Comments on: Yes, Dingell is Beholden to Detroit, But He’s Right about Carbon Taxes

By: Carel

Carel — Fri, 07 Dec 2007 23:32:15 +0000

Sylvester, the best argument against Cap & Trade is to look at its track record. We’ve had the Kyoto protocol in place for almost a decade and its failure to deliver is blatantly obvious.
Refer to the article on this site that gives a good explanation of how Cap & Trade actually rewards the worst offenders. As the price of carbon credit will continue to increase, carbon allowances will become truly valuable comodities indeed.
A perfect example of the weakness of cap & trade happened here in the UK: A chemical factory that upgraded its facilities to reduce it’s energy consumtion well in advance of the Kyoto protocol had to close because it was unable to compete. This happened because the carbon allowance was based on their carbon emissions when Kyoto came into effect. As a result, the competitors who had massively inefficient factories received much larger carbon allowances. With relatively minor improvements, the competitors were able to supplement their income by selling surplus carbon credits & drive the good guys into liquidation.

By: Sylvester Johnson

Sylvester Johnson — Sat, 17 Nov 2007 20:27:00 +0000

Recently I spoke with a lobbyist for Greenpeace who was invested in cap-auction, without offsets.
I ran through all my arguments for a C tax*, including the likelihood that any cap-auction bill, regardless how restrictive upon introduction, while in committee would get compromised by grandfathering and offsets.
*Cap–Trade & Offsets
Raise $energy: tax effect
Costs disperse: regressive
Permit price volatile
Lobbying unfair, distraction
Offsets warm, source evades
–Bal trade, export jobs
+ Traders & brokers: SO2 limited
Euro little net reduction C–T
C Tax
Tool: price–demand for ff
Income tax cut: progressive
Upstream at sources
Tax rate set yearly, no roller coaster
Compete: tariff
Labor–intensive efficiencies
Stimulate economy

Unfortunately, the lobbyist continued to favor cap-auction, determined to monitor the committee process against inclusion of grandfathering and offsets.
What further points could I bring up to help sway the lobbyist toward C tax?
Best regards,
Sylvester
Sylvester Johnson
ContactSJ@mac.com
Non-profit website: www.climatehealth.net

By: Doc Barnett

Doc Barnett — Fri, 26 Oct 2007 14:40:59 +0000

C.K., my comment was meant to be a response Muskie’s, who said he is undecided about carbon taxes and also links back to a web site called "Auto Choice" that seems to be in defense of light trucks. Regarding that site, it’s probably true that SUV enthusiasts are starting to feel the heat and fear that their recreational vehicles will be banned. Perhaps such people could be persuaded to support a carbon tax on the argument that it ensures their "freedom of choice." That is, if they fully pay their own way no one cares too much what they drive, policy-wise. The SUV fad would end in a heartbeat, but those who really really love them could still exercise their freedom to throw (more of) their disposable income into large internal combustion chambers.

By: Charles Komanoff

Charles Komanoff — Wed, 17 Oct 2007 01:02:57 +0000

Muskie — I’m confused by your post. You say reasonable CAFE standards make some sense (I agree), but they won’t curb CO2 (disagree — of course they will). As for the marketplace deciding, sure, but the price signals need to be there. That’s why a carbon tax.

Doc B — Whose mind isn’t made up about carbon taxes? Mine sure is!

By: Ken Johnson

Ken Johnson — Tue, 16 Oct 2007 22:37:26 +0000

10/16/2007Comments on Rep. Dingell’s carbon tax proposal (http://www.house.gov/dingell/carbonTaxComment.shtml):(1) A carbon tax and cap-and-trade are not mutually exclusive options. A cap-and-trade system with a price floor would essentially convert to a tax if the trading price falls to the floor threshold. The excessive price erosion that occurred with the SO2 trading program could have been avoided by employing a price floor, which would have allowed regulators to maintain incentives for maximum feasible SO2 emission reduction, avoiding the need for the new Clean Air Interstate Rule. Similarly, extreme price volatility in the EU-ETS could have been avoided with a price floor.(2) Cap-and-trade policies have achieved much greater political success than carbon taxes because of their revenue neutrality. Carbon taxes are typically revenue-neutral only in a much weaker sense. A cap-and-trade system with 100% auctioning would be "revenue neutral" in the same sense if auction revenue is used in the same way as tax revenue; but cap-and-trade with free allocation is revenue-neutral within the regulated industry (i.e., the only regulation-induced costs to industry is that of emission technology; there is no additional taxation burden). A carbon tax can also be structured to be revenue-neutral in this stronger sense by refunding tax revenue in such a way that emission reduction becomes profitable. From the perspective of a regulated firm, a refunded tax would resemble emission trading, but without the price volatility and transaction costs of trading. In 1990 Sweden enacted such a system to regulate stationary-source NOx emissions, achieving 50% NOx reduction by 1995, (http://www.acidrain.org/pages/publications/acidnews/2000/AN2-00.pdf); and the same approach could be used with a carbon trading system employing auctioned allocation and a price floor. In the transportation sector, vehicle feebates represent another type of refunded emission tax.(3) The proposed mortgage interest deduction phase-out appears to be redundant, because large homes would already incur the cost of carbon taxes, and their greater emissions would result in a proportionately greater taxation burden. The deduction phase-out is tantamount to double taxation, and is antithetical to market-based regulatory approaches.Ken JohnsonRelated information sources:My proposals to the California Air Resources Board for the AB-32 Scoping Plan:http://www.arb.ca.gov/cc/scopingplan/submittals/other/other.htmhttp://www.arb.ca.gov/cc/scopingplan/submittals/transportation/transportation.htm"Attribute-Based Vehicle Feebates": http://ssrn.com/abstract=1014866Publications:http://www.sciencedirect.com/ (Search for keyword "feebate".)RMI Feebate Forum: http://www.rmi.org/sitepages/pid270.php

By: Doc Barnett

Doc Barnett — Fri, 12 Oct 2007 19:38:35 +0000

When you do make up your mind about the "carbon tax idea," I hope you come out for it. The issue is decided by the marketplace with or without higher gasoline/carbon taxes, but at current tax rates the decision the market has come to is completely the wrong one. (Those tax exemptions for light trucks haven’t helped, either.) Gas prices must be made higher to account for political and ecological externalities, much higher than the blip of the past few years that has slowed Hummer sales and allowed the Prius to escape being the no-selling joke it would have been a few years prior. Auto choice is fine, so long as the consequences of that choice are fully reflected in its costs.

By: Muskie

Muskie — Thu, 11 Oct 2007 22:26:20 +0000

Charles, I do some work with AAM, and I had the same reaction as you when I read Clive Crook’s column. On one hand, he makes a very good point about how ineffective CAFE standards are. They are laughably inefficient. But on the other hand, we also don’t share the disdain he has for them. Reasonable CAFE standards make some sense. As far as the carbon tax idea, I’m still undecided. Generally speaking, I think this issue should be decided by the marketplace. Toyota will reap the benefits of producing more fuel efficient cars; GM knows this and is adapting.But what I think is clear, and what I think you, Crook and I agree on is that trying to mandate CAFE standards will do nothing to curb CO2 or reduce driving.