Is it time for a carbon tax?

Leslie Carlson

Financial planners are always exhorting Americans to save for a rainy day. Those of us who can try to save for retirement, for college, or for an unexpected calamity—a serious illness or the loss of a job. It’s become accepted practice that individuals and families should plan financially for the worst in order to remain prosperous economically through bad times as well as good.

This makes me wonder why no one seems to be advocating for saving for the inevitable environmental “rainy day”—the effects of global warming. Recent reports have detailed the potential downfall of our wine industry, the depletion of our water reserves and an increase in forest fires. Does anyone out there think that dealing with global warming is going to be cheap? Instead of burying our heads in the sand and paying the bills later, I think it’s time we put some money into lessening global warming’s effects and protecting our economy.

The most logical way to get this fund started would be to tax the consumption of the things that cause the problem in the first place. Gasoline, electricity (the non-renewable kind), natural gas, home heating oil—all these things are causing our glaciers to melt and our climate to change. With even just a 1 or 2 percent “carbon tax” on the causes of global warming, we might be able to put together a fund that would help us weather (no pun intended) the coming changes in our climate and our economy.

This global warming fund would do a few important things: first, it would provide an incentive for the more efficient use of fossil fuel, especially among the largest consumers of energy. Second, we should be able to provide financial assistance to Oregon companies that are hurt by global warming, such as winemakers and grape growers or pear and apple orchardists. Third, it could provide us with some capital to incent clean-tech, renewable energy and other sustainable industries. Fourth, investing in these “green” industries could provide us with enough "green" economic growth to help our economy stay healthy and perhaps lessen our reliance on fossil fuels.

I’m not an economist, so I don’t have the wherewithal to know exactly how much money global warming is going to cost us. I’m not sure anyone can predict it accurately, anyway. But most people agree the cost is going to be big--and get bigger the longer we wait to address it. As a regular citizen who does her best to plan for her family’s future, I think it's time Oregon--and Oregonians--plan for our collective future.

Some may argue that Oregon is too small to enact a carbon tax and create a global warming fund by itself. The states to the north and south of us have demonstrated that they too are worried about global warming and they could be just the right partners to participate in a fund. California alone—the world’s sixth largest economy—is already trading carbon credits in the open market. If California and Washington were to join us in creating a West Coast global warming fund, industry and business would have to listen, and would have to keep investing in our local economies.

Of course many people won’t like this idea. I don’t like saving for retirement, either, but it’s necessary if I am going to enjoy a good life. With the effects of global warming already upon us, is saving to preserve our statewide quality of life any different?

Comments

  • Ryan Ness (unverified)
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    I think it's a great idea. We already do pay a sort of extra tax on our electricity bill with the blue sky program at pacific power. Hopefully more people choose to do the same, if their power company offers a simular program.

  • Mike (unverified)
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    It's an interesting idea. I would consider using the raised money for: education Fund to help business learn to be more efficient and environmental friendly at the same time. (e.g. updating freezer in grocery stores and using plastic sheet covers; this actually pays off in just 3-5 years)

  • Tom Civiletti (unverified)
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    If you're into sin taxes, there are few greater sins these days than dumping greenhouse gases into the atmoshpere.

    Of course, how would one overcome the political power of the petroleum, coal, utility, shipping, ag, and auto industries in order to pass such legislation?

  • Bert (unverified)
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    Tom Civiletti said ...

    Of course, how would one overcome the political power of the petroleum, coal, utility, shipping, ag, and auto industries in order to pass such legislation?

    Well, that might be a good thing to brainstorm to apply some Art of War concepts. Some strategies might not be ideal, but implementable.

    Divide and conquer -- as with Tobacco, if a small portion of the population bears the cost, it might not matter as much that concentrated interests oppose. So for example, applying the carbon tax on select big polluters such as low milage vehicles or airlines might be a way to start.

    Find allies -- It can also help to find and reward constituencies. Giving tax money to education and alternative energy could be helpful, as Mike mentioned. Reducing income taxes and replacing them with carbon taxes could achieve broad voter support.

  • K (unverified)
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    Yo Kari! Nothing about the great piece of history we witnessed today as a nation? Not a single post about the example Ford set as a moderate Republican - prochoice, keeping his deep faith private because he knew that's where it belongs? Nothing about the difference between his and Reagan's funeral? Nothing about how our country wouldn't be so screwed up right now if the R's hadn't been taken over by people who think opposing homosexual's existence is more impotant than helping the downtrodden? Come on already! Or did I miss something?

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    K -- please stay on topic. This post is about a carbon tax. For a non-Oregon topic, the Ford stuff has been discussed enough here and here.

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    Find allies -- It can also help to find and reward constituencies.

    We might be able to find even more allies. In addition to the obvious agricultural allies, what about tourism-related allies like ski area operators? How about forestry companies? I'm sure BlueOregon readers can think of others.

  • Jason (unverified)
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    And now that Blumenauer's one of the tax-writers, maybe someone should talk to him?

  • peter (unverified)
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    more likely than a carbon tax, is a carbon trading scheme ala california's; barbara boxer has already spoke of trying to implement it on a national scale.

    carbon trading schemes so far have had a tendency to provide credits to current polluters, essentialy providing a windall of cash, so there's your ugly political solution.

    while we are implementing a carbon tax/trading scheme, we must be investing in infrastructure, technology, and implementing regulations so that any costs are spread evenly, rather than falling disproportionately on the poor.

  • j (unverified)
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    Looks like a good way to get low income people off of the roads, so that I can drive on less congested roads.

    It might even drive up the price of heating their homes so much that they will have sell out and to move out of Portland.

    Serously, why do so many progressive schemes end up screwing the poor? Have you guys no heart?

    Thanks JK

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    Looks like a good way to get low income people off of the roads,

    It's a valid point that consumption taxes can hurt the poor, especially one like this that would tax people's consumption of transportation fuel and heating oil. That can be easily remedied with some sort of credit or rebate for low-income people.

    However, this tax would create a fund to help low-income people who are already disproportionately bearing the burden of global warming without much help from anyone. You only need to look at the victims of Katrina--the poorest of New Orleans' poor who lived in the lowest elevations of the city--to see what happens when we aren't prepared or willing to help.

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    I thought Al Gore had already addessed this. Rather than impose new taxes, he proposes to simply alter the ones we have. A dollar for dollar reduction in employment taxes would not only make this palatable for the American people, it'd help the economy as well.

  • Steve Bucknum (unverified)
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    I'm going to echo Bert - Find allies.

    Portland imports nearly all of its energy. Stop and think about that - I'm not talking just oil. I'm talking hydro, solar, wind, etc.

    So, beyond the gimmick of a carbon tax to get everyone's attention, if you really want to make a difference you have to work with those who would produce the alternatives. Out here in Central Oregon we have all the alternatives available. We already make hydro, but that can be improved upon if we upgrade and update old hydro producers. We have solar - big time. We have wind - big time. We even have some geo-thermal. We have the potential of crops that could be converted to be energy producers - if the overall economics of that can work out.

    But, to start with a carbon tax as a first step might just feel like the BIG CITY of Oregon harrassing the rest of us, again. If we are partners in the venture, and see a carbon tax as a piece of a larger puzzle - well then, you might just get some allies.

    Hmm, what if --- carbon tax dollars were spent on working up alternatives and demostration projects. Could Prineville be the world's first town powered by hydrogen produced by solar power? A carbon tax could produce the revenue needed to play with that sort of concept. Could we run a hydrogen pipeline from Central Oregon to Portland, and in turn then Portland could burn non-polluting hydrogen for heat, lights, etc. - all made by the sun from Central Oregon?

    Now that would be a partnership.

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    Carbon taxes are an interesting idea, but I worry about a backlash. The righties have long identified enviros as their bete noir, radicals who wish to prevent anyone from doing anything. Add taxation into the picture, and I suspect this will make righties frothy-mouthed. So then the question is where the average citizen falls. We know most folks are worried about global warming. Would they see this as a reasonable measure, or would it actually create resentment?

    I'd like to see this idea trundled out to folks in rural parts of the state where gas and energy consumption already makes life hard to live. If people are generally positive, I'd love to see this kind of measure.

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    Jason wrote: And now that Blumenauer's one of the tax-writers, maybe someone should talk to him?

    Ding! Jason, this one is yours.

    Our country is run by the people who show up. You just showed up. Give Congressman Blumenauer's office a call and make your pitch. There's no reason to wait for someone else to take charge.

  • Tom Civiletti (unverified)
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    Steve Maurer is on target. Of course, offsets to make new taxes progressive is rare, simply because low income people have little political power. Instead, expect to see huge subsidies for the energy industry [such as pollution credits] in return for a carbon tax.

    Steve Bucknum refers to the relatively higher carbon emissions of rural people. Certainly, their should be some transitional accomadation for these folks who have, on average, lower income than city dwellers. On the other hand, it is inescapable that urban living is more energy efficient than rural living, at least as it is practiced today. Eventually, costs need to be borne by those who are responsible for them. The modern version of rural living is NOT a right, god-given or otherwise.

  • jim karlock (unverified)
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    Leslie Carlson .... low-income people who are already disproportionately bearing the burden of global warming without much help from anyone. You only need to look at the victims of Katrina--the poorest of New Orleans' poor who lived in the lowest elevations of the city--to see what happens when we aren't prepared or willing to help. JK: I hope you aren’t trying to link hurricanes to climate change? It is pure speculation. For instance, if warming causes hurricanes, where were they this last season? (ZERO hurricanes made landfall this past season.)

    Thanks JK

  • K (unverified)
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    Thanks Kari, I hadn't seen anything about it yet.

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    Jimmy Carter proposed an oil tax that would have been offset by an income tax rebate - not a %age tax cut, that favors the wealthy, but a capped rebate. You could do the same thing with Social Security taxes, I guess. Polls indicate, though, that people are more receptive to regulations than taxes. Mandating 50 miles per gallon would probably make cars more expensive, at least for a while, but it's not a "tax." With any tax you run into general distrust of government -- "what are they going to spend it on?" -- so you'd want to dedicate it to something energy-related,I think, if you do it. I suspect that "tax carbon to force ourselves to use it less" is a bit too abstract as a message.

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    We should generally be working to create the right policies in themselves, and figure out equity as a separate issue. There's no reason to build in progessiveness into every separate policy -- it creates deadweight loss and excessive bureaucracy.

    And most everyone in the science community agrees we're causing global warming, and that the poorest people will be hardest hit across the world. Katrina may or may not be an example (scientific uncertainty does not mean pure speculation), but collectively, global warming is screwing the poor.

  • Doug Allen (unverified)
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    One problem with an Oregon carbon tax is that Article IX, section 3a of the Oregon Constitution requires the proceeds of any such tax that is applied to motor vehicle fuel, or to the precursors to motor vehicle fuel, or to the emissions of motor vehicles, or to miles driven by motor vehicles, be spent on construction, maintenance, and operation of (more) highways.

    Although this doesn't totally invalidate the concept, changing the constitution, or exempting motor vehicles from the tax, are not appealing choices. Clearly the Federal level is best, if it can be done there.

  • Jonathan (unverified)
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    Jim Karlock wrote: "I hope you aren’t trying to link hurricanes to climate change? It is pure speculation. For instance, if warming causes hurricanes, where were they this last season? (ZERO hurricanes made landfall this past season.)"

    The science seems pretty strong that global warming will have negative effects, like Katrina, regardless of whether Katrina was "caused" by global warming. But just like Katrina doesn't prove global warming causes hurricanes, so too, the absence of hurricanes that hit land one season doesn't prove that global warming doesn't cause hurricanes. By analogy to an issue on which I believe there is now unanimity of belief about causality, when a smoker died from lung cancer, it didn't prove causation, any more than a smoker not dying proved the opposite. This is about trends and the big picture, and anecdotes will always be only anecdotes (not scientific proof). We've got plenty of scientific proof that global warming is caused or contributed to by our burning of fossil fuel.

    On the bigger point, even the Bush administration has given up on trying to say global warming doesn't exist. And when the President of Shell Oil spoke at City Club a month (or so) ago, he said that they took it as a given that burning fossil fuels has contributed to global warming (that's my recollection ... I didn't write down his exact language). Waiting to do something about it until it's more of an emergency, or until the "new" technology is available to poorer people, will hurt those who have less money. Something (lots of things) need to be done now.

    Finally, why is this really even controversial? We have gas taxes to pay for roads (and other things). Why not a carbon tax to pay for other things, particularly where it might diminish the negative effects of that carbon burning. To that end, I'm not sure why Leslie's post ends in a question mark.

  • peter (unverified)
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    i don't see any mention of emmissions in that section of the constitution:

    Section 3a. Use of revenue from taxes on motor vehicle use and fuel ... revenue from the following shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state:

    (a) Any tax levied on, with respect to, or measured by the storage, withdrawal, use, sale, distribution, importation or receipt of motor vehicle fuel or any other product used for the propulsion of motor vehicles; and

    (b) Any tax or excise levied on the ownership, operation or use of motor vehicles.

    the only term in the law that could be seen as applying to emmissions, imho, is the "use ... of motor vehicle fuel", but that is questionable; you could (theoretically) use the fuel, capture the emmissions, and be exempt from the carbon tax, though this would make administration of the law more difficult.

  • Tom Civiletti (unverified)
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    Evan,

    It's true that glaobal warming hurts the world's poor most. I don't think that's good reason to make America's poor pay for our response to global warming. Built-in progressivity may be complex, but in practice, if it's not built-in, in won't happen. Surveys of who pays taxes and government fees bear this out.

  • Doug Allen (unverified)
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    Peter, virtually all the carbon emitted by a motor vehicle is derived from the fuel. If you tax the emitted carbon, you are effectively taxing the fuel. The Oregon Constitution may be stupid in this respect, but you can't avoid it by reference to some hypothetical scheme to capture the carbon.

  • peter (unverified)
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    doug,

    well, that is a legal question--whether "effectively" is the same as "actually" in this case--and one i imagine would probably be challenged in court.

    now a carbon trading scheme, on the other hand, is not a tax at all. a carbon emission permit is a form of property, defining a new type of ownership (basically, shares in the earth's capacity as a carbon sink). i don't see how the constitution would prohibit a new type of property that happens to affect the price of gas, so perhaps this is the direction the legislature will have to go.

  • Adron (unverified)
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    "Looks like a good way to get low income people off of the roads, so that I can drive on less congested roads.

    It might even drive up the price of heating their homes so much that they will have sell out and to move out of Portland.

    Serously, why do so many progressive schemes end up screwing the poor? Have you guys no heart?"

    Dude, seriously. The Democrats where also the party that was pro-slavery (check the voting records) but nobody seems to notice anymore. A party's history only lasts about as long as the elections. The Democrats aren't pro-poor people, nor are the Republicans, nor are the Libertarians. Except that the most well proven method for enabling more people to live above the poverty line is the free-market approach, because it makes the have-notes such a small minority of people... but I digress, everyone will probably attack me for being pro free-market. Kinda like that Clinton guy the Dems theoretically supported but acted more like a Republican/Libertarian/EU Member when it came to market & economy issues.

    ...as for "Reducing income taxes and replacing them with carbon taxes could achieve broad voter support." hell yeah!!!! Bring it on. Anything I can legitimately do to stop being raped every year at tax time the better. If ya wanna stick a carbon tax on me I'll start walking!!!! (Not that I don't do that a lot anyway, but I'd make a point to point that out come tax time if it where the case).

    :)

    The best way still to control the main contributor of carbon pollution is to free the transportation markets and let companies compete and people actually PAY THE PRICES of what they incur. Just imagine if people paid full road costs at time of usage! For many that would more than double or triple what they pay to use the roads at the costs of the other half of society?

    I thought Al Gore had already addessed this. Rather than impose new taxes, he proposes to simply alter the ones we have. A dollar for dollar reduction in employment taxes would not only make this palatable for the American people, it'd help the economy as well.

    Wow, how come he (and others) say smart stuff like that more often?

  • Adron (unverified)
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    "Surveys of who pays taxes and government fees bear this out."

    Yeah, that 10% that pays 30+% of the taxes or the fact that the upper 50% of income earners pay 93+% of taxes. Wow... just think how many more people WOULDN'T drive around randomly if they paid for their fair share? Think how much more money would be in the economy if the most financially productive of peoples weren't zapped 40%+ of their net wealth and where able to make market decisions on the services (the rare few) that they receive for that 40%+. Imagine being able to make a decision between the $1.15 per mile costs of owning and operating a Toyota Camry (including infrastructure) vs. the $1.05 cost of riding the MAX (pending they had used right of way instead of digging a billion dollar tunnel). Think of the idea that transit would probably be light years advanced, with private corporations pushing forward with things like PRT to get around with instead of sumbling along with things like "busses" with their noisy and often times polluting nature of deisal.

    ...nice thoughts. Just imagine having those trillions of dollars go back into job creation instead of wars and silly interstate systems (that the private industry would have handled instead - at zero cost to non-users!!!). :o

  • lin qiao (unverified)
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    Per climate change and hurrianes (harkening back to Karlock's comment), the following is a brief item from Eos, Transactions of the American Geophysical Union, Vol. 88, No. 1, 2 January 2007.

    "Evidence exists both for and against an influence of anthropogenic climate change on any increased hurricane activity, and no conclusion can be drawn at this time as to whether or not a link exists, an international group of hurricane researchers concluded in a statement released on 4 December 2006.

    "More than 120 researchers from 34 countries met at the Sixth World Meteorological Organization International Workshop on Tropical Cyclones, which was held at the end of November in San José, Costa Rica. The workshop participants decided to develop the consensus statement because of increased attention to the subject due to several high-impact tropical cyclone events around the globe, such as the active 2004 and 2005 Atlantic hurricane seasons.

    "In addition, there have been conflicting reports on the topic in the scientific literature. Some articles have attributed increases in tropical cyclone intensity, numbers, and wind speeds to warmer sea surface temperatures while others have claimed that changes in data gathering methods and instrumentation are responsible. The participants concluded in their statement that variations in methods for monitoring tropical cyclones—such as improvements made over time in monitoring wind speed and differences in how tropical cyclones are monitored in various parts of the world—make it difficult to distinguish any trend accurately in the data. Multidecadal variability in tropical cyclone activity in some basins also can mask any trend, according to the statement. If climate continues to warm as expected, increases in peak wind speed and rainfall would be likely, they determined. However, it is not known at this time how numbers of tropical cyclone, storm tracks, or areas of impact could change.

    "The 'Summary Statement on Tropical Cyclones and Climate Change' as well as a longer statement are available at this site.

  • TR (unverified)
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    If there is a need for yet another tax in Oregon, it should and must be a tax that replaces a subsidy and/or freebee handed out by government. One example that immediately comes to mind is to directly tax bicyclists to pay for the bike lanes, and other infrastructure that bicyclists, and only bicyclists use. Oregon was built on a market based economy whereby consumers pay a fair value for the majority of services they use and receive, not a subsidized culture where the tax codes are used to create a socialistic government controlled society. The Oregon constitution embraces freedom of choice. Currently the majority of the tax dollars spent to support bicycling in Oregon are pilfered from the non-users of the bicycling infrastructure. This politically motivated raid on transportation funds to subsidize bicycling must end! Bicyclists who receive the most and direct benefit from bike lanes and other bicycle infrastructure are the only ones that have any obligation to pay for bike lanes and bicycle infrastructure. Bicyclists should welcome with open arms the idea of finally accepting some responsibility and paying their own way instead of just feeding off others.

  • Tom Civiletti (unverified)
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    Andron wrote:

    "Yeah, that 10% that pays 30+% of the taxes or the fact that the upper 50% of income earners pay 93+% of taxes."

    Not true, unfortunately, my friend.

    How They Move the Tax Burden off the Rich and onto Everyone Else

  • Bert (unverified)
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    Oregon was built on a market based economy whereby consumers pay a fair value for the majority of services they use and receive, not a subsidized culture where the tax codes are used to create a socialistic government controlled society.

    I am sure Native Americans find that statement rather droll. The railroad robber barons are also likely rolling in their graves in laughter.

    Please take a breather from your free market utopianism and consider history a bit more fully and accurately.

    Government management and investment in mixed economies has been pretty central to the growth that took place in all the successful industrialized countries. A lot of them did not attain success by strictly applying free market principles but rather came to evangelize about free markets only after they had acheived strategic advantages. (See the book "Kicking Away the Ladder" for more information)

    As for Oregon, you might consider:

    Federal forest management and timber supply Hydropower developed and managed by BPA Free and broadly accessible public education regardless of ability to pay. Shipbuilding for World War two. The GI bill. Parks Service Trails. Beaches as public rights of ways. State-run higher education Social security administration Internet economy (initially developed by the federal government)

    These coupled with group and invividual initiative in markets played a major role in shaping Oregon's economy.

  • LoneWolf (unverified)
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    Carbon Taxes will only be effective if they apply to excess, wasteful usage of energy. Part of the problem today is that we actually reward wasteful behavior. For example, many of the electric utilities reduce the cost per kilowatt after you have reached 300 kilowatts a month. This should be structured the other way where lower usage is rewarded and higher usage is taxed. If everyone was allocated a minimum number of energy units for basic necessities and then taxed for any usage over that amount, there would be incentive to use less energy. The amount of basic energy units allocated to an individual would be based on where they live, where they work, their health and age. This way an elderly person living in a cold region of the country would have enough energy credits to heat their home for the winter, while a younger person living in the south would have fewer energy credits.

  • jonesy (unverified)
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    Witness the article in the New York Times

    Would solar power work up here in the Northwest instead of sunny southern California.

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    According to Renewables Northwest, this region receives enough solar energy to meet its current annual needs. It seems sun, like wind and waves, remain an untapped resource for us.

  • jim karlock (unverified)
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    Of course, the other issue with solar is its cost - several times the cost of wind or coal or nuke.

    It is a non-starter until its price drops a lot. (unless you like to waste money - which the Gov. specializes in)

    Thanks JK

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    Boulder, Colorado has passed a carbon tax to fight global warming.

    read more.

    Let's get to it!

  • Daniel Ronan (unverified)
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    <h2>As far as solar power working in Oregon, there is no question that if state leaders were to push for the amount of funding needed to pursue the projects, we could not have sustainable energy on a large scale. Germany, the leader in solar energy, has less hours of sun on average per day than Oregon.</h2>

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