I will be speaking to you today to propose a different way to raise tax revenue to replace our declining severance tax. There are several ways this can be done, but I want to focus on just one today.
As you know, we are experiencing sharp reductions in our export of fossil resources for use as fuels. Climate change sentiment is forcing the reduction in use. Regardless of your opinion about anthropogenic caused climate change, almost every nation in the world has committed to reducing green house gas emissions over the next several years. This will require the rapid reduction in use of fossil fuels.
This does not bode well for the continued export of coal, oil and gas. Far better in my view is to develop technologies that add value to these fossil carbon and hydrocarbon materials and apply modest ad valorum or value added taxes to their increased value.
A good way to do this is to develop and create platforms that do not add green house gasses to the atmosphere while they supply safe, inexpensive, electricity and process heat for these developing technologies.
Such an energy platform exists in the form of the Liquid Fluoride Thorium Reactor(LFTR “lifter”), developed in the mid to late 1960s at Oakridge National Laboratory under the guidance of the lab’s director, Alvin Weinberg. Some development work is still required to make them a commercial reality: however, once developed and deployed they will be vastly superior to today’s solid fuel boiling water and pressurized water reactors in terms of safety, expense, and reduced volume of waste and radioactivity. They will be ideal for many reasons to power these new technologies.
As an example, I will show how the conversion of one metric ton (1000 kg) of coal might be converted to ethylene, a common industrial chemical. Ethylene brings about $600 per metric ton. By my assumptions and calculations, using a LFTR for hydrogen production, process heat and electric power generation, one metric ton of coal could yield about 800 kg of ethylene worth $475 dollars. If we were to remove the severance tax of five percent on $10 per ton coal and levy a production or value added tax of two percent on $475 worth of ethylene, that would increase the tax revenue to $9.50 on each ton of coal used as raw material. This is an overall increase of 550 percent.
We are not likely to mine coal for raw material at the rate we have for fuel, but that would just extend the life of the resource and the length of time that it would be used and taxed. I have provided a work paper to each of you that shows the assumptions and calculations used to come up with this example.
Under the right circumstances, we in Wyoming could participate in the engineering work required to implement LFTR on a commercial scale leading to their manufacture here in Wyoming. And, even if we don’t, we should be prepared to take advantage of LFTRs immediately on their availability.
In summary, lets take advantage of a superior nuclear technology, LFTR, to convert our abundance of carbon and hydrocarbon assets to high value products.