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A broad carbon price that starts small but rises gradually over time would be better than passing a hodge podge of half measures. Virtually all economists say
by thinkcontext 5y ago
A broad carbon price that starts small but rises gradually over time would be better than passing a hodge podge of half measures. Virtually all economists say this would be more economically efficient (cheaper) and it doesn't create distortions by favoring politically popular projects over less sexy but more effective solutions.
- LorenPechtel 5y agoExactly. Put the costs where they really are. I would make a bit of of a change, though--make the carbon tax refundable. Lets say you tax CO2 emissions at $100/ton. You then pay $100/ton to anybody who effectively sequesters CO2. In fact, I would pretty much scrap the emissions rules and replace them with taxes of this sort. There should be no acceptable level followed by fines, there should be a cost from the first gram.
- travisporter 5y agoIs this different from the "trade" of cap and trade?
- sagarm 5y agoYes, because in cap and trade the amount of pollution is decided by policy and price by the market. In this fine-based policy, the price is set by policy and quantity by the market.
- p_j_w 5y agoNot sure if a price that "starts small" is enough at this point. It may have been 15 years ago, but it seems like now it won't be enough to stave off a massive disaster. If there's only political will to start small, then obviously we should do that. It seems like the can kicking of the past has come to bite us in the ass, though, and these sorts of actions will not do it.
- orthecreedence 5y agoGasoline should be at least $25/gallon by now. So putting that aside, large-scale investment in nuclear seems to be the best option.
- sjburt 5y agoWith a $5/gallon tax, you could pay $600/ton for direct air capture of carbon. This is the current price for small test installations. There are claims that this could decrease to as little as $40/ton with scale.
- orthecreedence 5y agoAny literature on this? I've not really followed the idea of carbon capture (other than planting forests and stuff).
- pfdietz 5y agohttps://www.sciencedirect.com/science/article/pii/S2542435118302253 https://www.sciencedirect.com/science/article/pii/S254243511...
- epistasis 5y agoGiven the uncertainty of climate effects, we should actually be starting very very very high, and then bringing it down as we have more certainty about the worst case effects. I need to find that paper from financial analysts that say that simpler, more politically achievable schemes with low starting prices completely mismodel the financial risk...
- emodendroket 5y agoUnless you're advocating some kind of fundamental change in our systems of economy and government it seems kind of pointless to point out how a plan which has no hope of making it through might be better.
- epistasis 5y agoI used to think this, but this book convinced me otherwise: https://www.wiley.com/en-us/Making+Climate+Policy+Work-p-9781509541805 https://www.wiley.com/en-us/Making+Climate+Policy+Work-p-978... If we treat all industry as spherical cows, a common carbon price comes out as a great way to incentivize industrial change. However, once we get into the particulars of different industries and the varying levels of difficulty they have in decarbonizing, and the very different levels of lobbying power they have to influence that price, and the difficult of enforcement across different sectors, a common shared policy across all sectors starts to be far less efficient than tailoring the solution to each industry. For example, steel is pure commodity, very difficult to eat any cost from stranded assets, and has far less ability to call up capital to solve the problem than, say, natural gas. So the price will have hugely different consequences for steel than natural gas production, and there are different tailored industrial policies that will make the transition happen much more time- and cost-efficiently.
- whazor 5y agoI think we also need trade agreements to consider carbon tax, otherwise you would have unfair competition.
- angry_octet 5y agoThe current systmt is really distorted. Coal from Germany/Australia/US is taxed differently to coal from China/Indonesia. Products made from brown coal energy in China are untaxed. Chinese steel production using coal from Australia results in Australia having a carbon debt, but not China. If a ship is made with Chinese steel, no tax. Made with American/EU steel? Taxes. If a ship burns the filthiest high sulphur bunker oil then it pays no more tax than a sail boat. We can't fix climate change with exceptions for everyone.
- thinkcontext 5y agoA carbon border price was in Biden's campaign platform and it would be one of the best political moves he could make. US industry has a big advantage in carbon intensity over China, so a price would advantage domestic industry and at the same time put pressure on China to clean up faster. Both of these are big political problems for Biden.
- maxekman 5y agoEU Emissions Trading System https://ec.europa.eu/clima/policies/ets_en https://ec.europa.eu/clima/policies/ets_en
- emodendroket 5y agoI don't know if that's better or worse, but my intuition is that a sweeping, solve-all solution will take forever to get through and measures like this are easier to push through faster. In software terms, it's more akin to a gradual refactor than a rewrite.
- amanaplanacanal 5y agoUnfortunately, at least in the US, Congress doesn’t appear to work that way. If they pass something, it is assumed to solve the problem, and they won’t want to touch it again for at least a decade.
- stupendousyappi 5y agoNoah Smith has an article on Substack arguing that economists have largely failed to produce useful research on climate change, in part because of a preoccupation with carbon taxes to the exclusion of other research topics. The article is subscription only (edit: not true, see reply below), but his four big points are these: * First, academic economists have basically ignored the topic. A survey of top economics journals found that, out of 77,000 total articles published, only 57 (0.074%) were about climate change. * Many of the most cited papers have turned out to be crap, with basic calculation and data coding errors the authors have had to publish corrections for. Smith argues that this is partly because economists don't collaborate with other researchers much, especially natural sciences like climate change. * The most important model for integrating climate change into macroeconomic analysis is the DICE model created by Richard Nordhaus. But the DICE model has big problems, the most important of which is that, due to discounting of future economic effects, it basically ignores the welfare of future generations. The DICE model also assumes that preventing climate change will be very expensive, and hasn't adjusted for recent technology advances on that front. * Last, economists have been obsessed with carbon taxes, and haven't dealt with how politically unpopular they are, especially in international negotiations. This is, IMO, similar to how economists love to promote free trade, saying that the losers can be compensated via money from the overall economic gains, leaving everyone better off, and ignoring that this never, ever actually happens. I'm in the camp that thinks that economists haven't earned a ton of credibility on the specific topic of climate change. Our best shot, IMO, is massive R&D efforts and CO2-removal geoengineering (especially wave-powered olivine weathering, as promoted by Project Vesta). Accompanied by crippling taxes on heavy emissions industries, but I think people will have an easier time accepting those if it's clear that governments are pursuing alternatives to taxes too.
- notJim 5y agoI'm not convinced a carbon tax is politically viable. For some reason, they are incredibly unpopular. In very blue Washington state, they've made several attempts to pass one, and each has failed. The most recent was basically the cadillac of carbon taxes, they threw in everything you can throw in to address concerns. It still failed.
- abraae 5y agoA carbon tax would be more popular at if it was redistributed to the citizenry. Carbon tax is different from other taxes as the primary purpose is not to raise money for govt, it's to reduce carbon producing activity. So take all the proceeds and distribute directly to every citizen to use as they want - e.g to buy petrol if that's their choice. When people see those checks arriving they'll be more positive.
- notJim 5y ago> A carbon tax would be more popular at if it was redistributed to the citizenry. The Washington state plan included this redistribution. People didn't go for it.
- bluGill 5y agoWhat is the point? My gas bill goes up, only partially paid for by this check that I'm getting. A few who don't buy gas see some extra cash, but most people don't see any option to not drive so they lose.
- thinkcontext 5y agoThe biggest changes will be made by businesses since they are much more price sensitive than individuals. A lot of things will happen that you don't even notice Say you are choosing between 2 otherwise identical apartments that include utilities in rent. One building is more energy efficient than the other thus can charge less in rent and still make as much profit. Even though you are getting a dividend check you will still choose the lower priced apartment (if you are a rational economic actor). Multiply this scenario across the billions of economic decisions across the economy and it adds up quickly. In your specific scenario, since the initial tax is low a few pennies in added cost won't really matter, gas prices go up and down already. But you know that the price will continue to rise, so if you are a rational economic actor, the next time you buy a car you will take that into account. And by the time you need a new car the price of EVs may have declined enough to be cheaper than a new gas car, as they are predicted to be by the middle of the decade (fuel and maintenance are already significantly cheaper).
- nostromo 5y agoThe only way to make this work is to put the carbon tax into a fund that the US government has no access to, and to empty the fund every year, writing each American a check.
- kstrauser 5y agoSo, tax cuts. Got it.
- nostromo 5y agoRead the comment again, it’s not a tax cut. It’s a revenue neutral tax increase on carbon, returned to the people who are now paying more for just about everything. Poor people who don't use much carbon will net benefit. The rich who are now paying a bit more to re-fuel their private jets will pay a bit more.
- kstrauser 5y agoThat's literally a tax cut, but appropriately targeted at the not-rich this time.
- thinkcontext 5y agoAgreed. This is the approach favored by Janet Yellen, Biden's Treasury Sec and everyone from the NRDC to Exxon. https://clcouncil.org/ https://clcouncil.org/
- pyrale 5y ago> A broad carbon price that starts small but rises gradually That would have been the plan 30 years ago. Right now, we can either turn it up to 11 when the scheme starts, or face horrible consequences.
- kansface 5y agoI've been reading "Seeing Like a State", and this reminds me of the sort of legibility problems that States historically had around taxation. The premise of the book is that the State reorganizes society to make it easier to administer often times to the detriment of society itself. For instance, a medieval European kingdom wants to tax grain - there are no markets which determine the price of grain. There is no universal measurement, there is no universal language. Instead, each village has its own tradition founded upon hundreds of years of bitter dispute between the local lord, the peasants, and the local clergy. A peasant is given some number of baskets each year and is told to fill them up. The peasant and the lord don't trust each other. The peasant suspects baskets are bigger this year and the lord suspects the peasant will scheme to avoid filling them. So, everything is codified - the basket is filled from a certain height (eg shoulder) with a grain with a certain amount of wetness to a certain level - either mounded, semi-mounded, potentially leveled off with a specific tool, etc... Any changes to the system stand to create a revolt. Also, no one has a surname, detailed maps for productivity of fields don't really exist, and lets say 90% of males in England have 1 of 6 names. Peasants don't own anything anyway, but they have complex rules around the communal usage of land (even though that's illegal). Kings are forced to rely on the local knowledge of lesser lords as middlemen who can navigate the local systems without causing revolts; they in turn refuse to do anything to fix a system that benefits them greatly. Anyway, that's about what I see happening if you try to tax carbon. There is no legibility into what causes pollution from the outside - you can't look at the good itself, you must know the history of all inputs down to the raw goods and then some! If you just tax the creation of carbon domestically, you will encourage offshoring everything that necessarily pollutes to places that will pollute way more. If you just tax big players, businesses will split off divisions to be under the limit. If you just tax certain industries, you will send them offshore (apart from air travel). The righter solution would be to implement a carbon VAT, so that you align the incentives of producers and consumers. Now, you are in the business of taxing grain from peasants! How much pollution goes into foreign steel? Who knows? Are their carbon offsets real? Do we just put a tariff on foreign steel which feels sorta right? That will violate trade deals and will doubtlessly punish the honest players the most, once again encouraging more pollution.
- ineedasername 5y agoDepends on how it works. "Offsets" for example basically allow companies to pay other companies to not cut down trees that it wouldn't cut down anyway. A direct tax on carbon emissions would avoid that sort of thing.