Direct Carbon Tax Costs for Households in California and the Orange County Area

Projected Carbon Tax Costs for Households in California and the Orange County Area

With Carbon taxes being considered at various rates, we show how to convert from consumer units to pounds of CO2 for various energy sources.  Since there are local prices for gasoline, electric power, and natural gas, we will estimate their effects in Orange County, California.  This is an update of an older article, now including the Carbon Tax proposal of the Citizens Climate Lobby, and links to their 2019 Conference.

For gasoline, each gallon gives 19.6 pounds of CO2 per gallon.

Coal burned to electricity gives 2.21 pounds of CO2 per kWh.

Natural gas burned to electricity gives 0.922 pounds of CO2 per kWh, or only 42% of what coal yields, in California’s highly efficient combined cycle natural gas power plants.  In addition, we have lots of renewable and clean power, so the state average is 0.48 pounds of CO2 per kWh.  SC Edison is 0.50 pounds of CO2 per kWh. SDG&E is 0.53 pounds of CO2 per kWh.

Natural gas for heating produces 11.7 pounds of CO2 per therm.

Now for local prices.

California has higher gasoline prices than much of the rest of the US since we produce clean mixtures, and either get gasoline from California, or imported from the Middle East and Pacific Ocean countries.  Lately in my travels I have seen prices for regular from $3.69 to $4.09 per gallon.  If a typical commuter drives 15,000 miles a year at an average 25 mpg, the commuter will use 600 gallons.  That would generate 11,760 pounds of CO2 a year.  It would also cost about $2,400.

SC Edison covering Orange County has a Tier 1 rate of $0.16 per kWh to 317 kWh, a Tier 2 rate of $0.22 per kWh to 1,268 kWh, and High Usage rate of $0.31 per kWh, which includes generation, tax, delivery, and bond charges.  The company has apparently been snooping on my neighbor’s meters, and told me that their average is 560 kWh.  This is actually the state’s overall average.  The cost for this is $104 per month, or $1250 a year.  At 0.50 pounds CO2 per kWh, the average consuming household generates 280 pounds of CO2 per month, or 3,360 pounds of CO2 per kWh per year.

Coal is not of mix of our local utilities, and only 4% of in-state power is produced by coal.  There is more used from out-of-state by long range LADWP contracts.

The rate per therm of SoCalGas for natural gas is $0.85, plus a fee and tax gives $0.95 per therm.  In Southern California, natural gas use is mainly for winter heating, but also for water heating, clothes drying, and cooking.  I’m going to use an old average of 400 therms per household per year.  At 11.7 pounds of CO2 per therm, that gives 4,680 pounds of CO2 per year per household.  The cost of that is $380 per year.

So lets summarize CO2 emissions per year:  gasoline gives 11,760 pounds per commuter, the average household generates 3,360 pounds through electricity, and the average household generates 4,700 pounds through natural gas.  For one commuter, the household generates 19,820, or about 20,000 pounds of CO2 per year.  For two commuters, that gives 31,600 pounds.  For three commuters, we have 43,340 pounds.  Those are 10 tons, 16 tons, and 22 tons of CO2 a year, respectively.  Each long range commuter adds 6 tons a year.

For a one commuter household, the yearly cost is $2,400 for gas, plus $1,250 a for electricity, plus $380 for natural gas, totaling $4,000 a year.  Each additional commuter adds $2,400 a year.

Close to suggested carbon tax values, we will estimate the costs of taxes for rates of $12.50, $25, and $50 per ton.

For one commuter, the yearly household taxes would be $125, $250, and  $500.

For two commuters, the yearly household taxes would be $200, $400, and $800.

For three commuters, $275, $550, and $1,100.

Even at the $50 a ton rate, for one commuter, the $500 a year tax is 12.5% or 1/8 of the energy cost of $4,000 a year.  At the $25 a ton rate, it is 1/16 or 6%, and at the $12.50 a ton rate it is 1/32 or 3%.

June 8th to 11th was the Citizen Climate Lobby 2019 conference and lobbying in Washington, D.C.  They met with almost all of the Representatives in the Congress.  Their House bill H.R. 763 starts a Carbon Tax and Distribution at $15 per ton of emissions, and increases that by $10 per ton each year until emissions decline sufficiently.  They want to eliminate coal power by 2025.  Using our above numbers, we evaluate for $15 of emissions, and after 5 years of raises, for $65 per ton.  For one commuter, a household generates 10 tons a year, for two commuters 16 tons, and for three commuters 22 tons in our area.

For one commuter, the yearly household taxes start at $150, increasing to $650 after 5 raises.

For two commuters, the yearly household taxes start at $240, increasing to $1,040 after 5 raises.

For three commuters, the yearly household taxes start at $330, increasing to $1,430 after 5 raises.

At 20 pounds of CO2 per gallon of gas, which is 1/100 of a ton, the $12.50 tax per ton would be 12.5 cents per gallon.  The $25 tax per ton is 25 cents per gallon, and the $50 tax per ton is 50 cents per gallon.

The Citizen Climate Lobby tax on gasoline starts at 15 cents per gallon, and rises to 65 cents per gallon after five years.  For California, where the average price of gas is now about $4 per gallon, this starts out at 3.75%, and rises to 16.25% after 5 raises.  For the lowest gas price areas of the US, at about $2.50 per gallon, this tax starts at 6% and rises to 26% after 5 raises.

The videos of the conference are at the highlighted link, or:

The PowerPoint or PDFs of the talks at the conference are here.

Since the majority of the emissions are from gasoline, you really need incentives to buy hybrids, or plug-in-hybrids, or electric cars.  Or incentives to carpool.  Or to work at neighborhood distributed offices.  Or to shop at neighborhood express stores.  Or to eat at neighborhood restaurants.

About Dennis SILVERMAN

I am a retired Professor of Physics and Astronomy at U C Irvine. For a decade I have been active in learning about energy and the environment, and in lecturing and attending classes at the Osher Lifelong Learning Institute (OLLI) at UC Irvine.
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