Sean Casten Profile picture
Sep 25, 2020 19 tweets 4 min read Read on X
This has been a rough week in DC, but maybe we need some #energytwitter nerd threads to distract us. Today: why economy-wide GHG pricing doesn't work for the transportation sector, absent complementary policies.
1/ First, stipulate that "economy wide GHG pricing" is a supply/demand-set price per ton (or any other mechanism that treats all tons of GHG pollution as economically equivalent.)
2/ Suppose you buy a reciprocating engine to generate electricity. You run it 5 days/week, all year long, or 5x24x52 = 6,240 hours per year. When you make that investment, you plan on keeping it for 15 years before you have to replace it.
3/ Now suppose you also buy a reciprocating engine that in the form of your commuter vehicle (e.g., an IC engine). You have a 45 minute (each way) commute. You keep it for 15 years. That engine runs 45 minutes x 5 x 52 x 15 = 5,850 hours over the course of it's entire life.
4/ In other words, the same technology, but in one case used for power generation and in the other for transportation. In one mode you operate 6000 hours/yr, and in the other you operate it 6000 hours over 15 years.
5/ Since your fuel use is a function of operating hours (e.g., you don't burn gasoline while your car is in the garage), that means that fuel cost is ~15x as important to the investment thesis in a power plant as it is in a vehicle, all else equal.
6/ To put this in more personal terms: in the example above, if you average 35 mpg on your commute and get 27 mpg, you're spending $155/month on $4/gallon gas.
7/ I'll bet that's less than your monthly car + insurance payment. And note that if the price of gasoline moves by $1 / gallon, your differential cost is just $40/month.
8/ Which, by the way, is the same impact as a 25% change in fuel economy. The obvious implication being that in the (passenger) transpo sector, the economics of vehicle ownership are dominate by vehicle cost. In the heat & power sectors, the economics are dominated by fuel cost.
9/ Now let's bring that back to GHG pricing. GHG pricing, by definition is applied to the thing that emits greenhouse gases when burned - the fuel.
10/ Any price that is set at a high enough level to change the economics of the heat & power sectors & decarbonize will be too low to decarbonize transpo. And any price high enough for transpo will be way too high for H&P.
11/ Or, in economics parlance, the GHG price set in a supply/demand balanced paradigm will never clear at a high enough price to affect transportation economics.
12/ To be clear, we should - nay, MUST - put a price on GHG emissions. The point is just that decarbonizing the transportation sector will also require complementary policies that affect the price of the vehicle. I'm a big fan of feebates, personally: casten.house.gov/media/press-re…
13/ Another way to think of this for the financially inclined. How much more would you pay for a car that had zero fuel cost? e.g., in the example above, how much would you pay to save $150/month?
14/ If you are Homo Economicus rational and you are financing your car with a 7 year, 5% loan, you'd be willing to pay about $10,000 more for that car (since at anything above that level, your car payment increase > your fuel savings)
15/ Such a vehicle of course doesn't exist (Damn you thermodynamics!) but I think we can stipulate it would cost more than $10,000 more than Beck's current Hyundai.
16/ (Sorry for the obscure song reference - couldn't resist.) Point is, decarbonizing transportation requires policies to lower vehicle cost. Decarbonizing power and industrial sectors requires policies that price GHG emissions. /fin
Because there seems to be some confusion on this point. A $150/month car payment at 7 years would amortize a 5% loan. This is basic financial math, not a political statement on how much people should pay for fuel economy.
(Shorter version for those without any finance training: open Microsoft Excel on your computer. Click "help" and read up on the PMT function.)

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Sean Casten

Sean Casten Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @SeanCasten

Nov 17
Trump's nominee to be DOE secretary may be ignorant or intentionally wrong. But this video (which you should watch all of) consistently confuses upstream and downstream energy in an effort to suggest that climate change isn't a concern.
1. You would get laughed out of a room if you said that access to transportation depends on iron ore production, or nutrition depends on annual grain harvests. People understand that deweighting cars, reducing waste in the food distribution system is a net positive. And yet...
2. Wright would have you believe that access to heat, light and power (a net positive) = natural gas production. As a fracker, he has a $ interest in confusing those two things. But the world is richer, not poorer if we can deliver more useful energy with less fossil input.
Read 7 tweets
Nov 11
My primary thought on the election, after a week to reflect: We have to face up to some hard, uncomfortable truths about who we are. But we also have the opportunity to run headlong towards the nobility that accrues to to those who commit themselves to making us better. Thread:
1. I was speaking to a group earlier this week and noted that my Mt. Rushmore of writers about America is de Tocqueville, Baldwin, Paine and Douglass. It is not coincidental that all of them were outsiders. They understand America's unique defects AND it's unique potential.
2. I'm thinking specifically today of de Tocqueville's observation that "the greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults." The time has come for us to be great.
Read 19 tweets
Oct 14
A quick thread on Trump's Project 2025 thing that's been on my mind. It's not just Trump's agenda. It's the agenda of the entire @GOP. A small deep dive:
1. I want to focus very narrowly on the Financial regulation section because I've served on the committee of jurisdiction for 6 years. So much of the P2025 plan has already been introduced by @HouseGOP members. It's what they'd do if they controlled all 3 branches.
@HouseGOP 2. For example, P2025 says we should eliminate the Consumer Financial Protection Board (you know, so that businesses can abuse consumers more easily.) Image
Read 13 tweets
Oct 1
Let's talk US immigration policy. As JD Vance admits to lying so he can gin up the xenophobes and the @HouseGOP keeps bringing bills to the floor that claim to solve imaginary problems, we've got to understand the real data, and real issues. Thread:
1. First, the idea that immigrants are prone to criminality has ALWAYS been used to argue against immigration and has never been true. Immigrants - especially undocumented ones - are consistently vastly more law-abiding than the general population. nij.ojp.gov/topics/article…

Image
Image
2. This makes intuitive sense. Whatever drove one to leave their home, their social network, their culture, their language and start a new life in the United States, the more precarious you are in that new life the less likely you are to do something that could send you back.
Read 21 tweets
Sep 22
I promised I'd say more about this. We need to talk about the financial regulation portions Trump's Project 2025 and why they are inimical to capitalism, free markets and would destroy the US economy. Thread:
1. Prebuttal to everyone about to chime in with "Trump said he's not associated with it!" I don't know how to break this to you but Trump is a liar. Fool me once, shame on you. Fool me 356,782 times, shame on me. It's his people writing policies for him. Move along.
2. First, you need to understand that our modern financial regulatory system was essentially created in response to crises. Banks, capital markets, etc. are always prone to abuses; insufficient deposits, lack of consumer protection, withholding information from investors, etc.
Read 19 tweets
Sep 21
I am often critical of the @HouseGOP for their incompetence, absence of any abiding moral compass and hostility to democracy. But this week, they deserve praise for their nationwide message discipline during “anti-woke week”. Thread:
1. The floor agenda this week was dedicated to “anti-wokeism”. The purpose was to explain to the world why they support companies right to discriminate, ignore climate science and embrace bad governance - and own the media cycle. Did they ever. news.bgov.com/bloomberg-gove…
2. My first sense that this was a nationally coordinated program was when my little-known @GOP opponent used most of a media interview on Monday to double down on JD Vance’s racism, suggesting that she had personally seen “brown skinned people” eating pets.
Read 9 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(