Why A Price On Carbon (Dioxide) Is Nothing More Than A Great Big New Tax

Posted on Tue 07/13/2010 by


Fill a standard sized glass (about the same size as would hold a can of Coke) with water from the tap and have it close by as you read this.

First off, read that title again.

What infuriates me is that when people make statements on this, they say how we need to place a price on Carbon. Listen closely the next time someone from politics or the media talk about this. They always say just Carbon.

It should (always) be Carbon Dioxide.

You may think this is pedantic of me, but they are two completely different elements.

The (so called) problem is not with the solid Carbon. It’s supposedly with the gas Carbon Dioxide. (CO2)

The major thing about this placing of a cost on that CO2 is that ordinary people fail utterly to realise the monumentally astronomical scope of the amounts of CO2 involved, and from that the mammoth size of the amounts of money that will be raised by placing that cost on the CO2.

Now saying it like that, people may think that there could in fact be a problem, but even though the scope is so huge, the perspective of all that is so incredibly tiny.

Anachronistic you may think, so it needs some explaining.

We are told at length that the amount of CO2 in the Atmosphere is causing the whole Planet to warm on an unprecedented scale and that this is changing the Climate.

So before we look at the large, let’s look at the small.

CO2 is a minor trace gas that has always existed in the environment. Currently, that level of CO2 in the whole Atmosphere surrounding the Earth sits at 389 parts per million. (PPM) It is classified as a Greenhouse Gas, and is just one of those Greenhouse Gases. The largest of those Greenhouse Gases is Water Vapour, clouds and suspended water in the Atmosphere. That larger Water Vapour Greenhouse gas exists at levels 51 times greater than for CO2.

When expressed as it is, 389PPM, it sounds relatively large, but what needs to be remembered here is the ‘Million’ bit on the end. So this CO2 at 389PPM is only 0.0389% of the whole Atmosphere. See now just how tiny that CO2 content really is. In fact since the Earth was formed that CO2 level has been considerably higher, and right now, is at one of the lowest levels since the Earth was formed. True, it may be rising, but that rise is so small to be almost inconsequential.

So, how much is that CO2 if that PPM level is still difficult to understand?

Go back to the glass of water I mentioned at the top of the post.

It is tap water so it’s at room temperature. Now add one and a half drops of hot water to that glass. That is (almost) the same as that 389PPM when compared to CO2 and the Atmosphere. One and a half drops. Each year, add one millionth of one drop of water to the glass. In fact to take the amount up to two drops of water will take you 500 thousand years.

Now, this may actually change the temperature of the glass of the water, but it will be so small that it probably could not even be measured. The same applies with the CO2 content. The increase each year of 0.0001% each year (1PPM) may actually be raising the overall average temperature of the Earth, and that is only ‘MAY’ and we are even told that this raise in temperature is only in the region of one or two degrees in perhaps one to two hundred years, so even the so called experts tell us it is barely a fraction over a very long time, and even that is still open to scientific debate, even though we are told that the debate is over.

So, that’s the small of it. Let’s look now at the large.

This is something that can actually be calculated, because we have accurate figures we can call on. For those in the U.S. those figures come from the huge Government database The Energy Information Administration, (EIA) and each month they release updated statistics for everything about electrical power generation.

So from that, we can build up the totals for that CO2, and then, applying the Government’s own proposed legislation to that with regard to the cost we can work out how much money they propose to raise from this placing of a cost on Carbon (Dioxide).

This is where the huge scope of this comes in to play.

The vast bulk of those CO2 emissions come from coal fired power plants. Added to that there are emissions also from those Natural Gas Fired power plants, and to a (very much) lesser extent, emissions also from other plants which use petroleum based fuel.

As this cost will be imposed on a yearly basis, I’ll use the figures for the whole year.

We need to know how much coal is being burned and from that, we can calculate how much CO2 these plants emit. There is a simple calculation that can be applied to work this out. Each ton of coal that is burned produces 2.86 tons of CO2, and as difficult as that may be to understand, this is basic first year High School Science, nothing deep and obscure about that, and the post at this link carefully explains that.

The chart at this link shows how much coal was burned over the last 12 months. Scroll to the bottom and it’s the number in the first column at the left, in this case 948,200 and this is expressed in Thousand tons, so that amount of coal burned to produce the electrical power we use comes in at 948.2 Million tons.

So, using the 2.86 multiplier, the CO2 emitted comes in at 2.72 Billion tons of CO2.

For Natural gas Fired plants, there is also a calculation for CO2 emissions. For every MCF (One thousand cubic feet) of Natural gas being burned, an amount of 122 pounds of CO2 is emitted.

The chart at this link shows how much natural gas was burned over the last 12 months. Scroll to the bottom and again, it’s the number in the first column at the left, in this case 7,153,785 and this is expressed in Thousand MCF, so we are looking at 7.16 Billion MCF.

Using the multiplier of 122 pounds per MCF, we now see that there are total emissions from this Natural gas sector of almost 440 Million tons of CO2.

Add the emissions from the coal fired sector to those from the natural gas sector and the total is now 3.16 Billion tons of CO2, and when the emissions from those other sectors are added on, the total comes in at 3.25 Billion tons of CO2.

Just for the U.S. and just for the electrical power production sector.

That, however is not all there is.

The electrical power sector emits one third of all CO2 emissions, so, when all CO2 emissions are totalled up, that number comes in at 9.75 Billion tons of CO2 being emitted in the U.S.

Now can you get some idea of the scope.

Let’s now look at the call for a cost on that Carbon (Dioxide) that the new American Power Act currently being proposed by this Obama Administration.

The Post at this link details what this new legislation proposes, that being for a price of $25 per ton of CO2 to be imposed. Credits will be purchased by all emitters for the total CO2 they emit, and on April 1 of each year those emitters will have to hand back those credits, and then purchase new credits for the next year.

At that $25 per ton, then for those total U.S. emissions of 9.75 Billion tons, the Government will be taking in around $244 Billion each year, and then every following year.

$244 Billion.

Got that? Every year. That’s the base price, because there are significant fines if an emitter exceeds his set amount of CO2 emissions.

Now do you see why they want to impose a cost on Carbon (Dioxide).

It’s a goldmine.

A never ending supply of money coming in every year, because people just have to have access to that electrical power.

True, the legislation says that some of the credits will be given away to lessen some of the impact, but when you’re talking money on this sort of scale, they can afford to give a fraction of them away. They also say that the cap will be lowered each year, but that cap is fractionally minimal, so the total income would decrease by only the tiniest amount.

No wonder they want to pass this legislation so badly, and at any cost.

So, what does it all mean for the average guy in the street?

Let’s go back to just the electrical power sector, that figure of 3.25 Billion tons of CO2. At that $25 per ton, the amount to be raised from that comes in at $82 Billion.

The cost will be imposed upon each plant, and that extra cost will then be passed directly onto consumers.

Electrical power is consumed in three sectors, Residential 38%, Commerce 37%, and Industrial 24%.

So for the residential sector that cut comes in at around $32 Billion.

There are around 11 million residential consumers so the individual cost comes down to around $300 per year extra. Just for your electricity usage in your home.

That’s not the end of it.

Those extra costs will be felt across the Commerce and Industrial users as well, so those added costs will also be passed down to you as consumers, and that’s where you shop and in every area of your life. So in effect that amount could in fact as much as triple, so the small amount of your residential usage might effectively triple.

It may not seem all that much at around $20 a week extra, and that figure is a conservative amount that could in fact be higher. Keep in mind that President Obama in the lead up to the election that installed him as President said that he would like to see the auction figure for Carbon (Dioxide) start at $50 per ton, and then he would be happy if that figure rose considerably from that. So his ‘ballpark’ ‘thought bubble’ would see you paying an extra $600 a year for electricity at a household level and then he was ambivalent about that price rising considerably from that.

You’ll hear spin from those who are proposing this legislation that the cost will be absolutely minimal, and they will quote dollar amounts so low at that personal level that you might actually believe that it is a good thing they are proposing.

However, what they will most definitely not be telling you is that big picture overall figure of money coming in to the Government, that $244 Billion each and every year.

So keep in mind that even though the spin will be on how little all this might actually cost, they stand to make huge amounts of money from this. That spin will be about how good all this will be for the environment, but this isn’t about the environment.

It’s just about the money.

The same thing is being proposed here in Australia. Being a much smaller Country with only 22 Million people things all round will be smaller.

The proposed cost on a ton of Carbon (Dioxide) comes in at around the same amount in dollar terms, but from that overall electrical power sector Australia only emits 300 million tons of CO2, so the income that the Australian Government hopes to generate comes in at $7.5 Billion from the electrical power generating sector, and around $23 Billion for overall emissions. Approximately the same amounts will be ‘felt’ at the residential level, and that will probably be more because unlike the U.S. where just a tick under 50% of all power is generated from the burning of coal, here in Australia, that figure is closer to 80 to 85% of all power coming from coal fired sources.

Again, the spin from the Australian Government will be for the smaller amount calculated down to a weekly amount to make it sound so small, but as with the U.S. that huge amount that they will be generating as incoming to the Government will be left for you to work out, and in nearly every case, it will be something that very few people will even think of doing, or more importantly, how to work it out.

See also the perspective of context.

Something so tiny as the overall CO2 content of the Atmosphere has been spun to make it ‘seem’ so huge, and consider this. I have quoted CO2 emissions for the U.S. as being around 9.75 Billion tons. Overall, Worldwide emissions come in at around 50 billion tons, and even that is a conservative number as some put that number as high as more than 100 billion tons from every source, both man made and natural. That huge amount equates to an addition to the total of one part per million, which is 0.0001% of the overall Atmosphere. See how this part of the whole is made out to be something so huge.

On the other hand, the money that is to be made from this is extrapolated down to the lowest figure they can spin that to, a tiny amount per week, without telling you of the overall huge amount they will be making from this. This (as opposed to the other thing made out to be large) is made out to be tiny.

When those headline huge dollar numbers are seen in context, then what falls into place is that this has nothing whatsoever to do with the environment.

It’s just about the money.