derryl

My U.S. Infrastructure and Employment Plan

I agree that this is the kind of program the US needs to pursue into the future. Several bloggers have pointed out constraints on fast implementation.

I will add that the main problem with a carbon tax or "tax shift" as Mr. Ellard advocates to compel a shift away from oil is that in the short term all this does is return gaspump prices to last summer and beyond to $5-6 per gallon and more. Arguably high pump prices triggered the subprime meltdown as overextended borrowers could not absorb the additional $300/month cost of filling up their car with $4/gallon gas to get to work.

40 million low income Americans already pay no income taxes so replacing income tax with a carbon tax is not revenue neutral to these people. Poor workers would have to be exempted or compensated and pretty soon you have 69000 pages of "carbon tax breaks" instead of 69000 pages of IRS tax code.

A carbon tax high enough to actually reduce oil use would have to be painful, and it could be 10 years or more before most people could convert to new non-oil energy sources, so a carbon tax will either be political poison or it will be rendered ineffective by the inevitable multitude of exemptions.

The same political problems arise while converting from cheap coal-fired power to more expensive alternatives. Assuming wind and solar eventually become technically viable (and without some major technological breakthroughs they will not, in the short to medium term, be viable at utilities scale, as rrbatch notes), either taxes (to fund subsidies) or electricity prices will have to increase to cover the increased power generation costs. Then we become California with rolling brownouts because consumers refuse to accept higher prices so politicians legislate below-cost pricing and suppliers don't build new plant so you run out of electricity.

Coal gasification, or 'clean coal', converts coal to a fuel that performs much like natural gas. The technology is ready for industrial scale commercialization but it costs more to build and run a clean coal plant vs regular coal, so without some kind of help like subsidies, or some kind of threat like a carbon tax, nobody is going to build clean coal instead of regular coal. In the short term clean coal electricity is viable where solar and wind are not, and the cost premium for clean vs regular coal is not large.

rrbatch also points out there aren't enough engineers available to rapidly ramp up infrastructure construction and rejuvenation. Nor can infrastructure builders like road, bridge and electrical grid contractors rapidly scale up their operations due to the lack of a pool of unemployed skilled labor and heavy equipment.

These factors all put limits on available supply so rapidly increasing demand would create a boom in this sector and contract bid prices would go ballistic. So infrastructure spending is necessary but it won't be a quick fix job. You're really talking about converting the US from a service economy back to a production economy, and that is a very big deal that will not happen overnight.

Tomas Martin points out that if America switches from gasoline to natural gas for the transportation fleet "peak natural gas" will happen sooner rather than later, though this conversion will help as an interim measure. Existing cars can be converted to natural gas or hybrid gasoline/electric in the short term as these cars live out their economic lifespan.

bmerson points out that EV does not work for large vehicles like trucks and heavy equipment. Even if the passenger fleet wholly converts to electric there will still be a need for diesel to fuel ships, trucks and other heavy transport. Diesel and aviation fuel are made from oil so the need for oil is not going to go away. But once the passenger fleet is off gasoline US domestic supplies of oil will probably be sufficient to fuel the aviation and heavy transport sectors.

Electric cars are almost certainly the future and I have high hopes that Detroit can become a world leader in this technology. A century ago gasoline fueled internal combustion beat out steam, electric and diesel to become the dominant engine technology. Henry Ford figured out how to make it affordable and mass produce it. We need Henry v.2.0 electric to lead the way again.