This page quotes religious, environmental and business “thought leaders” supporting carbon taxes (or more targeted taxes, e.g., on gasoline). To access the other half dozen pages with different supporter categories, click “Progress” on the navigation bar and move to the desired category.
Prominent Former Public Officials
Barack Obama, 44th U.S. President
While Obama has not formally proposed taxing carbon emissions, at his Dec. 1, 2015 press conference at the Paris climate summit he argued for pricing carbon emissions in the strongest and clearest terms used by any president to date.
I have 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. If you open up an Econ101 textbook, it will say the market is very good about determining prices and allocating capital towards its most productive use — except there are certain externalities, there are certain things that the market just doesn’t count, it doesn’t price, at least not on its own. (White House Press Office)
Former Vice-President Al Gore
The individual who has done the most to raise the world’s consciousness of global warming has long been an outspoken advocate for taxing carbon emissions. “The most direct policy solution to the climate crisis is a carbon tax, offset by reductions in taxes on wages,” Gore said in November 2012. “By including the carbon tax in the solution to the fiscal cliff we can [get] away from the climate cliff.” (The Hill.)
In an interview in the Sept/Oct 2007 issue of 02138 magazine, Gore explained, “I’m convinced that we should eliminate the payroll tax and replace it dollar for dollar with a CO2 tax.”
Gore voiced this theme in an historical context in a March, 2008 talk at Autodesk: “Here’s the solution. We need a CO2 tax, revenue-neutral, to replace taxation on employment, which was invented by Bismarck — and some things have changed since the 19th Century.” (This is at around the 13:30-minute mark of his talk).
Gore added a bit of poetry to this idea in his address, A Generational Challenge to Repower America, on July 17, 2008 at D.A.R. Constitution Hall in Washington D.C., telling Americans, “We should tax what we burn, not what we earn. This is the single most important policy change we can make.”
In early 2010, in a 1,900-word opinion piece in the Sunday New York Times, We Can’t Wish Away Climate Change, Gore sought to re-invigorate the climate movement in the wake of the Dec. 2009 COP-15 debacle at Copenhagen. The former vice-president’s essay stands as a brilliant rebuttal to climate denialists:
[T]he reality of the danger we are courting has not been changed by the discovery of at least two mistakes in the thousands of pages of careful scientific work over the last 22 years by the Intergovernmental Panel on Climate Change. In fact, the crisis is still growing because we are continuing to dump 90 million tons of global-warming pollution every 24 hours into the atmosphere — as if it were an open sewer.
It is true that the climate panel published a flawed overestimate of the melting rate of debris-covered glaciers in the Himalayas, and used information about the Netherlands provided to it by the government, which was later found to be partly inaccurate. In addition, e-mail messages stolen from the University of East Anglia in Britain showed that scientists besieged by an onslaught of hostile, make-work demands from climate skeptics may not have adequately followed the requirements of the British freedom of information law.
But the scientific enterprise will never be completely free of mistakes. What is important is that the overwhelming consensus on global warming remains unchanged. It is also worth noting that the panel’s scientists — acting in good faith on the best information then available to them — probably underestimated the range of sea-level rise in this century, the speed with which the Arctic ice cap is disappearing and the speed with which some of the large glacial flows in Antarctica and Greenland are melting and racing to the sea.
Michael R. Bloomberg, New York City Mayor, 2002-2013
In a rousing speech in Seattle in November 2007, which he recapitulated a month later at the UN Framework Conference on Climate Change in Bali, New York City Mayor Michael R. Bloomberg vaulted to the head of the class of public officials supporting carbon taxes. As noted on our blog, the mayor’s speech put Bloomberg alongside former Vice-President Al Gore as the nation’s leading advocate of a carbon tax to cap and reduce carbon emissions from fossil fuels. Bloomberg could not have been more forceful on the need to price carbon emissions, the superiority of carbon taxes over cap-and-trade schemes, and the need for political leadership at this crucial time.
Bloomberg renewed his call for a U.S. carbon tax in November 2010. Speaking at the Wall Street Journal CEO Council, the NYC Mayor said the U.S. needs to reduce its dependence on foreign oil if “you want to stop sending your money to…terrorists.” The answer: “We need a carbon tax.”
Statesmen & women
António Guterres, Secretary-General of the United Nations: “The time of fossil fuel subsidies is over. Coal must be phased out. Carbon should be given a price. 2021 must be the year of a great leap towards carbon neutrality.” — on Twitter, Nov. 16, 2020.
Religious Leaders
Pope Francis: In his June 18, 2015 encyclical, On Care For Our Common Home, Pope Francis broke new ground by citing and supporting the overwhelming scientific consensus that humans’ use of fossil fuels is causing dangerous global warming. And in a second bold stroke, Francis aligned the Catholic Church with the equally robust economic consensus demanding that societies internalize the costs of pollution, especially climate pollution. He wrote:
[O]nly when the economic and social costs of using up shared environmental resources are recognized with transparency and fully borne by those who incur them, not by other peoples or future generations, can those actions be considered ethical. [Paragraph 195]
Francis stresses that emissions trading isn’t the way, for three reasons:
- First, trading carbon allowances allows traders to profit from the climate crisis — indeed, it’s designed to do that.
- Second, “offsets” that are virtually hard-wired into cap-and-trade shift the burden of pollution to developing countries.
- Third, cap-and-trade with offsets absolves the wealthy of responsibility to rein in their carbon-intensive lifestyles.
In his own words:
The strategy of buying and selling carbon credits can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors. [Paragraph 171]
The Pope’s call for “transparent” internalization of the costs of pollution aligns with mainstream economics’ tenet that a simple, direct carbon tax is the most transparent and effective corrective to shift “the economic and social costs” of climate pollution onto “those who [impose] them” and to broadly incentivize the transition to clean energy and efficiency. For more details, see our post: Who’s “Out of Step” on Climate — Pope Francis or Harvard Expert? (6/19/15). For an insightful discussion of the Encyclical’s treatment of carbon credits, see this post in Theology Politics Today by Daniel R. DiLeo, a Ph.D. student in theological ethics at Boston College.
Two months after the Pope’s encyclical, Islamic Leaders and Scholars from 20 countries issued an “Islamic Declaration on Climate Change” on August 18. 2015, calling on the world’s 1.6 billion Muslims and Muslim-majority oil-producing countries to act as leaders in eliminating greenhouse gas emissions, as The New Republic reported in The Islamic Climate Change Declaration Could Be More Effective Than Pope Francis’s Encyclical.
The Declaration begins by summarizing the scientific consensus:
The pace of Global climate change today is of a different order of magnitude from the gradual changes that previously occurred throughout the most recent era, the Cenozoic. Moreover, it is human-induced: we have now become a force dominating nature… Our species, though selected to be a caretaker or steward (khalifah) on the earth, has been the cause of such corruption and devastation on it that we are in danger ending life as we know it on our planet. This current rate of climate change cannot be sustained, and the earth’s fine equilibrium (mīzān) may soon be lost. As we humans are woven into the fabric of the natural world, its gifts are for us to savour. But the same fossil fuels that helped us achieve most of the prosperity we see today are the main cause of climate change.
The Declaration then raises the moral implications:
Excessive pollution from fossil fuels threatens to destroy the gifts bestowed on us by God, whom we know as Allah – gifts such as a functioning climate, healthy air to breathe, regular seasons, and living oceans. But our attitude to these gifts has been short-sighted, and we have abused them. What will future generations say of us, who leave them a degraded planet as our legacy? How will we face our Lord and Creator?
And quotes the Millennium Ecosystem Assessment (UNEP, 2005), backed by over 1300 scientists from 95 countries, to warn:
Human activity is putting such a strain on the natural functions of the earth that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted.
Finally, the Declaration points out the frustrating lack of progress in the UN climate negotiations:
It is alarming that in spite of all the warnings and predictions, the successor to the Kyoto Protocol which should have been in place by 2012, has been delayed. It is essential that all countries, especially the more developed nations, increase their efforts and adopt the pro-active approach needed to halt and hopefully eventually reverse the damage being wrought.
Although the Muslim Declaration is not a policy document and does not mention or endorse carbon emissions pricing per se, its characterization of climate pollution as “corruption” is consistent with the “polluter pays” ethos of carbon fees that compels individuals and institutions to assume responsibility for harms stemming from their actions and policies.
Rabbi Arthur Waskow, The Shalom Center, Philadelphia: Rabbi Waskow, a long-time leader in progressive Judaism and ecumenical organizing against injustice, has been speaking and organizing about U.S. “oiloholism” for some time. He has skillfully abridged material from CTC’s Web site on the Shalom Center’s site under the title Carbon Tax: Crucial Step To Stop Global Scorching.
Friends Committee on National Legislation (Quakers):
“What do the CEO of the world’s largest oil company, a former Reagan administration economist, the chair of the House Democratic Caucus, and the ranking Republican member of the House Science and Technology Subcommittee on Energy and Environment all agree on? That taxing the carbon content of fossil fuels would be the most direct, transparent, and effective way to reduce the human causes of global warming.”
“The key to winning public support for a carbon tax is that the money goes back to taxpayers. By itself, the carbon tax is regressive. People who pay a larger percentage of their income on energy and fuel, primarily people with low incomes, would be hurt the most. If the tax were accompanied by a dividend or tax credit system, however, it could easily be structured to have a net progressive effect — returning more money to most taxpayers than it costs them in higher bills for energy and products whose price is linked to energy.”
(FCNL Washington Newsletter, February 2009)
Devin Helfrich, FCNL’s former climate policy advocate, and CTC’s James Handley compared the Waxman-Markey cap-and-trade proposal with the simpler and more straightforward carbon tax proposals here.
Visionary Thinkers
(admittedly a squishy category, but perhaps helpful just the same)
Environmentalist-Entrepreneur Paul Hawken
“There’s no policy, there’s nothing that would accelerate these [climate solutions detailed in Hawken’s “Drawdown” book] more quickly than carbon pricing. Nothing would do more. There’s not a single solution in Drawdown that wouldn’t accelerate … if we had carbon pricing.” — Hawken, speaking in a telephone call with Citizen Climate Lobby leaders and members on August 14, 2017. (Link is to a YouTube video that opens to the section in which Hawken is asked about carbon pricing.)
Inventor-Entrepreneur Elon Musk
Musk, founder and CEO of both Tesla Motors (high-end electric cars) and SolarCity (supplier of photovoltaic panels and systems, now mass-manufacturing power-storage batteries), is rare among big-time entrepreneurs and “disrupters” in his repeated strong support of carbon taxing. In August 2016 we reported one such instance, Musk’s detailed and powerful narrative in response to a reporter at SolarCity’s battery “Gigafactory” under construction near Reno, NV. Here are excerpts:
Our August 2016 blog post has more, including Musk’s evocation of carbon taxing’s consistency with libertarian philosophy. See link at right.
“The real right way to correct [the subsidy] would be to establish a carbon tax. If you ask any economist they will tell you that is the obvious thing to do, put the correct price on carbon because we currently have an error in the economy which misprices carbon at zero or something closer to zero. It is a fundamental economic error.”
“[A]ll we are doing [with a carbon tax] is trying to match the inherent subsidy for fossil fuels . . . on the sustainable energy side. Fossil fuels are already getting a massive subsidy if you believe in global warming. If you don’t then [the subsidy] seems really unfair. If you do then it is like oh we are just trying to correct it.”
“[If you have . . . an unpriced externality … then any government action to increase the price above zero reduces the error in the economy. [What libertarians] should actually be opposed to is anything that increases the error in the economy, a pricing information error. So pricing carbon, if you believe in global warming, does not increase the price of the error it decreases the price of the error.”
Futurist and author Ramez Naam
Naam is a former Microsoft “Partner and Director of Program Management” who led teams developing early versions of Microsoft Outlook, Internet Explorer, and the Bing search engine, according to his Web site. In late 2015 and early 2016 he published a linked series of thought-provoking essays in which he drew upon declining-cost curves in wind power, solar photovoltaic cells, and battery storage to estimate possible prodigious growth paths for renewables in the U.S. (Vox’s David Roberts has a nice distillation of Naam’s posts here.)
Unlike many other solar-renewable proponents, however, Naam isn’t shy in calling for carbon taxes, as Guardian reporter Mark Gunther reported in a recent profile
Policy is the toughest nut to crack, Naam says. Solar would not be thriving without government subsidies in the US and, even more so, in Germany. To drive clean-energy innovation faster and further, Naam, like a growing number of business leaders and economists across the political spectrum, advocates a carbon tax.
He’s got a simple, four-point plan for a carbon tax. First, pass the tax, give businesses and consumers five years to prepare for it, and start it at just $10 per ton of CO2. Second, raise the price by $10 a year until the US meets its emission targets. Third, put a tax on imports from countries that don’t tax carbon. Fourth, give all the money back to taxpayers, probably by reducing payroll of income taxes.
Environmental Organizations and Leaders
Lester Brown, Earth Policy Institute: “We need a way to reduce gasoline use, one that is practical and politically acceptable. We need a higher gas tax, but the only way to get a gas tax rise large enough to wean us from imported oil is to offset the rise with a reduction in the tax on income. The gas tax boost should be substantial — a rise that will send a strong, clear signal to consumers — and it should be gradually phased in. A gasoline tax hike of 30¢ a gallon per year for the next 10 years would send the right signal. This eventual increase of $3 per gallon would be offset at every step of the way with a reduction in income taxes.” (Let’s Raise Gas Taxes And Lower Income Taxes, May 11, 2006)
Carl Pope, Sierra Club executive director: “It [a carbon tax] will be more effective [than a cap-and-trade system] if people know that in year ‘X’ they will pay this much. Companies are highly motivated by costs.” (quoted in Tax on Carbon Emissions Gains Support; Industry and Experts Promote It as Alternative to Help Curb Greenhouse Gases, Washington Post, April 1, 2007) The article goes on to say: “Moreover, he [Pope] worries that rationing carbon allowances based on historical emissions would reward companies that spew out the most greenhouse gases now and did the least to limit them in the past.”
Ralph Nader: In a Dec. 3, 2008 Wall Street Journal op-ed co-authored with Canadian Toby Heaps, We Need a Global Carbon Tax (subtitled, “The cap-and-trade approach won’t stop global warming”), the noted environmental and citizen activist made a compelling case for pricing carbon emissions via a tax rather than a trading scheme:
A global carbon tax levied on a relatively small number of large sources can be monitored by satellite and checked against the annual surveillance of fiscal and economic polices already carried out by IMF staff. Thus, the accounting involved is much more precise and much less subject to the vagaries of corruption and conflict over which industries and companies get their free handouts of carbon credits — carbon pork — than in a cap-and-trade system.
Greenpeace: Supports an emissions cap of 80 percent (with auctioned credits) AND a carbon tax. (Greenpeace Staff Blog)
Business Leaders
Bob Dudley, British Petroleum CEO, “A global carbon price would help to unleash market forces and provide the right incentives for everyone to play their part.” (Christian Science Monitor, Feb. 17, 2015).
ExxonMobil CEO Rex Tillerson and other company officials have frequently voiced support for a federal carbon tax. Here’s how the Wall Street Journal summarized the oil giant’s stance in mid-2016:
Exxon Mobil is ramping up its lobbying of other energy companies to support a carbon tax, marking a shift in the oil giant’s approach to climate change as the industry faces growing pressure to address the politically charged issue.
Exxon’s official position has long been the same—a carbon tax is the best way to address the risks of warming temperatures—but it has done little to actively advocate for that goal in recent years. Lately, Exxon has been making the case with its U.S. counterparts to support a carbon tax, arguing that the industry must not oppose all climate policies, according to people familiar with Exxon’s thinking.
Top Exxon officials have been more vocal about their support for a carbon tax and have met with Capitol Hill offices about related legislation, according to the company’s recent lobby disclosure forms.
For the past six months, Exxon has been asserting its position more in meetings within trade associations, including the American Petroleum Institute and American Fuel and Petrochemical Manufacturers, according to multiple reports from people who have attended meetings with Exxon officials.
“Of the policy options being considered by governments, we believe a revenue-neutral carbon tax is the best,” Suzanne McCarron, the company’s vice president of public and government affairs, wrote in May in the Dallas Morning News.
A straightforward carbon tax that is revenue-neutral—meaning other taxes should be lowered to offset the impact—is far preferable to the patchwork of current and potential regulations on the state, federal and international levels, according to Exxon spokesman Alan Jeffers.
(WSJ, Exxon Touts Carbon Tax to Oil Industry, June 30, 2016. Sorry no links in article.)
The article looks like a solid take. Exxon “favors a carbon tax” but there is no record of its having urged elected officials to back carbon tax legislation. In fact, Exxon has famously invested millions of dollars in organizations that aggressively espouse climate-denial arguments, as the Union of Concerned Scientists has systematically documented. Exxon’s support for carbon taxing should be viewed critically and, um, skeptically.
Note: Remaining quotes on this page are circa 2008, i.e., not current.
Jamie Dimon, Chairman and CEO JPMorgan Chase & Co.: “[I]t would be a shame to let gas go below $3.50 or $3.25 a gallon – we should add the taxes to BTU, charge energy. We’ll all learn to be a lot more efficient … people aren’t gonna put $100 billion into alternative energy if oil can go back to $50. And it’s a commodity, there will be a surplus one day and it will go down… I think we’re going to have to give it back to lower paid people. You know, so they’re losing $2000 a year now on oil and on food, so it has to come out of payroll taxes or low income, and we shouldn’t be selfish about it.” Interview July 2008
Donald E. Felsinger, Chairman and CEO, Sempra Energy, the subject of a recent “Saturday Interview” in the New York Times, was asked if he believes “that some form of carbon emissions restrictions, perhaps in the form of a carbon tax, is inevitable?” He responded:
I believe they are inevitable. We are having debates within my own company about what is a better outcome, whether it be cap-and-trade or a tax. I think the most effective way to deal with carbon pollution is to have a carbon tax. Turning Energy Uncertainty Into Opportunity, May 3, 2008.
Jim Gordon, CEO, Energy Management, Inc. (developer of the Cape Wind windmill project in Nantucket Sound): “The scale, urgency and challenge of climate change and energy security require that all citizens and corporations either pay the health, military and environmental degradation costs of carbon emissions or begin to transition to a more sustainable future. Implementing a revenue neutral carbon tax is the most effective way of internalizing the real costs of burning fossil fuels and providing the pricing signal that will modify consumer behavior. A carbon tax rather than a cap and trade program will provide the best chance of ensuring a more rapid path to this sustainable future.” (Personal communication to CTC, March 29, 2008)
Bruce Williamson, CEO, Dynegy, quoted in a recent Houston Chronicle story, expressed strong support for a carbon tax, while recognizing that it would make some of his fellow energy company CEO’s uncomfortable:
Fellow power company CEOs “would probably cringe to hear me say it,” Williamson said, but he believes a federal tax on carbon dioxide emissions would be more fair than a cap-and-trade system.
Mr. Williamson description of the benefits of a carbon tax over cap-and-trade is concise and accurate:
A tax is “the easiest method, the fastest and the most equitable,” Williamson said, because cap and trade systems tend to be more costly for companies to manage and create regional imbalances that would likely lead to federal lawsuits. “I’ve made the joke before that Wall Street would likely lose its interest in the environment if there wasn’t money to be made from a trading opportunity.” Dynegy Listens to Dissent, March 29, 2007.
Lewis Hay III, Chief Executive of FPL Group: According to a news article announcing that FPL would be promoting a ”carbon fee” that would be tacked on to fossil fuel charges based on the amount of carbon dioxide released from burning them, Hay “believes such a fee, set at a reasonable level and gradually increased, would create market pressures encouraging emission cutbacks not just on utilities but across the economy — but it should be done in a way that is friendlier to industries, businesses and consumers than the ‘cap and trade’ scheme dominating discussions in Congress.” Hay stated that “cap and trade” would result in a “giant food fight over these [carbon] allowances,” invite fraud, such as that which has marred similar programs in Europe, and result in volatile carbon pricing. According to Hay, ”We think the big winners in a trading scheme will all be the investment bankers.” FPL Suggests Carbon Fee to Control Gas Emissions, MiamiHerald.com, March 31, 2007.
Paul Anderson, former Chairman and CEO, Duke Energy
I believe U.S. public policy on global climate change should encourage a transition to a ower-carbon-intensive economy through a broad-based, mandatory approach. And, I believe the best approach is a carbon tax … A well-crafted carbon tax would do three things: First, it would provide incentives for conservation for everyone. Second, it would promote higher utilization of today’s power plants that are low emitters of carbon and encourage low-carbon fuel choices for the future. And third, it would encourage the development of new technologies. The greatest attraction of a carbon tax is that it allows us to share the cost of reducing greenhouse gas emissions across all sectors of the economy – minimizing the disruption in any one area.
(Address, Charlotte Business Journal, 10th Annual Power Breakfast, April 7, 2005)
Mr. Anderson was Chairman and CEO of Duke Energy at the time of his address. In an earlier interview, Mr. Anderson called a carbon tax a “no-regrets approach”:
Probably if you look at the position of industry in the past, it’s been very opposed to something like a carbon tax, but then I think in the past the reality that something was going to have to be done was not quite so evident. The nice thing about a carbon tax is if you accept that there still is a debate as to whether or not man-made CO2 is contributing dramatically to global warming, even if you don’t believe that, and there’s still some people out there that don’t, a carbon tax is a no-regrets approach to it; you haven’t shut down an industry, you haven’t penalised a fuel unduly, you’ve simply sent economic signals out there that, at the end of the day, the worst thing that happens, you have a little conservation.
(Interview, Sunday Sunrise (Austrailia), March 13, 2005)
T. Boone Pickens, oil and gas industry leader and philanthropist, “proposes that we increase gasoline taxes enough to raise the price of gasoline to $5 a gallon and use the revenues to cut the payroll taxes paid by employees and employers.” (Quote from an op-ed by Robert Walker, Global Warming Response – Markets or Taxes? in the San Francisco Chronicle, March 23, 2007)
Glenn Cannon, former General Manager, Waverly Light and Power, and Past Chair of the American Public Power Association: “To me, a carbon tax make the most sense in any strategy where we want to achieve meaningful reductions in all sectors of the economy.” (Email message to Carbon Tax Center, March 12, 2007)
Former American Petroleum Institute Chief Economist Michael Canes combined support for taxing carbon and criticism of carbon cap-and trade in a July 24, 2007 interview with E&E TV. From the transcript:
What’s wrong with cap and trade is that it’s very wasteful. It’s going to result in a lot of constraints on the economy. It’s going to result in volatility of energy prices that is unnecessary. It is going to create a source of wealth for people to lobby for and for the political sector to distribute. And that’s going to result in socially wasteful activity to try to redistribute wealth among parties, including not just within the United States but from abroad as well. And lastly, it’s going to have to have a monitoring system. Cap and trade requires policing, and not just in the United States, but internationally, because it will become an international system very quickly. So, in my opinion, it is going to be wasteful. Many, many billions of dollars will go into the construct of this system and it’s not necessary. There are better alternatives on the table.
Now, why is [cap and trade] politically popular even though it appears to be a more efficient system than other systems? The reason is because it does create a source of wealth. And that means that the business sector sees possibilities of obtaining part of that wealth. And so they view this favorably. The political sector sees ways to distribute that wealth and so it has attractiveness to the political sector. It will result in organized exchanges to exchange these allowances to emit. And those who would set up such exchanges see this as favorable. And ultimately the environmental community finds it favorable because a cap is a cap, and you have a quantitative limit on how much can be emitted. This is a mistake on their part. And the reason for that is the annual rate is not what counts. It is the total stock of greenhouse gases that are in the atmosphere that matters. And whether the rate is a little higher or a little lower really doesn’t matter in any given year. But the environmental community likes the certainty and that’s why they favor it.
I can accept that stronger measures might be necessary and if so, then in my view a carbon tax would be the way to go. A tax on carbon is much neater. The revenues from the carbon tax are kept inside the United States. You set it at a level that tries to approximate the costs that carbon is imposing on the world, you might say. It efficiently gets people to economize on carbon. If revenues can be redistributed, say through other kinds of tax reduction, you can actually improve the efficiency of the tax system. The people at Resources for the Future estimate somewhere between $15 and $25 billion annually in gains from a $7 to $15 carbon tax per ton. So you can improve the economy, it’s a more efficient system. You don’t have this creation of wealth that people begin to try to lobby for and the people try to distribute. You don’t have to deal with international offsets which requires monitoring worldwide of who is producing what in the way of offsets. Are they real? Should they count or should they not? A very expensive way to go. You can avoid all that with a carbon tax and that is the way I think we should go if we’re going to take more serious action than voluntary behavior.
I have not seen [a specific legislative proposal] that quite fits these parameters. I know that Congressman Dingell has proposed a tax, at least conceptually, on carbon. I think his purpose is to see whether or not such a tax could fly. But it’s how you pose the alternatives. If you say let’s have a tax or let’s not have a tax, many people in the public will oppose the tax, no question. If you say let’s have a tax that has redistribution, via reduction of other taxes at least equal so that its revenue neutral or even possibly a small tax decrease, a kind of a sweetener, to get people to kind of agree to this, then I think this could fly politically.
Demand price-elasticity denotes the extent to which rises in price engender a drop in demand. A price-elasticity of 50% means that the drop in demand is half as steep as the price rise. Thus, a 2% increase in price would be required to engender a 1% decrease in demand. Importantly, for large price increases such as we propose over time, the drops in demand would be proportionately less, reflecting the law of diminishing returns. And at the same time the phased-in tax is causing prices of fossil fuels to rise, incomes would be rising, offsetting some of the reductions.