Note that everything I discussed above [about jerry's energy tax] cannot be analyzed with a computable general equilibrium model.We will use a contrained flow model and watch what Jerry does with his tax income from selling permits. Here is the law:
Q: Where does the auction money go?The taxes are passed around. So we will see how they are passed around. If the energy tax is effective, we expect the ratio of government 'passed around taxes' to total energy consumption to be stable. Passing around taxes is not likely to be any more energy efficient then any other activity.
A: The money goes into two buckets. Investor-owned utilities like PG&E and Southern California Edison auctioned their allowances under one program, and proceeds from theses ales must be used for the exclusive benefit of those utilities' ratepayers. The California Public Utilities Commission has proposed giving residential ratepayers a twice-a-year "climate dividend" worth about $30 and credits to small businesses; that proposal is expected to be voted on Dec. 20 at the CPUC. The second bucket includes proceeds from the industrial and transportation sectors. These will be deposited in a new special fund in the state treasury that will be used to further the state's clean energy goals. Legislation signed last September will require at least 25 percent of the proceeds benefit the state's most disadvantaged communities.
But I bet the opposite happens. I bet the folks who get the taxes will grow and size much faster than energy is taxed. So we are going to look at the volatility of taxes being spent, volatility in this case we interpret as energy inefficiency. People who want the new taxes, like energy inefficient light rail and high speed rail, will grow.
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