carbon tax

Conservative economists agree: Taxes rule!

Stalwart Republican, former Bush advisor, and Harvard economics professor Greg Mankiw makes the case for the carbon tax. He also thinks a carbon tax is the most achievable global policy: A global carbon tax would be easier to negotiate. All governments require revenue for public purposes. The world’s nations could agree to use a carbon […]

On subsidizing ‘green’ energy R&D

In its "green" issue this week, The New Republic features an excerpt from Ted Nordhaus and Michael Schellenberger's new book, Break Through: From the Death of Environmentalism to the Politics of Possibility.

Their basic point is that the emphasis of the political debate is all wrong. I'm not sure they really understand how things are shaping up, but they're saying that politicians should spend less "time" talking about regulatory approaches, and more time reiterating the importance of innovation.

This gives pretty short shrift to the fact that a carbon tax (or cap-and-trade program that auctions credits) is basically an in-kind subsidy to clean energy. But still, regulation and direct subsidies aren't mutually exclusive, and I think the reason you don't hear a lot of hand-wringing about subsidies for green R&D is that securing real (as opposed to de facto) subsidies -- in any future climate change bill -- to well-positioned clean energy companies will be the easy part.*

* Keep in mind that part of the reason this will be easy is that the biggest subsidy winner will almost certainly be King Coal, who will almost without a doubt receive billions and billions of dollars to refine and implement carbon capture and sequestration technology across the country and, perhaps, the entire world.

WSJ on the carbon tax vs. cap-and-trade debate

People keep emailing me this Wall Street Journal piece on the debate between carbon tax and cap-and-trade, but as far as I can tell there’s nothing new in it. This is well-trod ground on sites like Grist. The one interesting thing about it is this graphic: For reasons Sean has well–described, I don’t believe these […]

There’s one

Chris Dodd comes out in support of Dingell’s carbon tax proposal. Think anybody else will?

From Rep. John Larson

Love the carbon tax but can’t stand Dingell? Rep. John Larson (D-Conn.) is your man. He just introduced a kick-ass carbon tax bill (PDF) to the House. From Greenwire ($ub req’d): Larson’s legislation would set a $15 tax in its first year for every ton of carbon dioxide emissions from the oil, gas and coal […]

Correcting two misunderstandings

As we discuss "cap-and-steal" (aka "cap-and-trade"), "cap-and-sell" (aka "cap-and-auction"), and carbon taxes -- three ways of putting prices on carbon -- it is worth remembering that putting a price on greenhouse-gas emissions is not enough to bring them under control. Gristmill is full of posts showing ways to save carbon at a profit. David posted an interview on Recycled Energy today that points to something that has been known, but mostly ignored, for over thirty years.

I can, and have in the past, posted extensive theoretical musings on this. But the bottom line is that if we are ignoring available savings at current prices, it seems likely that we would continue to ignore savings at artificially higher prices.

This sometimes makes people jump to the opposite extreme; if (as I insist) we can cut emissions by 90 percent or more, at prices comparable to fossil fuel, why do we need to put a price on carbon alone?

The answer is while we can cut emissions at a total cost comparable to what we currently pay for fossil fuels, that does not mean that every component is individually cheaper. The existence of market imperfections does not mean that markets don't have a role to play in solving the problem.

Let's take green buildings as a concrete example. There are a fair number of green commercial buildings that consume 30 percent of the energy of the typical U.S. building, and pay back the costs of those savings in four years or less.

Give away rights or sell them?

Joseph Romm in his post on Dingell's carbon tax proposal says:

Politically, you can't raise carbon prices high enough to raise gasoline prices since even $1 a gallon -- probably the minimum to significantly change fuel economy if Europe is any evidence -- would require a carbon charge of $400 per tonne of carbon -- which would be very harsh to coal, adding more than 10 cents per kilowatt-hour to coal electricity, and politically impossible (I'll post more on this later).

Also, the reason cap-and-trade has not worked well in Europe is that the Europeans didn't have a lot of experience with it and during their trial period they issued too many permits.

I don't know If Romm noticed, but paragraph two represents exactly the same weakness for caps as paragraph one represents for a carbon tax: it is politically difficult to get a high-enough tax or a low-enough cap through. Romm also notes that the Clinton administration could not get through even a weak carbon tax. True enough, but the Clinton administration also could not get through ratification of the Kyoto treaty -- which would have included a really easily met cap, much weaker than most (though not all) of the cap-and-trade proposals now before Congress.

In a prominent op-ed

Today in the Washington Post, Rep. John Dingell has an op-ed arguing on behalf of a carbon tax: I apparently created a mini-storm last month when I observed publicly for at least the sixth time since February that some form of carbon emissions fee or tax (including a gasoline tax) would be the most effective […]

It’s not the same as a carbon tax, and it’s not cool

I’ve noticed that lots of people talk about a carbon tax and a gas tax as if they’re interchangeable, or the same thing, or connected parts of some larger package. That’s bad. Please stop it. A carbon tax is just that: a tax on carbon content. It could take numerous forms, but it’s generally agreed […]