Could Returning Carbon Tax Revenue Garner Republican Support? (S Valk, Huff Po)
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Help Make Our November Conference A Turning Point for Climate Action
Dear Friend —
A carbon tax was always going against the grain — against the presumption that the most straightforward and effective approach to carbon emissions pricing couldn’t prevail over America’s special-interest politics and tax aversion — and against the smart money that insisted on hiding the price and buying off the opposition.
Well, the insiders’ cap-and-trade strategy has crashed and burned, but we carbon tax advocates are still standing and still facing a headwind. But we see a shift on the horizon: we’re convening a national conference next month at Wesleyan University in Connecticut designed to rally public and political support for effective and fair carbon taxing. And we’re asking you to help us make the Nov. 19-21 Pricing Carbon Conference a turning point at which a growing coalition of U.S. climate advocates unites under the banner of a revenue-neutral carbon tax.
It’s true that support for climate action is polling at near-record lows. But while part of that is due to the economy along with the highly orchestrated campaign of climate denialism, the spectacle of polluter giveaways under cap-and-trade has also convinced many that there’s no equitable way to price carbon emissions. We aim to turn that sentiment around, and show Americans that a national carbon tax with the revenues returned equally to U.S. households via “green checks” — carbon “fee-and-dividend,” as James Hansen terms it — can arrest the climate crisis while enhancing most families’ financial well-being. (Coupling those green checks with strategic “tax shifting” would be equally fair and effective.)
We’ve lined up an impressive and diverse roster of speakers for the conference, including Jim, Bill McKibben, Juliet Schor, Brent Blackwelder, Peter Barnes, Bill Shireman, two nationally known leaders from the environmental justice community, Cecil Corbin-Mark and Angela Johnson Meszaros, and members of Congress from both sides of the aisle. (A more complete list with links to speaker bios is here.)
As co-host of the conference, Wesleyan’s College of the Environment is providing additional experts including economist Gary Yohe along with world-class facilities for the conference presentations and discussion forums.
Now we need your help: to pay for speakers’ travel and lodging; for buses to bring delegates from New York, Boston and Washington; and for advertising and publicity to ensure that the halls are packed and the proceedings are communicated far and wide. We’re also eager to assist a growing number of young climate activists seeking “scholarship” assistance with travel and lodging. These are the people whom we will be counting on to take our mission forward. And they are also the people who will likely be most inspired by participating in the conference.
Your check, made out to “Wesleyan University” and mailed to The Price Carbon Campaign, P.O. Box 125, South Lee, MA 01260, will go entirely for conference organizing and will be tax-deductible. To contribute on-line, go to www.citizensclimatelobby.org. On the right, select the lower donate button (tax-deductible donation). Please fill out the form in its entirety. In the second address line, enter: pricing carbon, then hit continue. (Citizens Climate Lobby is a conference sponsor.) As always, you can contribute to the Carbon Tax Center via the “Donate Now” button elsewhere on this Web site.
Every successful revolution — in policy as well as politics — has begun with a small band of people who nurtured a new idea that went against the grain. A carbon tax that transparently and unmistakably builds the costs of climate damage into the price of fossil fuels is no different. This is our moment, and the Wesleyan “Pricing Carbon” conference is our vehicle for seizing it. Please write your check today and be as generous as you can.
Best wishes … and thanks!
Charles Komanoff (director, Carbon Tax Center)
PS: Of course, we’d love to have you join us at the conference. To register, click here: www.pricingcarbon.org or click the REGISTER NOW button higher up on this page. You can also call (413) 243-5665.
Photo: Flickr / Carlos Gotay Martínez
A Tragic Tale of "Hide the Price"
This week’s New Yorker (Oct 11) features an excruciatingly twisted tale. “As the World Burns, How the Senate and the White House missed their best chance to deal with climate change” reports how Senators Kerry, Graham and Lieberman took deal-cutting to new heights — or depths — to put across their carbon cap-and-trade-with-offsets bill. In pursuit of their holy grail — a cap to reduce U.S. CO2 emissions 17% by 2020 (but just 8% below last year’s level; and their cap would have relied heavily on unverifiable international and domestic offsets) — the “Three Amigos” offered deals to anyone who’d listen, including expanded offshore drilling (whose hazards inconveniently re-surfaced just weeks later in the BP disaster); more subsidies for nukes; de-regulation of toxic pollutants including heavy metals like mercury; special arrangements for the gas, coal and oil industries; and free “allowances” to help utilities buy their way out of the cap.
The fascinating and heartbreaking narrative can be read as an indictment of the Senate and the power of the fossil fuel industries. The scene of Sen. Kerry seeking a deal with natural gas baron T. Boone Pickens — who in 2004 “swiftboated” Kerry out of a possible presidential victory — is particularly pathetic. But there’s an ironic nugget missing from the story.
In February, at a meeting with Sen. Kerry, climate scientist Dr. James Hansen urged the Massachusetts Democrat to quit “hiding the CO2 price” under cap-trade-offset “gimmicks.” Instead, Hansen insisted, Kerry should propose a direct fee on CO2 pollution, assuring fairness and popular support by returning revenue via equal monthly “green checks” to every citizen. Kerry insisted, “I know what can pass the Senate.” As the New Yorker article’s title suggests, the Senator knew no such thing … and the result was tragic.
The tale of climate legislation isn’t over, though; people do learn from experience. Can we move beyond the mirages of cap-trade-offset to a transparent “carbon fee and green check” or “carbon fee with payroll tax cut”? With atmospheric CO2 at 388 ppm and rising, there’s no time to lose.
New Converts to Carbon Tax: Welcome Aboard, Now Start Rowing
(Note: NYT DotEarth blogger Andy Revkin linked to this post today in a piece that has more from Bill Gates on carbon pricing. Click here. – C.K., Sept 2.)
Last week, Bill Gates. This week, Bjorn Lomborg. With the world’s #1 software magnate and the man whom the Guardian labeled “the world’s most high-profile climate change skeptic” both endorsing a carbon tax, is the tide of influential opinion on climate policy and carbon pricing turning?
Yes and no.
Let’s look at Lomborg first. The Danish policy analyst built a lucrative career lambasting climate-change advocates as scaremongers who would consign millions to early death by devoting resources to decarbonizing the world economy rather than fighting killer diseases like malaria. But in a new book to be published next month, the self-styled “skeptical environmentalist” reportedly will call global warming “one of the chief concerns facing the world today” and “a challenge humanity must confront.” According to the Guardian, Lomborg will urge investing tens of billions of dollars a year to tackle climate change, with the funds to be raised through a carbon tax.
In somewhat overheated prose, the Guardian called Lomborg’s new-found resolve to combat global warming “an apparent U-turn that will give a huge boost to the embattled environmental lobby.”
Gates, on the other hand, has long worried about climate change. But in an interview in Technology Review last week, he added a new wrinkle: criticism of cap-and-trade:
TR: [A]lmost everyone agrees that there needs to be a price on carbon–whether a Pigovian tax or a cap-and-trade system. Without a price, there’s going be very little incentive to do the kinds of research, or create the kinds of technologies, or build out the kind of infrastructure, that we need.
Gates: No, that’s not right. It’s ideal to have a carbon tax, not just a price on carbon, which is this fuzzy term that includes cap-and-trade.
TR: Well, ideally, you’d do a Pigovian tax —
Gates: No, not a Pigovian tax. A Pigovian tax is where you pay for the damage. Here, you’re not paying for the damage — you can’t pay for the damage. You’re using the tax to create a mode shift to a different form of energy generation.
TR: That sounds very rational, pragmatically feasible, and humane. It also sounds politically unlikely.
Gates: Which is more likely: a [hidden] carbon tax [Gates’ way of describing cap-and-trade] with all sorts of markets and options and uncertainties about prices, and traders in the middle, and confusion about who initially gets the most advantage? Or a regulatory thing that says you mark every coal plant in the country with when it has to be retired, and a 2 percent tax to fund the R&D so that utilities know they can buy a plant that’s emitting hardly any CO2?
Gates’ disparagement of cap-and-trade is striking. But neither his 2% carbon tax nor Lomborg’s, which appears to resemble Gates’ in magnitude and function ─ funding energy R&D ─ is going to end the reign of fossil fuels in the foreseeable future.
The notion of an R&D solution is alluring. Who doesn’t want there to be global warming antidotes lurking in garages and labs, waiting for funding to unlock them? But it’s a chimera. Even with unlimited research funding, no technological breakthroughs can dislodge carbon-based fuels from dominion over the world’s energy economy. Fossil fuels’ energy density is too great, and their positional advantages of infrastructure and institutions too powerful.
Yes, subsidies can help push renewables past the “hump” in the S-curve to where scale economies can kick in and take a few bites out of the fossil fuel pie. But as New Republic blogger Brad Plumer pointed out recently, “Government subsidies just don’t pack the same punch as a market price on carbon pollution.” When a commodity or activity causes harm, the surest way to reduce it isn’t to subsidize a thousand and one alternatives but to directly discourage the thing by internalizing the cost of the harm into its price.
Ironically, Barack Obama appeared to grasp this during his run for the presidency. In a February 2008 interview with the San Antonio Express he enthused over the idea of a carbon tax:
Q. Have you considered … taxing emerging energy forms, for example, say a penny per kilowatt hour on wind energy?
A. Well, that’s clean energy, and we want to drive down the cost of that, not raise it. We need to give them subsidies so they can start developing that. What we ought to tax is dirty energy, like coal and, to a lesser extent, natural gas. (emphasis added)
How big a carbon tax is needed? A lot more than 2%. Raising electricity prices by 2%, if that’s what Gates envisions, would reduce electricity usage by an estimated 1.4% over the long run. Assuming, as modeling at the Carbon Tax Center suggests (xls), that fuel substitution (gas and nuclear for coal, wind and solar for gas, etc.) contributes roughly two units of carbon reduction for each unit gained from demand destruction, the total impact of the Gates tax on carbon emissions from the electricity sector would be just 4-5%. Since other sectors are less price-elastic, the average economy-wide reduction would be even less, probably just a few percent.
Contrast this with the bill introduced by Rep. John Larson (America’s Energy Security Trust Fund Act of 2009, H.R. 1337), which has a first-year carbon tax of $15 per ton of CO2 increasing steadily and predictably at $10-$15/ton each year, that would cut (xls) U.S. carbon emissions by approximately 30% by 2020, or an order of magnitude more than Gates-Lomborg carbon taxes. And Larson would return the vast bulk of carbon revenues to workers’ paychecks while setting aside a fund for the sort of clean energy R&D that Gates and Lomborg espouse.
Why the 10-fold difference in impact? A large carbon tax like Rep. Larson’s would create profound incentives: on the demand side to use less energy (via billions of decisions at household and social levels), and on the supply side to shift fuels and power to low- and zero-carbon sources (via thousands of decisions by entrepreneurs, utilities and energy companies). A mere 2% carbon tax, even one with revenues allocated to R&D, would not.
In his Technololgy Review interview, Gates at least coupled his carbon tax with a notion of ordering utilities to shut down CO2-intensive plants at such and such a time:
And then you just take all the carbon-emitting plants, you look at their lifetime, and you say on a certain date this one has to be shut down, and when a new one is put in place, it has to be low-CO2-emitting.
But how this would come to pass in the absence of price signals and corrections justifying it financially is, to be charitable, unclear.
Both Gates and Lomborg deserve plaudits for their disavowals: of cap-and-trade by Gates, of climate-change denialism by Lomborg; and for embracing the idea of a carbon tax. They now need to see the next light: to have the necessary impact, a carbon tax can start modestly but must keep rising predictably. Fortunately, we have the example of British Columbia to show that an upward-trending carbon tax of the needed size can be politically popular if the revenue is returned to the public.
Arising from the Senate’s Ashes?
And now, ve may begin?
Readers of a certain age, and a certain literary bent, will recognize the words of Alexander Portnoy’s psychiatrist, spoken at the close of Philip Roth’s transgressive 1969 novel, Portnoy’s Complaint.
After lo these many years, they popped into my head today as I read that Senate Democrats had finally thrown in the towel on an energy bill that would have included a partial cap-and-trade provision for limiting carbon emissions from power plants. The bill, written by Senators John Kerry and Joe Lieberman, was touted by Washington insiders and some major environmental groups as this year’s last hope for federal climate legislation. Yet it would have relied on carbon offsets and other dodges to postpone the day of reckoning with true, visible carbon emissions pricing — the cornerstone of meaningful climate policy.
Instead, reported the New York Times, Senate Democrats will pursue a limited bill aimed at increasing oversight of oil drilling and tightening energy efficiency standards — with no direct assault on climate-destabilizing CO2. (For a later Times story amplifying the first, click here.)
Yes, now, we may begin — “we” being Americans who care about climate, sustainability, and Earth — to unite around a climate approach that is effective, equitable and transparent enough to win the support of our fellow citizens and a Congressional majority.
I’m referring of course to the idea advanced by climatologist Jim Hansen as fee-and-dividend and by the Carbon Tax Center as a revenue-neutral carbon tax, by which fossil fuel extractors and importers pay the U.S. Treasury fees pegged to the carbon content of the coal, oil and gas they take from the ground or bring into U.S. ports, and the Treasury distributes the revenues to all Americans via equal monthly dividends (“green checks”), or by tax-shifting from regressive taxes such as payroll taxes.
The Senate’s antipathy to even the partial cap-and-trade proposed by Sen. Kerry will doubtless be spun as indicating that for the foreseeable future the well for climate legislation has been poisoned. The Carbon Tax Center says that the opposite may be true: with cap-and-trade out of the way at last, the political well can begin to be de-toxified so that the effective, equitable and transparent carbon fee-and-dividend can be seriously considered.
For this to happen, however, the Big Green groups like EDF and NRDC that for years have dominated climate discourse among environmentalists, and that convinced Congressional Democrats and the White House that the only way to “put a price on carbon” in America was via carbon cap-and-trade, will have to abandon that approach and allow others, and themselves, to try a fresh start.
It will be said that cap-and-trade failed because Fox News and other climate deniers branded it as “cap-and-tax” and, therefore, a carbon tax (or fee) cannot possibly succeed. And it is true that carbon cap-and-trade was looked to, years ago, as a way to build on the success of acid rain cap-and-trade, win over Republican free-marketers, and put a price on carbon without having to parade the dreaded t-a-x word before the public.
In the event, though, carbon cap-and-trade did none of these things.
Instead, Big Green’s pursuit of carbon cap-and-trade tethered the climate movement to complex financial instruments and branded us as servants of Wall Street elites. It opened the legislative floodgates to off-the-charts Beltway deal-making that rightly repulsed the public. Perhaps most importantly, the co-optation of climate advocacy by the cap-and-traders robbed us of the high moral ground we might have shared with abolitionists, suffragists, labor agitators and civil rights workers — true American heroes who fought to liberate our society of oppression and injustice.
If you’re in the climate movement, you recognize that fossil fuels’ assault on Earth’s climate is an ultimate form of oppression and injustice: of rich against poor, of the profligate against the frugal, of the present against the future. Ending this assault will require concerted action on many fronts; and it starts by internalizing the climate-damage costs of coal, oil and gas into their prices, so that the free ride for fossil fuels is ended and all of the alternatives, from energy efficiency, renewable energy and low-carbon fuels to conservation-based behavior and mindfulness toward energy consumption, may compete fairly and effectively.
Political action to accomplish this must be done in bright sunlight, not in Beltway shadows.
Cap-and-trade, let us hope, is dead. And now, we may begin!
Photo: Flickr / generica.
BC government increases carbon tax rate
BC Gov’t Boosts Both Carbon Tax Rate And Revenue Return (Oye!)
Spilled Oil
Oil Disaster Cries Out for Tax on Dirty Energy with Revenue Return (New Yorker)
Kerry-Lieberman “climate” bill is worse than nothing
“Is this the Climate Treaty You Came For?” George Monbiot asked hundreds of activists at the Copenhagen Klimaforum last December. Monbiot, a prolific reporter for The Guardian (U.K.) on climate, and author of Heat, offered this reply: “The UN isn’t even asking the right questions yet.” Green energy is still trying to “out-subsidize” dirty energy. “The Kyoto agreement isn’t curbing demand for fossil fuels.”
As one example, Monbiot pointed to tar sands mining wrecking boreal forests in Canada, a nation ostensibly “capped” by Kyoto. Monbiot agreed that unlike subsidies and “caps,” a revenue-neutral carbon tax would effectively curb demand while creating broad incentives for efficiency and increased supply of low-carbon energy.
Yesterday, the climate advocacy group 1 Sky held a conference call with Sierra Club’s climate and energy lobbyist David Hamilton. David pondered an updated version of Monbiot’s query: “Is the cap in the Kerry-Lieberman American Power Act worth the cost” in terms of subsidies for dirty energy and huge compromises including more offshore drilling. Hamilton called this a “cosmically difficult question.”
Not for me. Here’s why:
First and foremost, in dollars, Kerry-Lieberman is overwhelmingly a dirty energy subsidy bill with crumbs tossed to “green” energy. More money (loan guarantee, tax breaks, insurance subsidies) for nukes, “clean coal,” oil companies, and highways. As documented by Earth Track and Taxpayers For Common Sense, K-L’s “buy everyone off” approach means inducing more demand for energy, which in turn means driving drilling anywhere and everywhere, blowing up more Appalachian mountaintops, and maintaining and extending America’s military presence around the world: An addict’s frenzy for yet another “fix” of cheap fossil fuels.
For the utility sector, K-L relies on a “cap” with trading and offsets, ceding to traders (i.e. Wall St.) the authority to set carbon prices. In the transportation fuel sector, K-L at least uses a more direct approach of selling allowances at a price established by the utility permit auctions, thus limiting somewhat the problems from trading. (Oil companies don’t like volatility, either.) Yet nowhere does the bill set the clear, briskly-rising price on CO2 pollution essential to create incentives for efficiency and low-carbon energy development across the economy.
K-L gives offshore drilling the green light. While K-L purports to let states “veto” drilling in previously-protected waters up to 75 miles off their coasts, it offers them a whopping 37.5% share of revenues generated by offshore oil and gas activity — no strings attached. How many cash-strapped states will resist cries to “drill, baby, drill” in coastal and marine areas already under stress from pollution, over fishing, ocean acidification and warming? And this virtual “bribe” to drill will run afoul of long-standing domestic and international maritime law holding that coastal waters (and revenue from leasing) belong to the entire nation, not just the adjacent state.
K-L continues the pretense that coal can be made “clean” through thermodynamically-challenged “carbon capture and sequestration” by throwing an additional $2 billion/yr on top of the $2.4 billion in the 2009 stimulus package. CCS is a speculative technology that (if viable at all) will require burning at least 30% more coal per unit of net output to power the process of “capture” and “sequestration” of CO2 and building an additional facility roughly equal in size and cost to every coal-fired power plant. Plus, a huge new network of pipelines. Then there’s the problem of finding the underground capacity for permanently storing a few billion tons more CO2 every year… from now on.
K-L’s vaunted “cap” is a joke. A “cap” that adds 2 billion tons of offsets on top of an economy that generated 5.4 billion tons of CO2 last year means that even if the cap tightens a few percent each year, polluters will be able to buy (cheap) offsets instead of making reductions for the next two decades. By design (K-L calls it “cost containment”), CO2 prices will be set in the offset market, not by supply constraints of the “cap.” Charles K. Ebinger, Director of the Energy Security Initiative at the – Brookings Institution critiqued the bill forcefully:
“If we are trying to reduce carbon emissions in the U.S., let’s do it. Otherwise we simply are exporting capital and jobs [via offsets]. The [K-L] bill’s price on carbon is unlikely to be high enough to generate any real movement away from fossil fuels. Furthermore, the provisions… for trading in carbon are too complex and as written could allow gaming of the system. Energy security and climate change are issues of the most urgent national significance. We should not pretend that we can do it on the cheap with no pain, at no cost, and with no sacrifice for the greater national good.”
In short, as climate scientist Jim Hansen articulated on Earth Day, we will not address climate and energy security without raising the price of cheap, dirty energy. And if we’re serious about a meaningful and effective price, we must return revenue to U.S. workers and families.
Senator Kerry has been boasting about returning revenue, apparently in response to Senator Cantwell’s “CLEAR” bill that proposes returning 75% of revenue to citizens. But K-L’s revenue return has barely budged from that in the Waxman-Markey bill. K-L would return about half of revenue generated by allowance auctions in the utility sector (about 40% of CO2 emissions) through local distribution companies. In states with aggressive public utility commissions, consumers would see some reduction in the fixed charges on electric bills. But in poorly regulated states, which include many in the South, revenue return will be a big windfall for utilities. And since a majority of electricity usage is commercial or industrial, that leaves only a minority of the returned revenue for households. Bottom line: K-L returns only a small fraction of CLEAR’s 75% revenue return.
Still, the Big Green groups and their allies in the US Climate Action Partnership insist that K-L is “better than nothing.” And “we have to do something about climate now.” In exchange for an energy-giveaway bill masquerading as a climate bill, they’re in effect lobbying for dirty energy subsidies and for undercutting much of EPA’s authority to regulate greenhouse gases — an authority that these same groups once vigorously defended, and which was recently upheld by the Supreme Court.
Though K-L would leave intact EPA’s recently-finalized CAFE (automobile efficiency) standards, it would limit the Agency’s authority to mandate technology to cut CO2 emissions from stationary sources (e.g., coal power plants) and would confiscate EPA’s biggest Clean Air Act hammer, the National Ambient Air Quality Standards (NAAQS). The Center for Biological Diversity petitioned EPA to “cap” CO2 emissions using NAAQS under which states would develop and enforce plans to reduce GHG emissions. Some analysts suggest that states’ existing Regional Greenhouse Gas Initiatives (RGGIs) could be adapted and approved by EPA under NAAQS.
Cap-and-trade simply cannot achieve emissions reductions large enough to avoid climate catastrophe. The price signal is too murky to trigger the needed shifts to clean energy, and the revenue return is too meager to cover the needed price rises. Nor can it lead to an international price on CO2 pollution supported by trade agreements. Big Green’s insistence that “we have to pass Kerry-Lieberman or we won’t have any climate program” is specious, therefore, insofar as K-L itself is no more a climate program than was any other energy-giveaway bill in recent decades. We still need a carbon fee that returns all or nearly all revenues to citizens to gain and keep broad bipartisan and public support. Passing K-L will only make this difficult task harder by entrenching traders, offset purveyors and recipients of the bill’s dirty energy subsidies.
K-L presents no “cosmic difficulty” for me. Let’s book a grand, New Orleans-style funeral for cap/trade/offset where concerned citizens gather, take stock and start working for a People’s Climate Bill – a revenue-neutral carbon tax.
Photos: flickr– Google/SkyTruth, NASA Goddard
Join the Earth Day Climate “Revival” This Sunday
There are good reasons, ranging from corporate sponsorship to vapidity, to have been cynical about recent Earth Day observances. But there are even more compelling reasons — the imminence of the climate crisis and the recent gain in denialists’ political standing — to put cynicism aside and come to Washington this Sunday for what organizers hope will be the “largest climate rally ever.”
Earth Day’s original national coordinator Denis Hayes and the Earth Day Network are aiming for a 40th anniversary revival of the “spirit of 1970” that catapulted environmentalism into public consciousness, launching a decade of environmental reforms, winning landmark legislation, and birthing the modern environmental movement.
The list of speakers is impressive for its heft and diversity. They include:
- Climate scientist James Hansen
- Filmmaker James Cameron (Avatar; Titanic) and author Margaret Atwood (The Handmaid’s Tale; The Blind Assassin)
- Business executives from Siemens and Phillips, and union leaders from the AFL-CIO and the SEIU
- Rainbow Coalition leader Jesse Jackson and NAACP V-P for advocacy Hilary Shelton
- Evangelical creation-care advocate Rev. Richard Cizik
- Climate-policy blogger Joe Romm
Plus a stellar roster of musicians including Bob Weir, Mavis Staples, Willy Colon, Booker T, and Sting
And the program’s diversity includes sharp differences over climate policy. Hansen in recent years has moved beyond climate science to climate politics, becoming the most visible (and perhaps most aggressive) U.S. advocate of fee-and-dividend — a federal carbon tax whose revenues would entirely be returned, per capita, to the American people. For his advocacy and his criticism of carbon cap-and-trade, Hansen has been censured by Romm, the climate blogger for the Center for American Progress, which is closely linked to cap-and-trade advocates in the Democratic Party and the mainstream environmental movement.
On Sunday, these differences can and should be put aside. As Romm did in his blog on the rally, we defer to Denis Hayes’ post on Grist:
Humanity must swiftly abandon dirty energy sources and switch to safe, clean, decentralized, renewable energy sources like solar, wind, and geothermal. The world, led by America, must abandon the appallingly inefficient way it uses energy and swiftly embrace the most efficient new housing, transport, and industrial processes that exist. We Americans must slash our politically risky and economically catastrophic dependence on the oil wealth of nations that don’t like us very much.
A necessary—though not sufficient—common denominator is to establish a price on carbon that reflects the costs of climate disruption, blowing the tops off mountains, and acidifying the world’s oceans. We must place a firm cap with no loopholes on the amount of carbon fuels we consume each year and ratchet that cap down at a prescribed rate every year in the future until we hit something very close to zero. Only a federal law can accomplish this goal.
If this were easy, we would have begun a quarter century ago. The junk science, climate-denying interest groups are rich, powerful, and ruthless. But sooner or later they will lose. Sooner is better
They will lose for the same reason that IBM and Control Data lost to Microsoft, Apple and Dell. They will lose for the same reason that Ma Bell—the most powerful monopoly in the world—lost to cellular upstarts and Internet-telephony. They lost because their thinking was anchored in the past instead of envisioning the future
The junk science, climate-disruption-denying interest groups will lose because 19th century answers won’t solve 21st century problems.
At some point, this climate-disrupting madness has to start to stop. Come to the Mall between the Capitol Building and the White House on Sunday, April 25. Bring your spouse, your parents, your kids, your neighbors, your friends, your co-workers, your congregation, your bowling league. Vote with your bodies on April 25th at the largest climate rally ever.
While we at the Carbon Tax Center differ with Denis’s emphasis on a cap — we’re convinced that only a carbon tax or fee can give U.S. entrepreneurs, investors and families the clear price signal they need to move to clean technologies, fuels and lifestyles — we salute Denis’s 40 years of advocacy (some of which is on fine display in the documentary Earth Days that PBS is airing this week).
We also salute the late Sen. Gaylord Nelson of Wisconsin, who more than any other individual conceived Earth Day (originally as a national day of teach-ins on the environmental crisis) and whose staff hired Denis Hayes to co-ordinate it.
Let’s come to the Mall this Sunday and make our voices heard for climate sanity and the central policy measure that can take us there: a federal, revenue-neutral carbon tax.
Krugman on Building a Green Economy
Last week’s NY Times Sunday Magazine featured Nobel prize-winning economist Paul Krugman’s take on climate economics. Krugman notes that climate modelers have gained “enormous credibility” by successfully predicting the past 20 years of global warming. He concludes that climate trends over decades (which wash out short-term weather fluctuations), show that “the planet is indeed warming” which will lead to “massively disruptive events, like the transformation of the Southwestern United States into a permanent dust bowl over the next few decades.”
Krugman calls for the use of economic tools to curb the climate threat. He deftly articulates how (“Pigovian”) taxes discourage pollution by placing some of the “externalized” cost of pollution back on polluters, without the inefficiency and intrusiveness of regulations. He notes that a “cap-and-trade system produces the same incentives to reduce pollution… with the price of licenses effectively serving as a tax on pollution.” He explains:
A pollution tax… imposes costs on the private sector while generating revenue for the government. Cap and trade with auctioning… is just like a tax. [But current legislative proposals] involve[s] handing out licenses to existing players, so the potential revenue goes to industry instead of the government… as a way to partly compensate some of the groups whose interests would suffer if a serious climate-change policy were adopted. This can make passing legislation more feasible.
Krugman also acknowledges Dr. Hansen’s (and our) point that cap/trade punishes individual initiative to reduce GHG emissions. But Krugman never mentions the possibility of a carbon tax with revenue returned directly to the public, which should do even more to make passing legislation feasible and would avoid the volatility, manipulation and the need for “offsets” that effectively eviscerate the “emissions certainty” of a cap. Moreover, returning revenue to consumers rather than supporting “incumbent technologies” would encourage consumers to make the choices needed to speed our transition to a green economy.
Krugman confronts the problem of discounting the cost of future climate damage. Normal discounting (typically applied to business investments) drastically reduces the present value of future gains or losses; such discounting thus supports only small investments and low carbon taxes to avoid future climate damage. Siding with Sir Nicolas Stern, Krugman concludes that such large discounting is unfair to future generations; it effectively assumes away the potential for global catastrophe. Thus, despite his political judgment about cap-and-trade, Krugman’s reasoning supports the view that a substantial carbon price with a serious ramp-up is needed.
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