m.

[18] Erik Kirschbaum, “Germany to close All 84 of its coal-fired power plants, will rely primarily on renewable energy,” Los Angeles Times, Jan. 26, 2019, http://tinyurl.com/ycy4dl2c; “Renewables overtake coal as Germany's main energy source,” Reuters, Jan. 3, 2019, http://tinyurl.com/y8yg56p4.

[19] “Energy giant warns of ‘significant’ job losses over Germany's coal phase out,” The Local, Jan. 28, 2019, http://tinyurl.com/yd5z9w5f; Kirschbaum, ibid.

[20] Hans Nicholas Jong, “For Indonesian presidential hopefuls, burning coal is business as usual,” Mongabay, Feb. 15, 2019, https://tinyurl.com/y4ynd8fh; Nithin Coca, “The Other Country Crucial to Global Climate Goals: Indonesia,” The Diplomat, March 28, 2018, http://tinyurl.com/y5vyntae; “Exploitation of renewable energy only 2 percent of potential capacity,” AntaraNews.com, Aug. 1, 2018, http://tinyurl.com/y2a9dfxw.

[21] Coca, ibid.

[22] “Renewable Energy Market: 2019 Global Industry Size, Growth, Share, Trends, Value, Emerging Technologies, Growth, And Regional Outlook To 2023,” Market Watch, March 4, 2019, https://tinyurl.com/y59h46w8.

[23] Eric Niiler, “China Is Both The Best And Worst Hope For Clean Energy,” Wired, Dec. 4, 2018, http://tinyurl.com/y4r3spl5; Robert Rapier, “Why Did China Tap The Brakes On Its Solar Program?” Forbes, June 8, 2018, http://tinyurl.com/ybz459aq; Zhuoshi Liu, “The People vs. Pollution: Empowering NGOs to Combat Pollution with Environmental Law,” New Security Beat, Aug. 23, 2018, https://tinyurl.com/y37za4cr.

[24] “China Sets New Renewables Target of 35 Percent by 2030,” Renewable Energy World, Sept. 26, 2018, http://tinyurl.com/y3wnmepq; James Temple, “China is creating a huge carbon market — but not a particularly aggressive one,” MIT Technology Review, June 18, 2018, http://tinyurl.com/y9kgtc9k.

[25] Kuwar Singh, “India will add a record level of solar power capacity in 2019,” Quartz, Jan. 10, 2019, http://tinyurl.com/yy997grc.

[26] “The Evolving Energy Landscape in India: Opportunities for investments,” Deloitte, April 2018, https://tinyurl.com/y4c9whcr.

[27] Lisa Viscidi and Nate Graham, “Brazil Was a Global Leader on Climate Change. Now It's a Threat,” Foreign Policy, Jan. 4, 2019, http://tinyurl.com/y5elg6jx.

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Document APA Citation
Mossman, M. (2019, March 15). Renewable energy debate. CQ researcher, 29, 1-58. Retrieved from http://library.cqpress.com/
Document ID: cqresrre2019031520
Document URL: http://library.cqpress.com/cqresearcher/cqresrre2019031520
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