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When it comes to carbon reduction using tax, tradable, caps or any other instrument that tries to use the price system to alter consumption levels… I think you

by netcan 11y ago

When it comes to carbon reduction using tax, tradable, caps or any other instrument that tries to use the price system to alter consumption levels… I think you need a very sober economic estimate of efficiency and cost. A tax is not very different economically from other price increases in carbon fuels. These prices vary a lot over time. We also already have fairly variable taxes between countries on the use of carbon fuels for (eg) cars. Here's oil: http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe=10y http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe... The price varies a lot. Consumption does not vary that much or that fast. This is called price inelasticity of demand. Demand does not drop much for incremental increases in price. This means that to decrease consumption we'd need a very high carbon tax. In Europe, petrol has been taxed heavily for a long time and prices are higher than in the US. The long term effect has been somewhat smaller cars, not a completely different transportation market. There are also the realpolitik problems. When the public is concerned about something (say water), it's not impossible to convince the public (consumers) to bear a burden. But, entrenched economic interest are harder to sway or wrangle. This leads to weird regulation. An area where water use is distributed 15/35/50 between households/industry/agriculture will successfully enact water restrictions of some sort on households, the minor participant. There are equivalents in energy. I'm not saying do nothing, but I am saying be smart. Some plans are winers from a public debate perspective but do not solve the problem. I am against a plan that acts a a regressive tax affecting the middle and lower classes harshly unless it is going to have a big impact. If a household with $4,000 annual fuel costs (heating and transport) is to pay $7,000, the overall expected result better be big steps towards carbon goals. I have a hard time seeing this happen. Lets do a back of the envelope: take that $5.3 trillion externality at face value. Lets assume the world's 2 billion top consumers pay the majority of it. Call it 4 trillion, $2k each, $8k for a family of 4. How much of a reduction will we see? 10%? 25%? I'm not completely down on the idea. Elon Musk suggests lowering taxes elsewhere, being revenue neutral. This is a realistic politics problem again. Lets say we can do that though, globally. Reduce bottom level income tax and value added taxes by this much, people would be less harmed. Still, transport & heating make up a large part of poorer people's income so it's hard to think of a way this would not be regressive. I'm sure it is theoretically possible, but very hard. At the end of this ramble, I'm not sure where I am. I'd like to see a realistic estimate of actual reductions in emissions. This is too big a deal not to fix the problem.

mac01021 11y ago
The best solution I've seen is a "fee and dividend" system, where a carbon fee is collected and the proceeds are rebated in equal amounts to every legal resident of the nation. This means that, when gas prices go up, a lower-class person whose carbon footprint is exactly that of the average citizen will be reimbursed for the extra gas money by exactly the right amount. And the tax ends up being not regressive. Compare the carbon footprint of a well-to-do businessman who flies coast-to-coast on a monthly basis with that of a working-class guy who drives ten miles a day and heats his house with oil. The former is greater then the latter by several times. The working-class guy contributes a relatively small share to global warming, but bears an equal share of the public cost induced by the changing climate. Under the fee-and-dividend system, every man reimburses the public for the cost that he is imposing on them through his CO2 emissions, and is reimbursed by everyone else for the cost they impose on him. Because of this I argue that a carbon fee and dividend is the right policy from a social justice perspective, and should be enacted even if it is not going to be sufficient to push us as a society off of fossil fuels. Google "carbon fee and dividend" or see this (http://www.skepticalscience.com/CCL-pushing-for-US-fee-and-dividend.html http://www.skepticalscience.com/CCL-pushing-for-US-fee-and-d...) for more.

by netcan 11y ago

mac01021 11y ago

The best solution I've seen is a "fee and dividend" system, where a carbon fee is collected and the proceeds are rebated in equal amounts to every legal resident of the nation. This means that, when gas prices go up, a lower-class person whose carbon footprint is exactly that of the average citizen will be reimbursed for the extra gas money by exactly the right amount. And the tax ends up being not regressive. Compare the carbon footprint of a well-to-do businessman who flies coast-to-coast on a monthly basis with that of a working-class guy who drives ten miles a day and heats his house with oil. The former is greater then the latter by several times. The working-class guy contributes a relatively small share to global warming, but bears an equal share of the public cost induced by the changing climate. Under the fee-and-dividend system, every man reimburses the public for the cost that he is imposing on them through his CO2 emissions, and is reimbursed by everyone else for the cost they impose on him. Because of this I argue that a carbon fee and dividend is the right policy from a social justice perspective, and should be enacted even if it is not going to be sufficient to push us as a society off of fossil fuels. Google "carbon fee and dividend" or see this (http://www.skepticalscience.com/CCL-pushing-for-US-fee-and-dividend.html http://www.skepticalscience.com/CCL-pushing-for-US-fee-and-d...) for more.