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.)

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More from @SeanCasten

Oct 26
It's been a while since I've done a non-political nerd thread. And I wish I could do them more often! So let's do a palette cleanse to talk about this article from WaPo that is technically true, but deeply misinformative about US electric markets. washingtonpost.com/climate-enviro…
1. Read the whole article, but the big problem is this paragraph. It's true that electricity isn't like other markets, but not because it has high fixed costs. It's because it is a regulated market that isn't subject to those forces you learn in Economics 101. Image
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Oct 25
Mike Johnson refuses to open the House. Refuses to do oversight. Refuses to defend the Constitutional rights that only protect so long as they are enforced. Refuses to stand up to child predators. So we organized our own hearing in Chicago yesterday.
And if you’re objecting to this on the grounds that I accused Trump of being a child predator… well, you can choose to follow Mike Johnsons example and protect child predators too. Or you could insist on the release of the Epstein files that might clear his name.
Maybe that release will explain why this isn’t as disgusting and criminal as it sounds. courthousenews.com/wp-content/upl…Image
Read 8 tweets
Oct 21
If you care about the rule of law, you should furious that Rep. McIver is forced to defend herself against trumped-up, bogus charges today while so many legitimate criminals are being ignored or pardoned by Trump & his cronies. thehill.com/regulation/cou…
First, it is INSANE that Mike Johnson accused McIver of "inappropriate behavior" and sits silently in the face of this. abcnews.go.com/Politics/girlf…
And that the entire Republican party continues not only to sit in silent cowardice, but also to valorize a guy who pardoned people who attacked the US Capitol and were subsequently re-arrested for threatening to kill members of Congress. cbsnews.com/news/pardoned-…
Read 7 tweets
Oct 14
This is disgusting. And I can GUARANTEE you that lots of dumps are going to come out about lots of Republican electeds who are way too close to the people in these texts. politico.com/news/2025/10/1…
This is a good crowdsourcing project. Suggest you look through for names in your state, see who you can connect them to. For example, there’s this guy. Image
And there’s this guy. I’ll keep adding as I find more. Image
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Oct 4
Stephen Miller is trying to provoke people into responding to the government's unlawful use of force because he wants his own Reichstag Fire. This is an old, and very dangerous playbook. Take video. Resist peacefully. But don't give these fascists what they want. Image
Abraham Lincoln famously said that "in this country, public sentiment is everything. With it, nothing can fail. Against it, nothing can succeed." The crimes they are committing are horrific but keep that public sentiment in mind: neither their agenda nor their M.O. is popular.
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Sep 18
If you were under the impression that Trump & Witkoff’s abuse of presidential power with CZ Zhao was the only situation where the Trump family was violating the Constitution’s emoluments clause with a crypto criminal, we need to now move onto Justin Sun. Buckle up:
1. Sun created the Tron blockchain which, according to some estimates has housed the majority of the illicit (read: money laundering) crypto activity. trmlabs.com/resources/blog…
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Read 18 tweets

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