Unleash American Innovation – Restore Price Integrity to the Energy Market

Brian Merchant of Treehugger

In order to create the 30 Million Jobs this country needs, we know we must match the problems we face with the money we have to the people that we have looking for work.  If you put those all together, guess what happens?  You get solutions, and you create jobs.

Two of the greatest challenges facing our country — no matter who is in the White House — is America’s lack of energy independence and our gross energy inefficiency.  We’ve been mulling over the issue for a while, and today we’re excited to unveil our new plan: the Defense Energy Project.  

We’ve got two simple goals with this: first, create a jobs program that helps veterans returning from wars (often over foreign oil) creating clean energy and energy efficiency and independence.

The second component of the Defense Energy Project is this: expose the true cost of hydrocarbons (including the cost of the wars that we fight) and the environmental toll energy production takes on our country.  This will help restore price integrity to our energy markets with the discussion of a plan called “fee and dividend.”

How would “fee and dividend” work?  In short, fossil fuel producing companies would pay a fee, which would be pooled into a national fund.  That fund would be directly distributed equally to every American — all 311 million of us.  We would effectively be taxing energy waste and rewarding with a dividend energy efficiency.

Joining us to discuss the plan is Dr. James Hansen from NASA’s Goddard Institute for Space Studies and Brian Merchant, contributing editor for Treehugger, and author of the article “Unearthing the True Cost of Fossil Fuels.

Restoring Price Integrity in the Energy Market

“It is no secret we dump tens of billions of dollars directly into the pockets of big oil every year in the form of subsidies, tax breaks, direct from our pockets to theirs,” Brian Merchant explained on The Dylan Ratigan Show. “That is a small fraction of the cost.  Even though it amounts to billions of dollars and totaled as many as $500 billion over the last 50 years or so, the real costs are the indirect ones. The oil industry can’t operate without the u.s. military providing security presence.”

“$7.3 trillion just for aircraft carriers in the Persian Gulf over the past couple decades,” Dylan pointed out. “That is not a cost a lot of people recognize — the American taxpayer footing the bill for but the oil company gets a huge deal. They get to use that as their own personal security detail. It’s a huge cost for American taxpayers,” explained Brian.

The Enormous Advantages of the Fossil Fuel Market

Dr. Hansen also pointed out some other costs to fossil fuels outside of the security and war costs.  ”Human health damage from air and water pollution from fossil fuels is huge.  It sits on hundreds of billions of dollars per year.  In addition, there is the cost of climate change, which is going to be borne mainly by our children and grandchildren,” he explained.

Dr. Hansen suggested that the costs taxpayers be reimbursed for all the costs of fossil fuels that are borne by the public.  He explained:

“The climate is already beginning to change. The way we should deal with this is by putting a price on the fossil fuel emissions by collecting a flat fee on oil, gas, coal, at the source, the domestic port of entry. That money should then be distributed uniformly to legal residents of the country.  I would give one share to each legal adult resident of the country and half a share to children up to two per family. If you did that, then more than 60% of the people would get more in their dividend than they’d pay in increased energy prices. Those people who pay special attention trying to minimize their fossil fuel use, using clean energies, energy efficiency, they would do very well.

Brian believes restoring hydrocarbon price integrity in the markets would have a huge effect on the rate of transtition to more efficient fossil fuel use and alternative fuel use.  

“The advantages of the fossil fuel industry are enormous,” Brian explained.  ”They’re enormous and politicians complain about a little tiny subsidy for a solar company. They’re not seeing the whole picture. If there is even a modicum of price integrity restored to this scenario we would see American innovation unleashed. We would see clean tech solutions. We would see a whole new outpouring of funding into a new sector.  This would be a job creator… this would do kind of all of the things that need to happen in this sector so America can get a foot forward,” he said.

How Would “Fee and Dividend” Work?

With entrenched interests across the fossil fuel industry, how would we mitigate the most acute political resistance from the biggest payers? Dr. Hansen explained it this way:

If we put a fee that we collected at a rate of $15 a ton of carbon monoxide per year, and increasing $10 a ton each year, at the end of ten years, that would be $115 a ton.  The amount collected would be close to $600 billion a year.  If you distributed that among all legal residents, that would be between $2000 and $3000 yearly.  So, a family with two or more children would get between $6000 and $9000.  This would be deposited monthly to their bank account, or if they don’t have one, to a debit card.

This would reduce our fossil fuel dependence by 30% in ten years — an equivalent to more than 10 times the amount of oil that would be carried by the Keystone XL pipeline… and would make our industry more competitive. That’s what we need to do. In order for the economy to work most efficiently, you need to have the true costs for the fuels that are being used. You don’t want to subsidize them because all of those subsidies are coming out of the taxpayers’ pockets.

What do you think of the Defense Energy Project?  Email us at dylan@dylanratigan.com, and we’ll feature some of your responses over the coming days.  You can also find us on Twitter and Facebook.

You can watch the entire segment with Brian Merchant of Treehugger.com and Dr. James Hansen of the NASA Goddard Space Institute here:

- Meg Robertson is a digital producer for DylanRatigan.com.  You can find her on Twitter @megrobertson.