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]
I like that Obama looks positively upon the carbon tax idea. That he does not come out in favor of it is quite okay at this moment. Given that in this math-challenged day and age "tax" is a four-letter word, I would not expect him to propose a tax now. He has already had some trouble because of overly truth-based comments.
Remember the CARTER KISS MY GAS bumper stickers? What could be a deadlier "Third Rail" than a combination of TAX and raising gasoline prices at the pump? This is why we need the Carbon Tax Center, and say a Hail Mary for the Pigou Club, too.
Comment by David Collins — July 31, 2007 @ 4:58 pm
I agree with David. In order for leaders to promote a carbon tax we have to develop mass support to give them a mandate against entrenched interests. Don’t knock on your candidate’s door, knock on your neighbor’s.
Comment by socialscientist — August 1, 2007 @ 4:58 am
Obama, Clinton and McCain are all co-sponsors of the Lieberman-Warner cap ‘n trade bill which gives away most of the permits to the historic polluters. Clinton introduced an amendment to auction the permits– it got one vote. Hers.
One of the tricks for selling cap ‘n trade is to give away permits and to over-allocate them so the effect is not really a cap until later when they start to "retire" some of the permits, which drives prices up. California, tried a cap n’ trade system for smog emissions (RECLAIM) in the LA basin. The price went too high during their electricity crunch, so they just un-capped it and ultimately, price volatility has essentially killed the program. The EU’s carbon trading program is also plagued with price spikes (and has acheived no net reductions yet). And the northeastern states are still struggling to implement their Regional Greenhouse Gas Initiative. The initial allocation of permits is nothing short of a food fight and once the traders and permit holders have vested interests we’ll have to buy them out to switch to a carbon tax.
My nightmare is that Lieberman or some variation will pass– we’ll wait a decade or so to find that it didn’t reduce emissions, and we’ll seriously harm the economy in the process. A transparent revenue neutral tax could actually be an economic boon if it replaced other distortionary taxes like payroll taxes.
The politicians rarely do the right thing because it’s the right thing. They do it because of organized public pressure. Where’s the movement for a carbon tax? Why won’t ANY of the big environmental groups even talk about carbon taxes?
Friends of the Earth at least says "Fix or Ditch" Lieberman warner - they’d "fix" it by auctioning the permits. But that would be a big, sudden (and probably very unpopular) shift, even if permit prices were very low– because it would drive up fossil fuel prices very suddenly. A gradually-increasing carbon tax would be easier to phase in, would not result in price spikes and would avoid this backlash. It would also minimize the problem of enforcement– permits only are valuable if exceeding them has penalties. Lieberman-Warner can’t be fixed. Ditch it!
We need a movement for carbon taxes– and we’re being shut out by the environmental groups who view carbon taxes as a distraction from their pre-determined agenda of cap ‘n trade (or worse yet, regulations like CAFE standards). Without a citizens’ movement, expect Clinton, Obama and McCain to continue taking the path of least resistance, and another decade of accelerating GHG emissions from the US.
Nader is an ass for not working within the Democratic party and for running another counter-productive campaign. But he deserves credit for having the guts to utter the "T" word (as in Carbon Tax). The others won’t do it until we force the issue into the campaign.
Comment by James Handley — February 27, 2008 @ 3:23 pm
We shold have a poll of voters to see if a "revenue neutral carbon tax" is acceptable.
We shouldnever use the word "carbon Tax" without coupling it with " revenue neutral" and preferably naming the taxes that would be re duced or eliminated with the revenues froma carbon tax.
Comment by John Burton — June 16, 2008 @ 10:09 am
Yes, have a carbon tax and cap and trade and carbon sesquestion projects. Then the companies can get certified by DOE and get an IRS tax credit for thier carbon project.
Comment by Kathy — July 30, 2008 @ 4:47 pm