Russia’s Carbon Credits Could Sink Cap-and-Trade Permit Price (NYT)
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Did any group of incumbent politicians fare as badly in yesterday’s midterms as the Republican members of the Climate Solutions Caucus? That seems unlikely, given the staggering dimensions of the electoral debacle inflicted on them (all figures apply only to the Congressional group’s Republican members):
- 15 members lost their re-election bids (includes cliffhanger defeats of GOP incumbents Mia Love (UT-04) and Tom MacArthur (NJ-3)).
- That’s out of 35 members who were seeking re-election (another 7 stood down, 1 lost his GOP primary, and we exclude 2 members from U.S. territories).
- The loss rate for caucus members — 43 percent — wildly exceeds the roughly 10-15 percent loss rate for Republican House incumbents overall.*
- Caucus members accounted for around half of GOP incumbents’ House losses. (That total, still hard to pin down, appears to be around thirty.)
- With the 15 losses and 8 retirements, the 43-member Republican half of the caucus will dwindle in January to well under half, 20.
[* = Calculating the overall GOP incumbent loss rate isn’t simple, since it requires separating Republicans who stood down from those who ran and lost on Nov 6. District-specific results posted by the Cook Political Report by David Wasserman and Ally Flinn may help. Ditto, Ballotpedia.]
One of the defeated Congressmembers was caucus co-founder and spearhead Carlos Curbelo (FL-26), who was edged out by Democrat Debbie Mucarsel-Powell, a political newcomer.
Meanwhile, “No Democratic members of the climate caucus lost their reelection bids,” ThinkProgress reported, “although two Democratic members are retiring and one is running for a higher office.”
It is true that Republican caucus members on the whole were more vulnerable than other Republican incumbents, for two separate if complementary reasons. One, deep-red districts where climate concern is relatively low tend to be harder for Democrats to wrest from Republicans. Two, some Republicans whose electoral standing was shaky to begin with saw the caucus as a way to bolster their campaigns. For an effective price of zero, these members could signal their independence from Republican denialism and thus burnish their appeal to Democrats and so-called Independents.
These points aren’t new to readers of this blog. We first conveyed our skepticism of caucus sincerity in June, with a post, Another Carbon-Dividend Group. Will It Matter?, and followed that a month later with Last Chance to Believe In a Republican-Assisted Carbon Tax? As the midterms approached and GOP incumbents lashed themselves ever tighter to the White House denialist-in-chief, we let loose with the more cynical, “Climate Caucus” greenwashing in full force as midterms approach, in September.
In between, we gave caucus co-founder Curbelo his props with Unicorn or Harbinger? A Republican Carbon Tax Is Readied for Debut. We concluded by remarking that with Curbelo’s introduction in July of a carbon tax bill, a GOP first:
A “long national nightmare” of Republican silence and inaction on climate may be starting to end. Whether other G.O.P. lawmakers will stand with Curbelo remains to be seen. He is at least blazing a path, and for that he deserves our thanks.
Alas, Curbelo’s path was never more than a faint trail. The current Republican Party — which a year-and-a-half ago we labeled “a racket to restore patriarchy, extractionism and white supremacy” — wasn’t about to forsake Trump and the Koch Brothers and coal barons for a “unicorn” Republican Congressmember.
Whither the Climate Solutions Caucus, leaderless and downsized by half? (The disappearance of 22 caucus R’s means that 22 D’s will have to leave as well, to conform to its “Noah’s Ark” makeup whereby each Democrat requires a Republican counterpart, lest the caucus’s vaunted “bipartisan” brand be diluted.)
We expect the caucus will disappear. Not just because its membership is being cut in half but because its uselessness has been fully laid bare. In today’s tribal politics, national-level Republicans can’t evince climate concern except as a token gesture, if that. They certainly can’t act on it by, say, renouncing Trump’s renunciation of the Paris climate agreement, or calling for a national carbon tax or fee. Heresy of that sort guarantees being cast out of the party’s belly and into the political wilderness.
Shed a tear, then, for Carlos Curbelo, but only briefly. The Democratic takeover of the House is worth an eternity of Republican caucus members’ feints, signalings or even token bills. As CNN’s John Harwood tweeted today, the House vote “was an all-or-nothing binary — power or no power. [The] Dem[ocrat]s won power.”
One result: There will be fact-finding congressional hearings, on issues from Russia to climate. If we push hard enough, these will include examination of carbon taxing. Climate activists everywhere — in the U.S. and around the world — will be heartened and emboldened to demand and win real climate action, not lip service.
Carbon pricing is catching on around the world, but only at “a snail’s pace,” and carbon-pollution prices remain far too low to make much of a dent in emissions, says a new report from the Organization for Economic Cooperation and Development.
Effective Carbon Rates 2018: Pricing Carbon Emissions through Taxes and Emissions Trading reports that the “carbon pricing gap” — the amount that current carbon prices lag an admittedly low benchmark price — shrank from 83% in 2012 to an estimated 76.5% this year. The figures cover 42 countries with advanced economies and account for 80% of all carbon emissions.
A key pillar of globalism, the OECD grew out of the postwar Marshall Plan and is dominated by three dozen “developed” countries in North America and Europe but also includes Turkey, Chile and Japan. Its “effective carbon rate” is defined as the sum of revenues from three types of policies:
- taxes on specific fuels
- carbon taxes
- prices of tradeable emissions permits
The report compares that rate to the revenue that would be raised with economy-wide carbon prices at benchmark levels of 30 or 60 euros per metric ton (about $35/$70US at current exchange rates, or $32/$64 per “short” ton). The report didn’t count the impact of fossil fuel subsidies that lower market prices of carbon fuels, though these tend to be fairly low in the 42 countries studied.
For individual countries, the carbon pricing gap — the distance between actual pricing and the €30/tonne benchmark — ranges from 27% to 100% in 2015, the latest year for which complete individual-country data is available. The US, with a gap of 75%, ranked 31st among the 42 countries studied. Top rankings go to Switzerland (27%), Luxembourg (30%), and Norway (34%).
Russia, at the bottom of the list, has no carbon pricing at all. China ranks 39th, with a 90% shortfall from the €30/tonne benchmark, though the report notes that implementation of nationwide carbon-permit trading in China “could lead to a significant drop in the global carbon pricing gap, to 63% in the early 2020s.”
The report is upfront about its benchmark’s limitations. The World Bank–affiliated High Level Commission on Carbon Pricing warned last year that carbon prices must range from $40 to $80US per tonne by 2020 and $50-$100/tonne by 2030 to meet the emission targets of the Paris Climate Agreement. (And remember that those goals are almost universally regarded as too low.) Moreover, the 30 euro benchmark falls below even the bottom of the 2020 range. And advanced economies — which most of the countries studied are — should err toward the high end of that range, according to the Commission, to leave room for developing economies to reap at least some of the fruits of industrialization.
Applying a more realistic 60€/tonne benchmark (about $64US per short ton) casts the pricing shortfall into even sharper relief: under that benchmark the 2015 US gap would be 88%.
Perhaps surprisingly, the largest of the three contributors to OECD’s effective carbon rate is neither explicit carbon taxes nor tradeable carbon emssion permits, but taxes on specific fuels, especially in road transport. European countries, especially, began taxing gasoline and diesel fuel at high rates decades ago, not as a climate measure but to reduce car dependence in urban areas, to help rail and other public transit maintain market share, and to fund social programs. Years later, those taxation policies are now, properly, being recognized for their role in protecting climate as well.
Carbon taxing isn’t something you expect to see mentioned in What Happened, Hillary Clinton’s memoir about losing the 2016 election to Donald Trump. But deep in the book’s weeds we find a telling new window into how Clinton “blew the biggest slam dunk in the history of American politics” (as one political pro vented to New Yorker editor David Remnick; expletive deleted here).
Around p. 240* Clinton brings up carbon dividends — a form of carbon taxes — as the type of “bold, creative ideas” she says Democrats must offer Americans. She generously name-checks Peter Barnes, an avatar of carbon dividends, and points to Alaska’s “Permanent Fund” that annually divvies up North Slope oil royalties equally to all state households. Then she writes:
[S]ome Republican elder statesmen such as former U.S. Treasury Secretaries James Baker and Hank Paulson recently proposed a nationwide carbon dividend program that would tax fossil fuel use and refund all the money directly to every American … Under such a plan, working families with small carbon footprints could end up with a big boost in their incomes. [Bill and I] spent weeks working with our policy team to see if it could be viable enough to include in my campaign … Unfortunately, we couldn’t make the math work without imposing new costs on upper-middle-class families, which I had pledged not to do. (emphasis added)
Like so much with Clinton, this passage is strong on details and weak on vision.
Clinton is right that carbon dividend schemes will raise incomes of most working families. She is right that their gain will come at the expense of affluent families, whose carbon footprints are larger. Revenue distribution from a fixed revenue pie is, by its nature, zero-sum: what is disbursed to one class of recipients can’t be available to another.
Of course, any policy that transfers wealth from rich to poor is by definition income-progressive, which puts carbon dividends squarely in the Democratic Party tradition of Roosevelt, Truman and Johnson. Climate benefits aside, carbon dividends’ distributional benefits make the policy a natural for progressives, as we pointed out last week in our post, The climate solution that boosts income for over 60% of Americans — the ones who most need it.
But did Clinton’s policy team really “spend weeks” searching for the carbon-revenue equivalent of a perpetual motion machine — one that would diminish inequality without costing “affluent families” a dime? Doubtful. The impossibility would have been obvious in fifteen minutes, especially to her policy-smart husband. Besides, carbon dividends didn’t suddenly originate with James Baker et al.; they’ve been a staple of carbon tax advocacy for nearly a decade. Their distributional impacts are well-established.
What’s more likely, and as Clinton herself hints, is that her team spent weeks trying to find the messaging to sell carbon dividends to her upper-middle-class base. But that should have been easy as well; their message could have gone like this:
Carbon dividends are a policy we can put in place quickly to accelerate our country’s transition from climate-killing, health-killing fossil fuels, with no new administrative machinery, which the rest of the world can emulate. Those who are doing well will have to contribute more for the common good, but this is a way of making every American feel more connected to our country and to one another — part of something bigger than ourselves. (Bold section are Clinton’s own words, from the discussion of carbon dividends in her book; prior text is mine.)
Yes, Trump and his backers would have pilloried Clinton for backing a carbon tax. But she was being hounded anyway for a hundred other reasons, both real and ginned up. Why not take a stand? Indeed, why not take a page from Bernie Sanders’ primary campaign playbook? In his April 14, 2016 debate with Clinton, for example, Sen. Sanders unapologetically supported “a tax on carbon so that we can transit away from fossil fuel to energy efficiency and sustainable energy at the level and speed we need to do.”
Watching that debate, I imagined Americans who were tepid or worse on carbon taxing nonetheless admiring Sanders’ forthrightness. Some might even have been swept up with a new openness to the idea of carbon taxing.
To be clear, failure to back carbon taxing isn’t why Hillary Clinton lost last November. But her inability to stand for something bold like carbon dividends was indicative of her incapacity to transcend policy details and connect them to a larger vision. And that arguably cost her the election every bit as much as Comey, Russia and the other usual suspects.
* Page number from “What Happened” is approximate, as viewed on a Kindle. The conception and shape of this post benefited greatly from CTC supporter and blog contributor Rachael Sotos. Note that our original headline, “Hillary Clinton and the Missing Carbon Dividends,” has been changed.
State-level carbon taxes offer a path to the ultimate climate solution.
This post was first posted on the Huffington Post on April 26. It was co-authored with Yoram Bauman, the PhD economist who founded Carbon Washington and co-chaired the carbon tax initiative in that state last fall. Yoram was principal author of the new CTC report featured here.
The Carbon Tax Center is out with a new report timed to the surging climate movement. We surveyed all 50 U.S. states (and Washington, DC) to identify the ones with the most favorable conditions for enacting a statewide carbon tax. Joining the report is a toolkit to help advocates push for a carbon tax in their state.
Campaigns for state carbon taxes educate the public and advance the idea on the policy map. A carbon tax in one or more states will create facts on the ground that can appeal to the Left and Right alike and upend the climate stalemate.
The world’s leading climate experts agree that putting a price on carbon emissions is essential for slowing and eventually stopping global warming. The artificial marketplace advantage of unpriced carbon pollution has helped coal, oil and gas gain a stranglehold over our economic system and social structures. Charging these fuels for their climate damage is the fastest path to the clean energy future that we need to protect our cities, coasts and civilization from climate devastation.
Enacting a carbon tax in a single state can be a gateway toward the ultimate remedy: a national carbon tax. Look at Canada, where a successful carbon tax in British Columbia, that country’s third largest province, prompted Prime Minister Trudeau to commit the nation to carbon pricing starting next year.
None of the world’s five top emitters — China, United States, Russia, India, Japan — has a carbon tax covering even a province or state. Yet the grassroots movement to end the fossil fuel era has never been stronger, as evidenced by last weekend’s Marches for Science and the anticipated massive April 29 People’s Climate March.
Below are thumbnails of the eight states we determined have the best prospects for enacting carbon taxes. Our map shows another six states with carbon tax “potential” along with eleven more where only one barrier (e.g., an apparently legal impediment) stands in the way.
Residents of these states—indeed, residents of all states—must speak up, advocate, and demand that their lawmakers take action; in many states citizens can also act directly through ballot measures. Our report and toolkit explain where, why and how.
On the eve of China president Xi Jinping’s scheduled two-day visit with the U.S. president, we took a deep dive into data on China’s energy use and carbon emissions. With the help of Fordham University student (and CTC intern) Cristina Mendez, who drew on official Chinese government statistics along with outside sources including Carbon Brief, we find that China has essentially capped its carbon pollution emissions — far ahead of the 2030 date for capping CO2 to which China committed in the landmark 2014 agreement between President Xi and then-U.S. President Obama.
That agreement followed a year-long diplomatic offensive initiated by then-U.S. Secretary of State John Kerry, and effectively ended the “axis of denial” by which China and the United States, by far the world’s largest climate polluters, pointed to the other’s inaction to justify its own. The bilateral accord in turn paved the way for the December 2015 Paris climate agreement in which nearly 200 nations pledged to rein in their emissions of carbon dioxide and other climate-destroying greenhouse gases.
A naysayer could point out the divergence between U.S. and China carbon emissions since 2005 (a standard “baseline” year for comparisons over time). In that year, U.S. emissions of CO2 from burning coal, oil and gas were around 5,810 million metric tons (“tonnes”), just a shade below China’s estimated 6,160 million tonnes in the same year. Since then, U.S. emissions have fallen by around 800 million tonnes while CO2 from fossil fuel burning in China grew by over 3,000 million tonnes.
That’s a swing of nearly 4 billion tonnes between the changes in the two countries’ emissions, a huge difference that can’t be swept under the rug. Nonetheless, it is tempered by four key considerations.
1. China’s carbon emissions, though now nearly twice those of the United States, are well under half of U.S. emissions on a per capita basis. With almost 1.4 billion people, The population of China is more than four times the U.S. population of 325 million. U.S. per capita CO2 emissions, which we estimate at 15.4 metric tons last year, are nearly two-and-a-half times as great as China’s 6.4 tonnes per person.
2. A considerable part of China’s CO2 comes from electricity and direct fuel burning to manufacture goods exported to the United States. Those emissions far outstrip U.S. emissions to supply agricultural and other products to China.
3. Based on historical CO2 emissions — which determine the amount of atmospheric carbon pollution now trapping Earth’s heat, given the roughly hundred-year time scale for a carbon dioxide molecule to distintegrate — U.S. climate-damage responsibility is roughly double China’s, even without normalizing for population. (For that calculation we added the past dozen years of respective emissions to the World Resources Institute’s compilation of the world’s nations cumulative carbon emissions during 1900-2004.)
4. Most importantly, if we wish to look forward: The apparent capping of China’s CO2 emissions over the past three years marks a sea-change in that country’s previously inexorable rise in carbon pollution over the prior several decades. It was only in 1988 that China’s CO2 emissions from fossil fuels (along with cement manufacture, which is otherwise excluded from the data in this post) passed 2 billion metric tons, based on a terrific WRI times-series visualization. The implied annual growth rate to 2013, when the total (without cement) surpassed 9 billion, was greater than 6 percent per year. From 2005 to 2013, China’s compound average emissions increase rate was 5.3 percent. To bring emissions to a screeching halt since then, without war, famine or other cataclysm, is close to miraculous.
Two charts tell the story. The first, directly above, shows the overwhelming dominance of coal in China’s energy supply, but moderating since 2011 and falling since 2013. This is significant because coal is the most carbon-intensive fossil fuel, not to mention the most polluting in terms of “conventional” pollutants such as sulfur dioxide and fine particulates that kill several million Chinese people each year and sicken hundreds of millions more, as the New York Times has reported on multiple occasions. (See, for example, here, here and, perhaps most damningly, here.)
The second graph, below, highlights the changes in that supply over the past three years. Coal is down, while all other energy sources are up. In carbon terms (not shown in the graph), the combined increase in oil and gas use slightly more than offset the decline in coal burning, thus statistically creating a minuscule net estimated increase in CO2 of four-tenths of one percent from 2013 to 2016. Perhaps more importantly, energy output from carbon-free hydro-electric dams, non-hydro renewables (chiefly wind turbines and solar-photovoltaics) and nuclear power all increased, with their combined gain easily exceeding the net expansion in fossil fuel use.
The United States is not without its own climate triumph; as we pointed out in our recent “Good News” blog post and report, U.S. electricity-sector emissions (from power plants burning fossil fuels) fell 25 percent from 2005 to 2016 — a reduction equalling nearly four-fifths of the Clean Power Plan’s intended 32 percent drop in power-sector emissions from 2005 to 2030. (Note that our 25 percent figure is down slightly from the 27 percent reduction we reported in December, with preliminary 2016 data; both the post and report have been updated to reflect full-year emissions.)
But that’s electricity only — the “low-hanging fruit” for the U.S. and most other countries. U.S. emissions from transportation are up, as we’ll report shortly in a separate post. Far more worrisome, of course, is the Trump administration’s neanderthal assault not just on climate-related standards, regulations and research but on the very notion of energy efficiency and environmental stewardship.
The point of this data exercise is to underscore China’s historic achievement in flattening its carbon emissions. It may be premature to crown China as the new global leader in climate action, as some commentators have proposed lately. Let’s not forget that it was Germany’s pump-priming for renewable energy a decade or more ago that propelled the Chinese solar-PV industry down the cost curve. And lately the United Kingdom has been driving down carbon emissions at a remarkable rate.
But turning the corner on carbon emissions, as China apparently has done while providing material prosperity for well over a billion people, is no mean feat. The U.S. president will likely remain oblivious, but other Americans can acknowledge and celebrate China’s achievement.
Energy data for 2005-2015 are from BP, Statistical Review of World Energy, 2016, June 2016. We calculated 2016 energy data by applying year-on-year percentage changes in China Energy Portal, 2016 detailed electricity statistics, Jan. 20, 2017, and National Bureau of Statistics of China, Statistical Communiqué of People’s Republic Of China on the 2016 National Economic And Social Development, Feb. 28, 2017, Section XII. Resources, Environment and Work Safety, both accessed April 5, 2017. For coal, we applied the estimated 1.3% drop to 2016 in coal consumption stated in Jan Ivar Korsbakken & Glen Peters, A closer look at China’s stalled carbon emissions, March 1, 2017, posted to Carbon Brief, rather than the 4.7% drop asserted in NBS-China’s Statistical Communiqué. Emissions data are from BP Statistical Review (2005-2015), with 2016 calculated from the 0.3% rise to 2016 (excluding cement) estimated in Korsbakken & Peters.
Dozens of armed ultra-right ranchers seize a federal wildlife refuge in eastern Oregon and proclaim it “a base place for patriots from all over the country.” On the other side of the globe, Saudi Arabia goes on a rampage, subjecting neighboring Yemen to nightly bombing raids and then executing a revered Shi’ite leader named Nimr al-Nimr, prompting a furious reaction in Iran and bringing the Persian Gulf to the brink of war.
Given the immense distance separating such events, there couldn’t possibly be a connection between them — could there?
Actually, there is, and it starts with the conservative complaint about the infantilizing effects of welfare. This is the old right-wing argument that instead of making people richer, “free stuff” (to use Jeb Bush’s phrase) in the form of food stamps and aid to single mothers encourages a culture of dependency that discourages thrift and hard work and ultimately deprives recipients of the tools they need to get ahead. Rather than raising them up, government aid turns them into spoiled children who demand more and more and throw ever more violent tantrums when they don’t get it.
As George Will once said about riots in the French banlieues:
Welfare states are, paradoxically, both enervating and energizing — and infantilizing. They are enervating because they foster dependency; they are energizing because they aggravate an aggressive sense of entitlement; they are infantilizing because it is infantile to will an end without willing the means to that end, and people who desire welfare states increasingly desire relief from the rigors necessary to finance them.
Because the welfare state undermines the labor ethic, in other words, it undermines society in general, leaving the poor angrier and more impoverished than ever.
These are fighting words as far as liberals are concerned. But instead of rejecting them out of hand, when not turn them around and apply them to the real welfare chiselers, the ones truly raking in the big bucks?
Take the ranchers currently occupying the Malheur National Wildlife Refuge in southeastern Oregon. They claim a right to graze their cattle on federal lands free of charge and demand that the grasslands in question be “returned” to the states, even though the states never owned them in the first place. “It’s happening all across the United States,” explained protest leader Ammon Bundy. “We have the EPA taking properties away from American people … restricting whole industries, putting whole states and counties into economic depressions. We have a slew of other federal agencies that are doing the exact same thing and they’re doing it by controlling the land and the resources.”
But rather than removing such properties, the U.S. Bureau of Land Management has been renting them out for decades at well below the market rate — indeed, as much as 99.5 percent below according to a 1993 study. For the BLM as a whole, that amounts to an annual $11 billion giveaway, more than double what the feds provide via Temporary Assistance for Needy Families, the main welfare program for the poor. And where approximately two million families benefit from TANF funds each month, just three thousand ranchers have managed to corral half of all BLM subsidies.
This is welfare on a truly gigantic scale, yet Bundy and his followers want even more. And unless the feds give it to them, they’re going to seize government facilities at gunpoint and take it themselves.
Even greater infantilism is on display in Saudi Arabia, where the royal family claims exclusive control of a quarter of the world’s proven oil reserves. Saudi oil deposits are so extensive and so close to the surface that extraction costs are only a fraction of those in the U.S. The upshot is an income stream amounting to hundreds of billions of dollars a year in oil export, one that requires the House of Saud to do next to nothing in return.
By comparison, Ronald Reagan’s famous welfare queen, the one with “eighty names, thirty addresses, twelve Social Security cards [who] is collecting veteran’s benefits on four non-existing deceased husbands,” was a piker.
But there is bad news for the kingdom’s seven thousand or so princes. After peaking at $114 in July 2014, oil prices have plunged to less than $35 a barrel, a sickening 70 percent swoon that has left Saudi finances in tatters.
How have the Saudis responded? Exactly as George Will says French welfare recipients would respond to a massive cut in benefits, i.e. by blowing stuff up and taking out their anger on the world at large.
In March, with oil down to $60 a barrel, the Saudis vented their fury on Yemen, launching air attacks that have killed thousands of civilians and destroyed historic urban centers such as Sana’a and Saada to rubble. “Yemen after five months looks like Syria after five years,” declared Peter Maurer, head of the International Red Cross, following a mid-summer visit. With oil prices dipping another 25 percent, the kingdom followed up with a ground invasion in late August. Despite raking in trillions over the years, it pleaded poverty at the Paris climate talks in early December, claiming it could not afford to comply with mandates to present a comprehensive carbon mitigation plan.
“We developing countries don’t have the capacity to do this every five years,” a member of the Saudi delegation reportedly complained. “We are too poor. We have too many other priorities. It’s unacceptable.”
Mega-welfare in the form of lottery-level petro checks has thus left the House of Saud poorer and less self-reliant. But the ultimate tantrum came on January 2 when the kingdom ushered in the new year by executing 47 prisoners, including Nimr al-Nimr, a fiery Shi’ite preacher who had vigorously denounced the royal family’s arch-Sunni bigotry but nonetheless urged his followers to rely on “the roar of the word” rather than violence. When angry Shi’ites responded by storming the Saudi embassy in Teheran, the kingdom upped the ante by severing diplomatic relations and leaning on other Arab gulf states to do the same.
As The New York Times put it, “the Saudi government seemed willing to endure the potentially high political costs of the killings in order to deliver a warning to would-be militants, political dissidents and others that any challenge to the royal family’s rule would not be tolerated.” The more difficult its financial position, the more obdurate Saudi Arabia grows, turning its back on a growing chorus of criticism both domestic and foreign.
How would Saudi Arabia have responded if oil prices were still bouncing along in the $100 range? It is hard to imagine that they would have done the same. Despite talk about the Saudis cutting prices in order to punish Russia, Iran, and U.S. shale producers, it appears that the royal family has gotten caught in a downdraft of its own making and can’t figure a way out. As prices have plunged, the atmosphere in Riyadh has thus grown bleaker and bleaker. “The Saudis seem to be sort of in a retaliatory mood,” one Saudi watcher said regarding setbacks in Syria. A $100 billion budget-deficit, observed Rutgers professor Toby Craig Jones, “may soon force the kingdom to slash spending on social welfare programs, subsidized water, gasoline and jobs – the very social contract that informally binds ruler and ruled in Saudi Arabia.” As such ties fray, the position of the Saudi ruling family will grow more precarious rather than less.
If welfare weakens society as people like George Will maintain, then the lesson of Saudi Arabia is that super out-of-control welfare destroys it all the more decisively. The upshot is greater and greater instability, which, in the Middle East, translates into stepped-up terrorism and war.
Which brings us to carbon taxes.
The purpose of a carbon tax is to unwind a bloated welfare system that serves the interests of the oil companies, auto companies, and petro-sheikdoms rather than the poor. By internalizing the cost of climate change, it encourages society to accept responsibility for the carbon it injects into the atmosphere — not the most beleaguered segments, but society as a whole, which, in an age of galloping economic polarization, is increasingly of, by, and for the wealthy.
Tantrums thrown by the super-rich are wreaking havoc across much of the world. Conservatives have thus gotten it only half-right. It’s not welfare to those below that is leading to infantilization du monde, but the far greater welfare payments to those on top.
In theory, carbon offsets facilitate low-cost emissions reductions. In practice, they’ve done anything but.
Carbon “offsets,” a feature of most cap-and-trade systems, build on the sensible premise that emissions should be reduced wherever that can be done at the lowest cost. Offsets give CO2 emitters facing carbon caps a cost-minimizing choice: they can reduce their own (domestic) emissions through the usual means: investing in or incentivizing energy efficiency and use of lower-carbon fuels; or they can buy carbon offsets that pay for actions elsewhere — typically in less-developed countries — that reduce or avoid emissions, achieving the same net reduction.
Ideally, carbon offsets finance low-carbon energy projects (e.g., wind farms and solar arrays) or projects to reduce emissions from deforestation. Reflecting this duality, the United Nations Environment Programme administers two offset programs: the “Clean Development Mechanism” (CDM) and the “Reducing Emissions from Deforestation and Forest Degradation” (REDD) program.
The European Union’s “Emissions Trading System,” the world’s largest cap-and-trade system covering about 45% of greenhouse gas emissions from 31 countries, utilizes both CDM and REDD offsets. Similarly, California’s AB-32 cap-and-trade program, which started in 2013, includes offsets from five categories: U.S. Forest Projects, Livestock Projects, Ozone Depleting Substances Projects, Urban Forest Projects and Mine Methane Capture. Emitters can use offsets to meet up to 8% of their compliance obligations, but since California’s cap declines 2% per year, offsets could represent a large fraction of total emissions reductions under the cap for some time.
Why, and how, offsets have proven hard to evaluate and easy to game.
Offsets were a major feature of the Waxman-Markey cap-and-trade bill that passed the House in 2009 and of parallel Senate proposals in 2010. They were packaged into those bills as “cost control” measures to moderate energy price rises from steadily tightening the cap on CO2 emission permits. Offsets clearly appealed to both polluters and potential recipients of offset funding, in effect providing political “grease” to smooth passage. But in 2008, a year before Waxman-Markey came to a vote, close analysis suggested that many intended offset projects wouldn’t result in real emissions reductions. This raised concerns that a large supply of unverifiable offsets would overwhelm the emissions certainty claimed for cap-and-trade.
Later in 2008, the nonpartisan Government Accountability Office assessed the EU’s offset program under its Emissions Trading System. GAO found that over-allocation of allowances and offsets had resulted in “a price collapse.” As a result, Phase I of the ETS had “uncertain” effects on emissions in the capped countries while funding offsets of doubtful value, though GAO did hold out hope that reforms could make the system work.
The picture grew darker. GAO’s 2011 follow-up, “Options for Addressing Challenges to Carbon Offset Quality,” reported that in 2009, 81 million tons of offset credits — an estimated 59% of the ETS’s CDM offsets for that year — went to Chinese refrigerant factories to incinerate HFC-23, a chemical byproduct of refrigerant manufacturing whose per-pound greenhouse gas potency is 11,700 times that of CO2. According to GAO, the Chinese had constructed 19 new refrigerant manufacturing plants for the sole purpose of destroying the greenhouse gas byproduct in order to receive offset credits and the associated payments. According to estimates by Stanford professor Michael Wara, whereas installing equipment to capture and destroy HFC-23 at all of the facilities covered by the CDM would have cost just $100 million, these same projects were expected to generate $4.7 billion in CDM offset credits.
In 2011, EU officials finally acted to eliminate this perverse incentive, announcing plans to stop accepting offset credit for HFC-23. The Chinese government responded by threatening to vent HFC-23 straight to the atmosphere.
Similarly, in July 2015, the Stockholm Environmental Institute published a detailed analysis of offset projects to destroy HFC-23 and SF6 (sulfur hexaflouride) in Russia and the Ukraine. It concluded:
[A]ll projects abating HFC-23 and SF6 under the Kyoto Protocol’s Joint Implementation mechanism in Russia increased waste gas generation to unprecedented levels once they could generate credits from producing more waste gas. Our results suggest that perverse incentives can substantially undermine the environmental integrity of project-based mechanisms and that adequate regulatory oversight is crucial.
Poor information creates vast opportunities for manipulation.
While the HFC-23 sagas seem almost comical and are probably the most costly and egregious example of abuse of offsets, they illustrate a serious problem with practically all offsets — asymmetric information. Purveyors of offset projects know a good deal more about their “products” than do far-away “buyers.” And unlike the highly leveraged mortgages that were sliced and repackaged into intangible derivatives that helped crash global financial markets in 2008, offsets start out as intangibles.
GAO and other analysts of carbon offset markets group these information deficiencies into three categories: Additionality, Measurement, and Verification. They also raise concerns about the permanence of sequestration projects like forests that can later be burned as fuel, relinquishing the climate benefits that were bought with offset credits.
Additionality is the problem of answering a hypothetical question: what would have happened if offsets hadn’t funded this project? GAO identified many projects that got a boost from offsets, but with no clear sense as to whether they would have been built anyway without the added incentive of offset credits. Asking “What is the baseline” is inherently counterfactual, and thus untestable and unanswerable. It’s been a challenge for the UN and EU ETS to even write rules about how to review projects (which vary widely in concept, location, quality and cost), while the offset “industry” and large purveyors of offsets, particularly China, have clamored for ever more streamlined UN approvals.
A 2016 report prepared for the EU Directorate-General for Climate Action, How Additional is the Clean Development Mechanism, concluded that “the vast majority of ‘clean development’ projects [financed by carbon credits] likely fail to actually reduce emissions,” as Inside Climate News summarized in an April, 2017 story. “Given the inherent shortcomings of crediting mechanisms, we recommend focusing climate mitigation efforts on forms of carbon pricing that do not rely extensively on credits,” the report said.
Measurement is a complex accounting problem — how much CO2 was avoided by this project or process or by preserving this forest? GAO found that measurement is neither consistent nor transparent, even after a decade of effort by the UN.
Verification concerns who is checking on the projects’ completion, operation and maintenance. GAO reported that “Project developers and offset buyers may have few incentives to report information accurately or to investigate offset quality.” Everyone in the offset business – from project developers to offset sellers and buyers – wants offset values set as high as possible. GAO argues that strong, independent oversight is needed, but its report raises serious doubts about whether oversight can ever be sufficient, especially given its high administrative costs.
The 2011 GAO report confirmed critics’ fears that the global offset system places new hurdles in the path of energy-efficiency and other decarbonizing measures, in the form of perverse incentives under the CDM program:
[A]n offset program may create disincentives for policies that reduce emissions. For example, under an offset program that allows international projects, U.S. firms might pay for energy efficiency upgrades to coal-fired power plants in other nations. According to our previous work [GAO’s 2008 report on the EU ETS], this may create disincentives for these nations to implement their own energy efficiency standards or similar policies, since doing so would cut off the revenue stream created by the offset program.
For example, some wind and hydroelectric power projects established in China were reviewed and subsequently rejected by the CDM’s administrative board amid concerns that China intentionally lowered its wind power subsidies so that these projects would qualify for CDM funding. In addition, our review of the literature suggests that in some cases an offset program may unintentionally provide incentives for firms to maintain or increase emissions so that they may later generate offsets by decreasing them. This potential problem is illustrated by the CDM’s experience with industrial gas projects involving the waste gas HFC-23, a byproduct of refrigerant production. Because destroying HFC-23 can be worth several times the value of the refrigerant, plants may have had an incentive to increase or maintain production in order to earn offsets for destroying the resulting emissions.
Acknowledging that even the best oversight and management can’t assure high offset quality, GAO suggested limiting the fraction of CO2 reductions that offsets would be permitted to provide under national cap-and-trade programs:
[T]he emissions reduction program would ensure that only a fixed percentage of the emissions permits could be affected by any problems with offset quality. All existing emissions reduction programs we reviewed use this option. In the EU ETS, regulated entities are able to use CDM credits for 12 percent of their emissions cap, on average, through 2012. In contrast, a draft Senate bill [the “American Power Act”] would have allowed a greater number of offsets into the program—approximately 42 percent of the emissions cap during the first year of the program. These percentages are based on the total emissions cap, not the required emissions reduction. As a result, such limits could mean that regulated entities could use offsets for all of their required emissions reductions, assuming a sufficient supply of offsets was available.
In other words, offsets could have completely overwhelmed the Waxman-Markey bill’s cap (which only declined a few percentage points each year) for decades — precisely what Prof. Wara predicted just days before the bill passed the House in 2009.
Proponents of AB-32, California’s cap-trade-offset program, assure us that offsets won’t overwhelm its emissions cap. Yet the intrinsic problems of offset quality will require extensive and aggressive oversight.
Fraud and other crime
In cap-and-trade systems, a carbon allowance represents the right to emit a ton of CO2. Typically, allowances are auctioned or distributed to greenhouse gas emitters up to their cap levels. Thus, emitters will have surplus allowances to sell if they reduce emissions below their cap. Allowances function much like currency with attendant opportunities for fraud and manipulation. Offsets add another potential opportunity for mischief. To the extent that offsets fail to actually reduce emissions, they’re effectively a way to counterfeit money.
One of Friends of the Earth’s “Ten Ways to Game the Carbon Markets” (2011) was “carouselling,” in which carbon allowances are used to evade taxes. In 2013, Interpol issued a “Guide to Carbon Trading Crime” detailing real-world examples.
There’s no doubt that funding is needed for low-carbon energy and good forest practices in developing countries. Unfortunately, real-world experience indicates that offset markets are a questionable funding source. Offsets drive down allowance prices in carbon markets, resulting in weaker incentives for decarbonization, while uncertain offset quality undermines the certainty of emissions caps. A price floor, such as the $10/ton floor specified in California’s AB-32 program, can prevent a total collapse of allowance prices. Yet a simple, direct carbon tax offers an even clearer and more predictable price signals to CO2 emitters while creating far fewer opportunities for manipulation, fraud and crime.
Low oil prices and cheap gasoline bring a host of positives and negatives, as befits petroleum’s dual nature as a bestower of motion and light but also smog, traffic and climate change. This clash has bedeviled energy and climate policy for decades. Now we have a golden opportunity to resolve it.
Heading the good things is inexpensive oil’s boost to the economy. Cheap gas gives consumers more money to spend, and that means more jobs and better wages. Geopolitically, low oil prices are a scourge on several bad actors on the world stage, from Russia to Iran. And as drilling gets less profitable, thousands of fragile places might be left alone.
But when oil is cheap, the world gears up to use more of it, which accelerates climate change. For all we rightfully target coal, burning oil releases almost as much climate pollution. Boeing and Airbus are reportedly apprehensive that their latest fuel-efficient aircraft may go begging. And of course the faster oil usage rises, the more quickly the price rebounds, teeing up the next recession.
What’s needed is a way to safeguard the benefits of low oil prices while fending off the downsides. The trick to this feat, which should unite all sides of our fractured body politic, is to let consumers collect a tax on oil. Or rather, have government collect the tax at ports and wellheads and distribute the revenues to consumers each month, the same way Alaska distributes the revenues from its wildly popular tax on its oil flows.
Yes, we take Sarah Palin nationwide, taxing oil and disbursing the dollars — all of them — to U.S. households, the same “dividend” for each.
Because the tax dollars stay in circulation, the amount of money families have to spend doesn’t fall and the windfall to the economy persists. Most families of limited means will come out ahead because on average they spend fewer dollars on oil than they will receive in their monthly revenue check. Economic inequality eases a little, at no cost to economic activity.
Why have the tax at all, then? Answer: to simulate high fuel prices, preserving incentives to get more fuel-efficient. In this way, motorists will keep buying high-mileage cars and driving them somewhat less, manufacturers will build ever-more efficient vehicles and aircraft, and cities and counties will keep broadening their transit infrastructure. The same goes for freight movement ― goods produced nearby will be advantaged, boosting local agriculture and domestic jobs. [Read more…]
This page, featuring authors, writers and “pundits” (newspaper and magazine columnists, principally), is one of half-a-dozen compiling expressions of support for carbon taxes (or more targeted taxes, e.g., on gasoline) by notable individuals and organizations. To access other pages with different supporter categories, click on the Progress link on the navigation bar and move to the desired category.
New York Times columnists
Many of the Times’ regular editorial columnists have supported a carbon tax. (Former editorial columnist, John Tierney, has written in favor of a carbon tax, but he no longer appears on the op-ed page. Bob Herbert left the Times in March 2011 after nearly two decades as columnist.)
Writing about Obama’s tepid response to the BP oil disaster in the Gulf Coast, Herbert wrote on June 1, 2010:
[W]henever the well gets capped, what we really need is leadership that calls on the American public to begin coping in a serious and sustained way with an energy crisis that we’ve been warned about for decades. If the worst environmental disaster in the country’s history is not enough to bring about a reversal of our epic foolishness on the energy front, then nothing will.
The first thing we can do is conserve more. That’s the low-hanging fruit in any clean-energy strategy. It’s fast, cheap and easy. It’s something that all Americans, young and old, can be asked to participate in immediately. In that sense, it’s a way of combating the pervasive feelings of helplessness that have become so demoralizing and so destructive to our long-term interests…
We also need a carbon tax. The current crisis is the perfect opportunity for our political leaders to explain to the public why this is so important and what benefits would come from it. (Our Epic Foolishness, June 1, 2010, emphasis added).
“Raise taxes on carbon emissions,” urged The Times’ most right-leaning columnist, on Nov. 30, 2006 (Waiting To Be Wooed). Although Brooks favored using the tax revenues to make tax cuts on dividends and capital gains permanent, a stance at odds with CTC’s progressive-tax-shift position, he at least grasped the need to reflect climate-change costs in fuel prices.
In 2009, Brooks wrote:
A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs.(The Next Culture War, Sept. 29, 2009, emphasis added).
In a commentary on the 2012 State of the Union address, Brooks chided President Obama for ignoring the Peterson Foundation’s call to “tax fossil fuels to spur innovation,” among other recommendations. (Hope, But Not Much Change, Jan. 27, 2012).
In a critique of clean-tech subsidies during the 2012 presidential campaign, Brooks wrote:
Global warming is still real. Green technology is still important. Personally, I’d support a carbon tax to give it a boost. But he who lives by the subsidy dies by the subsidy. Government planners should not be betting on what technologies will develop fastest. They should certainly not be betting on individual companies.(A Sad Green Story, Oct. 18, 2012, emphasis added.)
The Times influential economist-columnist (and economics Nobel laureate) has, curiously, shied from carbon-tax advocacy. During the run-up to the Dec. 2009 Copenhagen COP-15 session, Krugman attacked climatologist and cap-and-trade opponent James Hansen for allegedly failing to grasp that a robust permit-based emissions-control system would lead to the rising carbon price Hansen advocated. (Krugman badly underestimated Hansen’s economics acumen, in our view, as can be seen by reading any of Hansen’s pronouncements gathered on the Scientists page of this Web site or by viewing Hansen’s presentation at the Nov. 2010 Wesleyan Univ. Pricing Carbon conference.) Nevertheless, in a July, 2011 post on his Conscience of a Liberal blog, Krugman came out swinging for putting a price on carbon emissions:
Opponents of a strong policy to curb greenhouse gases tend to be fervent believers in the magic of market economies. Yet somehow their faith goes away when it comes to environmental issues. If you seriously believe in markets, you should believe that given the right incentives — namely, putting a price on emissions, through either a tax or a tradable permit scheme — the economy will find lots of ways to emit less. You should definitely not believe, as anti-environmentalists claim, that the result would be economic disaster. (The Answer, My Friend, July 19, 2011)
His has been the most influential and persistent journalistic voice for breaking U.S. oil dependence by taxing gasoline and for addressing climate change with a carbon tax. His most recent column, The Market and Mother Nature, on Jan. 9, 2013, placed a carbon tax in the politically viable context of fiscal and tax reform:
A carbon tax would reinforce and make both strategies [deficit reduction and climate stabilization] easier. According to a September 2012 study by the Congressional Research Service, a small carbon tax of $20 per ton — escalating by 5.6 percent annually — could cut the projected 10-year deficit by roughly 50 percent (from $2.3 trillion down to $1.1 trillion).
Although a carbon tax needs to grow far faster than CRS’s hypothetical tax — which would take 13 years to double to just $40/ton — Friedman at least shows no signs of backing off his long-time carbon tax advocacy.
Friedman’s Sept. 14, 2011 column in this vein, Is It Weird Enough Yet?, was classic. Friedman set the table:
[H]ere is the Texas governor rejecting the science of climate change while his own state is on fire — after the worst droughts on record have propelled wildfires to devour an area the size of Connecticut. As a statement by the Texas Forest Service said last week: “No one on the face of this earth has ever fought fires in these extreme conditions.”
There is only one effective, sustainable way to produce “green jobs,” and that is with a fixed, durable, long-term price signal that raises the price of dirty fuels and thereby creates sustained consumer demand for, and sustained private sector investment in, renewables. Without a carbon tax or gasoline tax or cap-and-trade system that makes renewable energies competitive with dirty fuels, while they achieve scale and move down the cost curve, green jobs will remain a hobby.
We need revenue to balance the budget. We need sustainable clean-tech jobs. We need less dependence on Mideast oil. And we need to take steps to mitigate climate change — just in case Governor Perry is wrong. The easiest way to do all of this at once is with a gasoline tax or price on carbon. Would you rather cut Social Security and Medicare or pay a little more per gallon of gas and make the country stronger, safer and healthier? It still amazes me that our politicians have the courage to send our citizens to war but not to ask the public that question.
Similarly, but more succinctly, is this passage from Friedman’s Nov. 28, 2010 column, Got to Get This Right:
We need to raise gasoline and carbon taxes to discourage their use and drive the creation of a new clean energy industry, while we cut payroll and corporate taxes to encourage employment and domestic investment.
The same sentiments appeared most recently on Aug. 5, 2012, under virtually the same headline, Get It Right On Gas:
[W]e also need to get the economics right. We’ll need more tax revenue to reach a budget deal in January. Why not a carbon tax that raises enough money to help pay down the deficit and lower both personal income taxes and corporate taxes — and ensures that renewables remain competitive with natural gas?
Friedman was both more expansive and more eloquent in The Price Is Not Right (April 1, 2009):
[I]f I had my wish, the leaders of the world’s 20 top economies would commit themselves to a new standard of accounting — call it “Market to Mother Nature” accounting. Why? Because it’s now obvious that the reason we’re experiencing a simultaneous meltdown in the financial system and the climate system is because we have been mispricing risk in both arenas — producing a huge excess of both toxic assets and toxic air that now threatens the stability of the whole planet.
Just as A.I.G. sold insurance derivatives at prices that did not reflect the real costs and the real risks of massive defaults (for which we the taxpayers ended up paying the difference), oil companies, coal companies and electric utilities today are selling energy products at prices that do not reflect the real costs to the environment and real risks of disruptive climate change (so future taxpayers will end up paying the difference).
Whenever products are mispriced and do not reflect the real costs and risks associated with their usage, people go to excess. And that is exactly what happened in the financial marketplace and in the energy/environmental marketplace during the credit bubble.
And our biggest energy companies, utilities and auto companies became dependent on cheap hydrocarbons that spin off climate-changing greenhouse gases, and we clearly have not forced them, through a carbon tax, to price in the true risks and costs to society from these climate-changing fuels.
“Destructive creation” has wounded both the Market and Mother Nature. Smart regulation and carbon taxation can heal both.
Since the opponents of cap-and-trade are going to pillory it as a tax anyway, why not go for the real thing — a simple, transparent, economy-wide carbon tax?
Representative John B. Larson, chairman of the House Democratic Caucus, has circulated a draft bill that would impose “a per-unit tax on the carbon-dioxide content of fossil fuels, beginning at a rate of $15 per metric ton of CO2 and increasing by $10 each year.” The bill sets a goal, rather than a cap, on emissions at 80 percent below 2005 levels by 2050, and if the goal for the first five years is not met, the tax automatically increases by an additional $5 per metric ton. The bill implements a fee on carbon-intensive imports, as well, to press China to follow suit. Larson would use most of the income to reduce people’s payroll taxes: We tax your carbon sins and un-tax your payroll wins.
People get that — and simplicity matters. Americans will be willing to pay a tax for their children to be less threatened, breathe cleaner air and live in a more sustainable world with a stronger America. They are much less likely to support a firm in London trading offsets from an electric bill in Boston with a derivatives firm in New York in order to help fund an aluminum smelter in Beijing, which is what cap-and-trade is all about. People won’t support what they can’t explain.
We also count a dozen columns urging gasoline and/or carbon taxation in 2006 alone, including Who’s Afraid of a Gas Tax? (“Americans not only know that our oil addiction is really bad for us, but they would be willing to accept a gasoline tax if some leader would just frame the stakes for the country the right way,” March 1, 2006). Friedman subsequently broadened his call to “a gasoline or carbon tax”: And The Color of the Year Is … (“You have to make sure that green energy sources … can be delivered as cheaply as oil, gas and dirty coal. That will require a gasoline or carbon tax to keep the price of fossil fuels up so investors in green-tech will not get undercut while they drive innovation forward and prices down,” Dec. 22, 2006).
Friedman kept the pressure on in 2007, with The First Energy President (“It means asking Americans to do some hard things [including] accepting a gasoline or carbon tax,” Jan. 5), and (A Warning From the Garden, Jan. 19):
I don’t care whether it is a federal gasoline tax, carbon tax, B.T.U. tax or cap-and-trade system, power utilities, factories and car owners have to be required to pay the real and full cost to society of the carbon they put into the atmosphere. And higher costs for fossil fuels make more costly clean alternatives more competitive… And prices matter. They drive more and cleaner energy choices. So when the president unveils his energy proposals, if they don’t call for higher efficiency standards and higher prices for fossil fuels — take your socks off yourself. It’s going to get hot around here.
In a 9,000-word cover story in the Times Sunday Magazine in 2007, Friedman stated his preference for a carbon tax over a cap-and-trade system:
The market alone won’t work. Government’s job is to set high standards, let the market reach them and then raise the standards more. That’s how you get scale innovation at the China price. Government can do this by imposing steadily rising efficiency standards for buildings and appliances and by stipulating that utilities generate a certain amount of electricity from renewables — like wind or solar. Or it can impose steadily rising mileage standards for cars or a steadily tightening cap-and-trade system for the amount of CO2 any factory or power plant can emit. Or it can offer loan guarantees and fast-track licensing for anyone who wants to build a nuclear plant. Or — my preference and the simplest option — it can impose a carbon tax that will stimulate the market to move away from fuels that emit high levels of CO2 and invest in those that don’t. Ideally, it will do all of these things. But whichever options we choose, they will only work if they are transparent, simple and long-term — with zero fudging allowed and with regulatory oversight and stiff financial penalties for violators. The Power of Green, April 15, 2007
Friedman reiterated his desire for a carbon tax later in 2007, while criticizing the carbon offsets fad:
[W]hen you suggest a carbon tax or a higher gasoline tax — initiatives that would redirect resources and change habits at the scale actually needed to impact global warming — what is the first thing you hear in Congress? “Impossible — you can’t use the T-word.” A revolution without sacrifice where everyone is a winner? There’s no such thing. Live Bad, Go Green, July 8, 2007.
On May 21, 2008, Friedman opined:
It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.” Imbalances of Power.
Eight days later, on May 29, 2008, Friedman argued for a “price floor” to “guarantee people a high-price of gasoline – forever.” As Friedman stated:
The message going forward to every car buyer and carmaker would be this: The price of gasoline is never going back down. Therefore, if you buy a big gas guzzler today, you are locking yourself into perpetually high gasoline bills. You are buying a pig that will eat you out of house and home. At the same time, if you, a manufacturer, continue building fleets of nonhybrid gas guzzlers, you are condemning yourself, your employees and shareholders to oblivion. Truth or Consequences.
Friedman’s Dec. 7, 2008 column, The Real Generation X, contained possibly his most full-throated call yet for a carbon tax (emphases added):
It makes no sense to spend money on green infrastructure — or a bailout of Detroit aimed at stimulating production of more fuel-efficient cars — if it is not combined with a tax on carbon that would actually change consumer buying behavior.
Many people will tell Mr. Obama that taxing carbon or gasoline now is a “nonstarter.” Wrong. It is the only starter. It is the game-changer. If you want to know where postponing it has gotten us, visit Detroit. No carbon tax or increased gasoline tax meant that every time the price of gasoline went down to $1 or $2 a gallon, consumers went back to buying gas guzzlers. And Detroit just fed their addictions — so it never committed to a real energy-efficiency retooling of its fleet. R.I.P.
If Mr. Obama is going to oversee a successful infrastructure stimulus, then it has to include not only a tax on carbon — make it revenue-neutral and rebate it all by reducing payroll taxes — but also new standards that gradually require utilities and home builders in states that receive money to build dramatically more energy-efficient power plants, commercial buildings and homes. This, too, would create whole new industries.
Friedman followed that up on Dec. 28 with Win, Win, Win, Win, Win …:
I believe the second biggest decision Barack Obama has to make — the first is deciding the size of the stimulus — is whether to increase the federal gasoline tax or impose an economy-wide carbon tax. Best I can tell, the Obama team has no intention of doing either at this time… But I’ve wracked my brain trying to think of ways to retool America around clean-power technologies without a price signal — i.e., a tax — and there are no effective ones. (Toughening energy-effiency regulations alone won’t do it.) Without a higher gas tax or carbon tax, Obama will lack the leverage to drive critical pieces of his foreign and domestic agendas… The two most important rules about energy innovation are: 1) Price matters — when prices go up people change their habits. 2) You need a systemic approach.
His Hurricane Sandy cri de coeur, Will Climate Get Some Respect Now?, brilliantly connects the storm’s destructive ferocity to climate change, citing a warmer ocean, rising seas, more moist atmosphere, and the possibility that melting sea ice in the Arctic abetted the unusual atmospheric pattern that kept Sandy from moving back out to sea. His column concluded:
[W]e may need to invest in cleaner energy, impose a carbon tax or other curbs on greenhouse gases, and, above all, rethink how we can reduce the toll of a changing climate. (Oct. 31, 2012)
Here’s a Kristof sampler from prior years: Extended Forecast: Bloodshed (April 12, 2008):
[T]he United States’ reluctance to confront climate change in a serious way — like a carbon tax to replace the payroll tax, coupled with global leadership on the issue – [is] as unjust as it is unfortunate.” In Search of Cheney’s ‘Virtue’ (“The best way to encourage [widespread implementation of energy efficiency] would be to impose a carbon tax, although a cap-and-trade system is a reasonable backup.” Aug. 20, 2007). Our Gas Guzzlers, Their Lives (“All this [climate-exacerbated drought and famine in Africa] makes it utterly reckless that we fail to institute a carbon tax or at least a cap-and-trade system for emissions.” June 28, 2007). Scandal Below the Surface (“We know what is needed: a carbon tax or cap-and-trade system, a post-Kyoto accord on emissions cutbacks, and major research on alternative energy sources,” Oct. 31, 2006). A Paradise Drowning (“We must encourage conservation and fuel efficiency, support alternative forms of energy like wind, solar and biofuels, and … adopt a carbon tax… Jan. 8, 2006).
When op-ed columnist Collins turned her attention to climate change, in early 2013, she zipped off some impressive lines:
There was a time … when the Republican Party was a hotbed of environmental worrywarts. The last big clean air act of the Bush I administration passed the House 401 to 21. But no more, no more. You’re not going to get any sympathy for controlling climate change from a group that doesn’t believe the climate is actually changing … It’s sort of ironic. These are the same folks who constantly seed their antideficit speeches with references to our poor, betrayed descendants. (“This is a burden our children and grandchildren will have to bear.”) Don’t you think the children and grandchildren would appreciate being allowed to hang onto the Arctic ice cap?
Collins acknowledged the Obama administration’s tightening of auto and appliance efficiency standards and then got down to business:
But a carbon tax/fee is the key to controlling climate change. That or just letting the next generation worry about whether the Jersey Shore is going to wind up lapping Trenton. (Cooling on Warming, March 27, 2013)
Burn, Baby, Burn (“The fairest and most efficient way to reduce greenhouse gas emissions would be with a carbon tax on all fossil fuels,” Feb. 7, 2006; similarly on April 23, 2006, in Cheer Up, Earth Day Is Over). In late 2006 Tierney relinquished his column to focus on science reporting. He featured CTC in his Jan. 24, 2007 blog.
NYT Economic Columnist David Leonhardt (“Economix”)
The simplest idea in economics, I think, is that people respond to the incentives they are given… So if we have decided that we need to use less oil for our own good — which seems to be the case — we need big incentives to change our behavior… A substantial gas tax would be the simplest, with other taxes being cut to keep down the overall burden. Buy A Hybrid, Save A Guzzler, Feb. 8, 2006.
[I]f you put the economic advisers, from both parties, in a room and told them to hammer out solutions to the country’s big economic problems, they would find a lot of common ground. They could agree that doctors and patients need better incentives to choose effective medical care. They would probably hit upon education policies along similar lines, requiring that schools be held more accountable for what their students are, and are not, learning. They might suggest a carbon tax — a favorite idea of [former Bush chief economist Greg] Mankiw — to deal with global warming. The Economists are Writing Our Future, April 18, 2007.
No wonder [with gas now at $4 a gallon] that Americans are changing their driving habits so quickly. With sales plummeting, General Motors said Tuesday that it would stop making pickup trucks and sport utility vehicles at four of its North American plants. The company is also considering selling its Hummer brand, an emblem of the megavehicle. Rick Wagoner, G.M.’s chairman, explained the moves by saying that he thought the shift toward more efficient cars was ‘by and large, permanent.’ The unyielding reality is that price matters, enormously. That’s all you need to know about the car market these days. Big Vehicles Stagger Under the Weight of $4 Gas, June 4, 2008.
Times Economic Columnist Daniel Akst (“On The Contrary”):
Let’s face it: nothing but drastically higher prices will deter most of us from consuming more carbon-based energy… Of course, it would be nice not to have to rely on cartels and circumstances to make us moderate our consumption. Hefty taxes on carbon-based energy … would be a much better approach. The Good News About Oil Prices Is The Bad News, Sept. 17, 2006.
Wall Street Journal columnists and contributors
Business Columnist Holman W. Jenkins Jr.:
… walking upright, with knuckles no longer in proximity to the ground, are advocates — mostly economists — of a carbon tax. A carbon tax would be the efficient way of encouraging businesses and consumers to make less carbon-intensive energy choices. Government would not have to exercise an improbable clairvoyance about which technologies will pay off in the future. There’d be less scope for Congress to favor some industries over others purely on the basis of lobbying clout. (Decoding Climate Politics, Jan. 24, 2007) Note: While Jenkins’ remarks should be taken with a heap of salt (he’s no climate advocate, to put it mildly), his praise for a carbon tax and vitriol toward the new enviro-corporate climate alliance are both striking.
Political Columnist Kimberly A. Strassel: (referring to corporate lobbying efforts for a cap-and-trade climate program):
What makes this lobby worse than the usual K-Street crowd is that it offers no upside. At least when Big Pharma self-interestedly asks for fewer regulations, the economy benefits. There’s nothing capitalist about lobbying for a program that foists its debilitating costs on taxpayers and consumers while redistributing the wealth to a few corporate players. (If The Cap Fits, Jan. 26, 2007, not available on the Web).
Op-Ed Contributor Nicole Gelinas, (Contributing Editor to City Journal):
At the end of the day, a strict cap-and-trade program would have the same effect as a carbon tax, one that’s high enough, eventually, to encourage switching to cleaner generation, but that’s gradually imposed over a decade so that companies have plenty of time to plan. Such a tax would make emissions more expensive; discourage carbon-intensive power generation; and it would allow the market to decide which environmentally more-friendly technologies would be competitive enough to take its place. A tax per ton of carbon would mean higher power prices, too, but without direct subsidies to developing nations by paying for their power-plant upgrades. Nor would a carbon tax create a new multibillion-dollar global commodity whose value would depend on political manipulation. The feds could use the revenues from such a levy to reduce other taxes—including dividend and capital-gains taxes further to spur the massive private investment needed to build the next generation of power generators—while ensuring that they’re also creating a political and regulatory climate to encourage such mass-scale construction. If it’s true that a global warming consensus really exists — and not just in press releases and speeches — politicians and business leaders wouldn’t be afraid to suggest such a tax. They would insist on it. A Carbon Tax Would Be Cleaner, Aug. 23, 2007
Washington Post columnists
E.J. Dionne (in 2011):
Obama should put forward a plan of his own to close the long-term deficit. He should not be hemmed in by his negotiations with congressional Republicans to get the debt ceiling raised. They don’t hold the nation’s credit hostage anymore. He should lay out exactly what he would do and abandon his practice of making preemptive concessions to his opponents. That means Obama should not be shy about urging eventual tax increases, particularly on the wealthy. And let’s be clear: These would not be immediate tax hikes; they’d kick in a year or two from now. Any plausible plan should include at least $2 trillion to $2.5 trillion in new revenue over a decade [largely from additional taxes on the wealthy and super-wealthy]. A carbon tax, partly offset by tax cuts or rebates for middle-income and poorer taxpayers, could provide additional revenue. (Obama: Go Big, Long and Global, Aug. 21, 2011)
Anne Applebaum (in 2007):
I no longer believe that a complicated carbon trading regime — in which industries trade emissions “credits” — would work within the United States … So much is at stake for so many industries that the legislative process to create it would be easily distorted by their various lobbies. Any lasting solutions will have to be extremely simple, and — because of the cost implicit in reducing the use and emissions of fossil fuels — will also have to benefit those countries that impose them in other ways. Fortunately, there is such a solution, one that is grippingly unoriginal, requires no special knowledge of economics and is easy for any country to implement. It’s called a carbon tax, and it should be applied across the board … (Global Warming’s Simple Remedy, Feb. 6, 2007)
Anne Applebaum again (in 2009):
American politicians who really care about climate change — I’m assuming this includes our president, as well as a majority in Congress — should skip the summits and instead ask themselves why the oil and gas prices that started rising a couple of years ago (creating a boom in alternative-energy research) have once again dropped to an artificial low. Why artificial? Because the price of fossil fuels has never reflected their true cost, either environmental or political. It doesn’t reflect the cost of the U.S. military presence in the Middle East. It doesn’t reflect the cost of treating asthma. And it certainly doesn’t reflect the cost of rescuing bits of the coast of Florida that will be submerged by rising sea levels. Raise the taxes on fossil fuels to reflect those costs, and [T. Boone] Pickens’s [wind farm] project, along with many others, will once again be viable.” (The Summit of Green Futility, July 14, 2009)
These days almost nobody asserts that global warming isn’t happening. Instead, we are confronted with a new lie: that we can respond to climate change without taxing and regulating carbon… We already have technologies to cut carbon… The problem is we don’t use them… What matters is not just the technologies we have but the incentives to deploy them. (A Dated Carbon Approach, July 10, 2006)
Automotive columnist Warren Brown:
Why is it now more politically feasible to send our sons and daughters, brothers and sisters, husband and wives to foreign soil to fight and die for oil than it is for us to place higher taxes on the stuff at home to help reduce our wanton use of it? It’s time to tell Congress that we’re not stupid, not hopelessly blind or irrevocably self-centered. It’s time to demand that Congress give us a real energy policy, one that addresses industry and consumers, one that demands we do what we’ve historically done in times of crises — work together, sacrifice together to solve the problem. Bring Consumers into the Energy Equation, July 1, 2007.
Unfortunately, instead of hiking the price [of gasoline] ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us — and pocket the money that the tax would have recycled back to the American worker. This is insanity. For 25 years and with utter futility (starting with “The Oil-Bust Panic,” the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. On this page in May 2004 (and again in November 2005, I called for “the government — through a tax — to establish a new floor for gasoline,” by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123. But instead of doing the obvious — tax the damn thing — we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates and now a crazy carbon cap-and-trade system the Senate is debating this week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer. At $4, Everybody Gets Rational, June 6, 2008.
Financial Times Columnist Clive Crook:
If ever there were a case for the maxim, get prices right, this is it. The way to curb carbon emissions is to add the environmental cost of carbon to the price of energy. The current oil price offers a good opportunity: when it falls (as it probably will) a carbon tax could be used to set a floor, making the transition to correctly priced energy much easier. Once the price of energy is right, other decisions become simpler, or can be left mainly to the market. There is no need to legislate fuel economy standards or subsidise conservation and low-carbon forms of energy; no need for an emissions trading regime, with all the waste and complexity and gaming that that entails (witness Europe’s experience); no need to scapegoat oil companies or environmentalists; no need to mislead or pander. For sure, the politics is a challenge – but not, I am willing to bet, as hard as conventional wisdom insists. Carbon is bad: tax it and use the money to cut other taxes. A new kind of politician could do something with that. Financial Times Online June 22, 2008.
Clive Crook (again in FT):
In the US, cap-and-trade was dead even before the midterm elections. The Obama administration plans to rely on regulation instead. [B]ut … this micro-regulatory approach will be costly. The bureaucratic overhead will be huge, as producers vie for waivers and other special treatment. Effort and resources will be misdirected… Where, then, should the government concentrate its efforts? No prizes for guessing the answer: introduce a carbon tax. … In the US, many dismiss this as a political impossibility. They are wrong. Whether the country likes it or not, with or without an effective climate change policy, Americans will eventually have to pay more in taxes. The state of the public finances decrees it. However you do the political calculations, this unpopular outcome is inevitable. Therefore, start measuring a carbon tax against the relevant alternatives. At worst, a moderate carbon tax would be no more indigestible than higher income taxes or other revenue-raising options. And, in every important way, it would be the best climate-change policy as well… Compared to EPA action, a carbon tax is simpler, more transparent, less susceptible to rent-seeking and more economical in bureaucratic overhead. It also provides an indicator around which future international co-operation could be organised and explained. After their break in Cancún, if the US and other governments want to get serious, this is where they should look.” Stop Talking and Start Taxing Carbon, Nov. 28, 2010. (emphasis added)
Clive Crook (now, late 2011, in Businessweek):
Quantity targets enforced by treaty don’t foster effective cooperation, they hinder it… to succeed, measures to curb emissions need to be sustained for decades… Binding emissions targets are too rigid… The best instrument for coordinating climate-change efforts is the price of carbon… For most countries, the simplest and clearest way to hit the price target would be with an outright carbon tax. The economic benefits are well known: By letting markets work, a tax achieves a given amount of emissions abatement at the lowest cost. The world needs to cap its greenhouse gas emissions, but there’s no obligation to do this in the most expensive, painful or disruptive way. Climate-change campaigners made a great mistake early on in opposing this approach — arguing, in effect, that sin should be prohibited not taxed, and that cuts of a certain size had to be assured. The cost of this inflexibility is now apparent: Insist on known and guaranteed cuts in emissions, and the wheels of international cooperation turn too slowly. So far, explicit carbon taxes have not been widely adopted (though where they have been, as in British Columbia, they have worked). It’s not only environmentalists who aren’t enthusiastic. In many countries, especially the U.S., conservatives are bitterly opposed as well. A carbon tax, after all, is a tax. Yet with many countries in a fiscal crisis, a carbon tax is more attractive than before. A carbon tax could lift some of the burden from spending cuts and increases in other taxes. As this sinks in, what was once politically impossible may soon be merely hard. Free Markets, Carbon Tax Best Way to Fight Climate Change: View, Bloomberg Businessweek, Dec. 12, 2011.
San Francisco Chronicle columnist Carolyn Lochhead:
One day, someone’s going to put two and two together and discover that East Bay Rep. Pete Stark’s carbon tax could address global warming and budget troubles at the same time. San Francisco pols are ahead of the curve, proposing a gas tax — a close cousin of the carbon tax — to fight global warming… In policy circles, a carbon tax is a no brainer, embraced by lefties like Stark and conservatives like former Bush economic advisor Gregory Mankiw. It’s a highly efficient way to reduce demand for fossil fuels and induce alternative energy supplies by using market forces. That’s also why it gags politicians: it incorporates the true cost of fossil fuel consumption in prices. Polluting consumers would pay too. Two Vultures, One Stone, Oct. 15, 2007.
Newark Star-Ledger Columnist Paul Mushine:
We need a new generation of clean energy that will enable us to be liberated from dangerous dependence on dictatorships, effective in worldwide competition and provide for a much cleaner and healthier future,” says [Gingrich’s] Web site. These “alternative, renewable energies” that Gingrich is promoting sound the same as the mystery oil Pelosi’s pushing. Like ethanol, these fuels can be manufactured only with huge government subsidies. And those subsidies represent an indirect tax on drivers If we’re going to tax drivers, we might as well do it directly. This is a point upon which most free-market economists agree. Unlike politicians, economists are not up for election, so they can tell the truth about cutting oil imports. And the truth is if you want to cut imports, tax the hell out of gas. The imposition of so-called “Pigovian taxes,” named after the late economist Ar thur Pigou, generates lots of revenue that can be used to reduce other taxes, such as the income tax, that are much worse for economic growth. And such taxes also reduce what Pigou termed “externalities,” the externalities in this case being air pollution, traffic jams and reliance on unstable exporters. On Energy, Dems are Daffy, Newt is Nuts, op-ed, Star-Ledger, August 7, 2007.
Chicago Tribune Editorial Board Member Steve Chapman:
The free market is the best system ever created for providing what we want at the lowest possible cost. The way to get affordable amelioration of climate change is to put the market to work finding solutions. To achieve that, we merely need to make energy prices reflect the potential harm done by greenhouse gases. How? With a carbon tax that assesses fuels according to how much they pollute. Coal, having the highest carbon content, would be taxed the most, followed by oil and natural gas. The higher prices for the most damaging fuels would encourage people and companies to use them less and more of other types of energy, including nuclear, solar, wind and biofuels. This approach also would affect all sources — not just cars, which account for only one-fifth of all U.S. carbon dioxide emissions. Saving the Earth Sensibly, Chicago Tribune, April 12, 2007.
Economists almost unanimously agree that if you want to cut greenhouse gas emissions by curbing gasoline consumption, the sensible way to do it is not by dictating the design of cars but by influencing the behavior of drivers. If you want less of something, such as pollution from cars, the surest way is to charge people more for it. A carbon tax or a higher gasoline tax would encourage every motorist, not just those with new vehicles, to burn less fuel—by taking the bus, carpooling, telecommuting, resorting to that free mode of transit known as walking, or buying a Prius. A Wrong Turn on Saving Fuel – Which Energy Efficiency Plans Hold Up to Scrutiny?, reason.com, July 23, 2007.
[T]he GOP doesn’t have to surrender its principles to confront environmental reality. There is plenty of room for disagreement, for instance, about how to combat global warming. The method most congenial to personal and economic freedom is a carbon tax. Instead of putting the government behind favored forms of energy, as the administration likes to do, it would create strong incentives for people to find their own ways to reduce emissions. It would achieve maximum benefits at minimum cost. It could be revenue-neutral, if the receipts were used to pay for other tax cuts. A carbon tax is hardly a liberal idea. Among its proponents are Gregory Mankiw, who headed the Council of Economic Advisers under President George W. Bush, and Douglas Holtz-Eakin, John McCain’s chief economist during his presidential campaign. But Republican politicians have no interest. During hard economic times, that approach may work. But at some point, voters will conclude that global warming and other environmental problems demand solutions. And Republicans will be left wondering why they didn’t come up with any. Republicans vs. the Environment, June 16, 2011.
Atlanta Journal-Constitution editorial-page editor Cynthia Tucker (writing in the Baltimore Sun):
The president should have told Americans years ago that the days of cheap gas were over. If the president had imposed a stiff tax on gasoline at the pump [after 9/11], American motorists would have grumbled, but we would have gotten over it. (Oiloholic Nation Has No Business Lecturing China, April 24, 2006)
Arizona Republic columnist Robert Robb:
Economists have long preferred a carbon tax to a cap-and-trade regimen. A small tax would likely have a large effect. Once the infrastructure for collecting the tax is in place, an increased rate is just a vote away. Even with a small tax, carbon emissions would become an unpredictable variable cost, creating a large incentive to reconfigure production processes to reduce or eliminate them …Politicians frequently ignore the preferences of economists, since economists usually prefer a reduced role for the preferences of politicians … However, if serious action is to be taken on global warming, someone in the political class needs to start paying attention to them. (Cool It on Global Warming, Feb. 7, 2007)
New York Observer Columnist Nicholas von Hoffman:
When they talk about conservation at all — which is almost never — [politicians] talk in terms of new tax deductions when they ought to be talking about imposing new taxes. How about a heavy energy-consumption tax on McMansions?… Similar kinds of taxes could be imposed on whole classes of machines that pour filth into the atmosphere and consume frightful amounts of fuel. (While Politicians Pander, Conservation Is Ignored, May 15, 2006)
Although CTC seeks to tax all carbon emissions, not just those from uses deemed excessive, we share with von Hoffman the view that taxing carbon is more important than subsidizing carbon alternatives.
Toronto Star columnist David Olive:
Carbon taxes are coming … The carbon tax [is] the single most powerful tool for encouraging conservation of the planet’s finite coal, oil and natural gas resources, and for diminishing the role of CO2 emissions in destroying the earth. Only Carbon Taxes Can Rekindle Conservation, March 9, 2007.
The New Republic
In theory, if the United States ever got serious about tackling climate change and put a price on carbon–through either a cap-and-trade system or a simple carbon tax–we could put an end to much of this anguished contrarianism. Shoppers concerned about melting icecaps wouldn’t have to scratch their heads and wonder how many food miles a tomato has traveled, or fret about whether a tightly packed ship full of produce from Chile emits more carbon than having everyone haul groceries in their SUVs from the local farm. The climate impact would be reflected in the price, and markets could work their magic. Simple enough.OK, so it wouldn’t be that simple. Carbon pricing and markets alone won’t, for instance, produce better public transportation. Nor will they put an end to the vast array of government policies that subsidize suburban sprawl–which include, among other things, easy financing for roads, tax deductions for large McMansions, and various zoning regulations that can prevent mixed-use living and disfavor walkable town centers. Nor, for that matter, will they get rid of the federal subsidies that prop up the nation’s agricultural system. (On the other hand, a carbon tax might convince voters that these policies should be altered.) Second-Guessing the Conventional Environmental Wisdom — It’s Not Easy Being Green, Bradford Plumer, assistant editor, The New Republic on-line, Aug. 27, 2007.
Blogger Megan McArdle (“Asymmetric Information”) used the “local food” quandary to discourse on the capacity of carbon taxes to provide honest information on the true carbon costs of consumer purchases:
How much carbon goes into the food we eat? Recently I’ve been beseiged by buy-local fanatics, claiming that if I eat Guatamalan raspberries, I’m killing the earth with the carbon needed to transport them… [T]his … cause[d] me to try to figure out how much energy the various options consume, and frankly, the answer is, I have no clue. There are so many second, third, and eighth order effects that my brain is spinning… Not only has no one done a good analysis of this subject; I don’t think anyone could… That’s why if we’re serious about cutting carbon dioxide emissions, we need a carbon tax, and not CAFE, or other sorts of piecemeal regulatory solutions. The Perils of Buy Local, Oct. 15.
McArdle’s column, including her invocation of free-enterprise philosopher Friedrich Hayek, is worth reading in full.
The Nation published a special issue Surviving the Climate Crisis: What Must Be Done on May 7, 2007. It included a strong editorial, Going Green, stating that in order to reach the “necessarily ambitious goal: 80 percent emission reduction in carbon emissions from their 1990 levels by 2050:
We’ll have to discourage emissions by putting a price on polluting gases like methane and carbon. The best way to do that is through taxation, which would be offset by tax breaks to soften the impact on poor and middle-class households and to encourage green job growth and investment. But such ideas face formidable resistance from a political establishment beholden to entrenched interests–the oil and coal industries–that stand to lose out. Those industries have sunk billions of dollars in investments that would depreciate in value if real carbon reduction targets were achieved. Thus, they fight tooth and nail with lies and canards to keep things as they are.
In the same issue of The Nation, financial journalist Doug Henwood wrote:
Given the risk that a climate catastrophe could hit soon and suddenly … we may not have time for mass movements to develop and force elites to do the right thing. They’ve got to get started now, or all could be doomed. But … there are problems with their favorite strategy: cap-and-trade schemes… Already an entire industry has grown up around the trading system — analysts and brokers and traders who hope to make money from the scheme but contribute not much of anything to saving the planet. Also, cap-and-trade permit prices are tremendously volatile, more so even than the stock market. Volatility makes long-term planning very difficult. A far better approach would be to tax carbon. A carbon tax would be simple — gasoline, coal and other fuels would be taxed based on their carbon content — and nearly impossible to evade. It could be introduced quickly, unlike the multiyear phase-in of the complicated EU cap-and-trade system. The tax rate could start low and then increase, to allow energy users to adjust. Unlike the market volatility of CO2 and SO2 permit prices, a carbon tax would be predictable, making it much easier for businesses and consumers to plan ahead. And as Charles Komanoff of the Carbon Tax Center argues, at least part of the proceeds of the tax could be rebated to poor and middle-income households through the income tax system, neutralizing any inequities.” Cooler Elites, May 7, 2007 issue.
Elizabeth Kolbert, The New Yorker magazine, author, “The Sixth Extinction”
In her article “Rough Forecasts,” (April 14, 2014) Elizabeth Kolbert used the global ban on CFCs to foreground her argument that it is time to stop “standing around and waiting” when dealing with climate change. Specifically, Kolbert argued for a carbon tax and explained:
Economists on both sides of the political spectrum agree that the most efficient way to reduce emissions is to impose a carbon tax. “If you want less of something, every economist will tell you to do the same thing: make it more expensive,” former Mayor Michael Bloomberg observed, in a speech announcing his support for such a tax.
Kolbert’s call for a carbon tax is particularly salient in the last paragraph of her article:
The fact that so much time has been wasted standing around means that the problem of climate change is now much more difficult to deal with than it was when it was first identified. But this only makes the imperative to act that much greater, because, as one set of grim predictions is being borne out, another, even worse set remains to be written.
In an earlier article, “Paying For It,” (December 10, 2012) published in the aftermath of Hurricane Sandy, Kolbert forcefully made the case for a carbon tax both as a way to create the incentives needed to reduce carbon pollution and as a substantial source of revenue, preferable to other kinds of taxes. She explained how the “polluter pays” principle applies to carbon taxes:
One way to think about global warming is as a vast, planet-wide Pigovian problem. In this case, the man pulls up to a gas pump. He sticks his BP or Sunoco card into the slot, fills up, and drives off. He’s got a full tank; the gas station and the oil company share in the profits. Meanwhile, the carbon that spills out of his tailpipe lingers in the atmosphere, trapping heat and contributing to higher sea levels. As the oceans rise, coastal roads erode, beachfront homes wash away, and, finally, major cities flood. Once again, it’s the public at large that gets left with the bill. The logical, which is to say the fair, way to address this situation would be to make the driver absorb the cost for his slice of the damage. This could be achieved by a new Pigovian tax, on carbon.
“Pigovian” refers to the legendary British economist Alfred Pigou who early in the 20th Century pioneered the study of “externalities,” with environmental pollution as his prime case.
Noting that “as Washington edges toward the fiscal cliff, it has become obvious to just about everyone, except maybe House Republicans, that Washington needs more revenue,” Kolbert pointed out recent research showing the fiscal benefits of carbon taxes:
The Congressional Research Service reported that, over the next decade, a relatively modest carbon tax could cut the projected federal deficit in half. Such a tax would be imposed not just on gasoline but on all fossil fuels—from the coal used to generate electricity to the diesel used to run tractors—so it would affect the price of nearly everything, including food and manufactured goods. To counter its regressive effects, the tax could be used as a substitute for other, even more regressive taxes, or, alternatively, some of the proceeds could be returned to low-income families as rebates (although, of course, this would cut down on the amount that could go toward deficit reduction).
But she lamented:
One key player who has not embraced the idea is Barack Obama. The White House spokesman, Jay Carney, was asked about the tax last month, en route, as it happens, to visit storm-ravaged areas of New York with the President. “We would never propose a carbon tax, and have no intention of proposing one,” Carney told reporters. This was taken by some to mean that Obama was opposed to the tax and by others to mean just that he was not going to be the one to suggest it. In either case, the White House is making a big mistake. Pigovian taxes are rarely politically popular—something they have in common with virtually all taxes. But, as Obama embarks on his second term, it’s time for him to take some risks. Several countries, including Australia and Sweden, already have a carbon tax. Were the United States to impose one, it would have global significance. It would show that Americans are ready to acknowledge, finally, that we are part of the problem. There is a price to be paid for living as we do, and everyone is going to get stuck with the bill.
Kolbert’s suggestion partially came true at the end of 2015, at the Paris climate conference, when President Obama took the “risk” (albeit in the latter part of his second term) and affirmed that he has “long believed that the most elegant way to drive innovation and to reduce carbon emissions is to put a price on it … This is a classic market failure.” (Obama’s quote may be found at the end of the linked post.)
Hendrik Hertzberg, The New Yorker magazine
The veteran commentator Hendrik Hertzberg wrote in the Feb. 13 & 20, 2006 issue:
The best way to encourage conservation — and the true sign of a serious energy policy — would be imposing a hefty gasoline tax and raising mandatory fuel-efficiency standards.
Hertzberg broadened this theme in the March 23, 2009 issue:
If the economic crisis necessitates a second stimulus—and it probably will—then a payroll-tax holiday deserves a look. But it’s only half a good idea. A whole good idea would be to make a payroll-tax holiday the first step in an orderly transition to scrapping the payroll tax altogether and replacing the lost revenue with a package of levies on things that, unlike jobs, we want less rather than more of—things like pollution, carbon emissions, oil imports, inefficient use of energy and natural resources, and excessive consumption. The net tax burden on the economy would be unchanged, but the shift in relative price signals would nudge investment from resource-intensive enterprises toward labor-intensive ones. This wouldn’t be just a tax adjustment. It would be an environmental program, an anti-global-warming program, a youth-employment (and anti-crime) program, and an energy program. (emphasis added)
Newsweek columnist Fareed Zakaria:
Both problems [clean energy’s insufficient funding and insufficient incentives] can be solved by the same simple idea—a tax on spewing carbon into the atmosphere. Once you tax carbon, you make it cheaper to produce clean energy. If burning coal and petrol in current ways becomes more expensive because of the damage they do to the environment, people will find ways to get energy out of alternative fuels or methods. Along the way, industrial societies will earn tax revenues that they can use, in part, to subsidize clean energy for the developing world. It is the only way to solve the problem at a global level, which is the only level at which the solution is meaningful. Congress is currently considering a variety of proposals that address this issue. Most are a smorgasbord of caps, credits and regulations. Instead of imposing a simple carbon tax that would send a clear signal to the markets, Congress wants to create a set of hidden taxes through a “cap and trade” system. The Europeans have adopted a similar system, which is unwieldy and prone to gaming and cheating. The Case for a Global Carbon Tax, April 16, 2007.
Newsweek columnist Robert J. Samuelson:
If we’re going to use price to try to stimulate those new technologies, let’s at least do it honestly. Most economists think that a straightforward tax on carbon would have the same incentive effects for alternative fuels and conservation as cap-and-trade without the rigidities and uncertainties of emission limits. A tax is more visible, understandable and democratic. If environmental groups still prefer an allowance system, let’s call it by its proper name: ‘cap and tax.’ Let’s Just Call It ‘Cap and Tax’, June 9, 2008.
Reason Magazine Science Editor Ronald Bailey:
The problem with air pollution—and global warming is a form of air pollution—is that I don’t see a good, easy way to privatize it. The transaction costs are too large. And if you can’t privatize it, you have to regulate it. So now the question is: What’s the least bad way to regulate? And that is why I’ve come out in favor of a carbon tax….For consumers, for inventors, for innovators, a tax offers price stability in a way that the cap-and-trade markets don’t. For example, in the sulfur dioxide market, sulfur permits have ranged in price from $50 a ton to over $1,000 a ton. And for sulfur dioxide, it’s a smaller market. A carbon market would encompass the world.” Reason.com July 2008
Katherine Ellison (The Mommy Brain):
What our kids need to know most is that adults are acting like grown-ups… If we want to show our kids we mean business about global warming, let’s start by ponying up for a carbon tax. Let our children watch us demand this from Washington with the courage and force of the civil rights movement. (Global Warming-era Parenthood, Los Angeles Times, Dec. 23, 2006)
There’s another way of saying what is missing here. Almost every idea that might bring us a better future would be made much easier if the cost of fossil fuel was higher—if there was some kind of a tax on carbon emissions that made the price of coal and oil and gas reflect its true environmental cost.” (How Close to Catastrophe?, New York Review of Books, Nov. 16, 2006.) McKibben, author of the classic The End of Nature and a supremely effective and engaged climate activist, has also advocated for carbon taxes in articles in Orion, Grist, Mother Jones and elsewhere.
Grist columnist David Roberts:
A carbon tax is a huge deal, a game-changer, and if it’s taking root, even tenuously, it needs to be nurtured. Is This the Right Time to Attack Dingell?, June 2007.
Note, though, that Roberts (who now writes for vox.com) for years has criticized the effort to enact a U.S. carbon tax as politically naive. Our 2012 exchange with him is particularly illuminating.
Former George W. Bush speechwriter David Frum: Writing in The Wall Street Journal on Nov. 9, 2006, Frum urged Bush to send Congress a carbon-tax bill. In his 2008 book, Comeback: Conservatism That Can Win Again, Frum pressed carbon-tax advocacy at greater length:
There is a simpler and better way to encourage consumers to conserve while denying income to producers: Tax those forms of energy that present political and environmental risks — and exempt those that do not. That tax will create an inbuilt price advantage for all the untaxed energy sources, which could then battle for market share on their competitive merits. What would such a tax look like? … It would look exactly like the carbon tax advocated by global-warming crusaders…You don’t have to believe that global warming is a problem to recognize that a carbon tax is the solution. Under the umbrella of a permanent disadvantage for fossil fuels, markets could figure out freely which substitutes made most sense. (p. 129)