This page, featuring scientists and economists, is one of half-a-dozen pages 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.
Dr. James Hansen, Director, NASA Goddard Institute for Space Studies, the nation’s and perhaps the world’s pre-eminent climate scientist, has been a forceful advocate of a U.S. revenue-neutral carbon tax since at least 2006.
An effective fossil energy policy should include a tax on carbon emissions… Fuel taxes should encourage conservation, but with rebates to taxpayers so that the government revenue from the tax does not increase. The taxpayer can use his rebate to fill his gas-guzzler if he likes, but most people will eventually reduce their use of fuel in order to save money, and will spend the rebate on something else. With slow and continual increases of fuel cost, energy consumption will decline. The economy will not be harmed. Indeed, it will be improved. (New York Review of Books, July 13, 2006, The Threat to the Planet)
In 2008, Dr. Hansen further articulated his proposal for a gradually-rising carbon tax with revenue returned through equal and recurring “dividends”:
A price on emissions that cause harm is essential. Yes, a carbon tax. Carbon tax with 100 percent dividend is needed to wean us off fossil fuel addiction. Tax and dividend allows the marketplace, not politicians, to make investment decisions… Carbon tax on coal, oil and gas is simple, applied at the first point of sale or port of entry. (Full text of June 23, 2008 speech here.)
On the eve of the 2009 Copenhagen climate summit, Dr. Hansen’s NY Times op-ed, “Cap and Fade” forcefully critiqued proposals for cap-and-trade with offsets, arguing instead for an upstream carbon “fee” with all revenue returned directly to taxpayers via monthly “dividends.” Continuing this theme, in April 2010, Dr Hansen called on President Obama to seize moral leadership on the climate issue with a “carbon fee and green check.” Hansen acknowledged Sen. Cantwell’s CLEAR (“cap-and-dividend”) bill which would return 75% of revenue as well-intentioned but ineffective due to its reliance on a cap and its “low carbon price.” (Huffington Post).
In late 2009, Dr. Hansen published Storms of My Grandchildren: The Truth About the Coming Climate Catastrophe and the Last Chance to Save Humanity, a book weaving climate science, politics and personal experience into a heartfelt and compelling narrative. Auden Schendler reviewed “Storms” in Grist:
The science is fascinating, especially when presented in the context of a 30-year effort to make our government understand the dire need for aggressive action. But in the end, Hansen’s book is about something else. It’s about how one should live a life; the book is as much about Hansen’s answer to this philosophical question as it is about climate change.
Disclosure: Dr. Hansen has appeared at two Congressional briefings (2008 and 2009) and a fundraising house party (2010) organized by the Carbon Tax Center and our allied organization, the Price Carbon Campaign, and at our Wesleyan “Pricing Carbon” Conference (2010).
Stephen Chu, director, Univ. of California Lawrence Berkeley Laboratory: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” (Times Tough for Energy Overhaul, Wall Street Journal, Dec. 12, 2008. The Journal noted that “Mr. Chu has called for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work.”) Dr. Chu said this upon his designation as President Obama’s Energy Secretary. Since assuming that post, Secretary Chu has backpedaled from his support of energy taxes, at least in public.
William Moomaw, Professor of International Environmental Policy and Director of the Center for International Environment and Resource Policy, Tufts University:
As a first step, we should dismantle the web of policies that overwhelmingly favors fossil-fuel production and use and actively discriminates against new technologies and practices that would reduce harmful emissions… The second step is to institute federal, state, and local policies that reverse the disincentives created by the existing policy structure and force users to pay the costs of extracting, transporting, and burning fossil fuels. The most straightforward and effective policy changes would include a carbon tax.
(Article co-authored with Judy Mayzer in Jan/Feb 2007 “Can We Stop Global Warming?” issue of Boston Review; Moomaw, holder of a PhD in Physical Chemistry from M.I.T., has been a lead author on four major IPCC reports.)
Steven Running, University of Montana Professor of Ecology: “The first thing we need to do – and it’s highly unpopular – we really need to put a carbon tax that represents the impact carbon emissions have on the world. We need to have five-dollar-a-gallon gas. I’m probably going to be hung in Helena for saying that, but it’s true.” Remarks at an Audubon Society seminar, “Climate Change: What the Future May Hold for Montana’s Plant and Animal Communities,” in Helena, MT, Feb. 27, 2006 (reported by the Helena Independent Record).
David Suzuki, Canadian geneticist, broadcaster and environmentalist has strongly endorsed British Columbia’s revenue-neutral carbon tax and supported a similar nationwide carbon tax for Canada.
In May 2017, the World Bank-supported Carbon Pricing Leadership Council published a 68-page, grandly-named Report of the High-Level Commission on Carbon Prices. The 13-member council is chaired by Nobel Laureate Joseph Stiglitz and Lord Nicholas Stern and is drawn from 9 countries including not just the U.S., U.K. and France but developing nations including China, India, Mali, Indonesia and South Africa.
The report “identif[ies] the range of carbon prices that, together with other supportive policies, would deliver on the Paris climate targets agreed by nearly 200 countries in December 2015,” according to the council’s press release, which was issued under the title, Leading Economists: A Strong Carbon Price Needed to Drive Large-Scale Climate Action. It finds that “meeting the world’s agreed climate goals in the most cost-effective way while fostering growth requires countries to set a strong carbon price, with the goal of reaching $40-$80 per metric ton of CO2 by 2020 and $50-100 per metric ton by 2030.”
The report states that “a well-designed carbon price is an indispensable part of a strategy for efficiently reducing greenhouse gas emissions while also fostering growth [and] that a strong and predictable carbon-price trajectory provides a powerful signal to individuals and firms that the future is low carbon, inducing the changes needed in global investment, production, and consumption patterns.”
“Specific carbon price levels will need to be tailored to country conditions and policy choices,” said Commission member, Professor Harald Winkler of the University of Cape Town, South Africa. “Carbon pricing makes sense in all countries, but low-income countries, which may be more challenged to protect the people vulnerable to the initial economic impacts, may decide to start pricing carbon at a lower level and gradually increase over time.”
In an April 1, 2012 column in The New York Times, Prof. Richard H. Thaler of the U-Chicago Booth School of Business aptly summed up the near-unanimity among economists that carbon taxing is the optimal way to reduce CO2 emissions: “Consider a recent poll of a panel of economists conducted by the University of Chicago Booth School of Business, where I teach… [Forty-one] economists in [a poll conducted by the] University of Chicago … were asked whether they agreed with this statement: ‘A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as ‘corporate average fuel economy’ requirements for automobiles.’ On this question, there was just a single negative vote.” (Why Gas Prices Are Out of Any President’s Control).
In 2011, The Economist asked, Do All Economists Favour a Carbon Tax?
Carbon emissions represent a negative externality. When an individual takes an economic action with some fossil-fuel energy content—whether running a petrol-powered lawnmower, turning on a light, or buying bunch of grapes—that person balances their personal benefits against the costs of the action. The cost to them of the climate change resulting from the carbon content of that decisions, however, is effectively zero and is rationally ignored. The decision to ignore carbon content, when aggregated over the whole of humanity, generates huge carbon dioxide emissions and rising global temperatures.
The economic solution is to tax the externality so that the social cost of carbon is reflected in the individual consumer’s decision. The carbon tax is an elegant solution to a complicated problem, which allows the everyday business of consumer decision making to do the work of emission reduction. It’s by no means the only economically sensible policy response to the threat of climate change, but it is the one we’d expect economists to embrace.
Economists overwhelmingly support a well-designed national carbon tax. In 2012, a University of Chicago survey asked 40 prominent economists from across the political spectrum whether they would prefer the government to raise revenue through traditional income taxes or via a national carbon tax. Not one chose the income tax approach.
We turn now to individual economists, listed alphabetically.
Alan Blinder, former Federal Reserve vice-chairman and Princeton Professor of Economics and Public Affairs. In “The Carbon Tax Miracle Cure,” Blinder suggested on the editorial page of the Wall Street Journal (Jan. 31, 2011):
[A] carbon tax… should be enacted now [but] set at zero for 2011 and 2012. After that, it would ramp up gradually… What’s critical is that we lock in higher future costs of carbon today.
Once America’s entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away—and in ways that make the most economic sense… I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment. Jobs follow investment, and we need jobs now.
Blinder recommends using carbon tax revenue to reduce the deficit and underscores the advantages of a carbon tax over other deficit reduction strategies:
[E]very realistic observer knows that closing our humongous federal budget deficit will require a mix of higher taxes and lower spending as shares of GDP. Forget about value-added taxes and other new levies you may have heard about. A CO2 tax trumps them all… reducing our trade deficit, making our economy more efficient, ameliorating global warming, and showing the world that American capitalism has not lost its edge.
Tyler Cowen, economics professor at George Mason University. Cowen also directs the Mercatus Center, “which studies how societies become and stay prosperous, and is coauthor of the blog Marginal Revolution.”
Phase out all forms of capital income taxation, including the corporate income tax, and replace them with a carbon tax, including a gasoline tax. “Savings and investment boost economic growth, but when it comes to energy, global warming threatens as a major problem and our dependence on Middle Eastern oil damages our foreign policy. (Cowen’s “Economic Idea #4 that voters need to hear”; from Economic Ideas for Republicans, U.S. News & World Report, Oct. 18, 2006; however, that link was inactive as of August 2014.)
Herman E. Daly, professor in the School of Public Policy at the University of Maryland, foremost U.S. ecological economist, author of Ecological Economics, Steady-State Economics, Valuing The Earth, among other works:
Is it hard to come up with a reasonable [climate] policy? Not really — a stiff severance tax on carbon, levied at the well head, mine mouth, or port of entry, would go a long way by both reducing carbon use and giving an incentive for developing alternative carbon-free technologies. Yes, but how do we know what is the optimal tax rate, and wouldn’t it be regressive, etc.? … [T]ax the resource throughput (that to which value is added) and stop taxing value added. Tax bads (depletion and pollution), not goods (income). Does anyone imagine that we tax income at the optimal rate? Better first to tax the right thing and later worry about the “optimal” rate of taxation, compensation for regressivity, etc. People don’t like to see the value added by their own efforts taxed away, even though we accept it as necessary up to a point. But most people don’t mind seeing resource rents, value that no one added, taxed away. And the most important public good served by the carbon tax would be climate stability, brought about by the consequent reduction in use of carbon fuels and the incentive to invent less carbon-intensive energy sources. And much of the revenue from the carbon severance tax could be rebated to the public by abolishing other taxes, especially regressive ones. Climate Change: From ‘Know How’ to ‘Do Now’, Grist, Aug. 14, 2007.
Robert Frank, professor of economics at Cornell University and author of The Winner-Take-All Society and The Darwin Economy, frequently employs his once-every-sixth-week platform in the New York Times Sunday Business section to sing the praises of carbon and other “Pigovian” taxes. Here’s a sampling from Prof. Frank’s columns:
Reducing CO2 emissions would actually be surprisingly easy. The most effective remedy would be a carbon tax, which would raise the after-tax price of goods in rough proportion to the size of their carbon footprint. Gasoline would become more expensive, piano lessons would not. The functional equivalent of that — a cap-and-trade system — worked spectacularly well when Congress required marketable permits for discharging sulfur dioxide (SO2) in 1995. Acid rain caused by SO2 emissions quickly plummeted, at about one-sixth the cost predicted. Once people have to pay for their emissions, they find ingenious ways of reducing them. (Shattering Myths to Help the Climate, Aug. 2, 2014)
Although an effective solution will take global coordination, America’s inaction has been a major barrier to progress. If the United States and Europe each adopted a steep carbon tax, they could elicit broader cooperation through heavy tariffs on goods produced in countries that failed to do likewise. India and China need access to our markets, giving us enormous leverage. (Shattering Myths to Help the Climate, Aug. 2, 2014)
NO one enjoys paying taxes — and no politician relishes raising them. Yet some taxes actually make us better off, even apart from the revenue they provide for public services. Taxes on activities with harmful side effects are a case in point. (Heads, You Win. Tails, You Win, Too., Jan. 5, 2013)
[W]e could insulate ourselves from catastrophic [climate] risk at relatively modest cost by enacting a steep carbon tax. Early studies by the Intergovernmental Panel on Climate Change estimated that a carbon tax of up to $80 per metric ton of emissions — a tax that might raise gasoline prices by 70 cents a gallon— would eventually result in climate stability. But because recent estimates about global warming have become more pessimistic, stabilization may require a much higher tax. How hard would it be to live with a tax of, say, $300 a ton? If such a tax were phased in, the prices of goods would rise gradually in proportion to the amount of carbon dioxide their production or use entailed. The price of gasoline, for example, would slowly rise by somewhat less than $3 a gallon. Motorists in many countries already pay that much more than Americans do, and they seem to have adapted by driving substantially more efficient vehicles. (Carbon Tax Silence, Overtaken by Events, Aug. 25, 2012)
Taxes are … a far cheaper and less coercive way to curtail [harmful] behavior than laws or prescriptive regulations. That’s because taxes concentrate harm reduction in the hands of those who can alter their behavior most easily. When we tax pollution, for instance, polluters with the cheapest ways to reduce emissions rush to adopt them, thereby avoiding the tax… Every dollar raised by taxing harmful activities is one dollar less that we must raise by taxing useful ones. The resulting revenue would enable us to reduce not only the federal deficit, but also the highly regressive payroll tax. And cutting that tax would stimulate hiring and help low-income families meet the burden of new taxes on harmful activities. (Find the Taxes That Do Double Duty, Feb. 18, 2011)
Edwin L. Glaeser, Professor of Economics at Harvard University and director of the Rappaport Institute for Greater Boston:
Smart environmentalism has three key elements. First, policies should be targeted toward the biggest environmental threat: global warming. Second, our resources and political capital are limited. This means we must weigh the benefits of each intervention against its costs. Third, we must anticipate unintended consequences, where being green in one place leads to decidedly non green outcomes someplace else. “These simple rules provide a policy road map for environmentalism. The fight against climate change requires us to reduce greenhouse gas emissions. The most effective way to reduce emissions is to charge people for the social costs of their actions with a carbon tax. A significant carbon tax would be painful — gas will cost more at the pump — but it is never easy to change behavior, and change behavior we must. (Boston Globe, A Roadmap for Environmentalism, May 21, 2007)
Dale Jorgenson, Samuel W. Morris University Professor, Harvard
Leading off a June 12, 2012 Senate Finance Committee hearing on energy taxation, Dr. Jorgenson proposed internalizing the health and environmental costs of fossil fuel burning by eliminating fossil fuel “tax expenditures” (i.e., indirect subsidies) and taxing emissions of the six Clean Air Act “criteria” pollutants. He called his proposal “a kissing cousin” of a carbon tax because it would effectively put a price on fossil fuel burning while sidestepping the “debate” over whether CO2 emissions are causing global warming.
In 2013, Dr. Jorgenson published the book, “Double Dividend, Environmental Taxes and Fiscal Reform in the United States.” Harvard Magazine (September-October 2014) offered this synopsis of the book’s central thought-experiment:
[Dr. Jorgenson] examine[s] what would happen if revenues from a carbon tax—based on the price of carbon that will be the subject of debate in Paris—were recycled into the nation’s economy. After examining four strategies for deploying the revenue from a carbon tax, Jorgenson and coauthors Richard J. Goettle, Mun S. Ho and Peter J. Wilcoxen found that one strategy in particular—reducing taxes on capital—leads to an increase in economic efficiency that improves economic well-being despite greater inequality, as well as a decrease in carbon emissions: the “double dividend” of the book’s title.
Arthur Laffer, Guru of supply-side economics, in a Dec. 28, 2008 op-ed in The New York Times (co-authored with then-U.S. Representative Bob Inglis (R-SC)):
We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs). A carbon tax would attach the national security and environmental costs to carbon-based fuels like oil, causing the market to recognize the price of these negative externalities. [B]oth Democrats and Republicans could support a carbon tax offset by a payroll or income tax cut. (Our page covering public officials has more excerpts from the Inglis-Laffer op-ed, in the section devoted to former Rep. Inglis.)
Gregory Mankiw, Harvard University: Perhaps the most widely published advocate for higher fuel taxes in the economics profession is Gregory Mankiw, Harvard professor, chair of the President’s Council of Economic Advisers, 2003-2005, and senior economic advisor to the 2012 Romney for President campaign.
In late 2012, Mankiw wrote in a NY Times op-ed, Wishful Thinking and Middle-Class Taxes (Dec. 29, 2012):
Ultimately, unless we scale back entitlement programs far more than anyone in Washington is now seriously considering, we will have no choice but to increase taxes on a vast majority of Americans. This could involve higher tax rates or an elimination of popular deductions. Or it could mean an entirely new tax, such as a value-added tax or a carbon tax. (emphasis added)
While that may qualify as a fairly mild endorsement of a carbon tax, the timing was noteworthy, coming in the late stages of the “fiscal cliff” negotiations and less than two months after Romney’s defeat in an election campaign in which he had belittled concerns over climate disruption.
Years earlier, Mankiw powerfully made the case for a carbon tax in an op-ed, One Answer to Global Warming, in the Sept. 16, 2007 NY Times Sunday Business Section (see our blog for excerpts and discussion). His 2006 Wall Street Journal op-ed pieces (Jan. 3 and Oct. 20) are among the many lively pieces available on Mankiw’s pro-fuel-tax blog, The Pigou Club Manifesto. (Economist Arthur Pigou, 1877-1959, developed the concept of economic externalities along with corrective “Pigovian” taxes.) On the last day of 2006 Mankiw reiterated his 2006 New Year’s Resolutions from his Jan. 3, 2006 WSJ piece, including:
I will tell the American people that a higher tax on gasoline is better at encouraging conservation than are heavy-handed CAFE regulations. It would not only encourage people to buy more fuel-efficient cars, but it would encourage them to drive less, such as by living closer to where they work. I will tell people that tolls are a good way to reduce traffic congestion — and with new technologies they are getting easier to collect. I will advocate a carbon tax as the best way to control global warming.
In a Sept. 16, 2006 post to his blog, Rogoff Joins the Pigou Club, Mankiw listed some three dozen other economists and pundits who have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes. The list includes, in addition to several individuals mentioned here, such notables from economics, finance and journalism as Alan Greenspan, Gary Becker, William Nordhaus, Richard Posner, Anthony Lake, Martin Feldstein, Gregg Easterbrook and Lawrence Summers. (Links are included.)
In a June 1, 2008 NY Times column, The Problem With the Corporate Tax, Mankiw wrote:
I have a back-up plan for [Sen. McCain]: increase the gasoline tax. With Americans consuming about 140 billion gallons of gasoline a year, a gas-tax increase of about 40 cents a gallon could fund a corporate rate cut, fostering economic growth and reducing a variety of driving-related problems. Indeed, if we increased the tax on gasoline to the level that many experts consider optimal, we could raise enough revenue to eliminate the corporate income tax. And the price at the pump would still be far lower in the United States than in much of Europe.
In early 2012, Mankiw wrote in his NY Times column, A Better Tax System (Instructions Included):
Tax Bads Rather Than Goods: A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of. Consider the tax on gasoline. Driving your car is associated with various adverse side effects, which economists call externalities. These include traffic congestion, accidents, local pollution and global climate change. If the tax on gasoline were higher, people would alter their behavior to drive less. They would be more likely to take public transportation, use car pools or live closer to work. The incentives they face when deciding how much to drive would more closely match the true social costs and benefits. Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense. That would provide substantial revenue that could be used to reduce other taxes. By taxing bad things more, we could tax good things less. (Jan. 22, 2012)
Although this pronouncement concerned gasoline taxes rather than carbon taxes, it could be considered as bold by a senior advisor to the Romney for President campaign.
Gilbert Metcalf, Tufts University economist, was appointed in March 2011 by President Obama to head the energy office at the Treasury Department. Metcalf is a prominent and effective advocate of revenue-neutral carbon taxes. In August of 2007, the World Resources Institute and the Brookings Institution jointly published a policy brief by Prof. Metcalf, outlining a national carbon tax paired with a partial refund of the payroll tax. The brief assesses the expected emissions reductions from a tax starting at $15 per metric ton of carbon dioxide whose revenue would be used to rebate the federal payroll tax on the first $3,660 of earnings per worker. This tax swap is both revenue-neutral and distributionally neutral. (Video of Prof. Metcalf’s 2008 presentation.)
With Prof. David Weisbach (Univ. of Chicago Law School), Prof. Metcalf authored “The Design of a Carbon Tax” (Harvard Environmental Law Review, 2009) addressing carbon tax design issues: the tax rate (including distributional issues, the use of the revenues, and tax rate changes), the tax base, and international trade concerns.
Paul Portney, Dean, Eller College of Management, Univ. of Arizona (and president, Resources for the Future, 1995-2005):
[W]e’re nuts not to have instituted gradually increasing controls on CO2 and other greenhouse gases. The worst-case scenario, especially for future generations, is too scary not to be taking some preventative measures now. A carbon tax is obviously the best way to deal with this problem. It would raise revenues the government will badly need to pay for Social Security and Medicare as old fogies like me begin to retire, as well as create incentives for energy conservation, emissions reductions, and clean technology innovation. (What Are the Biggest Environmental Challenges Facing the United States?, RFF Weekly Policy Commentary, Sept. 10, 2007)
Robert Reich, Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley, former Secretary of Labor and co-founder of The American Prospect :
What’s needed is a carbon tax — a tax on all fossil-based fuels that reflects their true social, political, and environmental costs. That should remain the goal, but as a practical matter it’s not going to happen any time soon. Republicans won’t enact a tax hike for any purpose. And right now congressional Democrats don’t have the intestinal fortitude, or the votes, to enact it on their own. (American Prospect Online Edition, Inherit the Windfall Feb. 7, 2007)
Economist Jeffrey Sachs, director of the Earth Institute at Columbia University:
The changeover to a sustainable energy system will take decades and will require carbon taxes and emission permits to create market-based incentives for companies and individuals to switch to new kinds of electrical power plants, new kinds of automobiles and ‘green buildings.’ (Miami Herald, We Must Reverse Global Warming, Feb. 23, 2007)
The world’s producers and consumers currently regard the air as a free dumping ground for carbon dioxide and other climate-changing greenhouse gases. We need to correct market forces—for example, by taxing carbon emissions that are offset by tax reductions elsewhere—in order to create the right incentives. (Time Magazine, March 24, 2008; direct link unavailable, but full text was published later that year in Petroleum World).
[T]here is a much better strategy than tradable [emission] permits. Each region of the world should introduce a tax on CO2 emissions that starts low today and increases gradually and predictably in the future. Part of the tax revenue should be channeled into subsidies for new low-carbon energy sources like wind and solar, and to cover the costs of developing CCS (Carbon Capture & Sequestration). These subsidies could start fairly high and decline gradually over time, as the tax on CO2 emissions rises and the costs of new energy technologies fall with more experience and innovation. With a long-term and predictable carbon tax and subsidy system, the world would move systematically toward low-carbon energy, greater energy efficiency, and CCS. (Economy Watch, Towards A Global Carbon Tax – A Better Way To Fight Climate Change?, March 4, 2013).
Lawrence Summers, Charles W. Eliot university professor (and former president), Harvard University (and Former Treasury Secretary):
[T]he U.S. must engage in an energy efficiency program that takes effect without delay and has meaningful bite. As long as developing countries can point to the U.S. as a free rider there will not be serious dialogue about what they are willing to do. I prefer carbon and/or gasoline tax measures to permit systems or heavy regulatory approaches because the latter are more likely to be economically inefficient and to be regressive.” (Financial Times, Practical Steps to Climate Control, May 28, 2007)
Joseph E. Stiglitz, Nobel laureate in economics and University Professor at Columbia University; formerly Chairman of President Bill Clinton’s Council of Economic Advisers and Senior Vice President and Chief Economist of the World Bank:
Not paying the cost of damage to the environment is a subsidy, just as not paying the full costs of workers would be… American firms are being subsidized—and massively so. There is a simple remedy: other countries should prohibit the importation of American goods produced using energy intensive technologies, or, at the very least, impose a high tax on them, to offset the subsidy that those goods currently are receiving. (A New Agenda for Global Warming, Economists’ Voice, July 2006)
Economic efficiency requires that those who generate emissions pay the cost, and the simplest way of forcing them to do so is through a carbon tax. There could be an international agreement that every country would impose a carbon tax at an agreed rate (reflecting the global social cost). Indeed, it makes far more sense to tax bad things, like pollution, than to tax good things like work and savings. Such a tax would increase global efficiency. Of course, polluting industries like the cap-and-trade system. While it provides them an incentive not to pollute, emission allowances offset much of what they would have to pay under a tax system. Some firms can even make money off the deal. Moreover, Europe has grown used to the concept of cap-and-trade, and many are loathe to try an alternative. Yet, no one has proposed an acceptable set of principles for assigning emission rights. (Showdown in Bali, Project Syndicate, Dec. 2007)
More recently, Stiglitz has decried the stalled UN climate negotiations as a “charade.” Stigliz feels that the 2 decade-long attempt to allocate responsibility for reducing emissions among nations is doomed; he instead urges negotiators to shift to a price-based negotiation to set a global carbon tax:
Stiglitz’s plan is to set a single, global price for carbon dioxide, the most important greenhouse gas. The idea is to make it so expensive to use carbon that consumers and businesses voluntarily use less of it. Countries could raise the price of carbon either with a tax or with a domestic cap-and-trade system, Stiglitz says. In his vision, if a country didn’t set its carbon price high enough, hoping to gain a pricing advantage, other countries would be allowed to charge tariffs on its exports. He would throw in a green fund to compensate hard-hit poor countries. (Stiglitz Calls Climate Talks a ‘Charade,’ Pushes Plan C, Bloomberg, 7/10/15)
Paul Volcker, former chairman of the U.S. Federal Reserve: Please see discussion on our “Public Officials” page.
Gary Yohe, IPCC “Fourth Assessment” chapter editor and Professor of Economics at Wesleyan University. Prof. Yohe presented on the economic rationale for carbon pricing at the Wesleyan “Pricing Carbon” Conference in Nov. 2010, and was profiled on this point in Yale 360 in Dec. 2008.
Finally, we have: A majority of economists polled by the Wall Street Journal during Feb. 2-7, 2007:
The government should encourage development of alternatives to fossil fuels, economists said in a WSJ.com survey. But most say the best way to do that isn’t in President Bush’s energy proposals: a new tax on fossil fuels. Forty of 47 economists who answered the question said the government should help champion alternative fuels. “Economists generally are in favor of free-market solutions, but there are times when you need to intervene,” said David Wyss at Standard & Poor’s Corp. “We’re already in the danger zone” because of the outlook for oil supplies and concerns about climate change, he said. A majority of the economists said a tax on fossil fuels would be the most economically sound way to encourage alternatives. A tax would raise the price of fossil fuels and make alternatives, which today often are more costly to produce, more competitive in the consumer market. “A tax puts pressure on the market, rather than forcing an artificial solution on it,” said Mr. Wyss. (WSJ, Is It Time for a New Tax on Energy?, Feb. 8, 2007; the foregoing text is lifted directly from the article.)