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Guest Opinion: Proposed carbon tax a bad idea for Carbondale

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By Carl Ted Stude

I am writing these comments in response to lobbying by two overlapping non-profit environmental organizations attempting to persuade the Board of Trustees of Carbondale to adopt a “carbon tax.” The organizations are CORE (the Community Office for Resource Efficiency) headquartered in Aspen, and CLEER (Clean Energy Economy for the Region) headquartered in Carbondale. Both have special access to the town trustees through membership on the town’s environmental board. It would be nice if the everyday economic interests of Carbondale’s citizens received equal representation.

I have been an advocate of a substantial tax on oil ever since 1973, when the Arab embargo on oil exports caused shortages in the U.S. That would not have been so disruptive to the economy and threatening to national security if the U.S. were serious about conservation. The basic principle of such a tax on energy is to mobilize market forces to: encourage the optimal blend of energy production and conservation measures, while also funding key government programs while enabling other taxes to be reduced or eliminated.

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As a retired professional environmental engineer, I believe the preponderance of scientific evidence that emissions of carbon dioxide are contributing to global warming that will have long-term consequences that are more catastrophic than, say, a reduced ski season at Aspen. For that reason, I consider it to be prudent public policy to substantially tax all fossil fuels, based on their carbon emissions. More specifically, I would phase-in a tax at the national level on carbon emissions, while phasing out subsidies and mandates for politically-favored “alternative” energy sources such as ethanol, wind turbines and cultured algae. Solar power in particular is now competitive in selected applications without subsidies. I would include these changes in a comprehensive tax-reform package that would reduce the corporate profits tax (which would particularly appeal to conservatives), increase the Earned Income Tax Credit, and reduce various other taxes on lower income people (which would particularly appeal to moderates and liberals).

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Having said that, I think that the idea of municipalities adopting their own “carbon tax” is ridiculous — especially when they are as small as Carbondale and already apply sales taxes to natural gas, electrical energy and motor fuels.

A carbon tax at the local level would involve substantial administrative effort (read “economic waste”) in calculating and assessing the tax. That would be particularly true of electrical energy, which is produced by a variety of fuels and “alternative” methods, and distributed on massive interstate grids that make it virtually impossible to identify the sources of the energy delivered to any particular consumer. A carbon tax at the national level would be applied to the fossil fuels burned in power plants, and the cost of that would simply be incorporated in the cost of the energy delivered to the grid by those plants.

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The administration of a local carbon tax would be further complicated if an effort were made to offset the relatively greater financial burden that it would place on lower income people. At the national level, this could be addressed by targeted tax reforms as I suggested above, and by helping to fund progressive programs such as subsidies for Social Security and mandatory medical insurance. However, I can’t imagine a fair and efficient means of addressing it locally.

Furthermore, a local carbon tax would place certain local businesses at a substantial competitive disadvantage relative to those in communities not having such taxes. In Carbondale, a carbon tax would particularly harm businesses that sell motor fuels (which already have higher costs than downvalley). I suspect that it would also harm restaurants and producers of alcoholic beverages that rely on natural gas for the energy needed to heat their buildings in winter and produce their meals and beverages. I can imagine some of these businesses relocating to places like Rifle or to unincorporated parts of Garfield County, which I doubt would adopt a tax on carbon.

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With a population of about 6,400 people, Carbondale’s population is two one-thousandths of a percent of the U.S. population. As such, whatever it does about resource conservation will have negligible impact at the national or global level.

Despite this, there is a belief promoted by professional environmental advocates such as CORE and CLEER that Carbondale should set a utopian example of energy conservation and economic self-sufficiency for others to follow. My observation in travelling throughout Colorado and the rest of the country is that the small percentage of people who know about Carbondale recognize it as a highly atypical community, catering to outdoor recreation interests. If it is going to have a meaningful impact on the national and global environment, it will have to adopt policies that make more economic and environmental sense from both a local and national perspective.

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Carl Ted Stude is a retired environmental engineer. He has an MS in civil/environmental engineering, and an MA in economics. He has lived in Carbondale for 10 years.

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Published in The Sopris Sun on December 24, 2015.