Carbon Tax Center

Obama Extols Carbon Tax

07/31/2007 by Daniel Rosenblum

Obama Extols Carbon Tax (CTC)

Obama Extols Carbon Tax

07/31/2007 by Daniel Rosenblum

This Q&A is from an interview with Grist magazine, published July 30. While Obama’s positive words about a carbon tax are encouraging, shouldn’t his next step be to ditch the substitute and go for the real thing?

Q. Do you believe that we need a carbon tax in addition to a cap-and-trade program?

A. I believe that, depending on how it is designed, a carbon tax accomplishes much of the same thing that a cap-and-trade program accomplishes. The danger in a cap-and-trade system is that the permits to emit greenhouse gases are given away for free as opposed to priced at auction. One of the mistakes the Europeans made in setting up a cap-and-trade system was to give too many of those permits away. So as I roll out my proposals for a cap-and-trade system, I will price permits so that it has much of the same effect as a carbon tax. [Emphasis added]

Dingell Insists He’s For Carbon Tax (L.A. Times letter)

07/25/2007 by Daniel Rosenblum

Dingell Insists He’s for Carbon Tax: In a letter published in the July 23 Los Angeles Times, key House member John Dingell insists, "For months, I’ve been discussing a carbon emissions fee as one option for reducing carbon dioxide and other greenhouse gas emissions. While it may not be the most popular option, I agree with The Times that a carbon tax would be the most effective available option to fight global warming." Click here for complete letter.

Rep. Dingell Insists He’s for Carbon Tax

07/25/2007 by Daniel Rosenblum

From The Los Angeles Times, July 23, 2007

He means business with carbon tax

Re "Dingell’s roadblock," editorial, July 18:

Carbon Tax Offers a Practical Way to Limit Pollution from Fossil Fuels

07/22/2007 by Charles Komanoff

Carbon Tax Offers a Practical Way to Limit Pollution from Fossil Fuels
(Southwest Florida Herald Tribune, by Thomas Tryon)

The Cold Truth

07/22/2007 by Charles Komanoff

The Cold Truth (The Register-Guard – Editorial)

"The crisis presented by global warming demands a response that is simple, comprehensive and effective. A tax on carbon consumption is the only response in sight that both discourages the production of emissions that cause global warming, and finances the rapid transition to a post-carbon economy."

Keep Carbon Tax in the Mix of Solutions

07/14/2007 by Charles Komanoff

Keep Carbon Tax in the Mix of Solutions (Detroit Free Press – Editorial)

In a powerful endorsement of a carbon tax, the Detroit Free Press stated in a July 12, 2007 editorial:

A tax on carbon dioxide emissions, phased in gradually but relentlessly, would be the most transparent and efficient step this country could take in the search for energy independence and reductions in many emissions, including carbon dioxide. It would send a hugely important signal to the markets — for cars and for alternative energy sources such as windmills and solar collectors, in particular — that innovation and conservation are essential.

While some have characterized Congressman Dingell’s recent support of a carbon tax as a cynical ploy to undercut constructive efforts to reduce carbon dioxide emissions, the Detroit Free Press editorial states:

Dingell said by phone Wednesday that a gas tax would likely be phased in, and carbon tax revenue would be distributed among Medicare, Social Security and various conservation funds. "Truthfully, I believe this is the way to go, and I’m willing to lose some skin over it," he said. But he expects fierce opposition.

The editorial, reflecting automaker concerns about the impact on automakers of steps to reduce greenhouse gases, accurately notes that:

Consumers are going to pay for any measures taken to reduce greenhouse gases and shift away from dependence on foreign petroleum. But most politicians choose instead to hide the costs by placing expensive demands on automakers and by dispensing subsidies for alternative fuels, such as ethanol, that become a hidden tax burden. A cap-and-trade system for emissions also would have disguised costs.

Pay Carbon Costs Now to Save Later

07/9/2007 by Charles Komanoff

Pay Carbon Costs Now to Save Later (The Toronto Star – Editorial)

"And the message to government couldn’t be clearer. The sooner it acknowledges that we all must pay for the environmental damage we are doing by putting a price on carbon that leads to real reductions over the medium term, the better off we will be over the longer term in terms of both environmental and economic effects."

Counting on Failure, Energy Chairman Floats Carbon Tax

07/8/2007 by Charles Komanoff

Counting on Failure, Energy Chairman Floats Carbon Tax (NYT)

The New York Times reported Saturday that Rep. John Dingell, the powerful Chairman of the House Energy and Commerce Committee, "planned to propose a steep new ‘carbon tax’ that would raise the cost of burning oil, gas and coal, in a move that could shake up the political debate on global warming."

The Times reported:

Mr. Dingell, in an interview to be broadcast Sunday on C-Span, suggested that his goal was to show that Americans are not willing to face the real cost of reducing carbon dioxide emissions. His message appeared to be that Democratic leaders were setting unrealistic legislative goals. “I sincerely doubt that the American people will be willing to pay what this is really going to cost them," said Mr. Dingell, whose committee will be drafting a broad bill on climate change this fall.

The Times article makes no mention of a revenue-neutral carbon tax. A revenue-neutral carbon tax, such as CTC has proposed and which is supported by economists and opinion-leaders across the political spectrum, can protect vulnerable American households while instilling essential incentives for reducing U.S. emissions in time to prevent atmospheric concentrations of CO₂ from reaching an irreversible tipping point.

There is no longer any serious scientific question that CO₂ emissions must be reduced massively and quickly. Following a careful examination of the alternative approaches to reducing CO₂ emissions, probably taking at least another eighteen months, we are confident that the American people and Congress will recognize that the cost of reducing CO₂ emissions now is far less than the cost of suffering the costs of unmitigated CO₂ emissions later, and that putting a price on carbon emissions is an essential component of any plan to obtain the necessary reductions. Mr. Dingell underestimates the willingness of the American people "to pay what this is really going to cost them," particularly given the economic and national security benefits of a revenue-neutral carbon tax.

Carbon Tax Confusion

07/6/2007 by Daniel Rosenblum

Carbon taxes led the editorial page at two national papers this week, and both stressed the central imperative of raising fossil fuel prices to fight global warming.

"Putting a crimp on global warming can’t be done solely by promoting new energy technologies and voluntary conservation," said the Christian Science Monitor. "Consumers of oil and coal need a direct tax shock."

In the same vein, The New York Times asked that readers keep "one fundamental point in mind: we are now using the atmosphere as a free dumping ground for carbon emissions. Unless we — industry and consumers — are made to pay a significant price for doing so, we will never get anywhere."

We agree, and we applaud. Yet both papers stopped far short of full-throated endorsements of a national carbon tax. The Times editorial gave a clear nod to a carbon cap-and-trade system. The Monitor mostly bemoaned the hurdles to a carbon tax rather than push for overcoming them.

What gives?

How about faulty analysis (Monitor) and timidity plus wishful thinking (The Times)?

The Monitor’s editorial conflates a carbon tax with a gasoline tax:

A carbon tax would, of course, raise the price of gasoline and home heating/cooling.

No wonder that no presidential candidate endorses [a carbon tax], especially with gas prices hovering around $3 a gallon.

Hillary Clinton says a gas tax is "hardly politically palatable at this moment."

The last time Congress raised the gasoline tax was in 1993. In the Senate, Gore cast the deciding vote. At the next election in 1994, the GOP won big on Capitol Hill. Politicians took note.

Whew! That’s no small confusion. A carbon tax is not, repeat, not, a gasoline tax. Only a little more than one-fifth of U.S. carbon emissions come from gasoline (two-fifths are from making electricity). For every dollar raised from gasoline, a carbon tax would bring in four dollars from other petroleum products, natural gas and coal. (See CTC Slideshow, slide #23.)

This makes not just the impacts but also the politics of a carbon tax very different from those of a gasoline tax. A carbon tax can do a lot of good on  CO2 and climate without coming down on like a ton of bricks on the family car(s). Moreover, households that burn lots of gasoline — and feel they have little scope to cut back soon — don’t necessarily also guzzle coal-fired electricity. 

Unlike a gas tax, a carbon tax is multi-dimensional. CTC will try to help the Monitor internalize the difference. We’ll also work to correct their oversight of Sen. Chris Dodd, who has made a "corporate carbon tax" a centerpiece of his presidential campaign.

The Times’ bow to cap-and-trade, meanwhile, genuflects to the 1993 Clinton btu tax debacle:

Over a decade ago, the Clinton administration floated the sound idea of a tax on the carbon content of various fuels, like coal and oil. A tax on carbon, the main greenhouse gas, would cause energy prices to rise, thereby curbing consumption and providing a powerful incentive to invest in alternatives. The revenue from the tax could be used, in part, to subsidize the higher energy costs for low-income Americans. But the idea went nowhere, and new taxes remain a political nonstarter, at least for now.

Goodness, that was fourteen years ago! Must we remind The Times of the sea changes in climate science and politics (not to mention post-9/11 awareness of the costs of oil)?

Coincidentally, or not, the early 1990s was also the era in which the U.S. cap-and-trade system for sulfur emissions kicked in, establishing the precedent cited by The Times as well as the U.S. Climate Action Partnership. But as we’ve noted elsewhere, the market for cutting acid rain pollutants bears as much resemblance to a carbon market as did a French mud hut to the Palace of Versailles, seeing as how a carbon market will be two orders of magnitude larger than the market in sulfur emissions.

We at the Carbon Tax Center would love to be able to endorse a cap-and-trade for carbon, even as a respectable second-best approach. For that to happen, however, cap-and-trade would have to be a lot less opaque, regressive, long-lead-time, subject to manipulation, and volatile than we, and many others, expect.

The closer one looks at both, the clearer the choice of a carbon tax over cap-and-trade becomes. We invite both the Monitor and The Times to look closely at AEI’s cogent new paper and the LA Times’ magnificent Memorial Day editorial.

Courage, friends.

Photo: Big Daddy 72 / Flickr