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U.S. progressive activists have turned away from carbon pricing. Some are opposed, some are indifferent but few, it seems, vocally support carbon taxing or other ways to price carbon emissions.

To be sure, we have no data tracking left-progressives’ attitudes toward pursuing carbon taxes as part of a climate policy agenda. Still, it’s safe to say that support for carbon taxes by prominent progressive-identifying leaders and organizations is far less common today than it was early on in Barack Obama’s presidency, when a Democratic carbon cap-and-trade bill passed the House but failed in the Senate.

A case in point is Are We Entering a New Political Era?, a May 31, 2021 New Yorker magazine profile of the insurgent group Justice Democrats who were reported to be “reshaping the Democratic Party by giving moderates an unignorable reason to guard their left flank.” The article plumbed the politics of the climate crisis and the Green New Deal without once mentioning carbon taxing — a clear sign that the idea of pricing carbon emissions has fallen off progressives’ political map.

(Curiously, the article mischaracterized Bernie Sanders’ 2016 climate plan as relying on “tax cuts and other market-based incentives.” Sanders’ climate platform actually centered on an aggressive carbon tax, not tax cuts, and we don’t recall his ever characterizing carbon taxing as market-based — a label we consider shallow and reductionist.)

Here, after a quick look back at the watershed 2016 carbon tax referendum in Washington state, we assess political progressives’ stances toward carbon pricing during the Biden presidency. This page can be viewed as a companion to our Carbon Pricing and Environmental Justice page.

We say “stances” (plural) because there’s a range of views on carbon pricing among political progressives. Still, mirroring changing currents among environmental justice advocates, politically active left-progressives in recent years have distanced themselves from carbon tax advocacy. Considering the U.S. right wing’s descent into near-monolithic climate denialism (summarized on our Conservatives page), the antipathy to carbon pricing on the left is helping to relegate full-throated support for pricing carbon emissions to an ever-narrowing political center.

The divisive 2016 battle over Washington state’s carbon tax referendum

The 2016 referendum to enact a carbon tax in Washington state was a political watershed for carbon pricing. Bypassing a coalition of environmental-justice advocates and other progressives, the bipartisan group Carbon Washington placed a revenue-neutral carbon tax on the ballot. Initiative-732 would have levied a statewide $20 per ton carbon emissions fee. Rather than investing in low-carbon infrastructure and frontline communities, the proceeds would have been applied to cutting the state sales tax, the nation’s highest, by a percentage point — a move intended to shield lower- and middle-income households from the financial burden of higher fuel prices from the carbon tax.

The statewide coalition of progressives objected not only to this “revenue-neutral” form of carbon taxing but also to having their slower, consensus-building methodology trampled by upstarts aiming to touch off a nationwide prairie fire of state carbon taxes leading to a national carbon price. Progressive-identifying state organizations, augmented by prominent national figures like Service Employees International Union chief Mary Kay Henry, media darling Van Jones, and globe-trotting author Naomi Klein, lined up against the measure while most environmental groups remained neutral. I-732 lost resoundingly, and since then the divide in the climate ranks between carbon tax acolytes and left-leaning forces has only deepened. (The story is recounted on our page, Washington’s 2016 carbon-tax defeat.)

Ten reasons progressives have soured on carbon pricing

The schism over Washington’s I-732 didn’t emerge in a vacuum. Skepticism about carbon pricing — and pricing mechanisms generally — has long been present among people who lean progressive. We’ve collected and summarized ten reasons (they’re numbered for later reference):

1. Sympathy for the idea that carbon pricing commodifies the natural world and demeans humans’ right to a safe environment and climate.
2. The belief that pricing carbon emissions lets the affluent buy their way out of pollution regulations intended to protect vulnerable populations as well as the larger environment.
3. Suspicion that carbon pricing is a quintessential neoliberal policy, and thus a handmaiden to austerity policies that elevate private enterprise and well-being above public governance.
4. The oil industry’s ostensible support, which some regard as a badge of dishonor or Trojan Horse, or both.
5. A preference for taxing billionaires’ and multimillionaires’ wealth rather than for broadly based carbon taxes that ensnare poor people as well as rich.
6. Disdain for “market-oriented” measures as ploys to gain support from Republican voters and legislators.
7. Belief that energy use is essential down to the last drop, which would make pricing mechanisms punitive rather than curative.
8. Skepticism of the idea — a tenet of economics — that prices are a powerful determinant of human behaviors and choices.
9. A preference for “carrots,” i.e., subsidies that lower sticker prices of alternatives to fossil fuels, versus the “stick” of making fossil fuels cost more.
10. The conviction that society must be remade from the ground up through expansive public investment rather than through more diffuse programs with a top-down appearance.

These objections were always lurking. Nevertheless, in the past most progressives were willing to swallow them in the interest of gaining climate progress through eliminating fossil fuels’ artificial price advantage over efficiency and renewables. That changed with the 2016 Washington state schism, the rising opposition to carbon pricing by environmental advocates of color, and the sense of siege that settled in among progressives after the election of Trump — a cataclysm that appeared to require more fundamental responses than merely “tinkering with prices.”

In some ways, the changed mood comes down to the incongruity of seemingly politically-neutral calls to price carbon alongside the progressive mantra that “another world is possible.” Not many peoples’ idea of utopia includes triple-digit carbon taxes. (Though it’s also true that utopia doesn’t go well with a broken climate.)

Rebuttals

To carbon-tax proponents, all ten concerns are rebuttable:

1. Better to commodify nature than leave it prey to ever-greater assault by failing to exact a price for damaging it.
2. Similarly, making the affluent pay to pollute is preferable to letting them keep polluting for free.
3. Rather than being a detriment, carbon pricing’s ostensible neutrality makes it a perfect complement — administratively as well as politically — to progressives’ desired regulations, standards and investments.
4. Exxon and BP’s occasional professions of support for token carbon taxes are an obvious feint to advocates’ pushes for “robust” (triple-digit) carbon tax levels and should be treated as such.
5. Nothing precludes taxing billionaires and also taxing carbon emissions; that’s CTC’s preferred policy suite, in fact, as noted here and here.
6. Unlike cap-and-trade programs that entail markets in emission permits, carbon taxes are not “market mechanisms” — a canard that should be retired.
7. Changing energy usage overnight can be difficult, even sacrificial; but over the longer time frames that matter for climate, energy use is surprisingly elastic (fuller discussion here).
8. Prices influence the vast majority of the billions of short- and long-term daily decisions that collectively determine usage levels of fossil fuels and, hence, carbon emissions.
9. Raising prices of “bads” reduces their use considerably more than does lowering the prices of the multitude of possible alternatives. (See CTC’s 2014 congressional testimony quantifying the longer reach of carbon taxes vis-a-vis subsidies for low-carbon fuels and technologies: pdf.)
10. As noted in #3, carbon taxing is perfectly compatible with public investment and community participation; if it helps, think of carbon taxes as a tailwind to everything we want.

Admittedly, rejoinders don’t assuage the aversion to carbon pricing — even “pure” carbon taxing, untainted by offsets or other carve-outs — felt by most vocal progressives. To some on the left, carbon pricing presents as a piecemeal, reductionist, soulless approach that fails today’s “intersectional” moment. It’s not that pricing carbon won’t cut emissions (though we suspect that most progressives don’t fully grasp its reach — see points 7 and 8), but that, for many progressives, carbon pricing feels desiccated, dated and inadequate to the demand that everything wrong in the world be confronted at once.

Critiques of carbon pricing from a Spring, 2021 podcast about it

The Pricing Nature podcast gave voice to several prominent progressive climate activists in a May, 2021 episode, Carbon Pricing Hits a Brick Wall on the Left. We’ve tagged these excerpts from the podcast’s Substack page with our bullet points they match with:

Keya Chatterjee (then-executive director, US Climate Action Network): There’s simply a philosophical opposition —particularly in many indigenous cultures — there’s a philosophical opposition to the idea that you can give money to pollute. You can give money and continue to do something wrong as long as you pay to do that thing. (Reasons #1 & #2)

Michael Méndez (assistant professor, U-C Irvine): Initially, maybe 10 or 15 years ago, a majority of California environmental justice groups were advocating for carbon pricing. While it’s still a market-based solution or a neoliberal solution, it more closely aligned to their goals of having more stringent reductions in polluting facilities near the communities that they were living in. Over the time that evolution has changed a little and environmental justice groups have grown and have more influence in state legislatures and city halls, and to some extent at the federal government, where they’re advocating against all types of market-based mechanisms or neoliberal solutions. (#3, #6)

What’s striking about those statements is their abstract quality. Philosophical opposition . . .  market-based mechanisms . . . neoliberal solutions. Nothing about whether and how fast carbon taxes might actually cut carbon emissions, reduce co-pollutant emissions in fenceline communities, and make poor and working-class families better off financially.

Keya Chatterjee: We have massive income inequality in this country. We have massive racial injustice. We have a huge wealth gap between black and white people in this country, a massive wealth gap. There is nothing that we should be doing that puts any additional burden on people who have less. It should be quite the opposite. If we need to pay to deal with the climate crisis, that money should come from the people who created the climate crisis, the polluters. If we need more money, it can come from a wealth tax. (#5, #7)

David Roberts (author of the Volts newsletter): I think they [Green New Deal proponents] realized there just aren’t enough environmentalists to do something this big. Like we’re talking about remaking the entire economy. We’re talking about revolutionizing the entire direction of the world, you know? And that’s not something that the “environmental movement” has the juice to do. If we want to do that, we have to build a coalition. We have to bring everybody together. (#4, #8, #9, #10)

Unacknowledged in Chatterjee’s quotes in the Substack page is that with the right carbon tax, such as Citizens Climate Lobby’s fee-and-dividend, the dividend puts more money back in most poor and working households’ pockets than the fee takes away through costlier fossil fuels. She’s right, of course, about systemic economic inequality and massive wealth gaps — a matter so central to our dysfunctional politics and society that our site has an entire page about it. And as we’ve written repeatedly, as in this 2019 post, A New Synthesis: Carbon Taxing, Wealth Taxing & A Green New Deal, we’re in complete synch with her in wanting wealth taxes to pay for the Green New Deal.

Chatterjee almost certainly is conversant with the various carbon dividend proposals. Could it be that, like some other progressives, she believes in her heart that carbon tax revenues should be spent on carbon-reduction programs (rehabbing leaky houses, boosting public transportation, and so forth) and thus opposes distributing the revenues as dividends to households? Perhaps she lacks conviction that making coal, oil and gas cost more will actually move the needle on decarbonization?

We suspect it’s the latter. For evidence there’s Chatterjee’s phrase, “If we need to pay to deal with the climate crisis,” suggesting that, like many progressive activists, she views carbon taxes only as pay-for’s to finance green infrastructure and overlooks their other dimension: inducing across-the-board changes in behavior and investment.

Then there’s climate-politics commentator David Roberts, contending that the imperative of constructing a big-tent climate movement overrides the potential payoffs from carbon taxes — a thesis he trenchantly articulated in his May 2020 Vox post, At last, a climate policy platform that can unite the left.

“For the first time in memory,” Roberts wrote then, “there’s a broad alignment forming around a climate policy platform that is both ambitious enough to address the [climate] problem and politically potent enough to unite all the left’s various interest groups.” The platform, which Roberts and others dubbed S-I-J (Standards-Investment-Justice), pointedly omitted carbon pricing:

Carbon pricing — long treated as the sine qua non of serious climate policy — is no longer at the center of these discussions, or even particularly privileged in them. For one thing, there’s the political economy: Raising prices is unpopular, and raising prices enough, fast enough, to hit the 2050 target will be an almost insuperable political challenge. Cap and trade is still in the reputational toilet. Carbon taxes never saw the bipartisan support their backers always promised. The politics of carbon pricing just don’t seem to be going anywhere. (emphasis added)

There, at last, is an objection to carbon pricing that registers. Indeed, we share enough of it to have declared, three months into the Biden administration, that we did not want the president or Congressional Democrats to seek carbon tax legislation at least until after the 2022 midterms, on grounds that it can’t pass until the Democrats have more than paper-thin majorities. We also expressed strong support for the climate provisions of the Biden-Schumer Inflation Reduction Act, even though they embody the diametrically opposite approach from carbon pricing: making clean energy cheap rather than making dirty energy more expensive.

We differ from Roberts, however, in hoping that larger Congressional margins will embolden Biden to push for a carbon tax if and when Democrats have firm control of Congress . As much as we admire Roberts’ perspicacity, we’re not sure he has ever tuned in fully to carbon taxers’ key argument: pricing carbon emissions will go a long way to curtailing and eliminating fossil fuels, while not pricing them almost certainly consigns climate efforts to falling short. We also note the circularity implicit in Roberts’ last sentence excerpted above: since carbon pricing isn’t going anywhere, let’s set it aside, which ensures it won’t go anywhere.

Like Roberts and other progressives, we believe another world is possible, but we also believe carbon pricing is a key to building it.

CTC’s Carbon-Tax Strategy

Following, from mid-2021, was our rough schema for the remainder of 2021 and all of 2022:

1. Biden and Congressional Democrats enact uncontroversial wind, solar and electric vehicle incentives and programs as part of an infrastructure package.
2. By establishing and showcasing alternatives to fossil fuels, these measures soften opposition to carbon pricing somewhat.
3. Along with vehicle and appliance efficiency standards, these initiatives cut carbon emissions, albeit not massively (due to both lead times and the fact that neither renewables nor standards attack fossil fuel use holistically).
4. The stubbornness of U.S. carbon emissions increases belief in the necessity of carbon pricing to achieve deep cuts.
5. The Biden administration aggressively addresses disparate pollution incidence and other environmental injustices through such initiatives as its proposed $20 billion plan to reconnect predominantly Black neighborhoods severed by highways in mid-20th Century “slum clearance,” winning greater trust among EJ advocates.
6. Biden and Congressional Democrats raise taxes on wealthy businesses and households, mollifying progressives and making inroads into Republicans’ “populist” base.
7. These and other popular and successful programs enable Congressional Democrats to expand their majorities in the Nov. 2022 midterms.

“That’s a tough needle to thread,” we wrote then, adding that “we believe it’s achievable and can lay the groundwork for enacting a meaningful carbon tax in 2023-2024.”

Conversely, though conditions can always change, right now we don’t see other paths to the kind of robust carbon pricing that can slash U.S. emissions and establish a template for concerted global climate action.

This page reports on carbon taxes that have been enacted (and in one case, enacted and withdrawn) in:

• • European Union: Emissions Trading System
  • United Kingdom
  • Ireland
  • Australia
  • Chile
  • Sweden

Canada has its own page, where we summarize its nationwide carbon price and also report in detail on British Columbia’s carbon tax, the Western Hemisphere’s (if not the world’s) most comprehensive and transparent carbon tax.

European Union: Emissions Trading System

The European Union (EU) implemented a carbon cap-and-trade system in 2005. The EU Emissions Trading System (ETS) is the world’s first international emissions trading system, operating in all EU member countries plus Iceland, Norway, and Liechtenstein.

The EU ETS covers over 10,000 stationary emitters — mostly power stations and industrial plants. It also covers domestic and intra-EU air travel. In toto, the ETS covers around 40 percent of the EU’s greenhouse gas (GHG) emissions, making it the largest carbon cap-and-trade program in the world, covering approximately 1.5 billion metric tons of CO2 per year.

For much of its existence, the ETS was largely ineffectual because its emissions caps were too high and granted large numbers of free allowances to big polluters. Concern about carbon leakage — polluters from the EU potentially going elsewhere to do their polluting, hence, “leaking” carbon from the EU — drove the EU to implement free allowances as its primary method of allocation back in 2005. As a result, polluters obtained large numbers of allowances — in 2013, manufacturers received 80% of their allowances for free — and many were able to maintain a surplus.

Compounding the problem of giveaways, the EU grossly overestimated future CO2 emissions in setting the cap amounts, resulting in a too-high number of allowances. In the first phase of the EU ETS, from 2005-2007, only three member states had caps lower than baseline 2005 emissions levels. And with the 2008 financial crisis driving emissions down, the caps were rendered even more useless.

Background

In December 2019, the European Commission — the executive branch of the EU — introduced the European Green Deal, an ambitious climate policy package with the general goal of at least 50% GHG emissions reductions by 2030 and carbon neutrality by 2050. The European Green Deal represents the EU’s main legislative effort to meet its commitments under the Paris Climate Agreement. The Green Deal included the ETS as an integral part of its action plan.

In 2020, the EU expanded to a 55% reduction its commitment to reduce emissions 40% from 1990 levels by 2030 and. The ramp-up came in December 2020, following all-night negotations in which the EU committed to helping coal-heavy countries like Poland meet individual-country commitments.

The U.K.’s concurrent exit from the EU and ETS caused a substantial exit of low-carbon power producers, resulting in an increase in average carbon contents for the remaining EU power producers. It’s not yet clear how these changes will play out, as the U.K. has not announced plans to link with any other carbon trading systems.

How the ETS Works

The European Trading System implements an emissions cap for the overall volume of GHG that may be emitted by covered airlines, power plants and factories. Emitting companies purchase at auction — or receive — tradable allowances, the total number of which is capped at a level that steadily decreases each year. Since 2013, the emissions cap has applied to the EU as a whole, not individual countries. The current cap for 2021 on GHG emissions from these stationary installations is 1.57 billion tonnes per year, or roughly half of 2019 CO2 emissions for the entire European Union, including the U.K.

The price of a carbon allowance has roughly doubled in the past several years, reaching a high of nearly €43 in March 2021. BloombergNEF (New Energy Finance) projects that prices will hit €100 by 2030. The higher price levels enable the ETA to “arguably serve its purpose by making it too expensive for emitters of fossil fuels to continue business as usual,” as reported in early 2021 by Alessandro Vitelli of Montel News.

Since January 2019, the EU ETS has included a market stability reserve (MSR), which maintains any surplus of allowances, allowing for adjustments to the supply of allowances up for auction, if needed. Unallocated allowances are transferred to the reserve, which is operated under strict rules that bar meddling by the Commission or Member States.

Phases

The ETS’s 15-year tenure to 2020 may be divided into three phases.

• Phase 1, from 2005-2007, served as a pilot of “learning by doing.” During that phase, about 12,000 installations received permits to emit about 2.2 billion tons of CO2, nearly half of EU CO2 emissions at that time. Most allowances were given for free.
• In Phase 2, 2008-2012, the cap on allowances was reduced by 6.5% compared to 2005. Phase 2 aligned with the first commitment period of the Kyoto Protocol, when countries in the EU ETS had to fulfill commitments to reduce emissions by an average of 5% below 1990 levels. (The EU and its member countries ended up cutting emissions by 8% below 1990 levels.) Several countries held auctions.
• Phase 3, 2013-present, saw the application of a single, EU-wide cap on emissions instead of the previous system of national caps. Auctioning replaced free allocation as the default method of allowance allocation. Phase 3 also brought more sectors and gases under the EU ETS umbrella. During this phase, the EU-wide cap on stationary installations decreased by 1.74% each year.

For Phase 4, from 2021-2030, the Commission revised and strengthened the EU ETS in 2018. The overall number of emission allowances will now decrease at an annual rate of 2.2%, instead of 1.74%. However, significant amounts of free allowances remain, ostensibly to combat carbon leakage. The EU will still give 100% free allocation to sectors at the highest risk of relocating production outside the EU. For industries less likely to flee, free allocation will be phased out, from a maximum of 30% in 2026 to zero by 2030. Overall, the EU predicts 6 billion free allowances will be granted from 2021-2030.

Impact

The EU ETS’s specific targets are to reduce GHG emissions by 21% between 2005 and 2020, and by 43% by 2030.

Total EU emissions of greenhouse gases fell by 23 percent from 1990 to 2018, according to the European Commission. Emissions from ETS sectors alone fell 33% from 2005-2019.

Carbon leakage

In its Green Deal statement, the European Commission addressed the concern that countries across the world will continue to have “differences in levels of ambition,” by pledging to propose a carbon border adjustment mechanism as an alternative to the ETS’s carbon-leakage measures. As Inside Climate News explains carbon border adjustments:

Economists have long suggested that there’s a way to break that global impasse [on climate action] — and that’s to treat carbon like any other international trade dispute. Impose tariffs or quotas on imports from countries that have given their manufacturers an unfair advantage of uncontrolled carbon emissions.

In March 2021, the European Parliament adopted a resolution favoring a carbon border adjustment mechanism. The European Commission will propose legislation in June 2021.

United Kingdom

The United Kingdom — England, Scotland, Wales and Northern Ireland — has maintained a carbon tax since 2013. Technically, the tax is a “carbon price floor” (CPF) that functions as the minimum price that fossil fuel producers pay for emitting CO2. The CPF applies to energy-intensive industries only and is not economy-wide.

There have been several calls lately to tax carbon emissions in the U.K. at a higher rate and on a broader scale. Grantham Institute researchers Josh Burke and Esin Serin argued in a fascinating Feb. 2021 opinion piece that carbon pricing should be enacted not as a stand-alone but “as part of a significant and broad package of post-COVID fiscal reforms.”

History

As a result of the 2008 Climate Change Act — passed with overwhelming support across parties — the U.K. was required to drastically reduce its carbon output according to five-year carbon budgets. Unsurprisingly, the U.K. — birthplace of classical economics and home base of Sir Nicholas Stern, the renowned economist who in 2007 famously called climate change “the result of the greatest market failure the world has seen” — turned to carbon pricing to carry part of the load.

In 2009, the Department of Energy and Climate Change released a report, “Carbon Valuation in UK Policy Appraisal: A Revised Approach,” detailing reasons to adopt a carbon price. Witnesses at the 2009-2010 Environmental Audit Committee’s report on Carbon Budgets called for a carbon price floor, but the Labour government opposed the idea. Then in 2010, the Coalition government consulted on proposals for a CPF, and the measure was introduced in the 2011 Budget for implementation in 2013. The 2011 Budget framed the CPF as a way to “drive investment in the low-carbon power sector” and “support the long-term stability of the public finances.” The government also said the CPF “achieves the right balance between encouraging investment without undermining the competitiveness of UK industry.”

When the carbon floor was introduced, the Confederation of British Industry and Renewables Energy Association were supportive, but the measure also found criticism from several sides that argued it was, by turns, ineffective, expensive, and uncertain for investors. But the government framed the tax as the best move for consumers, stating that the “market-based approach to pricing carbon provides the most efficient and cost-effective policy framework to meet our environmental goals.”

Less than 10 years after implementing the CPF, the U.K. is halfway to meeting its goal of net zero greenhouse gas emissions by 2050. U.K. GHG emissions in 2020 were 51% below 1990 levels, putting the country mathematically on track to reach net zero by 2050.

30 Years of Falling Emissions

The first graph makes clear that this 2020 milestone is only slightly due to the COVID-19 pandemic. The 2020 decline in emissions, though severe, roughly 40 million tonnes, was no greater than that in 2014 (also 40 million tonnes) and was less than the 56 million tonne drop in 2009, during the severe recession. Emissions fell in almost every year from 1990.

 

The anticipated recovery from COVID-19 will, of course, provoke a partial rebound in emissions. The national government’s March 2021 Industrial Decarbonisation Strategy specifies that industrial emissions must fall by two-thirds before 2035 to enable the U.K. to meet its Dec. 2019 pledge — the first by a major economy in the world — to reach net-zero GHG emissions by 2050.

What accounts for the huge drop in U.K. greenhouse gas emissions from 1990 to 2019? Carbon Brief credits three changes for around 90% of the decline:

1. Electricity that doesn’t rely on coal – 43% of electricity was generated by renewables in 2020 (“renewables” does not include nuclear power, but it does include wind, hydro, solar, and bioenergy).
2. Cleaner industry and a shift away from carbon-intensive manufacturing.
3. A pared-down, cleaner fossil fuel supply industry.

It’s important to note, however, that a considerable amount of U.K. “renewable” electricity is generated by burning biomass, i.e. wood pellets. Inclusion of bioenergy as a renewable source of energy is at best contentious and more likely a scam, as journalist Michael Grunwald pointed out in his March, 2019 expose in Politico.

U.K. Carbon Pricing: Details

Initially priced at £16/tonne in 2013, the U.K.’s carbon price floor (CPF) was set to increase to every year, hitting £30/tonne by 2020 and £70/tonne in 2030, but was capped in 2015 at £18.08/tonne until 2021 (20.40 euros at the 2015 exchange rate). The CPF has impacted the generation fuel mix significantly; coals share fell from 41% in 2013 to less than 8% in 2017.

Brits sometimes call their CPF a “top up” tax since it was intended to top up European carbon pricing in the form of the EU emissions trading scheme (ETS). The U.K. finished its Brexit transition from the EU at the end of 2020, creating the need for a new, non-EU emissions trading scheme (ETS).

The U.K. announced in February 2021 that it would launch its own carbon trading scheme in May 2021. The U.K. government says their ETS replaced the UK’s participation in the EU ETS as of January 1, 2021, but the first U.K. ETS emissions auctions will not begin until May 19, 2021.

According to Auctioning Regulations released in February, bids will follow a minimum Auction Reserve Price (ARP) of £22/tonne when they begin in May, but the price will increase: “The government will consult on its intent to withdraw the ARP as part of the planned consultation to appropriately align the U.K. ETS cap with a net zero trajectory which will be launched later this year.”

The floor for the U.K. ETS was initially set to 15 pounds but raised to 22 pounds per tonne, perhaps following some form of the logic suggested by climate advocacy group Ember: “The EU ETS has averaged a price of around £22/t (€25/t) over the last two years, so it would make sense to set the U.K. carbon price floor to at least that level, especially with further reform to strengthen the EU ETS price due in the coming year.”

The U.K. government stated in the Autumn Budget 2017 that they were “confident that the Total Carbon Price, currently created by the combination of the EU Emissions Trading System [of 7.78] and the Carbon Price Support [of 20.40], is set at the right level, and will continue to target a similar total carbon price until unabated coal is no longer used.”

Ireland

(Thanks to Wesleyan University environmental studies major Nicholas J. Murphy for expanding this section in July 2015.)

Ireland enacted a carbon tax in 2010 under a coalition government of its Green Party, Fianna Fáil (one of Ireland’s two mainstay center-right parties) and the Progressive Democrats. Originally designed to provide a double dividend by offsetting income taxes, the revenue was re-allocated to satisfy the diktats of the Troika — the triumvirate of the European Commission (EC), International Monetary Fund (IMF) and European Central Bank (ECB) that administered the austerity policies on EU member nations bailed out during the 2008 debt crisis. (See OECD working paper on Ireland’s Carbon Tax and the Fiscal Crisis.)

The effect is arguably similar, since income taxes would have had to rise, absent the carbon tax revenues. Frank Convery, an economist at University College Dublin considered the foremost expert on Ireland’s carbon tax, writes enthusiastically:

Ireland is a pioneer in the implementation of a carbon tax. This has allowed us to avoid (more) increases in income tax which would have further reduced disposable income, increased labour costs and destroyed jobs. It is also facilitating us in meeting our very demanding legally binding obligations to reduce greenhouse gas emissions, and provides support for the creation of new jobs in improving energy efficiency and growing the low carbon economy.

Ireland’s carbon tax covers nearly all of the fossil fuels used by homes, offices, vehicles and farms, based on each fuel’s CO2 emissions. It began in 2010 at €15/ton and rose to €20/ton in 2012, where it remains today. Solid fuels (coal and peat) were added in 2013 at €10/ton after concerns from agricultural interests were resolved, and that price has since risen to match the €20 price on other fuels. The tax generates roughly €100 million in revenue per €5 of tax, meaning it currently draws about €400 million annually.

The carbon tax has been complemented by other environmental taxes based on vehicle fuel efficiency and domestic landfill waste, as New York Times environmental correspondent Elisabeth Rosenthal reported in Dec. 2012, in Carbon Taxes Make Ireland Even Greener:

Over the last three years, with its economy in tatters, Ireland embraced a novel strategy to help reduce its staggering deficit: charging households and businesses for the environmental damage they cause. The government imposed taxes on most of the fossil fuels used by homes, offices, vehicles and farms, based on each fuel’s carbon dioxide emissions, a move that immediately drove up prices for oil, natural gas and kerosene.

Household trash is weighed at the curb, and residents are billed for anything that is not being recycled. The Irish now pay purchase taxes on new cars and yearly registration fees that rise steeply in proportion to the vehicle’s emissions.

Environmentally and economically, the new taxes have delivered results. Long one of Europe’s highest per-capita producers of greenhouse gases, with levels nearing those of the United States, Ireland has seen its emissions drop more than 15 percent since 2008. Although much of that decline can be attributed to a recession, changes in behavior also played a major role, experts say, noting that the country’s emissions dropped 6.7 percent in 2011 even as the economy grew slightly.

Notably, the Irish carbon tax was designed to fill gaps left by the European Union Emissions Trading Scheme (EU ETS), which addresses only large polluting firms and accounts for only roughly 40% of emissions sources while being hampered by volatility. The case of Ireland demonstrates the potential for EU-wide cooperation in setting an effective harmonized price on carbon in preference to a piecemeal and volatile ETS.

The elements of Ireland’s carbon tax introduced in 2010 are specified in the Finance Act of 2010. (See Part 3 (Customs and Excise), Chapters 1 (Oil), 2 (Natural Gas), and 3 (Solid Fuels) for tax rates and other provisions.)

Ireland’s Vehicle Registration Tax is also partly emissions-based. A VRT Calculator on the Irish Tax & Customs website provides a means to estimate the amount of tax on a vehicle based on Make/Model/CO2 Emissions. Interestingly, the CO2-sensitive VRT has touched off a pronounced shift to diesel vehicles, which emit less CO₂ but more of other pollutants with localized health impacts. Changes to the tax rate in Budget 2013 are detailed here.

Finally, the law firm Arthur Cox offers these useful guides ([1] & [2]) to Ireland’s carbon tax.

 

Australia

The widespread wildfires devastating much of Australia in the Southern Hemisphere’s 2019-2020 summer have drawn worldwide news coverage and cast that country’s retrograde official climate stance in appropriately harsh light. CTC’s blog post, Australia’s Brief, Shining Carbon Tax distilled and updated the information below and also revealed the stunning detail that the two years in which Australia had a national carbon tax, 2012-2014, saw dramatic drops in CO2 emissions, both absolute and relative to GDP (see graphic directly below, at left). As of this mid-January writing, however, no other media had picked up this finding.

The Liberal Party government of PM Scott Morrison has come under withering attack for hewing to the climate-denying line of the Murdoch-dominated press that alternately blames the fires on arsonists and wildland “mismanagement” while hand-wringing that unilateral action to curb Australia’s emissions would have little or no discernible impact because the country accounts for only 1 percent of global CO2. The Daily Beast has reported that James Murdoch, the media baron’s younger son, was sharply critical of Fox News and News Corp’s “climate-change denial,” while Australian union organizer James Raynes posted the ironic tweet shown at right.

Our earlier coverage of Australia carbon taxing, though somewhat dated, is below. Be sure to read our Jan. 7 (2020) post.

Australia instituted a carbon tax on July 1, 2012 and repealed it two years later, on July 17, 2014. Both events were milestones. Though some countries, notably Sweden, have had longer-standing and stronger national carbon levies, Australia’s was the first explicit national tax on carbon emissions. The repeal was also precedent-setting, and predictably it has garnered far more global attention (and hand-wringing) than did the tax itself.

The tax level, $23 per tonne (metric ton), equated to $19.60 per U.S. ton of CO2, at the U.S.-Australian dollar exchange rate (1.00/0.94) in July 2014.

As recounted by Australian journalist Julia Baird in a 2014 NY Times op-ed, A Carbon Tax’s Ignoble End: Why Tony Abbott Axed Australia’s Carbon Tax, published a week after Australia’s Senate voted for repeal, the tax was a political stepchild, opposed by the country’s two major political parties, left-leaning Labor and center-right Liberal, and brokered by the Greens during a period of governmental stalemate in 2011-2012:

In 2010, the Labor prime minister, Julia Gillard, said she would look at carbon-pricing proposals, but also promised, “There will be no carbon tax under the government I lead.” Then, under pressure to form a minority government, she made a deal with the Greens and agreed to legislate a carbon price: a tax by any other name.

The heat, anger and vitriol directed at her as a leader — and as Australia’s first woman to be prime minister — coalesced around the promise and the tax. It grew strangely nasty: She was branded by a right-wing shockjock as “Ju-Liar,” a moniker she struggled to shake. The political cynicism surrounding the carbon tax certainly reduced Ms. Gillard’s political capital, but it was a perceived lack of conviction in the policy itself that damaged the pricing scheme’s credibility.

See also Australian ABC News’ superb Timeline of the tax’s torturous political path, posted in July 2014.

Predictably, the Times’ news dispatch, Environmentalists Decry Repeal of Australia’s Carbon Tax, cast the repeal as greens vs. economy, ignoring the reductions in carbon intensity in the power sector (which helped blunt the tax’s cost) as well as provisions that directed revenues to households to mitigate consumer impacts (see below).

Australia’s carbon tax also imposed climate-equivalent fees on methane, nitrous oxide and perfluorocarbons from aluminium smelting, and was collected from roughly 500 of the nation’s biggest emitters, according to the Big Pond Money blog. These included electricity generation, stationary energy producers, mining, business transport, waste and industrial processes; some (non-electric) industries were eligible to receive trade-exposure based assistance, according to the same source. Most if not all road transport fuel (i.e., petrol) was exempt. The tax level was indexed to inflation and rose from the initial $23.00 (Australian) per tonne to $24.15 per tonne in 2013 and $25.40 in 2014. Beginning July 1, 2015 the price was to be set by a cap-and-trade system linked to the EU ETS (whose price has fallen below $10/T CO2).  PolitiFact Australia compared the size and breadth of its carbon tax with others around the world, neatly refuting the Liberal Party’s pejorative characterization of the tax as “the world’s largest.”

In May 2013, one of Australia’s major papers, the Age, reported that national electricity generation with highly polluting lignite coal had fallen 14% vs. the same year-earlier period in the tax’s inaugural nine months, with conventional coal-fired generation also falling, by nearly 5%. During the same period, renewable electric generation “soared” by 28% and electricity output from lower-carbon methane increased by 9.5%. While factors such as greater hydro-electricity availability, flooding of a major coal mine, and implementation of a 20% renewable-energy target probably contributed to the declines in coal use, the 2.4% reported drop in overall electricity generation suggests that the carbon tax played a part.

Overall, reported the Age in the same article, “the emissions intensity of the national electricity market has fallen 5.4 per cent since the carbon price was introduced [presumably over the nine months extending from July 2012 through March 2013], meaning carbon emissions from power generation is [sic] down 7.7 per cent, or 10 million tonnes, from the previous nine months.”

Similar statistics were reported earlier, in Jan. 2013, by “The Australian” newspaper. The “big change in the mix of power” was attributed to “much greater use of renewable energy from hydroelectricity from the Snowy Mountains and Tasmania, and also wind farms.” The same source also said that “The retreat of manufacturing has been a factor, with the closure of the Kurri Kurri aluminium smelter last year and cutbacks in other metals plants affecting industrial demand.” A consultant cited by The Australian added that “the spread of roof-top solar panels and of appliances that used less energy were reducing growth in household consumption” of electricity, while another consultant, pointing to reduced electricity generation and emissions, said that “changes of this scale are without precedent in the 120-year history of the electricity supply industry.”

According to “The Australian,” the power sector accounted for about half of Australia’s emissions and a larger share of the carbon tax, because some of the largest emitters have free permits.”

Use of the carbon tax revenues was complex. Some went to the Australian Renewable Energy Agency for project funding and other monies providing “a raft of other compensation and development funds focused on biodiversity, low carbon agriculture, small business grants and support for indigenous communities,” according to Big Pond Money. More than half of the revenue was said to be earmarked to support low and middle income households to cover the increase in prices that business will pass on to consumers. The government also acknowledged, according to Big Pond Money, that the carbon tax would take more from 3 million households than it would return, while 2 million households would be no worse off and 4 million households better off. A Household Assistance Estimator developed by the authorities was said to provide a means for families to estimate how they would fare financially under the carbon tax.

A later AP story hammered Australia’s carbon tax, asserting that “Voters have never stopped hating the tax and its effect on their electric bills” and predicting that it would doom the ruling Labor Party in the Sept. 8, 2013 elections. “Longtime Labor Party supporters — even people who have helped cut pollution by installing solar panels at home — have flocked to the opposition,” AP reported, in Australian Gov’t Faces Carbon Tax Backlash at Poll (Sept. 6, 2013). “The government estimated the tax would cost the average person less than AU$10 per week,” said AP, “but three months after it took effect, most Australians surveyed by policy think-tank Per Capita said it was costing them more than twice that much. But they also expressed confusion, with most blaming the tax for higher gas prices even though it is not levied on motor fuel purchases.” In an e-mail, cap-and-dividend proponent Peter Barnes blamed the tax’s unpopularity on the absence of “100% dividends, fully transparent and highly visible.” We don’t disagree.

Update (January 2015): In case anyone doubted the effectiveness of taxing carbon pollution, the following graph of power plant CO2 emissions published in Australia’s Guardian shows what has happened in the year since the tax was repealed. The vertical red line is the repeal date.

See also, Emissions for power sector jump as carbon tax ends (Sydney Morning Herald, 1/7/15).

Chile

In October 2014, Chile enacted the first climate pollution tax in South America. It’s a modest levy — a mere $5 per metric ton of CO2 — that applies to only 55% of emissions. Moreover, it doesn’t take effect until 2018. Still, it’s a positive first step. The NY Times reported these details:

Chile’s tax, which targets large factories and the electricity sector, will cover about 55 percent of the nation’s carbon emissions, according to Juan-Pablo Montero, a professor of economics at the Pontifical Catholic University of Chile, who informally advised the government in favor of the tax. At $5 per metric ton of carbon dioxide emitted, Chile’s tax is lower than the $8-per-metric-ton carbon price in the European Union’s carbon-trading system, which has often been criticized as too lax. But it is higher than a carbon tax introduced in Mexico in January.

“We all understand we need to go way beyond the $5 mark” in order to really reduce carbon emissions, Dr. Montero said. However, he added, “I think this still allows you to start building the institutions that you need in the future, when you start moving forward toward more ambitious goals.”

Chile’s tax was enacted as part of a broader tax reform and revenue measure, according to the Times:

Chile’s approval of a carbon tax owes much to its positioning inside a broader tax package, experts said. At the same time that it passed the carbon tax, the Chilean government raised corporate taxes substantially, in a bid to increase revenues for education and other projects. As a result, the carbon tax raised less debate within Chile than it might have otherwise, though electricity companies have objected.

Sweden

Sweden enacted a tax on carbon emissions in 1991. Currently, the tax is $150/T CO2, but no tax is applied to fuels used for electricity generation, and industries are required to pay only 50% of the tax (Johansson 2000). However, non-industrial consumers pay a separate tax on electricity. Fuels from renewable sources such as ethanol, methane, biofuels, peat, and waste are exempted (Osborn). As a result the tax led to heavy expansion of the use of biomass for heating and industry. The Swedish Ministry of Environment forecasted in 1997 that by 2000 the tax policy would have reduced CO2emissions in 2000 by 20 to 25% more than a conventional, regulatory-based policy package (Johansson 2000). On September 17, 2007, Sweden’s government announced that it will increase its carbon taxes to address climate change. Petrol prices will go up 17 öre per litre, with the increase in fuel tax calculated on the basis of a 6 öre tax increase per kilo of CO2 emitted. (The Local)

A new (July 2014) major report by the International Monetary Fund, “Getting Energy Prices Right,” briefly summarized Sweden’s carbon-fuels tax regime as follows:

In the early 1990s, Sweden introduced taxes on oil and natural gas to charge for carbon and (for oil) sulfur dioxide and on coal-related sulfur dioxide and industrial nitrogen oxide emissions. These reforms were part of a broader tax-shifting operation that also strengthened the value-added taxes while reducing taxes on labor and traditional energy taxes (on motor fuels and other oil products). (See Box 3.5, “Environmental Tax Shifting in Practice,” p. 41. The full report is behind a paywall and may be ordered via this link; Chapter 1 of the report, a summary, may be downloaded at no charge via this link.)

Sweden’s carbon tax history and current status were summarized intelligently in a 2013 blog post by “realmelo,” who appears to be a graduate student in economics in British Columbia. Click here for her/his useful, brief report.

Other Nations

(Note: See comment at bottom of page on the Vermont University Law School book, The Reality Of Carbon Taxes In The 21st Century.)

France has no carbon price outside of the implicit price from its participation in the European Union’s Emission Trading System. In April 2016, however, Ségolène Royal, Minister of Environment, Energy and the Sea, issued a four-page declaration calling for the nations of Europe to adopt “a carbon component in the energy tax” of €22/tonne in 2016, with a price trajectory of €56/tonne in 2020 and €100/tonne in 2030. Converting from euros (at the 1.14 exchange rate of 4-April-2016) and metric tons, the price schedule equates to $23/ton today, $58/ton in 2020 and $103/ton in 2030. She wrote:

This measure is essential to encourage energy efficiency and the development of renewable energy in the transport and construction sectors, which have the largest potential for investment and job creation. This change can be made by revising directive 2003/96/CE restructuring the communal taxation framework for energy products and electricity, which has remained unchanged for several years. It may also be undertaken by Member States individually. It should also be based on the principle of fiscal neutrality to avoid increasing mandatory contributions and instead favour the transfer of taxation to fossil fuels. The context is favourable because the drop in the price of hydrocarbons and gas is significant enough so that the carbon component will not result in increasing the final bill including all taxes for consumers (including motorists). Thus, the introduction of the carbon component preserves purchasing power over the short term, but gives a clear signal of the need to quickly carry out energy retrofitting on housing, purchase clean vehicles and develop renewable energy (especially renewable heat and biogas).

Minister Royal’s statement also urged EU member states to “work for the establishment of the carbon price outside the European Union and unite countries that choose to act.”

The goal is not to impose a single worldwide price or a world CO2 market, but to bring together all committed countries and companies around common principles: ensure the carbon price is within the range of between $10-20/tonne before 2020 and $30-80/tonne in 2030; remove subsidies for fossil fuels; prepare for price convergence through networked carbon markets or mechanisms for rebalancing competition such as carbon inclusion mechanisms. The alliance may rely on the Carbon Pricing Leadership Coalition, on condition that it follows its road map and expands it to new countries.

Finland enacted a carbon tax in 1990, the first country to do so. While originally based only on carbon content, it was subsequently changed to a combination carbon/energy tax (U.S. EPA National Center for Environmental Economics). The current tax is €18.05 per tonne of CO2 (€66.2 per tonne of carbon) or $24.39 per tonne of CO2 ($89.39 per tonne of carbon) in U.S. dollars (using the August 17, 2007 exchange rate of USD 1.00= Euro 0.7405). Current taxes are summarized in a Ministry of the Environment fact sheet Environmentally Related Energy Taxation in Finland.

New Zealand made plans in 2005 to enact a carbon tax equivalent to $10.67 (of U.S.) per ton of carbon (based on conversion rate of USD 1.00 = NZD 0.71). The tax would have been revenue-neutral, with proceeds used to reduce other taxes (Hodgson 2005). However, a new government determined that the carbon tax would not cut emissions enough to justify the costs, and the tax was abandoned (Myer 2005). [CTC addendum: In Sept. 2007 the government unveiled a proposed emissions cap-and-trade scheme intended to cover all carbon emissions. The NZ Green Party’s preliminary assessment provides some details.]

The U.S. 2022 Inflation Reduction Act is intended to reduce carbon emissions in vehicular travel and other economic sectors through a broad range of energy incentives and subsidies led by measures to reduce the cost to manufacture and sell electric vehicles. This page links to coverage of the IRA and explores its likely implications for both carbon emissions and the project to enact economy-wide carbon taxes in the U.S.

Biden Administration Detailed Guide to the IRA

In December 2022 the White House released a 182-page guide to the energy and climate provisions of the Inflation Reduction Act. Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action is a 15 MB pdf.

Introduction

In a head-spinning 20-day legislative whirlwind from late July to mid-August, the Inflation Reduction Act of 2022 was unveiled by Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin, passed by the Senate and the House, approved by the Senate parliamentarian (and thus immunized against the filibuster), and signed by the President.

In the climate-policy firmament, the Inflation Reduction Act could be seen as an antithesis of carbon pricing. Rather than making dirty (fossil) energy costlier in the marketplace, it seeks to make clean energy cheaper by subsidizing low- or zero-carbon power sources. It also aims to leverage low-carbon electricity by paying vehicle and building owners to switch to electric power from combustion fuels that can’t themselves be decarbonized.

Nevertheless, the “IRA” stands as a landmark legislative achievement — the most ambitious as well as costliest federal initiative to reduce carbon and other greenhouse gas emissions. Moreover, the affirmative nature of the legislation — “upending the debilitating narratives of U.S. climate helplessness and Biden-Democratic Party haplessness,” as we wrote in early August in a post in The Nation (cross-posted here as well) — could some day open the door to federal legislation pricing carbon emissions.

What the Inflation Reduction Act Does

The IRA (download summary or full text) commits $370 billion in federal subsidies over the next decade to bring down the cost of “clean” (ultra low- or zero-carbon) energy and accelerate the electrification of U.S. vehicles, buildings and industry so that increasingly low-carbon power displaces carbon-spewing direct combustion of oil and gas. The designated spending pots are depicted in the New York Times graphic below.

Another section of the omnibus legislation authorizes the federal government to negotiate down prescription drug prices and expands subsidies for health insurance under the Affordable Care Act — measures intended to bolster and expand the Obama administration’s signature “Obamacare” legislation and  also situate climate legislation in a more popular context. And, in a potentially important precedent, the IRA sets in motion a greenhouse gas fee — not on CO2 but on “excess” methane emitted from oil and gas extraction and transportation infrastructure — to take effect in 2024.

Passage of the IRA ended a protracted period of U.S. backsliding from climate action. It also fulfills, if only as a first, albeit major, step, campaign commitments by Joe Biden and other national Democrats to tackle U.S. emissions and climate change. Its enactment was viewed as boosting the Democratic Party’s chances a retaining control of Congress in the 2022 midterms. [Post-election addendum: the Democrats did in fact surpass expectations in the Nov. 2022 voting, increasing their Senate majority by one and limiting their House losses to nine, though that was enough to flip control to the Republicans.]

This page presents and distills informed commentary on and analysis of the Inflation Reduction Act. We hope to soon tend to the legislation’s implications for advancing comprehensive, national-level U.S. carbon pricing.

A veteran journalist’s take: “It makes clean energy cheap.”

An excellent early entry point into the IRA is from the pen of veteran journalist Mark Hertsgaard. His Aug. 11, 2022 essay in The Nation, Does The Climate Bill Throw Environmental Justice Under The Bus?, touted the legislation as by far the biggest pro-climate policy by the U.S. or any other country, while making clear that it’s not enough by itself.

Mark’s piece is worth quoting at length, especially up front, where he said, Yes, the legislation is a big deal:

“It makes clean energy cheap, that’s the bottom line,” said Jesse Jenkins, an engineering professor at Princeton who conducted independent modeling of the spending. New federal money, often in the form of tax credits, will subsidize consumers who switch to electric vehicles or install heat pumps and other energy efficient household technologies. It will incentivize electric utility companies to shift from gas to renewables and oil and gas companies to minimize leaks of methane, an exceptionally potent greenhouse gas. It will pay to clean up America’s ports, a concentrated source of emissions that not only overheats the planet but poisons nearby communities, which tend to be disproportionately poor and people of color.

By doing all this and more, the Inflation Reduction Act will create 9 million jobs over the next decade in clean energy, clean manufacturing, and natural infrastructure (e.g., forests and parks), according to the Blue Green Alliance. The bill’s backers further assert that it will reduce annual US emissions by 40 percent from 2005 levels by 2030, a claim supported by three independent analyses that is further examined below. If achieved, that reduction would approach the 50 to 52 percent reduction that scientists say is needed to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels.

(We at Carbon Tax Center are less sanguine about 2030, in part because we question the apparent modeling assumption that the U.S. was already on track for a 30 percent reduction by 2030; U.S. 2021 emissions were only 14 percent below the 2005 baseline figure, not 20 percent, a figure calculated with 2020 emissions, an obvious aberration due to temporary Covid-related economic and energy contractions, yet one advanced by a high-profile NY Times climate columnist in May and repeated a month later in a NYT editorial. Note also that the bill’s backers didn’t credit the IRA with reducing U.S. emissions by 40 percent; rather, they pointed to the bill as a big assist to accomplish that job, tacking a high single-digit reduction onto that putative 30 percent “business-as-usual” reduction level.)

That’s another reason this bill is a big deal: It gives the United States much-needed credibility to urge other countries to slash their own emissions. The U.S. has taken many big steps on climate over the years, just mostly in the wrong direction. Instead of cutting emissions, it boosted them through subsidies and lax regulations. It has repeatedly cast doubt on whether there is even a problem, with the last president calling climate change “a hoax” to applause from fellow Republicans. At international conferences dating back to the Earth Summit in 1992, the same script has played out again and again: Other big emitters that don’t want to cut back hide behind the U.S. refusal to do so. If the Inflation Reduction Act becomes law, that dodge will no longer be credible.

Hertsgaard put G.O.P. climate obstructionism in a harsh light, asking “How much longer will the Republican Party be given a pass on its climate wrecking?” Here’s his answer:

Until Manchin’s surprise announcement that he was ready to support a climate bill after all, both wings of the movement, along with 99 percent of press coverage, was giving him all the blame for blocking climate progress on Capitol Hill. This was understandable, but bizarre given that his vote only mattered because Republican senators have been in lockstep opposition to climate action since, well, forever. Republicans in Washington have opposed real climate action for more than 30 years … Yet they never pay a political price for it. News coverage and political adversaries treat the GOP’s opposition as unchangeable as gravity. Thus Republicans get away with scorning Democrats’ ideas for combating the climate crisis, even as they offer no credible plans of their own. (emphasis added)

“No more hiding behind a free pass,” Hertsgaard wrote, as he called on climate activists to challenge climate-do-nothing Republicans, not a single one of whom voted for the IRA, in midterm campaigning. Alongside parallel challenges to regain reproductive autonomy and stop deranged 2020 election conspiracy-mongering, the Democrats’ newfound climate voice just might give them a fighting chance to hold Congress in November. [Note addendum above, reporting the Democrats’ greater-than–expected electoral strength in the 2022 midterms.]

Perhaps the most intriguing part of Hertsgaard’s article was his discussion of the IRA’s environmental justice implications. He gave EJ advocates, from environmental justice godfather Robert Bullard to the upstart Climate Justice Alliance (whom we called out on our Carbon Pricing and Environmental Justice page), plenty of space to decry the provisions nominally authorizing more drilling and other fossil fuel extraction, which historically has disproportionately damaged BIPOC communities. But Hertsgaard also spotlighted the assertion by the consultancy Energy Innovation (one of the three bullish “independent analysts” of the IRA noted earlier) that “the bill’s clean energy measures will yield 24 times more emissions reductions than its fossil fuel provisions will increase emissions.” [Addendum, Sept 2023: Energy Innovation subsequently raised its 24-to-1 emissions ratio to 28-to-1; details here.]

This claim, even if only half-valid, could be catalytic, as Hertsgaard explains:

That 24-to-1 ratio hints at why the bill’s environmental justice impacts might be less destructive than predicted. The fundamental strategy behind this bill is to make clean energy dramatically cheaper — so much cheaper that fossil fuels are squeezed out of existence, not by government fiat but by the workings of the marketplace.

Let’s go ahead and say what Hertsgaard only hinted: Environmental justice stands to win enormously under the Inflation Reduction Act. Not just from the millions of new jobs. Not just from its down payment against climate pollution that disproportionately threatens communities of color from the US to the Global South. And not just from “the good things in it,” per Prof. Bullard, “that are greatly needed by low-income, people of color and environmental justice communities — such as incentives for clean energy technologies, electric vehicles, school buses and transit; helping families who are energy insecure with their electric bills; retrofits and tax credits to assist with making homes more energy efficient; and targeted investments to address legacy pollution and environmental ‘hot-spots’ created by racial redlining.”

All these matter greatly. But the big EJ payoff from the IRA will come from reducing the “need” to extract and process fossil fuels, by strangling the source: demand.

The omission of this point by the many EJ activists and allies whom Hertsgaard interviewed or cited — not just Bullard and the Climate Justice Alliance but also Greenpeace USA co-director Ebony Martin and Erich Pica of Friends of the Earth — raises an intriguing question: If it is true that climate justice campaigners downplay or ignore policy legislation that, at least on paper, seems destined to reduce extractive and exploitative pressures on communities of color, is it because they regard connections between demand and extraction as tenuous or even chimerical? Or is it because their movement is built on solidarity (see for example the 1991 founding Principles of Environmental Justice) and thus they cannot countenance sacrifice by a few (if indeed it’s only “a few”) for the benefit of the many communities that will be spared because the large-scale restructuring of energy demand will allow the plague of extraction or exploitation to pass over them?

Fabulous Weeds: The Jesse Jenkins Interview by David Roberts

Our heading references “The interview” because this podcast conversation achieved cult status among climate and energy policy types. We say “Weeds” because the 72-minute podcast went deep into the workings of the IRA. And we say “Fabulous” because Jenkins’ command of the intricacies of the legislation and their implications — for U.S. energy supply and use, for emissions and climate, and for the surrounding politics — is nothing short of brilliant. In this conversation the weeds sway and sing.

Roberts, a veteran political + energy + climate journalist whom we have followed closely (and occasionally tangled with) for more than a decade, posted his conversation with Jenkins, an assistant professor of mechanical engineering at Princeton, on Aug. 19 as Diving further into the Inflation Reduction Act: Part Two.

Among the topics covered and the points made:

• The IRA greatly liberalizes companies’ and non-profit organizations’ ability to sell clean electricity tax credits earned from renewable investments, thus expanding capital pools to finance clean power.
• New zero- or low-carbon generating facilities located in transitioning fossil fuel communities and on Indigenous lands receive extra tax credits. The same applies to electric vehicle and battery component manufacturing plants.
• Unionized manufacture likewise receives greater tax advantages, as do vehicles and batteries manufactured with especially high domestic content.
• Wind and solar projects are guaranteed tax credits for an entire decade (to 2032), thus removing an habitual source of uncertainty that had helped bottle up clean energy supply. The time horizon is lengthened even further as long as the U.S. falls short of 75% electricity decarbonization from today’s level.

This brief list barely scratches the surface of the details enumerated by Jenkins. “It’s like a roulette wheel that just happened to settle out at a decent place at just the right moment,” enthuses Roberts, marveling not just that Manchin climbed aboard the legislative train at all but that seemingly every smart nudge ever dreamed up by Congressional Democrats and their staff made it into the bill that got passed.

Politics of clean energy subsidies vs. carbon taxes

For carbon tax proponents, the podcast’s signal moment comes just before the close, at the one hour, six minute mark, when Roberts asks Jenkins how durable he thinks the IRA policies and programs in the Inflation Reduction Act will be “in the nightmare scenario in which [climate-uncaring] Republicans pull off a trifecta in 2022 and 2024″ and gain power.

Jenkins’ answer, which we’ve put in the graphic at left, is worth pondering. And unlike Roberts, who has the same outlook, Jenkins seems to state his with no animus against carbon pricing, which makes his view even more important.

“Over the next decade there will be hundreds of billions of new tax revenues tied to these [clean-energy] facilities,” says Jenkins, “and dozens and dozens of new factories, there will be over a million new jobs in manufacturing and a million more in installation and construction and maintenance … and they will be spread all over the country and they will be … driven specifically into energy communities that have traditionally been tied to the fossil energy economy, and so their affiliation with and self-interested ties to the fossil economy may not be eliminated but will certainly be complicated over time.”

“Moreover, [the IRA] will deliver very near-term salient environmental health benefits, particularly to environmental justice communities … that will be felt in the short term way before we can see any signal in the climate chaos that is unfolding around us. [Which makes the legislation] more economically durable, instead of delivering a backlash that has to be defended against,” in the case of a carbon emissions price.

If you try to repeal any of the provisions of the IRA, Jenkins says, “You’re going to have billion-dollar companies lined up to fight you because they’re making money off of this [and you’ll have] local elected officials pissed off because you’re jeopardizing investments in their districts. It’s just not a good idea,” he concludes, to try to roll back the legislation.

“A constituent creation machine,” Roberts calls the Inflation Reduction Act, “shooting money out every which way.”

We find Jenkins’ (and Roberts’) viewpoint cogent, though more as a defense of the IRA than a final nail in the carbon-tax coffin. We hope to say more on this score soon, in this space.

Red States’ IRA Windfall

It shouldn’t be surprising that investment in green-energy infrastructure is concentrated in Republican-leaning states and counties. Solar arrays and, especially, wind farms are land-intensive and, as Republicans never tire of pointing out, the area of U.S. counties that voted for Trump over Biden in 2020 was triple the area that went for Biden. Manufacturing too is more prevalent in rural areas, relative to population, than urban.

Still, it’s startling how much of new investment in green energy is taking place in what is considered “red” voting territory. An August 2023 preliminary analysis by the Treasury Department reports that more than 80 percent of IRA-related investments are in areas with below-average college graduation rates. Around 65 percent are in areas with above-average poverty rates, and the same share, 65 percent, are in areas with below-average  employment levels. Even more striking is that almost 90% of the announced investments are in counties with below-average weekly wages. (Percentages are based on 2021 data; hat tip to New York Times columnist David Brooks, who featured these figures in his Sept 7, 2023 column, The American Renaissance is Already at Hand.)

This is pork-barrel politics with a twist, or, at least a wide purview. The Biden administration’s hope is that the anticipated surge in green energy and reductions in carbon emissions will resonate with climate-concerned urban and suburban voters while the job benefits for red-leaning areas will entice some vote switches there. (The Treasury Dept. should also express its data in absolute terms to allow a sense of the strength of the employment effects.) Some cutting-edge political commentators disparage this, of course, based on anecdotal plus polling evidence that the IRA has yet to register with the electorate. Even so, the IRA facts on the ground, which will only grow with the passage of time, should help to inoculate the legislation against Republican roll-back efforts.

Lording It Over Carbon Pricers

We were taken aback that veteran climate writer (formerly NY Times, now Energy Innovation) Justin Gillis didn’t just badger carbon tax proponents to get aboard the “Make Clean Energy Cheap” train but also blamed our ilk for “the most epic wrong turn in the history of climate policy,” one that, in his telling, delayed passage of the Inflation Adjustment Act for decades.

Goodness! Whatever happened to magnanimity in victory? Not to mention historical accuracy. Fact is, climate policy hit a dozen-year wall after 2010 not because carbon taxers held sway in climate discourse — believe me, we did not — but because Tea-Party Republicans took over Congress. As for the 1990s, climate policy’s failure to lift was more because climate dangers appeared hypothetical, a mere speck on the horizon, than because of the long shadow cast by Clinton’s failed 1993 Btu tax.

Even in the in-between decade of 2000-2010, carbon taxing never got a real shot in Congress. The big green groups, seeking to duplicate the success of the 1990 Clean Air Act Amendments creating the SO2 trading system, and determined to “hide the price” rather than level with Americans over the true costs of cheap fuels, insisted on the convoluted, Wall Street-tinged, devilishly complex cap-and-trade approach, only to see it crash and burn under its immense weight. The rightward, xenophobic cultural shifts that arose after 9/11 hurt as well, as did eight years of oil-allegiant George W. Bush and Dick Cheney.

Moreover, it is only fairly recently that zero-carbon energy became readily available at prices low enough to allow them to scale rapidly and massively without subsidies that would blow up the national debt (remember that bugaboo?). Arguably, the wind and solar sectors also had to be granted time to edge far enough into the mainstream that an industrial policy built on subsidizing them into ubiquity wouldn’t meet with widespread ridicule.

All of which is to say that what started as Build Back Better and eventually became the Inflation Reduction Act probably couldn’t have come into fruition until now. Sure, David Roberts — he of the Jesse Jenkins podcast celebrating the IRA — presaged the theory behind that legislation in mid-2020, with his Standards-Investment-Justice formulation (which we dutifully praised at the time in our post, If the Democrats Run the Table in November). But it’s a hell of a stretch to argue, as Gillis did on Twitter, that something like the IRA could have been conceived and enacted a lot sooner if not for people “who chased the will-o-the-wisp of a carbon tax for 30 years.”

As for Recalculating on Climate, Lydia DePillis’ NY Times commentary Gillis was touting, the less said the better. Not for the first time, it conflates nominal carbon pricing proponent Bill Nordhaus with climate-damage modeler Bill Nordhaus whose blinders about global climate chaos’s prospective toll on ecosystem services and economic productivity contributed greatly to the economic profession’s persistent lowballing of the likely costs of unchecked fossil fuel emissions.

The second headline of DePillis’s piece, “They underestimated the impact of global warming, and their preferred policy solution floundered in the United States,” is true enough. But while it was perhaps inevitable that a piece of this sort would lead with Nordhaus, winner of the 2018 Nobel Memorial Prize in Economic Sciences, it was off-pitch to place him at the center of carbon tax advocacy. To its credit, the article granted space for Columbia Business School climate economist Gernot Wagner to point out that Nordhaus’s proposed “optimal carbon price” of just $43 per metric ton in 2020 was and is a “woeful underestimate of the true cost.”

(For CTC’s brief and partly laudatory commentary on Nordhaus’s 2018 Nobel, see our post, From Sweden, A Deeper Dive Into Last Weeks’ Economics Nobels. For a deeper and more critical look, see our 2017 post, Showing the Cost Side of the Climate Equation in a New Light.)

Perils of Making Clean Energy Cheap

“The [IRA] is designed to make clean energy cheaper which means mak[ing] energy and energy technologies cheaper for everyone.” That’s Princeton energy savant Jesse Jenkins, speaking with podcaster David Roberts just after the Inflation Reduction Act was signed into law in August 2022 (quote excerpted from earlier graphic).

The political benefits of making clean energy cheap are clear: It creates large, diverse constituencies strong enough not just to enact the subsidies but to maintain them through shifting political winds. Moreover, monetary firepower from the clean-energy subsidies can help counter NIMBY pressure to block the new wind farms, solar arrays and transmission lines needed to generate the clean power and to help bring into being the supply chains (mines, factories, etc.) needed to crank out the hundreds of millions of vehicles and appliances needed to replace the incumbent ones that run on fossil fuel combustion.

That’s the political logic and the vision behind the IRA, which Jenkins and Roberts depict so alluringly. But it comes with a potentially large downside: more total energy consumption, not less. That’s because the artificial lowering of energy prices — artificial because the wind and solar facilities and allied infrastructure will be heavily subsidized — will militate against efficiency investments and choices.

How? The subsidies that make the IRA work politically will tend to weaken the micro-economic case for virtually every conservation investment, from HVAC upgrades and moderately sized homes to increased residential density and less-car-dependent street designs. That’s due to longer payback periods and worsened benefit-cost ratios stemming from the reduced monetary value of the saved energy.

In addition to lesser conservation investment, conservation behaviors such as driving less, re-using more and just plain lowering consumption will similarly be buffeted by the powerful tide of cheaper energy. And while it’s true that carbon- and climate-mindful behavior has never gained much of a foothold in the U.S., cheap energy will further discourage it.

The IRA’s bending of consumption curves toward more overall energy use rather than less might not matter much if complete grid decarbonization could be accomplished quickly and with little ecosystem and community disruption. After all, why fret about energy overuse if (i) all of the energy is electric, and (ii) all of the electricity is ultra-low or zero carbon, and (iii) installing and deploying those seemingly benign electricity sources and the devices that use them (EV’s, heat pumps, etc.) don’t unduly damage nature and communities?

The answer is that none of those three conditions will be met anytime soon. And the day on which all three obtain is way out on the horizon, if at all.

The Methane Fee

The Inflation Reduction Act includes a fee on “excess” methane emissions from oil and gas extraction and processing. The fee looks to be impactful not only on future methane emissions but as a potential stepping stone to possible carbon emission fees.

The text box at right, courtesy of the Akin Gump law firm, contains key details but little context. We hope soon to add metrics indicating the fee’s “bite” including projected revenue and estimated impact on emissions.

The Transmission Trap

The vast buildout of renewable capacity that the Inflation Reduction Act is intended to catalyze won’t happen without two enormous, complementary developments: easier and quicker siting of wind, solar and battery installations; and accelerated construction of large-scale electric transmission lines to connect those installations to power grids and also better interconnect the nation’s disparate power grids to each other.

Underscoring transmission’s critical importance, in September 2022, just a month after the IRA was signed into law, the law’s most prominent modeler and proponent, Jesse Jenkins (see his interview with journalist David Roberts, above), acknowledged in an elaborate slide deck that failure to accelerate the historical rate of U.S. transmission buildout would cancel 80 percent of its emission reductions he projected for 2030.

Jenkins’ key chart on the consequences of stalled transmission capacity growth is copied at left, with our embellishments. The takeaway: subsidizing green energy, even via the enlightened, innovative paths in the Inflation Reduction Act, is no panacea. Enacting a U.S. robust carbon tax is hard, obviously, but attacking climate change without carbon pricing has its own pitfalls, and they’re not incidental.

This page is a catch-all repository of expressions of support for carbon taxes or other forms of carbon pricing by individuals who no longer occupy the positions of influence (as office-holders, editorial columnists, etc.) that they held at the time those statements appeared. For more current expressions, go to the individual pages (Public officials, Economists, Scientists, and so-forth) listed in the pull-down menu under Supporters.)

Public Officials

Former Energy Secretary Stephen Chu

In a February 2009 New York Times interview, Secretary Chu said “that while President Obama and Congressional Democratic leaders had endorsed a so-called cap-and-trade system to control global warming pollutants, there were alternatives that could emerge, including a tax on carbon emissions or a modified version of cap-and-trade.” Chu was one of four Nobel prize winners (he was awarded the Physics prize in 1997) to sign CTC’s Paris letter calling upon the UN climate negotiators to endorse national and global carbon taxes.

Paul Volcker, chairman of the U.S. Federal Reserve, 1979-1987

Volcker, who died in 2019, was revered in the business and financial community for shepherding the U.S. economy out of the “stagflation” of the 1970s into the long-term boom of the 1980s and beyond, as chairman of the Federal Reserve under Presidents Carter and Reagan (1979-87). Speaking to the U.S. Chamber of Commerce in Egypt, earlier this year, he stated: “[The argument that taxes on oil or carbon emissions would ruin an economy is] fundamentally false. First of all, I don’t think [such a step] is going to have that much of an impact on the economy overall. Second of all, if you don’t do it, you can be sure that the economy will go down the drain in the next 30 years,” Volcker said. Referring to the new report by the UN Intergovernmental Panel on Climate Change, Volcker added:

What may happen to the dollar, and what may happen to growth in China or whatever pale into insignificance compared with the question of what happens to this planet over the next 30 or 40 years if no action is taken… The scientists seem pretty well agreed that [global warming] is still potentially manageable if we act decisively, beginning now into the next decade or so, by taking measures that are technically and economically feasible.

(All quotes attributed to Mr. Volcker, above, are from an article published in the International Herald Tribune on Feb. 6, 2007, US: Economist Paul Volcker Says Steps to Curb Global Warming Would Not Devastate an Economy.)

Senator Bill Nelson (D-FL, 2001-2019)

Pope Francis’ June 2015 encyclical, calling for urgent action to equitably respond to the dangers of global warming and urging policies requiring polluters to pay for climate damage, prompted Senator Bill Nelson to speak out on the Senate floor. Nelson explained the need for a carbon tax whose revenue could be used to reduce other taxes that impede economic growth.  (Video.)

Senator Christopher Dodd (D-CT, 1981-2011)

Dodd anchored his 2007 presidential candidacy to a Corporate Carbon Tax. As he explained: “Until you deal with the issue of price, until you impose a corporate carbon tax, we will never get away from fossil fuels. It’s the only way this can be achieved. You have to advocate that if you’re serious about global warming.” (NY Times, 7/24/07.)

Bill Bradley (D-NJ, 1979-1997)

From Bradley’s op-ed, We Can Get Out of These Ruts, in the April 1, 2007 Washington Post (written a decade after he left the Senate):

We also need to change our tax system to reduce our oil dependence. In general, we ought to reduce taxes on things we need, such as wages, and raise taxes on whatever is dangerous to us, such as pollution and resource depletion. We could implement a $1 per gallon gasoline tax; or an equivalent carbon tax … After a few years of adjustment in the case of a gasoline or carbon tax, cars would be more fuel-efficient, so consumers would pay what they used to pay for the same amount of driving, and the broad middle class would continue to pay lower employment taxes. The result would be increasing demand for goods and services; shrinking dependency payments such as unemployment compensation and welfare; lowered social costs, such as crime and avoidable illness; and a more equitable tax system that encourages rising employment.

Congressman John Delaney (D-MD, 2013-2019)

On Earth Day 2015, Rep. John Delaney introduced a discussion draft of his “Tax Pollution, Not Profits Act” that would establish a tax of $30 per metric ton of carbon dioxide or carbon dioxide equivalent, increasing each subsequent year at 4% above the rate of general inflation. Delaney’s proposal would apply revenues to reduce the corporate tax rate to 28%, provide monthly payments to low-income and middle-class households, and fund job training, early retirement and health care benefits to coal workers.

Congressman Henry Waxman (D-CA, 1975-2015)

Waxman, ranking member of the House Energy and Commerce Committee and co-author of the the American Clean Energy and Security Act, a cap-and-trade measure that passed the House in 2009 but failed in the Senate, began seeking public input on a proposal for a much simpler carbon tax in early 2013. With Republicans (many of whom are climate science denialists) wielding the gavel in the House, Waxman’s initiative made little headway. Nevertheless, Waxman’s shift appeared to bode well for efforts to enact simple, transparent carbon taxes without the gimmicks of complex cap, trade and offset schemes.

Congressman Bob Inglis (R-SC, 1993-1999, 2005-2011)

Inglis represented South Carolina’s 4th Congressional District for six terms before losing the 2010 Republican primary to a Tea-Party backed rival. With economist Arthur Laffer, Inglis published An Emissions Plan Conservatives Could Warm To (NY Times, 12/08), calling on Congress to enact a revenue-neutral U.S. carbon tax (emphasis added):

Conservatives don’t support tax increases that are veiled as “cap and trade” schemes for pollution permits. But offer us a tax swap, and we could become the new administration’s best allies on climate change.

A climate-change bill withered in Congress this summer because families don’t need an enormous, and hidden, tax increase. If the bill’s authors had instead proposed a simple carbon tax coupled with an equal, offsetting reduction in income taxes or payroll taxes, a dynamic new energy security policy could have taken root.

As long as national security risks aren’t factored into the cost of gasoline and as long as carbon dioxide can be emitted without penalty, oil will continue to have an advantage over emerging fuels in the marketplace, and we’ll continue our ruinous addiction to it. 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.

Conservatives do not have to agree that humans are causing climate change to recognize a sensible energy solution. All we need to assume is that burning less fossil fuels would be a good thing. Based on the current scientific consensus and the potential environmental benefits, it’s prudent to do what we can to reduce global carbon emissions. When you add the national security concerns, reducing our reliance on fossil fuels becomes a no-brainer.

It is essential … that any taxes on carbon emissions be accompanied by equal, pro-growth tax cuts. A carbon tax that isn’t accompanied by a reduction in other taxes is a nonstarter. Fiscal conservatives would gladly trade a carbon tax for a reduction in payroll or income taxes, but we can’t go along with an overall tax increase.

The good news is that both Democrats and Republicans could support a carbon tax offset by a payroll or income tax cut.

Two carbon tax bills introduced in House Ways & Means (tax-writing committee) embodied much of what Rep. Inglis advocated in his op-ed: Stark-McDermott, filed in April 2007, and Larson, filed in August. (More details on our Bills page.) Rep. Inglis now chairs republicEn, (formerly the Energy & Enterprise Initiative at George Mason University) and is a vocal advocate for a revenue-neutral U.S.carbon tax.

Congressman Pete Stark (D-CA, 1973-2013) and Congressman Jim McDermott (D-WA, 1989-2017)

(Former) Congressmen Stark, who died in 2020, and McDermott were lead sponsors of the “Save Our Climate Act,” (2007) that would have imposed a $10 per ton (of carbon) charge on coal, petroleum and natural gas when the fuel is either extracted or imported. The charge would increase by $10 every year until U.S. carbon dioxide emissions have dropped 80% from 1990 levels. Introducing the bill, Congressman Stark eloquently stated:

The question is not if human activity is responsible for global climate change, but how the United States will respond,” said Stark. “Predictable, transparent and universal, a carbon tax is a simple solution to a difficult problem. It would drastically reduce our carbon dioxide emissions by providing an economic disincentive for the use of carbon-based fossil fuels and an incentive for the development and use of cleaner alternative energies. The Save Our Climate Act would establish the United States as a global leader in environmental protection and encourage other nations – most of whom have already acknowledged the climate change threat – to take similar action to reduce emissions. I strongly encourage Congress to pass a carbon tax.

CTC reported on the Stark-McDermott bill here.

Editorial Positions

The New York Times

See our Editorial Positions page for more recent expressions.

Global Warming and Your Wallet (July 6, 2007): “When the market, on its own, fails to arrive at the proper price for goods and services, it’s the job of government to correct the failure… We are now using the atmosphere as a free dumping ground for carbon emissions. Unless we — industry and consumers — are made to pay a significant price for doing so, we will never get anywhere.”

Warming Up on Capitol Hill (March 25, 2007): “Forcing polluters to, in effect, pay a fee for every ton of carbon dioxide they emit will create powerful incentives for developing and deploying cleaner technologies.”

The Truth About Coal (Feb. 25, 2007): “There is a need to put a price on carbon to force companies to abandon older, dirtier technologies for newer, cleaner ones. Right now, everyone is using the atmosphere like a municipal dump, depositing carbon dioxide free. Start charging for the privilege and people will find smarter ways to do business. A carbon tax is one approach. Another is to impose a steadily decreasing cap on emissions and let individual companies figure out ways to stay below the cap.”

Avoiding Calamity on the Cheap (Nov. 3, 2006): “Since the dawn of the industrial revolution, the atmosphere has served as a free dumping ground for carbon gases. If people and industries are made to pay heavily for the privilege, they will inevitably be driven to develop cleaner fuels, cars and factories.”

The Washington Post

See our Editorial Positions page for more recent expressions.

Some Positive Energy — Now Start Talking About a Carbon Tax, (June 25, 2007).

As important as many of the measures in [the Senate energy] bill are, they amount to only tinkering at the margins of a serious problem. What the Senate bill doesn’t do — and what the House bill won’t do when it is brought to the floor for consideration next month — is spark a necessary debate on the imposition of a cap-and-trade system or a carbon tax. This must be on the agenda after the Fourth of July recess when the Senate is expected to take up global warming. Sooner or later, Congress will have to realize that slapping a price on carbon emissions and then getting out of the way to let the market decide how best to deal with it is the wisest course of action.

Sorry Record – Waiting for breakthrough technologies is not the way to reduce greenhouse gases (July 11, 2006)

[The Administration] has resisted taxing carbon use, preferring instead to provide incentives for oil and gas extraction — just the opposite of what’s needed.

Los Angeles Times

See our Editorial Positions page for more recent expressions.

The L.A. Times ran two stirring editorials in May-June 2007 that powerfully made the case for taxing carbon. Here are excerpts:

Time to Tax Carbon, (May 28, 2007):

There is a growing consensus among economists around the world that a carbon tax is the best way to combat global warming, and there are prominent backers across the political spectrum … Yet the political consensus is going in a very different direction. European leaders are pushing hard for the United States and other countries to join their failed carbon-trading scheme, and there are no fewer than five bills before Congress that would impose a federal cap-and-trade system. On the other side, there is just one lonely bill in the House, from Rep. Pete Stark (D-Fremont), to impose a carbon tax, and it’s not expected to go far.

The obvious reason is that, for voters, taxes are radioactive, while carbon trading sounds like something that just affects utilities and big corporations. The many green politicians stumping for cap-and-trade seldom point out that such a system would result in higher and less predictable power bills. Ironically, even though a carbon tax could cost voters less, cap-and-trade is being sold as the more consumer-friendly approach.

A well-designed, well-monitored carbon-trading scheme could deeply reduce greenhouse gases with less economic damage than pure regulation. But it’s not the best way, and it is so complex that it would probably take many years to iron out all the wrinkles. Voters might well embrace carbon taxes if political leaders were more honest about the comparative costs.

Reinveting Kyoto, (June 11, 2007):

A better treaty [than Kyoto] would scrap the unworkable carbon-trading scheme and instead impose new taxes on carbon-based fuels. As recently explained in the first installment of this series [Time to Tax Carbon, above], carbon taxes avoid many of the pitfalls of carbon trading. They would produce an equal incentive for every nation to clean up without relying on arbitrary dates or caps, or transferring money from one nation to another. They’re also much less subject to corruption because they give governments an incentive to monitor and crack down on polluters (the tax money goes to the government, so the government wins by keeping polluters honest)… Real solutions to global warming, such as carbon taxes, won’t come cheap — they’ll make power bills steeper and gas prices even higher than they are now. But the economic news isn’t all bad. Much of the clean technology of the future will probably be developed in the United States and sold overseas. Think of [a carbon tax] as a novel way of reducing our trade deficit with China while building a cleaner world.“

For the strong critique of cap-and-trade in the Time to Tax Carbon editorial, click here.

Other Newspapers

Detroit Free Press:

A tax on carbon dioxide emissions, phased in gradually but relentlessly, would be the most transparent and efficient step this country could take in the search for energy independence and reductions in many emissions, including carbon dioxide. It would send a hugely important signal to the markets — for cars and for alternative energy sources such as windmills and solar collectors, in particular — that innovation and conservation are essential. Consumers are going to pay for any measures taken to reduce greenhouse gases and shift away from dependence on foreign petroleum. But most politicians choose instead to hide the costs by placing expensive demands on automakers and by dispensing subsidies for alternative fuels, such as ethanol, that become a hidden tax burden. A cap-and-trade system for emissions also would have disguised costs. Keep Carbon Tax in the Mix of Solutions, July 12, 2007.

Chicago Tribune:

[T]he ultimate goal should not be to reduce the price consumers pay at the pump. It should be to reduce the amount going to oil producers. Global warming is more than ample grounds for levying taxes on carbon-based fuels, including gasoline, to reduce emissions. But those taxes would fall partly on foreign oil producers. By cutting consumption, they promise to put downward pressure on world crude oil prices—weakening OPEC and stemming the flow of dollars to anti-American regimes. American consumers have a choice: They can pay high prices to oil producers or to themselves. The tax proceeds can be used to finance programs of value here at home or to pay for cuts in other taxes—even as they curb the release of carbon dioxide. Pump Pain, May 20, 2008.

Christian Science Monitor:

Consumption taxes, after all, are often designed to wean people off bad behavior, such as smoking. A 90 percent drop in these emissions is probably what’s needed to limit any rise in atmospheric warming to 2 degrees Celsius, a goal that many scientists recommend. Most presidential candidates do endorse pinching pocketbooks, but only indirectly, such as by calling for higher fuel efficiency in vehicles and a cap on greenhouse-gas pollution from company smokestacks. Such demands on industry have the advantage of creating more certainty in reducing emissions, but they are complex to enforce. Gore would do both: tax carbon use and cap emissions. Putting a crimp on global warming can’t be done solely by promoting new energy technologies and voluntary conservation. Consumers of oil and coal need a direct tax shock. Christian Science Monitor, July 5, 2007.

The Monitor was even more direct in a pair of editorials on Oct. 25 and 26. In the first, Be Wary of Complex Carbon Caps, the Monitor noted the loopholes, fraud and other problems that have hamstrung carbon cap-and-trade programs. In the second, A Tax on Carbon to Cool the Planet, the Monitor summarized the first editorial:

Indeed, caps may put the US on a knowable track to, say, an 80 percent reduction in carbon emissions by 2050. But as the previous Monitor’s View pointed out, the flaws in cap-and-trade plans as experienced in other nations – their complexity and vulnerability to fraud and special-interest lobbyists – would reduce the intended effect. They also take a long time to set up and get working right. And, in the end, they also raise energy prices for consumers, just not as directly as a tax.

The Monitor then concluded:

With Europe’s cap-and-trade system faltering, the US should be a leader in using a carbon tax, even if big polluters such as China don’t follow. As a last resort, the US could tax goods from countries that fail to cut their carbon emissions.

A carbon tax is not the whole solution. Regulations will still be needed, such as stiffer fuel-economy standards for cars and trucks. And the US should fund research into alternative fuels, too. All it takes is the political will to act.

Eugene (OR) Register-Guard:

The crisis presented by global warming demands a response that is simple, comprehensive and effective. A tax on carbon consumption is the only response in sight that both discourages the production of emissions that cause global warming, and finances the rapid transition to a post-carbon economy… “The best way to tax carbon fuels is at the point of production: at the wellhead, mine or biofuel plant. The added tax should be large – starting at the equivalent of $1 per gallon of gasoline, and increasing to the equivalent of $6 per gallon of gasoline over 10 years… The phase-in of high taxes on carbon fuels over 10 years will provide huge incentives for market-financed, market-driven, market-governed development of unsubsidized, safe, sustainable alternate energy sources, far more efficient uses of energy, and other alternate products and methods. (The Cold Truth, July 22, 2007).

Writers & Pundits

Bob Herbert

Writing about Obama’s tepid response to the BP oil disaster in the Gulf Coast, Herbert wrote on June 1, 2010:

[W]henever the well gets capped, what we really need is leadership that calls on the American public to begin coping in a serious and sustained way with an energy crisis that we’ve been warned about for decades. If the worst environmental disaster in the country’s history is not enough to bring about a reversal of our epic foolishness on the energy front, then nothing will.

The first thing we can do is conserve more. That’s the low-hanging fruit in any clean-energy strategy. It’s fast, cheap and easy. It’s something that all Americans, young and old, can be asked to participate in immediately. In that sense, it’s a way of combating the pervasive feelings of helplessness that have become so demoralizing and so destructive to our long-term interests…

We also need a carbon tax. The current crisis is the perfect opportunity for our political leaders to explain to the public why this is so important and what benefits would come from it. (Our Epic Foolishness, June 1, 2010, emphasis added).

John Tierney

Burn, Baby, Burn (“The fairest and most efficient way to reduce greenhouse gas emissions would be with a carbon tax on all fossil fuels,” Feb. 7, 2006; similarly on April 23, 2006, in Cheer Up, Earth Day Is Over). In late 2006 Tierney relinquished his column to focus on science reporting. He featured CTC in his Jan. 24, 2007 blog.

There was a time … when the Republican Party was a hotbed of environmental worrywarts. The last big clean air act of the Bush I administration passed the House 401 to 21. But no more, no more. You’re not going to get any sympathy for controlling climate change from a group that doesn’t believe the climate is actually changing … It’s sort of ironic. These are the same folks who constantly seed their antideficit speeches with references to our poor, betrayed descendants. (“This is a burden our children and grandchildren will have to bear.”) Don’t you think the children and grandchildren would appreciate being allowed to hang onto the Arctic ice cap?

Times Economic Columnist Daniel Akst (“On The Contrary”):

Let’s face it: nothing but drastically higher prices will deter most of us from consuming more carbon-based energy… Of course, it would be nice not to have to rely on cartels and circumstances to make us moderate our consumption. Hefty taxes on carbon-based energy … would be a much better approach. The Good News About Oil Prices Is The Bad News, Sept. 17, 2006.

Wall Street Journal business columnist Holman W. Jenkins Jr.:

… walking upright, with knuckles no longer in proximity to the ground, are advocates — mostly economists — of a carbon tax. A carbon tax would be the efficient way of encouraging businesses and consumers to make less carbon-intensive energy choices. Government would not have to exercise an improbable clairvoyance about which technologies will pay off in the future. There’d be less scope for Congress to favor some industries over others purely on the basis of lobbying clout. (Decoding Climate Politics, Jan. 24, 2007) Note: While Jenkins’ remarks should be taken with a heap of salt (he’s no climate advocate, to put it mildly), his praise for a carbon tax and vitriol toward the new enviro-corporate climate alliance are both striking.

Wall Street Journal Op-Ed Contributor Nicole Gelinas, (Contributing Editor to City Journal):

At the end of the day, a strict cap-and-trade program would have the same effect as a carbon tax, one that’s high enough, eventually, to encourage switching to cleaner generation, but that’s gradually imposed over a decade so that companies have plenty of time to plan. Such a tax would make emissions more expensive; discourage carbon-intensive power generation; and it would allow the market to decide which environmentally more-friendly technologies would be competitive enough to take its place. A tax per ton of carbon would mean higher power prices, too, but without direct subsidies to developing nations by paying for their power-plant upgrades. Nor would a carbon tax create a new multibillion-dollar global commodity whose value would depend on political manipulation. The feds could use the revenues from such a levy to reduce other taxes—including dividend and capital-gains taxes further to spur the massive private investment needed to build the next generation of power generators—while ensuring that they’re also creating a political and regulatory climate to encourage such mass-scale construction. If it’s true that a global warming consensus really exists — and not just in press releases and speeches — politicians and business leaders wouldn’t be afraid to suggest such a tax. They would insist on it. A Carbon Tax Would Be Cleaner, Aug. 23, 2007

Washington Post columnists

E.J. Dionne (in 2011):

Obama should put forward a plan of his own to close the long-term deficit. He should not be hemmed in by his negotiations with congressional Republicans to get the debt ceiling raised. They don’t hold the nation’s credit hostage anymore. He should lay out exactly what he would do and abandon his practice of making preemptive concessions to his opponents. That means Obama should not be shy about urging eventual tax increases, particularly on the wealthy. And let’s be clear: These would not be immediate tax hikes; they’d kick in a year or two from now. Any plausible plan should include at least $2 trillion to $2.5 trillion in new revenue over a decade [largely from additional taxes on the wealthy and super-wealthy]. A carbon tax, partly offset by tax cuts or rebates for middle-income and poorer taxpayers, could provide additional revenue. (Obama: Go Big, Long and Global, Aug. 21, 2011)

Anne Applebaum (in 2007):

I no longer believe that a complicated carbon trading regime — in which industries trade emissions “credits” — would work within the United States … So much is at stake for so many industries that the legislative process to create it would be easily distorted by their various lobbies. Any lasting solutions will have to be extremely simple, and — because of the cost implicit in reducing the use and emissions of fossil fuels — will also have to benefit those countries that impose them in other ways. Fortunately, there is such a solution, one that is grippingly unoriginal, requires no special knowledge of economics and is easy for any country to implement. It’s called a carbon tax, and it should be applied across the board … (Global Warming’s Simple Remedy, Feb. 6, 2007)

Anne Applebaum again (in 2009):

American politicians who really care about climate change — I’m assuming this includes our president, as well as a majority in Congress — should skip the summits and instead ask themselves why the oil and gas prices that started rising a couple of years ago (creating a boom in alternative-energy research) have once again dropped to an artificial low. Why artificial? Because the price of fossil fuels has never reflected their true cost, either environmental or political. It doesn’t reflect the cost of the U.S. military presence in the Middle East. It doesn’t reflect the cost of treating asthma. And it certainly doesn’t reflect the cost of rescuing bits of the coast of Florida that will be submerged by rising sea levels. Raise the taxes on fossil fuels to reflect those costs, and [T. Boone] Pickens’s [wind farm] project, along with many others, will once again be viable.” (The Summit of Green Futility, July 14, 2009)

Sebastian Mallaby:

These days almost nobody asserts that global warming isn’t happening. Instead, we are confronted with a new lie: that we can respond to climate change without taxing and regulating carbon… We already have technologies to cut carbon… The problem is we don’t use them… What matters is not just the technologies we have but the incentives to deploy them. (A Dated Carbon Approach, July 10, 2006)

Automotive columnist Warren Brown:

Why is it now more politically feasible to send our sons and daughters, brothers and sisters, husband and wives to foreign soil to fight and die for oil than it is for us to place higher taxes on the stuff at home to help reduce our wanton use of it? It’s time to tell Congress that we’re not stupid, not hopelessly blind or irrevocably self-centered. It’s time to demand that Congress give us a real energy policy, one that addresses industry and consumers, one that demands we do what we’ve historically done in times of crises — work together, sacrifice together to solve the problem. Bring Consumers into the Energy Equation, July 1, 2007.

Charles Krauthammer:

Unfortunately, instead of hiking the price [of gasoline] ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us — and pocket the money that the tax would have recycled back to the American worker. This is insanity. For 25 years and with utter futility (starting with “The Oil-Bust Panic,” the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. On this page in May 2004 (and again in November 2005, I called for “the government — through a tax — to establish a new floor for gasoline,” by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123. But instead of doing the obvious — tax the damn thing — we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates and now a crazy carbon cap-and-trade system the Senate is debating this week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer. At $4, Everybody Gets Rational, June 6, 2008.

Other Publications

Financial Times Columnist Clive Crook:

If ever there were a case for the maxim, get prices right, this is it. The way to curb carbon emissions is to add the environmental cost of carbon to the price of energy. The current oil price offers a good opportunity: when it falls (as it probably will) a carbon tax could be used to set a floor, making the transition to correctly priced energy much easier. Once the price of energy is right, other decisions become simpler, or can be left mainly to the market. There is no need to legislate fuel economy standards or subsidise conservation and low-carbon forms of energy; no need for an emissions trading regime, with all the waste and complexity and gaming that that entails (witness Europe’s experience); no need to scapegoat oil companies or environmentalists; no need to mislead or pander. For sure, the politics is a challenge – but not, I am willing to bet, as hard as conventional wisdom insists. Carbon is bad: tax it and use the money to cut other taxes. A new kind of politician could do something with that. Financial Times Online June 22, 2008.

Clive Crook (again in FT):

In the US, cap-and-trade was dead even before the midterm elections. The Obama administration plans to rely on regulation instead. [B]ut … this micro-regulatory approach will be costly. The bureaucratic overhead will be huge, as producers vie for waivers and other special treatment. Effort and resources will be misdirected… Where, then, should the government concentrate its efforts? No prizes for guessing the answer: introduce a carbon tax. … In the US, many dismiss this as a political impossibility. They are wrong. Whether the country likes it or not, with or without an effective climate change policy, Americans will eventually have to pay more in taxes. The state of the public finances decrees it. However you do the political calculations, this unpopular outcome is inevitable. Therefore, start measuring a carbon tax against the relevant alternatives. At worst, a moderate carbon tax would be no more indigestible than higher income taxes or other revenue-raising options. And, in every important way, it would be the best climate-change policy as well… Compared to EPA action, a carbon tax is simpler, more transparent, less susceptible to rent-seeking and more economical in bureaucratic overhead. It also provides an indicator around which future international co-operation could be organised and explained. After their break in Cancún, if the US and other governments want to get serious, this is where they should look.” Stop Talking and Start Taxing Carbon, Nov. 28, 2010. (emphasis added)

Clive Crook (now, late 2011, in Businessweek):

Quantity targets enforced by treaty don’t foster effective cooperation, they hinder it… to succeed, measures to curb emissions need to be sustained for decades… Binding emissions targets are too rigid… The best instrument for coordinating climate-change efforts is the price of carbon… For most countries, the simplest and clearest way to hit the price target would be with an outright carbon tax. The economic benefits are well known: By letting markets work, a tax achieves a given amount of emissions abatement at the lowest cost. The world needs to cap its greenhouse gas emissions, but there’s no obligation to do this in the most expensive, painful or disruptive way. Climate-change campaigners made a great mistake early on in opposing this approach — arguing, in effect, that sin should be prohibited not taxed, and that cuts of a certain size had to be assured. The cost of this inflexibility is now apparent: Insist on known and guaranteed cuts in emissions, and the wheels of international cooperation turn too slowly. So far, explicit carbon taxes have not been widely adopted (though where they have been, as in British Columbia, they have worked). It’s not only environmentalists who aren’t enthusiastic. In many countries, especially the U.S., conservatives are bitterly opposed as well. A carbon tax, after all, is a tax. Yet with many countries in a fiscal crisis, a carbon tax is more attractive than before. A carbon tax could lift some of the burden from spending cuts and increases in other taxes. As this sinks in, what was once politically impossible may soon be merely hard. Free Markets, Carbon Tax Best Way to Fight Climate Change: View, Bloomberg Businessweek, Dec. 12, 2011.

San Francisco Chronicle columnist Carolyn Lochhead:

One day, someone’s going to put two and two together and discover that East Bay Rep. Pete Stark’s carbon tax could address global warming and budget troubles at the same time. San Francisco pols are ahead of the curve, proposing a gas tax — a close cousin of the carbon tax — to fight global warming… In policy circles, a carbon tax is a no brainer, embraced by lefties like Stark and conservatives like former Bush economic advisor Gregory Mankiw. It’s a highly efficient way to reduce demand for fossil fuels and induce alternative energy supplies by using market forces. That’s also why it gags politicians: it incorporates the true cost of fossil fuel consumption in prices. Polluting consumers would pay too. Two Vultures, One Stone, Oct. 15, 2007.

Newark Star-Ledger Columnist Paul Mushine:

We need a new generation of clean energy that will enable us to be liberated from dangerous dependence on dictatorships, effective in worldwide competition and provide for a much cleaner and healthier future,” says [Gingrich’s] Web site. These “alternative, renewable energies” that Gingrich is promoting sound the same as the mystery oil Pelosi’s pushing. Like ethanol, these fuels can be manufactured only with huge government subsidies. And those subsidies represent an indirect tax on drivers If we’re going to tax drivers, we might as well do it directly. This is a point upon which most free-market economists agree. Unlike politicians, economists are not up for election, so they can tell the truth about cutting oil imports. And the truth is if you want to cut imports, tax the hell out of gas. The imposition of so-called “Pigovian taxes,” named after the late economist Ar thur Pigou, generates lots of revenue that can be used to reduce other taxes, such as the income tax, that are much worse for economic growth. And such taxes also reduce what Pigou termed “externalities,” the externalities in this case being air pollution, traffic jams and reliance on unstable exporters. On Energy, Dems are Daffy, Newt is Nuts, op-ed, Star-Ledger, August 7, 2007.

Chicago Tribune Editorial Board Member Steve Chapman:

The free market is the best system ever created for providing what we want at the lowest possible cost. The way to get affordable amelioration of climate change is to put the market to work finding solutions. To achieve that, we merely need to make energy prices reflect the potential harm done by greenhouse gases. How? With a carbon tax that assesses fuels according to how much they pollute. Coal, having the highest carbon content, would be taxed the most, followed by oil and natural gas. The higher prices for the most damaging fuels would encourage people and companies to use them less and more of other types of energy, including nuclear, solar, wind and biofuels. This approach also would affect all sources — not just cars, which account for only one-fifth of all U.S. carbon dioxide emissions. Saving the Earth Sensibly, Chicago Tribune, April 12, 2007.

Economists almost unanimously agree that if you want to cut greenhouse gas emissions by curbing gasoline consumption, the sensible way to do it is not by dictating the design of cars but by influencing the behavior of drivers. If you want less of something, such as pollution from cars, the surest way is to charge people more for it. A carbon tax or a higher gasoline tax would encourage every motorist, not just those with new vehicles, to burn less fuel—by taking the bus, carpooling, telecommuting, resorting to that free mode of transit known as walking, or buying a Prius. A Wrong Turn on Saving Fuel – Which Energy Efficiency Plans Hold Up to Scrutiny?, reason.com, July 23, 2007.

[T]he GOP doesn’t have to surrender its principles to confront environmental reality. There is plenty of room for disagreement, for instance, about how to combat global warming. The method most congenial to personal and economic freedom is a carbon tax. Instead of putting the government behind favored forms of energy, as the administration likes to do, it would create strong incentives for people to find their own ways to reduce emissions. It would achieve maximum benefits at minimum cost. It could be revenue-neutral, if the receipts were used to pay for other tax cuts. A carbon tax is hardly a liberal idea. Among its proponents are Gregory Mankiw, who headed the Council of Economic Advisers under President George W. Bush, and Douglas Holtz-Eakin, John McCain’s chief economist during his presidential campaign. But Republican politicians have no interest. During hard economic times, that approach may work. But at some point, voters will conclude that global warming and other environmental problems demand solutions. And Republicans will be left wondering why they didn’t come up with any. Republicans vs. the Environment, June 16, 2011.

Atlanta Journal-Constitution editorial-page editor Cynthia Tucker (writing in the Baltimore Sun):

The president should have told Americans years ago that the days of cheap gas were over. If the president had imposed a stiff tax on gasoline at the pump [after 9/11], American motorists would have grumbled, but we would have gotten over it. (Oiloholic Nation Has No Business Lecturing China, April 24, 2006)

Arizona Republic columnist Robert Robb:

Economists have long preferred a carbon tax to a cap-and-trade regimen. A small tax would likely have a large effect. Once the infrastructure for collecting the tax is in place, an increased rate is just a vote away. Even with a small tax, carbon emissions would become an unpredictable variable cost, creating a large incentive to reconfigure production processes to reduce or eliminate them …Politicians frequently ignore the preferences of economists, since economists usually prefer a reduced role for the preferences of politicians … However, if serious action is to be taken on global warming, someone in the political class needs to start paying attention to them. (Cool It on Global Warming, Feb. 7, 2007)

New York Observer Columnist Nicholas von Hoffman:

When they talk about conservation at all — which is almost never — [politicians] talk in terms of new tax deductions when they ought to be talking about imposing new taxes. How about a heavy energy-consumption tax on McMansions?… Similar kinds of taxes could be imposed on whole classes of machines that pour filth into the atmosphere and consume frightful amounts of fuel. (While Politicians Pander, Conservation Is Ignored, May 15, 2006)

Although CTC seeks to tax all carbon emissions, not just those from uses deemed excessive, we share with von Hoffman the view that taxing carbon is more important than subsidizing carbon alternatives.

Toronto Star columnist David Olive:

Carbon taxes are coming … The carbon tax [is] the single most powerful tool for encouraging conservation of the planet’s finite coal, oil and natural gas resources, and for diminishing the role of CO2 emissions in destroying the earth. Only Carbon Taxes Can Rekindle Conservation, March 9, 2007.

Magazines

The New Republic

In theory, if the United States ever got serious about tackling climate change and put a price on carbon–through either a cap-and-trade system or a simple carbon tax–we could put an end to much of this anguished contrarianism. Shoppers concerned about melting icecaps wouldn’t have to scratch their heads and wonder how many food miles a tomato has traveled, or fret about whether a tightly packed ship full of produce from Chile emits more carbon than having everyone haul groceries in their SUVs from the local farm. The climate impact would be reflected in the price, and markets could work their magic. Simple enough.OK, so it wouldn’t be that simple. Carbon pricing and markets alone won’t, for instance, produce better public transportation. Nor will they put an end to the vast array of government policies that subsidize suburban sprawl–which include, among other things, easy financing for roads, tax deductions for large McMansions, and various zoning regulations that can prevent mixed-use living and disfavor walkable town centers. Nor, for that matter, will they get rid of the federal subsidies that prop up the nation’s agricultural system. (On the other hand, a carbon tax might convince voters that these policies should be altered.) Second-Guessing the Conventional Environmental Wisdom — It’s Not Easy Being Green, Bradford Plumer, assistant editor, The New Republic on-line, Aug. 27, 2007.

Atlantic Monthly

Blogger Megan McArdle (“Asymmetric Information”) used the “local food” quandary to discourse on the capacity of carbon taxes to provide honest information on the true carbon costs of consumer purchases:

How much carbon goes into the food we eat? Recently I’ve been beseiged by buy-local fanatics, claiming that if I eat Guatamalan raspberries, I’m killing the earth with the carbon needed to transport them… [T]his … cause[d] me to try to figure out how much energy the various options consume, and frankly, the answer is, I have no clue. There are so many second, third, and eighth order effects that my brain is spinning… Not only has no one done a good analysis of this subject; I don’t think anyone could… That’s why if we’re serious about cutting carbon dioxide emissions, we need a carbon tax, and not CAFE, or other sorts of piecemeal regulatory solutions. The Perils of Buy Local, Oct. 15.

McArdle’s column, including her invocation of free-enterprise philosopher Friedrich Hayek, is worth reading in full.

The Nation

The Nation published a special issue Surviving the Climate Crisis: What Must Be Done on May 7, 2007. It included a strong editorial, Going Green, stating that in order to reach the “necessarily ambitious goal: 80 percent emission reduction in carbon emissions from their 1990 levels by 2050:

We’ll have to discourage emissions by putting a price on polluting gases like methane and carbon. The best way to do that is through taxation, which would be offset by tax breaks to soften the impact on poor and middle-class households and to encourage green job growth and investment. But such ideas face formidable resistance from a political establishment beholden to entrenched interests–the oil and coal industries–that stand to lose out. Those industries have sunk billions of dollars in investments that would depreciate in value if real carbon reduction targets were achieved. Thus, they fight tooth and nail with lies and canards to keep things as they are.

In the same issue of The Nation, financial journalist Doug Henwood wrote:

Given the risk that a climate catastrophe could hit soon and suddenly … we may not have time for mass movements to develop and force elites to do the right thing. They’ve got to get started now, or all could be doomed. But … there are problems with their favorite strategy: cap-and-trade schemes… Already an entire industry has grown up around the trading system — analysts and brokers and traders who hope to make money from the scheme but contribute not much of anything to saving the planet. Also, cap-and-trade permit prices are tremendously volatile, more so even than the stock market. Volatility makes long-term planning very difficult. A far better approach would be to tax carbon. A carbon tax would be simple — gasoline, coal and other fuels would be taxed based on their carbon content — and nearly impossible to evade. It could be introduced quickly, unlike the multiyear phase-in of the complicated EU cap-and-trade system. The tax rate could start low and then increase, to allow energy users to adjust. Unlike the market volatility of CO2 and SO2 permit prices, a carbon tax would be predictable, making it much easier for businesses and consumers to plan ahead. And as Charles Komanoff of the Carbon Tax Center argues, at least part of the proceeds of the tax could be rebated to poor and middle-income households through the income tax system, neutralizing any inequities.” Cooler Elites, May 7, 2007 issue.

Hendrik Hertzberg, The New Yorker magazine

The veteran commentator Hendrik Hertzberg wrote in the Feb. 13 & 20, 2006 issue:

The best way to encourage conservation — and the true sign of a serious energy policy — would be imposing a hefty gasoline tax and raising mandatory fuel-efficiency standards.

Hertzberg broadened this theme in the March 23, 2009 issue:

If the economic crisis necessitates a second stimulus—and it probably will—then a payroll-tax holiday deserves a look. But it’s only half a good idea. A whole good idea would be to make a payroll-tax holiday the first step in an orderly transition to scrapping the payroll tax altogether and replacing the lost revenue with a package of levies on things that, unlike jobs, we want less rather than more of—things like pollution, carbon emissions, oil imports, inefficient use of energy and natural resources, and excessive consumption. The net tax burden on the economy would be unchanged, but the shift in relative price signals would nudge investment from resource-intensive enterprises toward labor-intensive ones. This wouldn’t be just a tax adjustment. It would be an environmental program, an anti-global-warming program, a youth-employment (and anti-crime) program, and an energy program. (emphasis added)

Others

Newsweek columnist Fareed Zakaria:

Both problems [clean energy’s insufficient funding and insufficient incentives] can be solved by the same simple idea—a tax on spewing carbon into the atmosphere. Once you tax carbon, you make it cheaper to produce clean energy. If burning coal and petrol in current ways becomes more expensive because of the damage they do to the environment, people will find ways to get energy out of alternative fuels or methods. Along the way, industrial societies will earn tax revenues that they can use, in part, to subsidize clean energy for the developing world. It is the only way to solve the problem at a global level, which is the only level at which the solution is meaningful. Congress is currently considering a variety of proposals that address this issue. Most are a smorgasbord of caps, credits and regulations. Instead of imposing a simple carbon tax that would send a clear signal to the markets, Congress wants to create a set of hidden taxes through a “cap and trade” system. The Europeans have adopted a similar system, which is unwieldy and prone to gaming and cheating. The Case for a Global Carbon Tax, April 16, 2007.

Newsweek columnist Robert J. Samuelson:

If we’re going to use price to try to stimulate those new technologies, let’s at least do it honestly. Most economists think that a straightforward tax on carbon would have the same incentive effects for alternative fuels and conservation as cap-and-trade without the rigidities and uncertainties of emission limits. A tax is more visible, understandable and democratic. If environmental groups still prefer an allowance system, let’s call it by its proper name: ‘cap and tax.’ Let’s Just Call It ‘Cap and Tax’, June 9, 2008.

Reason Magazine Science Editor Ronald Bailey:

The problem with air pollution—and global warming is a form of air pollution—is that I don’t see a good, easy way to privatize it. The transaction costs are too large. And if you can’t privatize it, you have to regulate it. So now the question is: What’s the least bad way to regulate? And that is why I’ve come out in favor of a carbon tax….For consumers, for inventors, for innovators, a tax offers price stability in a way that the cap-and-trade markets don’t. For example, in the sulfur dioxide market, sulfur permits have ranged in price from $50 a ton to over $1,000 a ton. And for sulfur dioxide, it’s a smaller market. A carbon market would encompass the world.” Reason.com July 2008

Katherine Ellison (The Mommy Brain):

What our kids need to know most is that adults are acting like grown-ups… If we want to show our kids we mean business about global warming, let’s start by ponying up for a carbon tax. Let our children watch us demand this from Washington with the courage and force of the civil rights movement. (Global Warming-era Parenthood, Los Angeles Times, Dec. 23, 2006)

350.org founder and author-journalist Bill McKibben:

There’s another way of saying what is missing here. Almost every idea that might bring us a better future would be made much easier if the cost of fossil fuel was higher—if there was some kind of a tax on carbon emissions that made the price of coal and oil and gas reflect its true environmental cost.” (How Close to Catastrophe?, New York Review of Books, Nov. 16, 2006.) McKibben, author of the classic The End of Nature and a supremely effective and engaged climate activist, has also advocated for carbon taxes in articles in Orion, Grist, Mother Jones and elsewhere.

Vox.com (earlier, Grist) columnist David Roberts:

A carbon tax is a huge deal, a game-changer, and if it’s taking root, even tenuously, it needs to be nurtured. Is This the Right Time to Attack Dingell?, June 2007.

Note, though, that Roberts (who now writes for vox.com) for years has criticized the effort to enact a U.S. carbon tax as politically naive. Our 2012 exchange with him is particularly illuminating.

Former George W. Bush speechwriter David Frum: Writing in The Wall Street Journal on Nov. 9, 2006, Frum urged Bush to send Congress a carbon-tax bill. In his 2008 book, Comeback: Conservatism That Can Win Again, Frum pressed carbon-tax advocacy at greater length:

There is a simpler and better way to encourage consumers to conserve while denying income to producers: Tax those forms of energy that present political and environmental risks — and exempt those that do not. That tax will create an inbuilt price advantage for all the untaxed energy sources, which could then battle for market share on their competitive merits. What would such a tax look like? … It would look exactly like the carbon tax advocated by global-warming crusaders…You don’t have to believe that global warming is a problem to recognize that a carbon tax is the solution. Under the umbrella of a permanent disadvantage for fossil fuels, markets could figure out freely which substitutes made most sense. (p. 129)