Carbon Tax

[Stu]

Climate change seems like this complicated problem with a million pieces. But Henry Jacoby, an economist at MIT's business school, says there's really just one thing you need to do to solve the problem: Tax carbon emissions.

"If you let the economists write the legislation," Jacoby says, "it could be quite simple." He says he could fit the whole bill on one page.
Basically, Jacoby would tax fossil fuels in proportion to the amount of carbon they release. That would make coal, oil and natural gas more expensive. That's it; that's the whole plan.
Jacoby's colleague John Reilly told me the price of gasoline might rise by 25 cents a gallon in the first year. Over time, that would increase. By 2050, Reilly figures the carbon tax would add about $1 to the price of every gallon. Across the economy, prices of energy-intensive goods and services would rise. This would encourage people and businesses to be more efficient.
This is why economists love a carbon tax: One change to the tax code and the entire economy shifts to reduce carbon emissions. No complicated regulations. No rules for what kind of gas mileage cars have to get or what specific fraction of electricity has to come from wind or solar or renewables. That's by and large the way we do it now.
Reilly says the current web of rules is a more complicated and more expensive way of getting the same outcome as a carbon tax. The current system "pretty much is one of the worst ways we could do it," he says.
As with any fix for climate change, a carbon tax would hit some people harder than others. People with long commutes would pay more. People who work in coal mines could lose their jobs.
But here is where Reilly brings up what is perhaps the most surprising thing about a carbon tax: If you do it right, he says, carbon tax can be nearly painless for the economy as a whole.
Besides reducing carbon emissions, a carbon tax brings in a bunch of money — it's a tax after all. So, Reilly says, you can reduce, say, income tax to balance out the new taxes people are paying for carbon emissions. People pay more for gas, but they get to keep more of their income.
I called around and talked to a bunch of economists about this, and they said the basic idea was sound: If you give the carbon-tax money back by cutting income taxes, you can probably offset a lot of the pain.
President Obama has indicated he would support a market-based solution to climate change. But a carbon tax would, of course, require an act of Congress. And right now, that seems unlikely.

Listen to the story here---->http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=196355493&m=196511516

 

[Eventhorizon]

I think you need to add an answer. "I think global warming is real but not caused by man."

 

[Stu]

I was thinking of that and that it is not caused by human activity but could be slowed by humans, and that it is not caused by man nor can it be slowed but reducing carbon is good because of the other bad things about fossil fuels both environmental and political, and then I was gonna mention the energy companies own the world so there is no stopping them and then.... [MENTION=1871]muir[/MENTION] help a brother out here

 

[Eventhorizon]

Reducing "pollution" to include carbon emissions is obviously a good idea. Pollution has far reaching effects that are eclipsed by "global warming" because I think people use the global warming argument as kind of a catch all as to why pollution in general is bad. One big argument rather than a bunch of smaller ones put together.

I believe many people to include myself, become upset that we essentially have to support what I consider to be the very shaky "evidence" indicating mankind has anything to do with the earth warming in an attempt to get people to look at the issues mankind causes here on earth. I cant get behind the global warming alarmists because of this.

 

[casie]

We Australians have a carbon price, and it does work. I encourage everyone else to do the same.

 

[Eventhorizon]

We Australians have a carbon price, and it does work. I encourage everyone else to do the same.

How can you say it works? How do you know? Are you following the money associated with it? Few people have time to do that.

 

[casie]

there has been some pretty good reporting on this issue for many years now, e.g.

http://reneweconomy.com.au/2012/carbon-price-claims-sas-largest-coal-fired-generator-95197
http://www.eco-business.com/news/fall-greenhouse-gas-emissions-biggest-24-years/

but the market system does have a role in this process as well, see http://www.abc.net.au/news/2014-06-04/technology-not-regulation-will-kill-coal-fired-power/5500356

 

[say what]

We Australians have a carbon price, and it does work. I encourage everyone else to do the same.

How did it impact people of lower SES?

 

[Kanamori]

How did it impact people of lower SES?

Maybe about the same as regulating methane emissions.

 

[say what]

Maybe about the same as regulating methane emissions.

Is methane used a lot in our daily lives? I don't know much about this stuff!

I would think there would be impact that would be felt hard for those with lower economic statuses. As the article mentioned, things like commuting to work, job loss, heating their homes, etc. would all impact people who were already financially at risk.

 

[Stu]

"Natural Gas" is methane, whether from the depths of the earth or the bowls of a cow.

 

[Flavus Aquila]

A carbon tax simply passes the cost to the consumer in a way that reduces the effective income of low earners disproportionately, when compared to high income earners.

It is also seems to me to be a dishonest way of introducing a new tax, using the environment to make it more palatable.


If government really wanted to cut down carbon emissions, and not simply increase revenue, it should start imposing large fines, with protections that prevent the cost of fines being passed on to customers; and legislating against certain carbon consuming industries.

 

[casie]

How did it impact people of lower SES?

Lower SES had a supplement to their income through an income tax break and/or additional welfare payment, so their energy use was unaffected while everyone else was forced to think even more carefully about their energy consumption.

A carbon tax simply passes the cost to the consumer in a way that reduces the effective income of low earners disproportionately, when compared to high income earners.

It is also seems to me to be a dishonest way of introducing a new tax, using the environment to make it more palatable.

If government really wanted to cut down carbon emissions, and not simply increase revenue, it should start imposing large fines, with protections that prevent the cost of fines being passed on to customers; and legislating against certain carbon consuming industries.

But seeing as energy is energy no matter where it comes from, cheaper solutions that are carbon efficient will be favoured by both rich and poor alike, thus after having priced in carbon externalities everybody is better off from lower energy costs in the long run and a better environment. #economics

Plus, the system that you are proposing is expensive, bureaucratic, and introduces price controls on businesses which are very much against free market economics. Banning certain carbon-intensive industries domestically means that you only hamstring your own economy unless you also ban imports of goods produced in similarly carbon-inefficient ways - and if you did that then there's no way your people are going to be better off than if you had just priced carbon emissions. If you used the revenue to fund R&D or at the very least welfare for those disproportionately affected by pricing carbon emissions then you're golden.

 

[Eventhorizon]

http://phys.org/news135003243.html

Yes really.

On a side note I am all about moving away from oil as an energy source. I just dont like shady science and scientists who even when their heart is in the right place, simply are still guessing this is what happening.

Take for instance the idea that the earth is inching a little closer to the sun in its orbit every year and this really is part of a natural cycle. Has anyone looked into this idea? What if its real? While I very much believe "global warming" is partly being used as an argument to get rid of the worlds oil dependency and support this idea, using non-factual manipulated data to do so is simply wrong.

Further note, China is polluting at twice the rate of the US. Even if the US were to stop, China never will so it doesnt matter what we do.

 

[casie]

That's silly. Planets don't just suddenly inch a little closer to the sun in the way you are describing unless it occurs over many millions of years. The whole concept of being in orbit with something relies on this. If our orbit was that unstable then my guess is that Earth probably would have collided with the sun long ago.

And if the liberal democratic world can move towards renewable energy then so can anyone else. The rapid pace of development may make this even more likely if we take the attitude that vital infrastructure should be future proofed as far as is possible.

 

[say what]

Where does the money garnered from the tax go? Does it go back into sustainability programs?

Personally, I like the idea. As a whole, we are so disconnected from our plant, and very rarely consider how our immediate actions impact the future of our environment. I don't believe a tax will mend this relationship and encourage the stewardship that is needed, but it may reduce short-term consumption. I don't think placing a monetary amount on our environment encourages people to see intrinsic value in it, but it could be a start.

However, you'd think it should be a world-wide implementation. Would it really help if the main contributors (ie., countries) weren't implementing a tax?

 

[casie]

Originally the money from the Australian carbon price was going to go into the Clean Energy Funding Corporation, a government-established body which would fund research and investment into clean energy solutions. I did not like this part of the scheme because I think it is dangerous to set a precedent where the state can establish a fund dedicated to manipulating the market to achieve an environmental or social objective. Yes, taxes can have the same endgame, but it's one thing to have private firms compete with each other on the basis of natural and artificial conditions of the market, and another thing to force private enterprise to compete with businesses who are offered cheaper money so long as they suit your policy. For example, you may see renewable energy companies become inefficient or anti-competitive as their objectives are not to compete with each other but to qualify for cheap money. However, you could justify this negative effect if it results in overall cheaper prices for energy and more carbon efficient technologies. Definitely better than trying to send inspectors everywhere.

Because people kicked up such a stink about the carbon price unfairly affecting lower SES, they decided to fund welfare with the carbon price and borrow money for the CEFC. Of course, CEFC is turning over profits for the govt but it's still a bit anti-free market.

I agree with you about how a carbon price will do nothing to encourage people to care about the environment. Of course, that is the point - it's a solution for people who don't care enough about the environment to change their behaviour. We would need something radically different about the way that we price goods and circulate wealth in order to see the kind of change you are hoping for.

The cool think about a free-market based solution in the global economy is that it works even in countries where there isn't a price. The technologies developed to counter the increasing price of carbon emissions will spread as the cost of renewable energy drops below the cost of extracting and using fossil fuel. As long as somebody, somewhere applies the technologies developed in their own country to the energy needs of another, inevitable pressure will mount on governments to take advantage of the opportunity and stop wasting taxpayer resources.

 

[Stu]

The MIT paper, and the podcast that reports on it, proposes that the tax collected be returned to the tax payers, either as a refund or as a deduction on their income taxes. A point that economists like to make is that taxes should only be levied on activities which are detrimental to the economy. For instance they are usually critical of income taxes because of the negative effect it has on the monetary incentive of working hard and making money.

My understanding of the MIT proposal is that the tax be split equally per person which means that the more you do to not pay the tax, the greater your reward in refund money. Of course this means that folks who live in cites would have an advantage over the rural population, which plays into the whole liberal vs conservative narrative in that city dwellers tend to be more liberal and folks who live in less densely populated areas tend to be more conservative (politically).

That said, in some states, the Rocky mountain states for instance, a carbon reducing project could be funded by the tax. Anyone who has driven through the Rockies in recent years must have noticed the millions of acres of dead pine forests which eventually will all catch fire and burn, releasing loads of CO2 along with plenty of other toxins (remember anything in high enough concentration is toxic) not to mention the cost in real estate damages and labor.

If they had the money to build high temp plasma wood burning electrical generation plants those dead forests could be harvested and burned in a far less damaging way negating the wild fires and adding lots of lumber jack jobs. (I bet if you offered a young coal miner the chance to make the same money working in the forest rather than underground chances are he/she would jump at the chance).

 

[Flavus Aquila]

Lower SES had a supplement to their income through an income tax break and/or additional welfare payment, so their energy use was unaffected while everyone else was forced to think even more carefully about their energy consumption.



But seeing as energy is energy no matter where it comes from, cheaper solutions that are carbon efficient will be favoured by both rich and poor alike, thus after having priced in carbon externalities everybody is better off from lower energy costs in the long run and a better environment. #economics

Plus, the system that you are proposing is expensive, bureaucratic, and introduces price controls on businesses which are very much against free market economics. Banning certain carbon-intensive industries domestically means that you only hamstring your own economy unless you also ban imports of goods produced in similarly carbon-inefficient ways - and if you did that then there's no way your people are going to be better off than if you had just priced carbon emissions. If you used the revenue to fund R&D or at the very least welfare for those disproportionately affected by pricing carbon emissions then you're golden.

I am cynical that a carbon tax is anything but a revenue raising activity, floated under a more acceptable flag.

If carbon is a real problem, then do with it what was done to CFC's several decades ago. Phase carbon heavy activities out, whatever the cost.

 

[casie]

the difference is that the CFC generating activities weren't also generating most of our power, steel, and other valuable resources. I'm not sorry to say that your cynicism is misplaced in this circumstance