We established the Carbon Tax Center in January 2007. As we look back on our first year, we are thrilled by what we’ve accomplished.
CTC has established a reputation as the go-to web site for objective, non-partisan information on carbon taxes, with hundreds of hits almost every day. We have participated in conferences and debates in New York, Washington and Boston, we have appeared on national television, and we’ve been featured in newspapers, magazines and blogs. Congressional staff, academics, students and interested citizens of all stripes and from many countries have all turned to our site to get up to speed on a topic that is going to become increasingly vital as Congress and a new President grapple with reducing greenhouse gas emissions and limiting the damage from climate change.
The good news is two-fold. One, CTC has established a very solid foundation. Two, there is widespread support for revenue-neutral carbon taxes across the political spectrum from economists, business leaders, pundits and other opinion leaders. Just take a look at our Supporters page.
But we are not naïve. We know that powerful polluters who use the atmosphere as a free dumping ground are not going to give up that entitlement without a struggle. We know that cap-and-trade has well-connected advocates, many of them with a strong economic self-interest to favor their second-best alternative over carbon taxes. We know that carbon tax opponents have tremendous financial resources they will exploit to maintain their advantages.
And we are mindful that the “T” word is unpopular with politicians. Fortunately, awareness is growing that “putting a price on carbon” is an essential element of any successful strategy to significantly reduce greenhouse gas emissions. While debate continues over the two basic ways to put a price on carbon, a carbon tax or cap-and-trade, we remain convinced that the advantages of carbon taxes are becoming increasingly clear.
A legislated price on carbon is unlikely before a new Congress and President take office, providing time for careful examination of the relative merits of a carbon tax and cap-and-trade. We intend to use the time to frame the choice between an equitable revenue-neutral carbon tax and cap-and-trade schemes that provide huge windfalls to polluting industries and the financial community. This will help voters and elected officials grasp the huge benefits of the prompt reductions in greenhouse gas emissions that will result from an easily implemented revenue-neutral carbon tax, compared to the excruciatingly slow reductions that would result from the endlessly tendentious process of implementing a cap-and-trade scheme.
CTC intends to play a central role in the ongoing debate. To do so, we need your generous financial support. As you make your end-of-year contributions, please think of the Carbon Tax Center and click our Donate Now button or click here for instructions on making a contribution.
Thanks and Happy New Year!
Photo: Peter Bowers / Flickr
Hernando Quevedo says
It is very good to try to reduce the effect that the carbon has over the earth. But, unfortunately, I beleive that it is little that ours, humans, can do for the earth, includding this iniciative of taxes for the carbon.
Fortunately, There is a God in the heaven that will renew our earth and He has the final solution.
Glory to our God.
I agree completely that a revenue-netrual tax is far superior to cap and trade. However, calling for a tax increase will be a tough haul. That is why I would have argured for calling your site something other than the word tax. My webster new college dictionary says a tax is "1. money that one must pay to support a government." Many, including myself, would wonder if all that tax would be returned to all equally. Would it end up as another revenue source for politicians. This is extremely important. If the message of returing equally to all taxpayer could be absolutely conviencing made, then you would have the lower income earners with you. You could get the high income people on board by letting them know their freedom to fly or use fossil fuel would not be impinged by mandates or any other restriction. If the poor would benifit from an assessment as you state in myth#1, than the wealthly must be paying for bringing renewable energy on line and need not feel guilty. You may find interest at greengenes.info
Aaron Naparstek of Streetsblog is a facist. He only publishes comments which aree with his point of view. If you have anything contrary to say, no matter how you say it, you will be deleted.
I have heard similar response to Glenn’s above, that there is little reason to believe that the Congress would be able to resist using CT revenues as additional money to waste in their usual ways. However, this concern must not be used as an argument against CT; rather, it must be integrated into the reasoning behind CT: that as long as the government is dependent on tax revenue, it is better that taxes be levied on damaging, destructive pollution than on productive work (wages). Any legislation that may be proposed *must* stipulate that for every dollar collected under a CT, a dollar must be rebated from wage revenues. This is a simple argument and must accompany any mention of CT. Eventually, the general public should come to appreciate the notion of taxing dirty energy (the consumption of which is voluntary) in exchange for a lower tax burden on their wages (the rates for which are fixed). This provides more flexibility in the tax burden people bear and therefore increases our personal freedom. It is an uphill battle to communicate these concepts to the lay public, no doubt, but is worth fighting the fight because CT makes so much sense!
CT Skeptic says
Like any smart businessman knows, always begin the job with the goal in mind.
Unfortunately, a carbon tax, by my understanding, is goal-less.
Carbon tax puts a PRICE on emissions but lacks a direct link to limiting the AMOUNT of emissions over TIME.
An economist could only hope that such a taxation mechanism may create an economy that aspires to become less carbon intensive but by ‘how much and by when’ remains impossible to predict.
That ‘how much and by when’ is what this whole ball game is about.
For example, say a US carbon tax doubles the price for gas, what would be achieved?
Well, your average European already pays about $6.50/gallon for gasoline and the end result has been a doubling in motor engine efficiency. That in itself appears to be a good outcome and a strong argument for carbon taxing, but as populations and economies grow, so too does the number of folks buying and driving cars with the NET amount of emissions still increasing over time. The result, the carbon tax increases engine efficiency but doesn’t limit CO2 emissions over time because of economic/population growth and so global warming continues.
The real goal lies in the severing of the linkages between economic prosperity and the consumption of fossil fuels.
The fatally ironic taxation and trading in the commodity we wish to eliminate keeps us beholden to the devil we know and shackled to an economic system incapable of the leap of faith/logic required for the creation of low carbon, high GDP, economies.
Oh, I forgot to mention – the ball game is, 450ppm atmospheric CO2eq (or a globally eco-harmonized output of about 1 ton of CO2eq per person per year for a future population of around 9 billion by the year 2070 in order to stop dangerous global warming).
Jonas Nycander says
Your discussion focuses on the national level: should the US introduce a carbon tax or a cap-and-trade system? I suggest broadening the perspective: should the international climate negotiations continue with their present emphasis on setting national quotas, coupled to a cap-and-trade system, or should they instead aim at imposing a carbon tax in all countries? The arguments in favour of carbon tax are even stronger on this level than on the national level.
First, focusing on taxation will make it easier to negotiate an effective treaty. Negotiations about quotas are about how to distribute a burden, and the quotas have a direct (but unpredictable) economic value. The logic of such negotiations is that every country is primarily interested in getting a large quota.
We only need to look at the disastrous European fishing policy to realize where this logic will lead us. The problem of over-fishing is incomparably simpler to solve than that of the greenhouse gas emissions, the scientific knowledge of what needs to be done is much more certain, and the European Union provides a stronger institutional framework than the climate negotiations. Yet too large fishing quotas are granted each year, and Europe is presently heading for a collapse of important fish stocks.
Negotiations about a carbon tax will have a different logic. Countries will have varying opinions about the appropriate minimum tax level, and would have to reach a compromise on this and on how quickly the tax level in different countries should converge. But the interests of different countries will not be as contradictory as when distributing quotas, and the economic consequences of a treaty are much more predictable. In fact, shifting taxation to energy would probably be advantageous in many countries, since energy taxes are easy to administer, and cause less economic distortion than most other taxes. At the very least, a compromise is certain to be an improvement compared to “business as usual”, which cannot be said about quotas.
Second, an effective cap-and-trade system will induce large flows of money across borders. In order to have a substantial effect on consumption, a carbon tax should probably correspond to a few per cent of GDP. (For example, Sweden’s energy taxes, including the carbon tax, presently amount to 2.3 per cent of GDP.) This is a moderate amount compared to the total tax revenue, or to the total domestic economy. However, similar amounts would be seen as huge if they were transferred between different countries as a result of a cap-and-trade system, particularly since they would depend on rather arbitrary quotas that were negotiated politically a decade earlier. A treaty with such consequences will collapse.
The choice between carbon tax and cap-and-trade in the US will be crucial for the international climate negotiations. If the US would advocate a carbon tax, Europe would not object, since energy taxes are already higher in Europe. China and India do not want binding quotas because of their rapidly growing economies. A carbon tax, on the other hand, does not punish growth, and should more easily be accepted by these countries. Thus, the US is in a key position to lead the world toward a climate treaty on carbon tax.
CT Skeptic says
Thank you for your response.
I am confused as to why you would use Sweden as a carbon tax model in your discussion.
Presently, Sweden with a population of 9 million, a GDP of 263 billion and a CO2 per capita of around 6 tons gets almost 60% of it’s energy from nuclear, hydro and combined renewable/waste methods.
Coal, oil and gas acount for less than 35% of their energy needs and has done so since the mid 80’s when research and investment in renewable/waste sector blossomed through government initiatives.
With respect, and in my quest to understand how a carbon tax will answer my “by how much and by when” question, I feel that using Sweden as a poster girl for a carbon tax only weakens the argument.
Jonas Nycander says
I’m not using Sweden as a model. But let’s compare the US and Western Europe. Because of taxation, the price of gasoline and diesel is at present about twice as high in Europe as in the US. Historically, the ratio was even higher, since the pre-tax price was lower.
As a result, the per capita consumption of gasoline and diesel combined is almost three times larger in the US than in Western Europe, 2135 litres as compared to around 800 litres (UK: 797, Germany: 743, France: 809; figures from 2003). This is not to say that Europe has done enough, but it shows that taxation works.