Replace ALL Federal Government Revenue With A Simple Energy Tax

America needs a new answer regarding energy, economics and the environment.  Our current systems are failing and the solutions currently on the table won’t work.  And everybody knows it.

We also need to rethink how we fund our government. The current tax system discourages work, productivity, free enterprise, job creation and almost every other goal and value our economy is purported to be based upon. The anger growing across America is in large part inspired by the complexity and irrationality of our tax system.

It is increasingly obvious that it isn’t enough trying to address the massive challenges that confront our nation by making minor adjustments to the sclerotic patchwork of contradictory public policies that has emerged over the decades. And recent efforts at government micromanagement of the entire econ0my are clearly not going to work. It is pretty clear from the polls that most Americans are fed up with Congress, the federal government and with politicians from both parties.

But one real solution to address many of our most fundamental challenges is astoundingly simple, clear and bold. It is a solution that can be strongly supported by people across the entire political spectrum of America – once we overcome our profound fear of sensible change.

I propose that it is time that we replace 100% of our federal government revenues with an energy tax and in doing so completely unleash our society  from the burdens and distortions of our current counterproductive tax system.

That sounds completely impossible at first thought, but as shown below, the numbers work. It is actually a far more realistic proposal than all counterproductive pseudo-solutions to the daunting problems our country faces that make their way through Congress these days.

After the failures of the Copenhagen Climate Conference and the Cap and Trade corporate welfare scheme in the Senate, the environmental and clean energy communities are regrouping to figure out what’s next.

Many environmentalists are now jumping on board with the Breakthrough Institute and others who are calling for massive new government research and development for clean energy solutions on the order of the Manhattan Project or NASA’s mission of the 1960’s to put a man on the moon. Surely better technology will be welcome. But after all the recent waste our federal government has been involved in and the massive deficits we already face, it is highly doubtful that Congressional or public support for such a huge government effort will be forthcoming.

Others have long argued that if we are serious about reducing pollution from our wasteful energy system, making renewable energy cost competitive, spurring the growth of dynamic new energy industries, creating bountiful new job opportunities, reducing our dependence on foreign oil, improving our balance of trade deficit and all sorts of other notable goals – then we clearly need to raise the price of petroleum. And we should do it simply and completely transparently through an oil tax. But up until now everyone, including me, has been talking about timid energy tax solutions that are unlikely to be enough to either do the job or garner adequate public support.

Upon reflection, I’ve come to realize conventional solutions aren’t nearly enough. Neither a modest energy tax or  significantly increased public investment in clean energy technology,  while infinitely better than corrupt proposals like Cap and Trade, are bold enough solutions. Facing continuing economic stagnation, as we pass the crest of the era of peak oil production, it’s time to completely re-imagine political possibilities and get serious about  transforming our economy and restoring our nation’s economic productivity.

Replacing 100% of our federal government revenues with an energy tax is a transformative proposal that can inspire the American people and appeal across the political spectrum, while igniting an unprecedented era of economic prosperity.

Look at the numbers:

According to the US Energy Information Agency, our country currently consumes 19,498,000 barrels of petroleum a day, which is the equivalent of 298,904,340,000 gallons of petroleum a year.

All federal revenues for fiscal year 2010 are projected to be about $2,165,000,000,000. That includes all individual income tax, corporate income tax, investment taxes, social security tax, disability insurance, hospital insurance, unemployment insurance, excise taxes, fees, energy and transportation taxes, and every other form of federal government revenue other than debt.

So doing the math, if we were to replace every single source of government revenue with a tax on petroleum, that tax would only be $7.24 per gallon. And if you add in the full recent cost of gasoline of about $2.60 a gallon nationally, not even discounting for the federal and state taxes already built into that price, the total price on gasoline and other petroleum based fuels would be $9.84 a gallon.

According to the US Energy Information Agency, that isn’t significantly more than average European gas prices in March of this year: Belgium-$7.18, France-$6.98, Germany-$7.12, Italy-$7.06, Netherlands-$7.68. And those countries are burdened with massive taxes on top of high energy prices.

On average according to the US Energy Information Agency, along with paying far more for petroleum, Europeans paid about twice what Americans paid for natural gas and coal in 2009. So if we added to the energy sources being taxed to offset current federal revenues both the over one billion short tons of coal consumed each year in the US, along with the 23 trillion cubic feet of natural gas we consume annually, the overall level of fuel taxes could be around the same as  European energy prices, while completely replacing all other forms of federal taxation and government revenue.

Most sensible people would jump at the opportunity to trade a European level of energy prices in exchange for no IRS, no income taxes, no payroll taxes, no business taxes, no inheritance taxes, no government fees and no government interference with our personal lives and business revenues.

For those who will inevitably scream this level of energy taxation will make American industry uncompetitive, the one other revenue source the feds should have is a tariff on goods from countries that don’t implement similar levels of taxation on energy. That unilateral action will do far more to spur other countries toward responsible energy policy than complicated well intentioned, but unenforceable climate treaties. At the same time it could further reduce our energy taxes, or perhaps help offset the federal budget deficit.

Of course change this profound couldn’t happen overnight and would need to be phased in. And inevitably in the transition, the winners and losers will all be lobbying madly in Washington to turn a simple idea into the inevitable compromised and complicated sausage making that is all Congress seems able to produce. But if we insist that simplicity and transparency are fundamental to success, perhaps a bold proposition like this could gain enough public support to overcome the corrupting influence of lobbyists.

Is this whole idea completely crazy? …..  Maybe.

Or maybe its so obvious and simple that the only reason not to consider it is all the special interests that will be completely upended by the elimination of our current corrupt and senseless tax system. Lets face it, this kind of change would impact every single American in a major way and will scare the hell out of many. But in the end, anyone honest will recognize that it would be a far more rational and sensible way to fund our government than the increasingly untenable ways we do so today.

Think of the business and investment potential it would unleash. Think of the truly free economy unfettered by manipulations of the tax code. Think of the productivity gains when businesses make decisions based on common sense rather than tax consequences. Think of the rebirth of American industrial opportunity when advantages are eliminated for cheap products from China being subsidized by their low cost energy, lack of environmental standards and the low cost of wasting fuel in transport. Think about the jobs created when we no longer impose punishing taxes on working and on productive investment. Think of the jobs restored to this country when we eliminate the insane tax subsidies for shifting industrial productivity overseas and eliminate the payroll tax penalties on hiring people. Think about the time, money and talent it would free up when we no longer have to spend countless hours and dollars reporting our personal business to the IRS. (According to CNS news: The Internal Revenue Service  estimated that about 7.75 billion hours of human labor went into completing all of the 2009 tax forms and that doesn’t begin to count the huge amounts of time and money wasted figuring out how to game the system and avoid taxes).  Think of the personal freedom and productivity regained for everyone when we eliminate the entire irrational tax code.

Many will argue that people will start to conserve energy with high price signals, thus putting government revenues at risk. Radically reducing energy waste and pollution is one of the two fundamental propositions of the whole idea. And yes, significantly reducing the size and scope of the federal government is the other fundamental goal and benefit, one that would be a welcome relief to the vast majority of Americans.

Most Americans fundamentally trust and favor transparent market oriented solutions and don’t want the government meddling in our lives and in our economy.  Watching the sales of fuel efficient cars after the 1973 Oil Embargo, the 1979 Iranian Oil Crisis and the huge spike in gasoline prices in the summer of 2008, as well as the lack of interest in such vehicles when oil prices dropped, nobody should question the reality that unlike government programs, price signals actually  work to inspire the goals clean energy advocates hope to achieve.

This proposal is a real test for environmentalists, as well as political liberals and conservatives alike.

Are environmentalists really concerned about the environment, or as opponents often suggest, are environmental issues merely excuses for increasing the power of elitist bureaucrats to exercise government control over every aspect of our lives?

Are conservatives really interested in political freedom, economic efficiency and free markets, or is all their rhetoric really just a cover for protecting the special privileges and loopholes for increasing the wealth and power of the already wealthy and powerful corporate oligarchies in our country?

Liberals are bound to hate the idea initially because it removes all the redistributionist “progressive” aspects of our tax code. But based on the accelerating levels of wealth disparity in our country, the impenetrable complexity of the tax code and the hypocritical shenanigans that many prominent liberal politicians get caught using to avoid the tax burdens they want to impose on the rest of us, maybe its time for everyone to just admit that the current system is completely failing to meet those idealistic goals, which are negated by all the special loopholes embodied in the unreadable thousands of pages of the tax code. The reality is that when one includes payroll taxes in the overall calculation, our current tax system is neither progressive, fair or in any way rational.

Rather than everyone just pointing fingers and blaming the other guys for our problems, if we focus on finding solutions simple enough, bold enough and sensible enough to actually garner broad support, maybe maybe there is a possibility of rediscovering consensus in our society.

Lets start taxing waste and pollution instead of using the tax system to punish people for working, creating jobs and making productive investments. Let’s actually try real market based solutions and restore the economic competitiveness our nation enjoyed before every aspect of the economy was micromanaged by the government and manipulated for tax reasons.   Let’s encourage the prudent conservation of our limited fossil fuel reserves so we don’t impoverish our children and grandchildren with our prolifigate waste. And yes less sensibly prune back the over-reaching size and scope of our federal government.

Why single out fossil fuels for taxation? Energy is the lifeblood of a modern economy. The highly concentrated energy available from fossil fuels is a precious resource both for us and for future generations. Unlike metals and other minerals that can be readily recycled in a prudent society, once mined and burned, the concentrated energy in fossil fuels is dissipated and unavailable for future use. Arguably, those concentrated energy resources stored over millions of years shouldn’t be squandered, but rather should be husbanded wisely, as higher price signals would encourage. Balance of trade, foreign policy, pollution and a variety of other reasons which almost everyone is aware of, further contribute to the selection of fossil fuels as the sensible focus for taxation.

Perhaps as this fundamental idea of tax shifting gets refined, we will find consensus to add other wasteful, dangerous or polluting industries to the mix of appropriate consumption taxes, so we can begin to balance our federal budget and pay down our out of control federal debt, while also making our nation a safer, healthier and saner place to live.

But we should start the conversation recognizing how surprisingly affordable it could be to align rational revenue policy with sensible market mechanisms that would encourage economic prosperity, job and business growth, broadly shared environmental and clean energy goals along with the basic principles of freedom and liberty that our country was founded upon.

Let’s fundamentally reform the American economy with a government funding system that no longer undermines the most essential ideals and principles of our national heritage. Let’s support an idea bold enough, simple enough and compelling enough to actually work.

You Can't Make This Stuff Up

The world is watching in disbelief as we blunder through the oil spill cleanup in the Gulf of Mexico. Lawrence  Solomon’s “Avertible Catastrophe” in the Canadian publication Financial Post, describes the most ridiculous kind of bureaucratic inflexibility imaginable in the reasons used to reject effective technology and help from the Netherlands and other countries in cleaning up the spill and protecting the Gulf Coast.

“Three days after the BP oil spill in the Gulf of Mexico began on April 20, the Netherlands offered the U.S. government ships equipped to handle a major spill, one much larger than the BP spill that then appeared to be underway. “Our system can handle 400 cubic metres per hour,” Weird Koops, the chairman of Spill Response Group Holland, told Radio Netherlands Worldwide, giving each Dutch ship more cleanup capacity than all the ships that the U.S. was then employing in the Gulf to combat the spill.”………..

“Why does neither the U.S. government nor U.S. energy companies have on hand the cleanup technology available in Europe? Ironically, the superior European technology runs afoul of U.S. environmental rules. The voracious Dutch vessels, for example, continuously suck up vast quantities of oily water, extract most of the oil and then spit overboard vast quantities of nearly oil-free water. Nearly oil-free isn’t good enough for the U.S. regulators, who have a standard of 15 parts per million — if water isn’t at least 99.9985% pure, it may not be returned to the Gulf of Mexico.”

In Solomon’s article there are more disheartening details of well intentioned bureacrats turning the accident in the gulf into a far worse disaster than it should have become.

“According to Floris Van Hovell, a spokesman for the Dutch embassy in Washington, Dutch dredging ships could complete the berms in Louisiana twice as fast as the U.S. companies awarded the work. “Given the fact that there is so much oil on a daily basis coming in, you do not have that much time to protect the marshlands,” he says, perplexed that the U.S. government could be so focussed on side issues with the entire Gulf Coast hanging in the balance.”

As Logan Penza suggests at The Moderate Voice: “Seriously, You can’t make this stuff up”

Yet some folks still wonder why Americans are increasingly skeptical of ever expanding bureaucratic regulatory solutions and their inevitable unintended consequences.

Videos on Sensible Climate and Energy Policy

The media page for the Price Carbon Campaign has several great videos available that explain from a wide variety of perspectives why a simple clear revenue neutral carbon tax is the best solution to climate, economic, environmental, employment and national security challenges that are all interrelated. Another important video is  “The Huge Mistake” by attorneys Laurie Williams and Allan Zabel which explains clearly why the solutions generally favored in Washington really are a huge mistake. Then there is this good summary of the issues from a forum sponsored by The Carbon Tax Center, Climate Crisis Coalition, Citizens Climate Lobby, Friends Committee on National legislation, Friends of the Earth, Progressive Democrats of America, The Clean Coalition, We Act for Environmental Justice and the Price Carbon Campaign.

For those who care seriously about these issues and do not want to see wasteful and ineffective solutions substituted for clear simple and real solutions, spending an hour or so watching these videos could be a great investment of your time. It would also be great for every member of the senate to watch them all prior to taking a position on legislation.

These videos provide compelling video regarding the fundamental problems of the  convoluted corporate welfare schemes like the Kerry Graham Lieberman bill now making its way to the senate. With clearly far better bipartisan bills already drafted, like the Cantwell Collins “Carbon Limits and Energy for America’s Renewal (CLEAR) Act” and the Inglis Flake Lipinski  “Raise Wages, Cut Carbon Act”, we can only hope that these clear messages of common sense have more impact than all the special interest lobbyists that generally drive policy in Washington.

Climate Politics

To assure sustainable prosperity, we need the market place to account fairly for the long legacy of subsidy and economic externalities that distort energy markets in favor of incumbent polluting industries. We need to establish public policies that enable such accounting in a direct, transparent and dependable manner.

I have long been an advocate of a tax on incumbent energy resources. There are compelling national security, economic and environmental reasons for a revenue neutral tax that shifts taxation away from productive activities like creating jobs, and instead taxes polluting, non-renewable energy resources. Such a strategy could win broad based support across the political spectrum.

But I believe the focus on climate change, favored by many in the environmental movement, is a significant liability in the political effort to create sensible energy policy. Recently, my apprehensions regarding such focus have been proven well founded.

When it comes to addressing climate issues through public policy, there are a wide spectrum of views which, while not supporting the recent policy orthodoxy of climate politics, are not based on denial of the issue or its potential ramifications. Many people recognize that current politically favored solutions to climate change would not only be ineffective, but could potentially create worse problems then those they are intended to address.

Those advocating for complex convoluted public policy responses to the threats of climate change have seen serious setbacks over the last few months, not the least of which was the failure of the Copenhagen conference to achieve any meaningful results.

It is also becoming more clear recently that the science of climate change is being heavily influenced by political agendas. But contrary to the concerns of many in the environmental movement that it is “right wing” interests which are corrupting the science, it appears that it is largely those pushing an agenda of climate change alarmism who have had the most significant influence on the scientific reporting.  Crony capitalists have been more than willing to go along as the politics of climate have been co-opted by Wall Street interests and others who stand to benefit immensely from the convoluted economic distortions embedded in solutions to climate change now favored by many politicians.

Especially since the release of e-mails and other documents from the University of East Anglia Climate Research Unit in November, the press and public have become more skeptical on the issue and there have been increasing numbers of questions raised regarding the quality of the UN sponsored 2007 IPCC Fourth Assessment Report on Climate Change.

Respected conventional news outlets of all political persuasions, many of which have in the past been supportive of an aggressive climate policy agenda, have been publishing articles and editorials with titles like: Climate change: this is the worst scientific scandal of our generation ClimateGate: Was Data Faked? , How Climate-Change Fanatics Corrupted Science , The Death of Global Warming , UN wrongly linked global warming to natural disasters , Conning the climate: Inside the carbon-trading shell game , Alarmists’ credibility melting , How Wrong Is The IPCC? and What happened to global warming?

Though here in the US the traditional press has been less prone to cover the story than in Britain, Australia, India and elsewhere, there is increasing controversy regarding many of the findings in the 2007 IPCC Fourth Assessment Report, which won its authors the Nobel Prize along with Al Gore. Of most concern in the report are elements of the Summary for Policy Makers.

It has been reported than when asked in advance of publication to review the draft of the summary for Chapter 9  which attributes global warming to man made causes, Dr. Andrew A. Lacis, a climate researcher at the NASA Goddard Institute for Space Studies had this to say:

“There is no scientific merit to be found in the Executive Summary. The presentation sounds like something put together by Greenpeace activists and their legal department. The points being made are made arbitrarily with legal sounding caveats without having established any foundation or basis in fact. The Executive Summary seems to be a political statement that is only designed to annoy greenhouse skeptics. Wasn’t the IPCC Assessment Report intended to be a scientific document that would merit solid backing from the climate science community – instead of forcing many climate scientists into having to agree with greenhouse skeptic criticisms that this is indeed a report with a clear and obvious political agenda. Attribution can not happen until understanding has been clearly demonstrated. Once the facts of climate change have been established and understood, attribution will become self-evident to all. The Executive Summary as it stands is beyond redemption and should simply be deleted.”

Dr. Lacis suggestion was unfortunately rejected. It is now coming out that significant portions of the IPCC report were not based on peer reviewed science at all and several findings of the report have been confirmed to be erroneous.

Public support for action on climate change is waning.  A study from Yale University offers an interesting analysis of attitudes on the subject. The Pew Research Center shows climate change being a very low public priority.

A good friend of mine and passionate advocate for climate change policy action suggested that:

“The surveys and editorials are interesting reflections of public opinion, but they don’t undermine the science.  Don’t forget that a little over half of Americans don’t believe in evolution either.”

But contrary to Al Gore’s proclamations and the views of many people I respect, the science is not settled. Some evidence of that is the Petition Project, which claims the signatures of 31,486 American scientists who have all endorsed a petition that states:

“There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gasses is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate. Moreover, there is substantial scientific evidence that increases in atmospheric carbon dioxide produce many beneficial effects upon the natural plant and animal environments of the Earth.”

Dr. Judith Curry, the Chair of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology recently wrote:

“No one really believes that the “science is settled” or that “the debate is over.” Scientists and others that say this seem to want to advance a particular agenda. There is nothing more detrimental to public trust than such statements.”

Personally I feel absolutely certain that humans must be having some influence on climate, just based on the scale of influence that 6.8 billion people have on everything on the planet. Very few people would disagree with that premise. But clarifying how the many human and natural factors impacting climate will interact, how those factors will manifest themselves in complex climate systems, how significant our human influence will be and whether changes will have positive or negative impacts on agriculture and other critical aspects of human society, are all determinations that unfortunately are outside any clear understanding or real consensus in the scientific community at this time.

Perhaps most significant of the recent clarifications regarding the science of climate change has been the BBC interview with Phil Jones, who was the director of the University of East Anglia Climate Research Unit.

When asked: Do you agree that from 1995 to the present there has been no statistically significant global warming: Dr. Jones answered a qualified “yes”.  In details supporting his answers, he showed that the warming trend from 1995 to 2009 of 0.12 degrees centigrade per decade is matched by the cooling trend of 2002 through 2009 of -0.12 degrees centigrade per decade.

In discussing the warming periods:1860-1880, 1910-1940, 1975-1998 and 1975-2009 Dr Jones states clearly that:

“the warming rates for all 4 periods are similar and not statistically significantly different from each other.”

When asked : when scientists say the debate on climate change is over, what exactly do they mean – and what don’t they mean? Dr. Jones answered:

“It would be supposition on my behalf to know whether all scientists who say the debate is over are saying that for the same reason. I don’t believe the vast majority of climate scientists think this. This is not my view. There is still much that needs to be undertaken to reduce uncertainties, not just for the future, but for the instrumental (and especially the palaeoclimatic) past as well.”

His answer on the so called Medieval Warming Period from 800–1300 AD makes clear that current levels of scientific understanding of historic climate data can’t determine conclusively if warming trends since the industrial revolution are unique or unusual.

Recently, Tom Ward, the publisher of the Valley Breeze, a local newspaper here in Rhode Island, published an editorial entitled Inconvenient truth. In it, he suggested that:

“Climate change, formerly known as ‘global warming,’ is a fraud. The science is junk.”

One member of an environmental organization I am involved with issued a call to respond suggesting:

“Some might say its hopeless to answer such extreme positions, but the far right-wing repeats similar stuff every day on cable, talk radio and the like.”

I pointed out to the group that while his rhetoric is harsh, the important conclusion of his editorial is something we can all largely support when Mr. Ward suggests:

“As Americans, we must embrace energy conservation in the short term, and generate more home-grown nuclear, natural gas and wind power in the longer term, to keep our money here and create tens of thousands of well-paying jobs. With those goals achieved, we can power our cars and trucks with U.S.-made electricity and natural gas, and stop sending $800 billion a year overseas, money that funds our enemies.”

While I strongly disagree with Mr. Ward regarding nuclear power (a subject for another posting), I fully agree with him on conservation, wind energy and on using natural gas as the critical transition fuel on our way to a clean energy future.

If the environmental community embraced the energy independence, national security, economic development, employment and balance of trade arguments that Mr. Ward champions, we could be much further along in addressing the challenges of climate change than we are today.  Instead of condemning them, we should be reaching out to potential strong policy allies like Mr. Ward who, like most Americans, would favor rational energy policy.

As I have suggested here before, everything that Mr. Ward argues for could be achieved through a Pigouvian tax on non-renewable energy resources.  That solution would actually be effective in directly and immediately curbing carbon dioxide emissions, unlike the leading solutions being pushed in Congress. If we all embraced the idea that such tax should be 100% revenue neutral, offsetting payroll taxes and income taxes that discourage job creation and working,  Americans of all political persuasions would support such solutions as prudent economic, jobs  and tax policy.

It is not smart politics to be looking for enemies among our potential friends. Rather than blaming the “right wing” or “a well-funded disinformation machine” for the lack of progress, we should take responsibility for the narrow partisan political strategy of the environmental community on these issues.

If the climate change rhetoric from the environmental community were less extreme, it wouldn’t provide such tempting targets for ridicule and harsh criticism and we wouldn’t see the backlash we have. We don’t need to blow the scariest possible outcomes for climate change out of proportion in order to gain broad based political support for effective measures to curb carbon emissions. In fact, overblown climate rhetoric from the environmental community has significantly set back political prospects for sensible energy and climate policy.

The IPCC  has done significant disservice to those concerned with climate change by becoming an imprudent advocate rather than the professional scientific organization that it was chartered to be.

Environmental scientist, James Lovelock is the author of the original “Gaia Hypothesis”, the theory of how the earth’s interrelated feedback mechanisms act as an integrated single organism. He has been described as “The Prophet of Climate Change” . He offers some important perspective:

“I think you have to accept that the skeptics have kept us sane — some of them, anyway. They have been a breath of fresh air. They have kept us from regarding the science of climate change as a religion. It had gone too far that way. There is a role for skeptics in science. They shouldn’t be brushed aside. It is clear that the angel side wasn’t without sin.”

Phil Jones, Andrew Lacis, Judith Curry, James Lovelock and other reputable climate scientists have come to realize that it is best to clearly and honestly present known facts along with the uncertainties surrounding this very complex science. Its about time the rest the environmental community does too.  We should accept  the political reality that with current levels of actual scientific understanding and consensus, most rational people would be reluctant to totally transform the world economy or create the worlds largest derivatives game for Wall Street in convoluted schemes like Cap, Trade and Offset.

I expect that acknowledging the scientific uncertainties regarding the long held beliefs of many of my friends in the environmental movement may result in some calling my integrity and intentions into question. The best answer I can offer them is that unlike those supporting ineffective convoluted answers currently favored in Washington, I am serious enough in my concern on these issues to advocate for policy solutions like H.R. 2380, The Raise Wages, Cut Carbon Act that puts an immediate, real and dependable price on carbon emissions. That bipartisan legislation would also address our economic and unemployment problems as well as our energy and environmental concerns and it wouldn’t add a penny to our monstrous federal debt. That’s the kind of solution the vast majority of Americans would support and that credible politicians should also support if they are really more serious about solving problems than they are about handing out pork to their special interest benefactors.

All the reasons Tom Ward cites in encouraging our nation to move to a clean energy economy have been more than adequate inspiration to spend my career doing green building and renewable energy work for the last three decades. Terrorism funded by our exported petro-dollars, pollution, the economic mess our oil dependency has helped cause, the war in Iraq and our other military adventures to secure oil supplies,  and all the other symptoms of our fossil fuel dependency are plenty of inspiration for good policy.

Effective public policy response to climate change and all those other challenges would be clear, simple and easily understandable by everyone so that everyone participating in the economy can anticipate impacts and respond in rational ways.  All these inter-related issues are too important for the typical corrupt political horse trading between politicians and lobbyists we have come to expect from Washington. We need real leadership at the grass roots level advocating for sensible policy.

Rational climate policy wouldn’t be based on adding vast new convoluted complexities to the economy that are easily vulnerable to the distortions of Wall Street’s financial engineering manipulations. Nor would they be based on legislators and bureaucrats anointing winners and losers in the economy. Instead we need the kind of policy that directly puts a real and dependable price on the “economic externalities” that are currently hidden subsidies for incumbent energy industries – a revenue neutral carbon tax.

Its far past time for everyone concerned with climate change to seek out alliances around sensible energy policy by focusing on the issues that all Americans can readily agree on.  We should align our political agenda with those who are more concerned with other issues like the economy, jobs, trade deficits, national security, terrorism and our government’s unsustainable ballooning levels of debt and unfunded liabilities. Effective solutions to climate concerns can also address all those issues and should be politically framed to do so in a manner that appeals across traditional political boundaries. This shouldn’t be a partisan or politically divisive issue. We need a broad political coalition which will only be achieved by being far less dogmatic about our politics.

The most prudent and sensible advice I have seen regarding the politics of climate policy is from Mother Jones magazine, which quotes a perhaps unexpected ally, Republican pollster Frank Luntz:

“It doesn’t matter whether you call it climate change or global warming,” he said. “The public believes it’s happening, and they believe that humans are playing a part in it.” In fact, Luntz warned that if Republicans continue to dispute climate science it could hurt them politically. Instead, he said, the GOP should be engaging in the debate over how to solve America’s energy problems……….

Luntz suggests less talk of dying polar bears and more emphasis on how legislation will create jobs, make the planet healthier and decrease US dependence on foreign oil. Advocates should emphasize words like “cleaner,” “healthier,” and “safer”;  scrap “green jobs” in favor of “American jobs,” and ditch terms like “sustainability” and “carbon neutral” altogether. “It doesn’t matter if there is or isn’t climate change,” he said. “It’s still in America’s best interest to develop new sources of energy that are clean, reliable, efficient and safe.”

Luntz’s polling suggests  The First Rule of Fighting Climate Change: Don’t Talk About Climate Change.

Stimulating Renewable Energy

Buried in the massive “stimulus bill” working its way through Congress this week are details that could significantly alter the markets for solar and wind energy. And the details matter.

After a decade of remarkable growth, both the solar and wind industries have been significantly impacted by the recession and credit crash in financial markets. So 2009 is starting out as a more challenging year for renewable energy industries. There are fewer parties with appropriate tax appetite to invest equity in large projects under current tax laws. And renewable projects have not been immune to the problems in credit markets.

Whatever your views may be on the stimulus bill, it passed. Energy sections in the bill will have important implications for renewables. The Senate and House versions are very different though.

Probably of most significance, the House version has provisions to monetize the value of renewable energy tax credits through DOE grants in lieu of the current tax advantages. That provision is not included in the Senate version that still relies exclusively on manipulations of the tax code.

It’s past time to have transparency in the way governments intervene in energy markets. Incumbent energy sources benefit from decades of huge and continuing complex subsidies that skew markets in their favor. But the vast majority of citizens favor renewables. So lets encourage renewable energy development in a direct and sensible way as proposed by the House. Reliance on crazy manipulations of the tax code ends up providing hidden subsidies to financial institutions while complicating the development of clean energy projects. If the government is going to intervene in energy markets as much as it does, let’s make those interventions transparent and effective.

This week, the Conference Committee is going to hash out the details of the massive “stimulus package”. For anyone who cares about renewable energy, there has rarely been a better time to call your Senators and Congressional Representatives. Encourage them to support the House provision for a simple direct solution for reviving the remarkable growth and job creation of renewable energy industries. Its clearly better than the Senate alternative.

More information can be found in these announcements from the Solar Energy Industries Association and the American Wind Energy Association.