A Do It Yourself Carbon Tax in 5 Simple Steps

Six weeks ago, I decided to impose a carbon tax on me.  Call it a DIY carbon tax.

I received lots of enthusiastic comments and great ideas for improvement. Many people joined me and together we are reducing our emissions of carbon dioxide, improving our energy efficiency, saving money, investing in cleaner energy and helping to end energy poverty. My thanks for your efforts.

Others were quick to criticize the initiative, suggesting that individuals make little difference, and that it is only through regulation and legislation at a massive scale that CO2 emissions will be reduced. Perhaps. But it is all too easy make demands of others. If you want to see change, you often need to start with yourself.

So, I started with me. You can make the choice to do the same. Then imagine if everyone you know who is concerned about energy, climate and energy poverty initiated their own personal carbon tax.  Imagine the energy savings, the cuts in emissions, the business and research opportunities, the improved lives of people living in energy poverty, and the opportunities for creating wealth and investing in our future.

What is needed now is for a lot more people to actually move beyond imagination - to take up the challenge - and to challenge their friends, family, colleagues and neighbors to do the same.

Here is how my Do It Yourself Carbon Tax works:

• Cut CO2 emissions by 10 percent next year and 50% over the next decade through energy efficiency, conservation, lifestyle choices, and implementation of new technologies.
• Tax yourself with a $40/ ton self-imposed price on carbon (or whatever price you feel is most appropriate).
• Save money through energy efficiency measures to offset or complement the tax.
• Invest your tax and savings in companies, institutions and organizations researching, developing, implementing and deploying clean energy solutions.
• Contribute to organizations and institutions helping to reduce energy poverty around the world.

How you can do it:

Step 1: Determine your current CO2 output
You can calculate your personal  CO2 footprint using any number of widely available, free online calculators. See the full proposal for useful links. With the help of these calculators (there are many others) in less than 30 minutes you can determine your personal CO2 output in tons per year.

Step 2: Establish your carbon reduction target
My goal is a 10 percent reduction in my own CO2 emissions in year one and to cut my emissions in half over the next decade. I plan to review my target range annually. There are many ways you can achieve a reduction in your CO2 emissions. For some useful links to  lists of CO2 reduction measures each of us can take, again refer to the original #carbontaxonme proposal.

Step 3:  Apply a price for carbon to your CO2 output and determine your annual carbon tax
Just this past week, in a well-reasoned article in the Financial Times, former U.S. Treasury Secretary Lawrence Summers called for a carbon tax and suggested a price of $25/ton.   I will take a more aggressive approach and impose a personal carbon price of $40/ton CO2 per year on myself. Note that this is well above the price of carbon as traded anywhere in the world.  I will review my personal carbon price annually.

In application then, I simply multiply my carbon price of $40/ton times my calculated CO2 emissions
to arrive at the annual carbon tax.  At the average per capita emissions of CO2 in the US of 17 tons
per annum, the carbon tax would be $680.  With strong energy conservation and efficiency measures you can save money to offset the tax and in many cases will actually come out ahead.  Still, if my proposed $40/ ton carbon tax is too high for your budget, simply consider a lower carbon price, such as Summers' $25 or Microsoft's $6-7. Corporations have disclosed a wide range of prices which you may wish to use as benchmarks:

Step 4:  Save and Invest the tax proceeds
Which brings us to what you can do with your tax proceeds and cost savings? Invest!  As with any investment you can choose between many options, but I will narrow it down to three.

Investment Option 1: Invest in companies that develop, produce and deploy products and services available now to reduce our carbon footprint - solar solutions, efficient wind turbines, high MPGe vehicles, storage, grid and off-grid solutions,  local produce, Socially Responsible Investment funds and energy financing options to name but a few.

Investment Option 2: Invest and support Research and Development with institutions and organizations doing high quality basic and applied research in science and engineering directly related to energy, as well as those addressing broader policy issues.

Investment Option 3: Invest directly in the products and services that reduce your carbon footprint.
Buy solar panels for your home, participate in distributed energy systems, purchase a hybrid or an electric vehicle, support local foods, install efficient lighting. There are many options which will help you save energy and money.

Step 5: Support Organizations Helping to End Energy Poverty:

Use a portion of your tax and savings to invest in organizations that help alleviate energy poverty 
around the world. The world needs energy now, especially in poverty, famine and disease stricken places like sub-Saharan Africa.  Every contribution helps.

Each of us can make a difference. How much of a difference is up to you. Collectively the impact can be massive. Join me now by posting your personal pledge at #carbontaxonme and copy me @lawrence_energy and we'll track our momentum together. Let's watch our contributions add up.

Energy Pragmatism

Energy Pragmatism


By 2050, the earth’s population could grow to 9 billion people,  2 billion more people than today. That averages out to more than a million new people to feed, clothe and shelter every week. And the greatest growth in population comes from many of the least developed nations.  Today, in this rapidly expanding world, 1.3 billion people have no access to electricity, and nearly 900 million still use unsafe drinking water.  More than 2.5 billion people still rely on biomass, like wood and dung, for cooking.  Energy is crucial to lift people from a life of hardship and poverty. Where will this energy come from? And if choices are made, as many advocate,  to limit the supply of energy like fossil fuels or nuclear,  who will determine the energy haves and have nots.

The dilemna we face is that under almost any energy scenario, world energy demand will continue to grow at a pace even greater than the pace of population growth – this despite the best efforts of increased efficiency and conservation efforts.

Most of us would agree that its best not to have to pick winners and losers - who gets to turn on the lights, heat their homes, refrigerate their food, or power their schools and hospitals. To meet the rapidly expanding needs of the world’s growing population in developing nations, not to mention the ongoing demand in places like the US,  China and Europe,  the world will need all the energy that it can get. But the energy so many need comes with trade offs  – CO2, spills, and particulates from fossil fuels, safety and radiation risk from nuclear;  cost, reliability, footprint, and distribution for wind and solar; land use and ecological disruption from hydro. NIMBY for all.  The cheapest sources of energy on a massive scale typically produce the most CO2 -and with that increase in CO2 comes climate change: higher temperatures, sea level rise, shifts in rainfall, droughts, and intensity of storms, and ocean acidification. There is a cost for everything.

To the  worlds emerging economies and for the livelihoods and health of people around the world, affordable energy is essential.  It is highly likely that, even while renewable energy makes gigantic strides, at least until the middle of this century the majority of that affordable energy supply will still need to come from oil, natural gas and coal, and as is increasingly evident, nuclear.

Why is this?  Be pragmatic.  The massive scale, capital costs,  engineering and construction time, regulatory and infrastructure requirements of major new energy projects,  the long  residence time and economics of existing assets, and the pace of introduction and incremental scale of off grid solutions mean that market penetration of new energy technology operates on a time frame of decades rather than years. An example is LNG, which 50 years after it's introduction in Algeria in 1964 using Shell technology still fills less than 3% of world energy needs.  Significant growth of market share of renewables is difficult when cheaper and more efficient coal, oil and gas continue to be in great demand. Today there are plans for more than 1900 coal fired  power plants around the globe, with the highest pace of construction in China. And it's not just coal where the demand is soaring. In the last decade, China’s gasoline consumption has grown from 0.9 million barrels per day in 2003 to more than 2 million barrels per day in 2013.  

Against that backdrop only the most innovative technologies, policies and investments will allow us to both meet the energy needs of the world and mitigate the impacts of that very energy. We need not only all the energy we can produce and provide, but all the solutions that can be implemented towards reducing  CO2 and other emissions from that energy. What are the requirements? Costs that allow economies to grow at a sustained pace and are competitive with existing energy sources, scale that makes a difference, capital availability for new projects, high environmental, safety, and health standards, and, importantly, a realistic pace for massive implementation and skilled and energized people to make it happen.

In the past decade, natural gas from hydraulic fracturing and horizontal drilling of shale and tight reservoirs  has been a major technical breakthrough ( preceded by years of trial and failure)  that has met these requirements.  And yet, even this remarkable piece of good news for climate, energy, jobs and the economy continues to face significant challenge from some sectors.

For too long we have been polarized in our views on climate change and energy needs. Regardless of our own personal bias, the world will continue to require energy. And, without extensive mitigation of CO2,  the climate will continue to warm.

Pragmatism coupled with innovation and optimism are strange but necessary bedfellows to meet the worlds energy needs.  For energy pragmatism, fact-based assessments are essential: of demand, of environmental,  economic, political, security, health and climatic impact; of safety, cost, and capital requirements; of scalability,  pace of market penetration, distribution and implementation.  For innovation there are no shortages for projects being worked:  low cost, scaleable solar technologies, breakthroughs in transportation, storage, distribution and electrification, innovative policies, commercial structures, and marketing solutions, novel urban architecture, design and infrastructure, low cost carbon capture, storage and utilization, new oil and gas exploration plays,  advanced drilling and development technologies, a rebirth of safe and efficient nuclear facilities. And much more in all aspects of solar, wind, nuclear, hydro, oil, natural gas and coal.

Pragmatism coupled with innovation changes the game for energy. If you could have efficient carbon capture and storage for coal ( or clean coal) at a cost that is competitive with other energy sources, then imperfect energy sources like coal become part of the solution.  If natural gas continues to lower CO2 emissions at its current pace, and the risks and environmental impacts continue to be managed to high standard,  gas will continue to play a vital role. Have we truly weighed the actual health and safety risks of nuclear energy against those of alternatives and the benefits of scale and pace of implementation? And why wouldn't we all be for solar or wind if the costs can be lowered and reliability improved to be competitive with coal, oil and gas.

A note of optimism:  perhaps it's time to stop myopic thinking about how unique we are as a society in facing the challenges we deal with today and recognize that each generation has similiarly  faced and tackled the issues of their day or their decade – be they famines, plagues, tyranny, oppression, civil wars, westward expansion, world war, industrialization, Dust Bowls, depressions, nuclear threats, Cold Wars, Silent Springs, space exploration, or  revolutions in manufacturing and information technology – to name but a few. Attempts to meet the challenge of energy and climate  may lead to setbacks and to cynicism in some. But others will see enormous opportunities for individuals, business and society.  It's not a time for disengagement and divestment - it's a time for communication, action and investment in ideas and solutions across the entire energy sector.