Climate Fight Heads for New Round (WSJ)

Lower Natural-Gas Price Leaves Coal Out in Cold (WSJ)

Higher Forecast for Demand Pushes Up Oil Prices (NYT)

10-Fold Carbon Price Rise Needed by 2030, IEA Director Says (Financial Post)

The Carbon Tax Center applauds President Obama’s proposal to cap emissions, use market forces to reduce emissions, and return revenues through payroll tax credits. The proposal, as outlined this week, is a huge step forward from the Lieberman-Warner pork-barrel cap-and-trade fiasco last year and moves the discussion closer to the “gold standard” of a revenue-neutral carbon tax. We hope other carbon tax advocates join us in building upon the proposal; blanket opposition would be counter-productive to our common goal of reducing greenhouse gas emissions. 

How do we build upon the President’s initiative? We believe carbon tax advocates should:

• Agree with the need to cap emissions, but advocate implementing the cap through a cap-and-tax rather than a cap-and-trade program.  We need to recognize and endorse the political value of a "cap" and recommend that any carbon tax include specific emission reduction goals to be implemented through periodic adjustments to the carbon tax rate.  
• Agree with the concept of using market forces to reduce emissions, but continue to argue that carbon taxes are simpler, more transparent and efficient than trading.  Carbon taxes will provide a powerful price signal promoting more efficient use of energy and the substitution of renewable energy for high-carbon fossil fuels. 
• Agree with the general concept of returning revenues through payroll tax credits, but suggest improvements such as ensuring that lower-income families are adequately protected and returning all or a far larger percentage of the revenues through payroll tax reductions or dividends.
• Continue to stress the importance of imposing a tax, or obligation to obtain permits, upstream in order to reduce administrative complexity and ensure comprehensiveness.
• Recognize that a well-designed and implemented cap-and-auction program, one that is as close to a carbon tax as possible, is far better than nothing and would also be better than a poorly designed and implemented carbon tax. We should not hesitate to point out the superiority of carbon taxes, but not in ways that might aid those who want to delay effective action on climate change.

We support a well-designed carbon tax because it is the most efficient, equitable and certain means to reduce greenhouse gas emissions significantly— and soon. Our future demands that we advocate for nothing less.

Photo: Flickr / Annie Oakley.

Wild swings in market have some automakers looking to European tax model (MSNBC)

Breaking the Boom-Bust Oil Cycle (Gilbert Metcalf in The Vine / TNR)

Why the Death of S.U.V.’s? (Freakonomics blog)

Black Gold: It’s Time to Raise the Gas Tax (Michael Kinsley in Time magazine)

Just a couple of months ago, the newspapers were full of stories about people who had cut back on their driving because of high gasoline prices. Ever so briefly it looked like Americans were going to make lasting changes in their driving habits and car-buying choices. People didn’t like high gas prices, but it looked like good news for climate change.

Suddenly the economy collapsed, pump prices plummeted and this week the New York Times reported that As Gas Prices Go Down, Driving Goes Up. Will people start buying Hummers again? Not now, since consumer demand is down across the board. Will gas consumption return to earlier levels? Probably not soon, since gas usage is affected by income as well as price. Since the economic news just keeps getting worse with job losses announced every day, the income effect is likely to hold down gas consumption until we muddle through the recession.

What happens when the economy improves? Will people decide that high gas prices this past summer were just an aberration? Will they return to thinking that gas prices go up and then inevitably go down, so why invest money in more efficient vehicles and change their driving habits?

Should we defer putting a price on carbon until the economy improves? Not surprisingly, given where you’re reading this, the answer is absolutely not! Now is the time to take action so that consumption doesn’t spiral upwards when the economy eventually improves. Now is the time to, at a minimum, put a floor under the price of gasoline and other fossil fuels by beginning to phase in a carbon tax. Now is the time to make sure that an increasingly large portion of the price of gas is collected as carbon taxes to be returned to the American economy, instead of going to oil companies and oil producing countries.

Next week the country will finally be able to turn its attention from the election to governing. Let’s hope the new Administration and Congress take prompt action to address climate change by beginning to phase in a price on carbon as soon as possible.

Photo: DRosenblum