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Why Carbon Taxes Work

46 points by AndrewDucker 5y ago

mavhc 5y ago
As long as the pollution tax is higher than the cost to clean up the pollution it works, because then the company cleans up the pollution for you. Also massive incentives to reduce pollution, and reduce cost of pollution cleaning technologies.
- ThunderSizzle 5y ago
  Except who actually pays the tax? Energy consumers, which is anyone who needs electricity or fuel for their household. You just don't see it in the explanation of why your electric rates went up 50-100%. Or, if it doesn't go up, you start living with brown outs and blackouts like California.
  - mavhc 5y ago
    The consumers, they pay all for everything after all. The point is to stop companies cheating by polluting for free to make their product cheaper at our expense
    - ThunderSizzle 5y ago
      That's not what will happen. The consumers have to pay for electricity, otherwise your sending them back to the stoneage.
      - mavhc 5y ago
        But they should prefer to get solar/wind/nuclear, which would be half the price of coal/oil/gas if those 3 weren't cheating by polluting our air for free
  - timbit42 5y ago
    Consumers should switch to low carbon goods and services to avoid paying the carbon tax.
  - TheCoelacanth 5y ago
    That's why the proceeds of the carbon tax should be split up and paid out evenly across the whole population. It's not just a uniform increase in prices. It's people who emit an above average amount of carbon paying the people who emit a below average amount of carbon.
    - mavhc 5y ago
      The proceeds should be used to clean up the pollution, isn't that the whole point?
kranke155 5y ago
Carbon Taxes work because the market can't solve a problem it doesn't have a price for. Knowing the word "externality" is all you need to know. In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. The fantasy is this AI can run the markets better than any centralized authority. Even if we assume that's true right now the AI has no price for carbon, can't take into consideration, hence it can't "solve" it. This is the equivalent of having a self driving car that wasn't trained to see bycicles. Obviously, it will keep killing cyclists until you give it training data to see them. There is no "market solution" for a blind AI system that doesn't see carbon, because the AI has no data set for carbon costs.
- vasco 5y ago
  So who do you propose to be the centralized authority?
  - kranke155 5y ago
    I never suggested anything of the sort. I would think a reading of history - ie the book "How Asia Works" has a lot of material on this - shows that there is a hybrid model where intervention of the govt is needed to "steer" the direction of things in order to ensure sustainable income and economic growth. I highly recommend reading that book for an alternative history on how Germany, Korea, Japan and China have succeeded while the West has mostly stagnated.
  - kspacewalk2 5y ago
    The governments. They recognize market failures and mitigate with things like the carbon tax. In fact, the whole concept of a market, even the traditional physical one, by definition implies regulation with enforcement (e.g. weights and measures). Without those, there's no market, there's just a free for all.
- roenxi 5y ago
  > The fantasy is this AI can run the markets better than any centralized authority. I agree with a literal reading of your comment, but will just point out that the wealthy countries all tend to be the ones that let the market do its thing though. We've got a lot of examples now of authoritarian vs free market (the Koreas, Germanys and China pre- and post- Deng Xiaoping leap to mind). People routinely do better when they control their own destiny rather than strong central authorities. If we pick which end of the spectrum is more likely to keep people fed, the answer is pretty much always the intelligence of a free market will do the best job. Starvation tends to be isolated. This is something that central authorities don't do so well, and that has been tested out quite a few times in practice now. I'm still mildly amazed that the continued and ongoing failures of political leadership for decades hasn't made an obvious dent in the number of people wanting the politicians to be in charge. Politicians are popular, not competent. Markets are really good at putting competent but unpopular people in charge which is a better strategy.
schnitzelstoat 5y ago
I agree that externalities should be priced in - but I wonder if in practice Governments would end up footing the bill via subsidies. For example, look at what happened in France with the fuel tax rise which lead to the “gilets jaunes” protests. If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting. A simple flat tax on CO2 emissions, while far easier to implement, would be regressive compared to one that scaled with your personal emissions or something. Such a regressive tax, levied on basic things like energy, fuel etc. that are fundamental to normal life seems incredibly likely to trigger political unrest as we saw in France.
- yunohn 5y ago
  > If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting. So much this. Here in NL, my heating bill is 70% tax and 30% gas charges (not exaggerating). The government claims to do this to encourage installation of better insulation and other energy saving measures - however, as a renter (like the vast majority of NL is), I can’t do anything about this and just pay the exorbitant heating bill (1). I have no option but to use gas, and even if I move to a (rare) neighborhood with city heating, they’ll charge me the same amount (2). (1) https://www.dutchnews.nl/news/2021/09/as-gas-bills-rise-more-households-fall-victim-to-energy-poverty/ https://www.dutchnews.nl/news/2021/09/as-gas-bills-rise-more... (2) https://www.dutchnews.nl/news/2021/11/homes-with-district-heating-systems-may-still-be-hit-by-higher-gas-bills/ https://www.dutchnews.nl/news/2021/11/homes-with-district-he...
  - Vinnl 5y ago
    To be fair, the policy was to raise gas taxes while lowering those on electricity in a way that it evens out for most people. Additionally, while I don't know the numbers of renters vs. buyers, I do know that the vast majority of renters in NL live in social housing, which means the government has some leverage there to get the housing corporations to lower gas use.
RobertRoberts 5y ago
It depends on who gets the taxes. If it goes to greedy bureaucrats that waste it or are themselves bought and for it will be worse than no tax at all. Then the system will be used by lobbiests to attack one industry in favor of another.
lovemenot 5y ago
Global warming is a global problem. While carbon tax would be levied locally, creating incentives to just shift production to low or no tax locations. Just as harmonisation over Cororate Tax is finally emerging, similar cross-border agreements should be needed for a Carbon Tax.
- LeanderK 5y ago
  it's complicated, but could tariffs help?
  - lovemenot 5y ago
    Tariffs might help in one respect. But they lack the market-driven simplicity and transparency which were the principal benefits of the carbon tax mentioned in the article.
- nabla9 5y ago
  EU is making carbon tariffs to prevent exporting emissions to avoid paying for carbon emissions outside EU Emissions Trading System. Carbon tariffs are essential feature of any functioning system. Either countries enter agreement where they harmonize their carbon trade/tariff or there will be tariff.
- wcoenen 5y ago
  Which is why mechanisms like carbon tariffs on imports are being designed. https://en.wikipedia.org/wiki/Carbon_Border_Adjustment_Mechanism https://en.wikipedia.org/wiki/Carbon_Border_Adjustment_Mecha...
  - tonyedgecombe 5y ago
    That seems like it could become very messy and open to fraud. The nice thing about carbon tariffs within borders is they would be trivial to implement because there are relatively few targets (oil wells, coal mines, etc).
    - 5y ago
julienreszka 5y ago
Watch "Lords of Scam". Carbon taxes not only don't work, they breed corruption.
throwaway599281 5y ago
Another tax on the middle class, because they don't have enough of a fiscal burden already, in the goods they need, in paying gas when they drive to work (no, not everyone has a very green public transportation that gets them to work in an efficient fashion). Do these people even know the carbon footprint of manufacturing a solar panel or a wind mill for their "green" energy? I do agree that products should be manufactured locally, but that has nothing to do with the environment.
- occz 5y ago
  >Another tax on the middle class, because they don't have enough of a fiscal burden already, in the goods they need, in paying gas when they drive to work (no, not everyone has a very green public transportation that gets them to work in an efficient fashion). So build it, then. You have lots of money available to construct it from your carbon tax, and even more money when you stop subsidizing the ridiculously expensive car-oriented infrastructure. >Do these people even know the carbon footprint of manufacturing a solar panel or a wind mill for their "green' energy? Total emissions from these technologies are significantly lower than fossil-powered energy generation. Stop spreading disinformation, it's extremely frustrating. It's very obvious that you're doing it on purpose.
  - throwaway599281 5y ago
    >So build it, then. You have lots of money available to construct it from your carbon tax, and even more money when you stop subsidizing the ridiculously expensive car-oriented infrastructure. You don't know what you're talking about. And just because you're ignorant doesn't make me argue in bad faith.
    - occz 5y ago
      I do know what I'm talking about - and we can conclude on the basis of your statements on renewable energy production that you either don't know what your talking about (willfully ignorant) or that you're attempting to willfully sabotage the conversation.
- 5y ago
londons_explore 5y ago
Carbon taxes only work if they are applied universally worldwide. If a carbon tax is applied in just one country, then people are rewarded for shifting carbon intensive activities to another country. There also needs to be a clear answer to 'who should receive the carbon tax revenue?'. If countries receive the revenue, they have an incentive to try to attract carbon intensive industries to collect revenue from them. The only real solution is a worldwide tax paid by countries to something like the world Bank. Each country could then tax their citizens equally.
deleted 5y ago
[deleted]
dougweltman 5y ago
That a carbon tax is a source of information about the highest leverage areas we can change is a great framing. Unfortunately, the main barrier to implementing a carbon tax is how we treat imports, which is the key to getting the whole thing to work. Failing to solve this means importers deindustrialize in favor of countries with more lenient carbon pricing regimes. “Do I have to spell it out for you? Just implement a border-adjusted carbon tax!” they’ll retort: “that will cause exporters to harmonize their standards with the markets they sell to.” I can see how this works for plastics (producing PTFE in <Exporter> would have a carbon tax of $2/ton), but what about complex, assembled goods like cars with complex supply chains, like a Hyundai assembled in S Korea with parts from more than 60 countries? The Americans need to trust the S Koreans to tax that, and the S Koreans need to trust the Chinese, Indians, Canadians and Japanese to be implementing theirs properly. Every major component in an assembled good becomes a problem. Carbon tax works when all countries implement it, but what’s the equilibrium given current starting conditions?
- ajb 5y ago
  Then you also need to tax the uncertainty...
  - fuoqi 5y ago
    And of course no one will exaggerate this "uncertainty" as a cover for protectionism. /s
    - UncleMeat 5y ago
      Perfect can't be the enemy of good. We are on a clock. Something has to be done.
flooow 5y ago
1) Tax carbon at the source - yes, that means every oil well and coal mine pays a whopping great tax before any fossil energy leaves the front gate. Prices will adjust all the way down the supply chain 2) Use this huge income source as global helicopter money, the dividend every person in the world gets from allowing other people to destroy their global shared ecosystem 3) Create various green energy projects into which citizens can invest their dividend 4) Planet does not become unliveable mad-max hell within our lifetimes?
- Mountain_Skies 5y ago
  Sounds like a way to end up with women forced into having children they do not want.
  - Jensson 5y ago
    Concentration camps full of women and children so the dictator can collect all that sweet carbon money.
  - flooow 5y ago
    Nah, you don't get your dividend until you are 16.
- fuoqi 5y ago
  >Prices will adjust all the way down the supply chain Hitting the poorest most, since rise in energy prices has a cumulative effect on everyday spending. Also "adjustments" can very easily lead to shocks if not done carefully. And don't forget, we are talking about it in a highly inflationary environment. To summarize: small mistakes in introducing such policy can easily lead to a sizable civil unrest. >Use this huge income source as global helicopter money So effectively you pay back money to people which they additionally spend due to the increased prices. In the best case scenario, additional spending and such UBI may equalize each other, but more realistically I think the former will be bigger than the latter. And I am not even touching the matter of exports becoming less competitive on global markets against countries which do not implement such policies. So I don't think that most people magically will be able to invest into green projects en masse. Yes, eventually everything will stabilize and we will have an economy with properly taxed carbon externalities, but my point is that it's very easy to make mistakes on this path with very drastic consequences. And I would advice against magic hand-wavy thinking.
jillesvangurp 5y ago
Of course they work. Fuels have historically been taxed quite highly in some countries. EVs are doing well in those countries and these countries tend to be a bit ahead of the curve in terms of adoption. Financial incentives help so they are a useful tool. One caveat here is that governments also hand out subsidies and a much more effective way to penalize carbon emissions is simply to stop subsidizing it and then add the carbon tax on top. Yes, EVs get subsidized too. But it's peanuts to the many billions the oil and gas companies still continue to get their hands on to perpetuate the problem. Whenever you hear oil companies defend blue hydrogen what they are really talking about is getting payed (with tax money) for the process of pumping insane amounts of natural gas for the next few decades so they can use that to produce hydrogen. That's "the hydrogen economy": pumping yet more gas to speed up how quickly our planet heats up. They'll emphasize how important that is and how green it is (or could be). Never mind that it is completely unprofitable to capture carbon at scale and of course tax payers are going pay for them pretending that it's going to be meaningful amounts. That's the game right now in terms of handouts. We're talking tens of billions being allocated for this madness. Companies often double dip even and get also get subsidies for cleaning up their act (or pretending to) while also taking full advantage of governments wielding their power on their behalf, public spending on their infrastructure (e.g. pipelines), leniency when it comes to environmental issues, permits, and public money generally being used to clean up their mess. A carbon tax would go towards balancing that; but only a little bit. Eliminating subsidies for carbon producers would cost the worst offenders the hardest and actually level the playing field in terms of cost for the alternatives that they've been allowed to unfairly undercut in pricing. The irony is that getting rid of the subsidies is somehow more controversial than carbon taxes. That's how messed up our world is. We're actively paying to destroy it quicker currently. Every time you pay your taxes.
- DisjointedHunt 5y ago
  Energy runs the world. It isn’t as one dimensional as you paint it. Governments don’t simply subsidize burning coal. . . They do so as a means to meet the growing demand of their people for electricity. India for example, has one of the most expensive fuels sold in the world thanks to immense taxation. Even with one of the lower per capital incomes in the world, they are a massive energy market because ENERGY IS NEEDED FOR SUSTENANCE. We need to realize that what sounds like a great idea on paper to minimize one dimension is actually counter productive when we factor in many more.
DisjointedHunt 5y ago
I’ve never been more astounded than when in the company of absolute geniuses in Silicon Valley, watching them discuss the economics of a carbon tax without having once encountered a real world carbon tax credit trade or having seen the dishonesty of the entire system. Tl;dr: It isn’t a system to “inform one of the behavior one needs to change most urgently” as the author puts it. It’s a transfer of wealth from the economies that impose it to the economies that find a way to leverage the arbitrage. Going green doesn’t need to be a punitive process, Infact, all indications from our efforts over the past decade indicate that punitive measures are far from perfect. The incentive for solar and wind energy, for example, has saddled places like Germany and California with systems that dont scale with growing demand, leading to temporary large burns of dirty coal or arguably worse, cutting off power to whole cities for hours. Intelligent societies solve problems through innovation. A billion dollars to five or so independent contractors to set up efficient modular nuclear reactors with some entity like the Army Corps of Engineers or experts from the energy department assisting with oversight and safety would completely change the game over night. You can still fly to meet your family and cities can run public infrastructure around the clock carbon free for any demand load we can imagine for the next century. The issue is precisely the idiots who come up with the ideas of a carbon tax. Bureaucrats. Won’t be around by the time the idea fails so the blame falls to someone else. The legal and regulatory barriers holding nuclear back in the US right now is one of the gravest mistakes of the coming century.
mpbeauj 5y ago
Carbon taxes are a terrible idea. The reason the capital markets can't solve climate change is because it's not a real pain point that people care about (even though they claim to), so taxing people doesn't solve the underlying issue. The simple solution is make consuming products that are bad for the environment really annoying/painful to the point where not buying them is the best option. Nothing else will do more good for the environment.
sleepysysadmin 5y ago
Gasoline prices have little impact on demand. https://www.eia.gov/todayinenergy/detail.php?id=19191 https://www.eia.gov/todayinenergy/detail.php?id=19191 For this reason alone Carbon taxes do not work. In my jurisdiction, we already have over 100% tax on gasoline. Partly for road building purposes, but still obviously not impacting usage. Hybrids coming around ~2000 certainly had a visible effect but it wasn't enough. Which is why Rivian, a company which has delivered no cars, is worth 97 billion. Tesla is worth a trillion. Whereas Ford is only worth $78 billion. We must get to EV transportation asap. We must electrify our railroads. We must electrify our planes. In fact, carbon taxes are bad. Very bad right now. Because prices are inelastic it makes the tax regressive and anti-compounding. So gasoline prices go up. Trucking immediately is more expensive. Products prices go up. But because product prices are higher, inflation etc. trucking gets more expensive. Alberta recently had a carbon tax and allowed this circle to run for some time. An interesting thing happened. The prices didn't go higher. This is a problem. The price available to oil value crashed instead. So while WTI was about $50/barrel. WCS from Alberta went to $5/barrel. The albertan oil industry couldn't sell their oil. The trucks weren't running. Alberta repealed their carbon tax which nearly immediately fixed the problem. Their economy was basically halted. No trucks running means people will soon stop eating. Imagine 10 years from now. We have maybe 30% of vehicles gone EV. Who owns those? The rich. The rich no longer pay the 100% tax for building roads. Who is paying for the road tax and carbon tax? the poor buggers driving the 15 year old shitmobile. The poor end up paying and the rich dont? Pretty regressive.
jaybrendansmith 5y ago
This used to be a conservative and Republican idea. I'm grown up enough to admit that they are right: The market is absolutely the best way to decide who pays based on the cost of the externality, in this case, Kg of Carbon Dioxide in the atmosphere. We need this to start now, so it can be phased in over 10 years. We need to get all the big nations to jump off this cliff with us at the same time. The alternative is crazy. Yes there will be winners and losers, there always are. It will be very hard on some folks in the midwest, and the 150 coal miners left, and the fossil fuel companies and people in that industry. I hope they've all diversified into solar and wind by now. It's all too late, they suppressed this change for 20 years now. In that time, average temperature has risen by .8 degrees where I live. Time to put on the big boy pants and make the hard decisions, folks.
DisjointedHunt 5y ago
No. Carbon taxes are an accounting trick. Just fucking deploy modern nuclear technology. Run trains and heating and industrial heating for entire cities limitlessly with a predictable dollar budget. Zero carbon emissions. The problem I have with this entire line of argument is how in reality you have nations such as China generating significant volumes of carbon credits in exchange for that sweet cash generated by gullible nations. We have the Department of fucking Energy and a thousand other agencies that have researched and operated this technology for decades in the most grueling environments (Nuclear Submarines and other classified domains) and it is more than ready for large scale commercial use. Imagine having limitless power to run projects of Earth scale -> Literally convert saltwater of an ocean into freshwater and pump it continuously into deserts or inland. . . Turn off natural gas heating entirely in the northern hemisphere thanks to electric heating . . The possibilities are endless.

46 points by AndrewDucker 5y ago

As long as the pollution tax is higher than the cost to clean up the pollution it works, because then the company cleans up the pollution for you. Also massive incentives to reduce pollution, and reduce cost of pollution cleaning technologies.

ThunderSizzle 5y ago
Except who actually pays the tax? Energy consumers, which is anyone who needs electricity or fuel for their household. You just don't see it in the explanation of why your electric rates went up 50-100%. Or, if it doesn't go up, you start living with brown outs and blackouts like California.
- mavhc 5y ago
  The consumers, they pay all for everything after all. The point is to stop companies cheating by polluting for free to make their product cheaper at our expense
  - ThunderSizzle 5y ago
    That's not what will happen. The consumers have to pay for electricity, otherwise your sending them back to the stoneage.
    - mavhc 5y ago
      But they should prefer to get solar/wind/nuclear, which would be half the price of coal/oil/gas if those 3 weren't cheating by polluting our air for free
- timbit42 5y ago
  Consumers should switch to low carbon goods and services to avoid paying the carbon tax.
- TheCoelacanth 5y ago
  That's why the proceeds of the carbon tax should be split up and paid out evenly across the whole population. It's not just a uniform increase in prices. It's people who emit an above average amount of carbon paying the people who emit a below average amount of carbon.
  - mavhc 5y ago
    The proceeds should be used to clean up the pollution, isn't that the whole point?

kranke155 5y ago

Carbon Taxes work because the market can't solve a problem it doesn't have a price for. Knowing the word "externality" is all you need to know. In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. The fantasy is this AI can run the markets better than any centralized authority. Even if we assume that's true right now the AI has no price for carbon, can't take into consideration, hence it can't "solve" it. This is the equivalent of having a self driving car that wasn't trained to see bycicles. Obviously, it will keep killing cyclists until you give it training data to see them. There is no "market solution" for a blind AI system that doesn't see carbon, because the AI has no data set for carbon costs.

vasco 5y ago
So who do you propose to be the centralized authority?
- kranke155 5y ago
  I never suggested anything of the sort. I would think a reading of history - ie the book "How Asia Works" has a lot of material on this - shows that there is a hybrid model where intervention of the govt is needed to "steer" the direction of things in order to ensure sustainable income and economic growth. I highly recommend reading that book for an alternative history on how Germany, Korea, Japan and China have succeeded while the West has mostly stagnated.
- kspacewalk2 5y ago
  The governments. They recognize market failures and mitigate with things like the carbon tax. In fact, the whole concept of a market, even the traditional physical one, by definition implies regulation with enforcement (e.g. weights and measures). Without those, there's no market, there's just a free for all.
roenxi 5y ago
> The fantasy is this AI can run the markets better than any centralized authority. I agree with a literal reading of your comment, but will just point out that the wealthy countries all tend to be the ones that let the market do its thing though. We've got a lot of examples now of authoritarian vs free market (the Koreas, Germanys and China pre- and post- Deng Xiaoping leap to mind). People routinely do better when they control their own destiny rather than strong central authorities. If we pick which end of the spectrum is more likely to keep people fed, the answer is pretty much always the intelligence of a free market will do the best job. Starvation tends to be isolated. This is something that central authorities don't do so well, and that has been tested out quite a few times in practice now. I'm still mildly amazed that the continued and ongoing failures of political leadership for decades hasn't made an obvious dent in the number of people wanting the politicians to be in charge. Politicians are popular, not competent. Markets are really good at putting competent but unpopular people in charge which is a better strategy.

schnitzelstoat 5y ago

I agree that externalities should be priced in - but I wonder if in practice Governments would end up footing the bill via subsidies. For example, look at what happened in France with the fuel tax rise which lead to the “gilets jaunes” protests. If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting. A simple flat tax on CO2 emissions, while far easier to implement, would be regressive compared to one that scaled with your personal emissions or something. Such a regressive tax, levied on basic things like energy, fuel etc. that are fundamental to normal life seems incredibly likely to trigger political unrest as we saw in France.

yunohn 5y ago
> If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting. So much this. Here in NL, my heating bill is 70% tax and 30% gas charges (not exaggerating). The government claims to do this to encourage installation of better insulation and other energy saving measures - however, as a renter (like the vast majority of NL is), I can’t do anything about this and just pay the exorbitant heating bill (1). I have no option but to use gas, and even if I move to a (rare) neighborhood with city heating, they’ll charge me the same amount (2). (1) https://www.dutchnews.nl/news/2021/09/as-gas-bills-rise-more-households-fall-victim-to-energy-poverty/ https://www.dutchnews.nl/news/2021/09/as-gas-bills-rise-more... (2) https://www.dutchnews.nl/news/2021/11/homes-with-district-heating-systems-may-still-be-hit-by-higher-gas-bills/ https://www.dutchnews.nl/news/2021/11/homes-with-district-he...
- Vinnl 5y ago
  To be fair, the policy was to raise gas taxes while lowering those on electricity in a way that it evens out for most people. Additionally, while I don't know the numbers of renters vs. buyers, I do know that the vast majority of renters in NL live in social housing, which means the government has some leverage there to get the housing corporations to lower gas use.

RobertRoberts 5y ago

It depends on who gets the taxes. If it goes to greedy bureaucrats that waste it or are themselves bought and for it will be worse than no tax at all. Then the system will be used by lobbiests to attack one industry in favor of another.

lovemenot 5y ago

Global warming is a global problem. While carbon tax would be levied locally, creating incentives to just shift production to low or no tax locations. Just as harmonisation over Cororate Tax is finally emerging, similar cross-border agreements should be needed for a Carbon Tax.

LeanderK 5y ago
it's complicated, but could tariffs help?
- lovemenot 5y ago
  Tariffs might help in one respect. But they lack the market-driven simplicity and transparency which were the principal benefits of the carbon tax mentioned in the article.
nabla9 5y ago
EU is making carbon tariffs to prevent exporting emissions to avoid paying for carbon emissions outside EU Emissions Trading System. Carbon tariffs are essential feature of any functioning system. Either countries enter agreement where they harmonize their carbon trade/tariff or there will be tariff.
wcoenen 5y ago
Which is why mechanisms like carbon tariffs on imports are being designed. https://en.wikipedia.org/wiki/Carbon_Border_Adjustment_Mechanism https://en.wikipedia.org/wiki/Carbon_Border_Adjustment_Mecha...
- tonyedgecombe 5y ago
  That seems like it could become very messy and open to fraud. The nice thing about carbon tariffs within borders is they would be trivial to implement because there are relatively few targets (oil wells, coal mines, etc).
  - 5y ago

julienreszka 5y ago

Watch "Lords of Scam". Carbon taxes not only don't work, they breed corruption.

throwaway599281 5y ago

Another tax on the middle class, because they don't have enough of a fiscal burden already, in the goods they need, in paying gas when they drive to work (no, not everyone has a very green public transportation that gets them to work in an efficient fashion). Do these people even know the carbon footprint of manufacturing a solar panel or a wind mill for their "green" energy? I do agree that products should be manufactured locally, but that has nothing to do with the environment.

occz 5y ago
>Another tax on the middle class, because they don't have enough of a fiscal burden already, in the goods they need, in paying gas when they drive to work (no, not everyone has a very green public transportation that gets them to work in an efficient fashion). So build it, then. You have lots of money available to construct it from your carbon tax, and even more money when you stop subsidizing the ridiculously expensive car-oriented infrastructure. >Do these people even know the carbon footprint of manufacturing a solar panel or a wind mill for their "green' energy? Total emissions from these technologies are significantly lower than fossil-powered energy generation. Stop spreading disinformation, it's extremely frustrating. It's very obvious that you're doing it on purpose.
- throwaway599281 5y ago
  >So build it, then. You have lots of money available to construct it from your carbon tax, and even more money when you stop subsidizing the ridiculously expensive car-oriented infrastructure. You don't know what you're talking about. And just because you're ignorant doesn't make me argue in bad faith.
  - occz 5y ago
    I do know what I'm talking about - and we can conclude on the basis of your statements on renewable energy production that you either don't know what your talking about (willfully ignorant) or that you're attempting to willfully sabotage the conversation.
5y ago

londons_explore 5y ago

Carbon taxes only work if they are applied universally worldwide. If a carbon tax is applied in just one country, then people are rewarded for shifting carbon intensive activities to another country. There also needs to be a clear answer to 'who should receive the carbon tax revenue?'. If countries receive the revenue, they have an incentive to try to attract carbon intensive industries to collect revenue from them. The only real solution is a worldwide tax paid by countries to something like the world Bank. Each country could then tax their citizens equally.

deleted 5y ago

[deleted]

dougweltman 5y ago

That a carbon tax is a source of information about the highest leverage areas we can change is a great framing. Unfortunately, the main barrier to implementing a carbon tax is how we treat imports, which is the key to getting the whole thing to work. Failing to solve this means importers deindustrialize in favor of countries with more lenient carbon pricing regimes. “Do I have to spell it out for you? Just implement a border-adjusted carbon tax!” they’ll retort: “that will cause exporters to harmonize their standards with the markets they sell to.” I can see how this works for plastics (producing PTFE in <Exporter> would have a carbon tax of $2/ton), but what about complex, assembled goods like cars with complex supply chains, like a Hyundai assembled in S Korea with parts from more than 60 countries? The Americans need to trust the S Koreans to tax that, and the S Koreans need to trust the Chinese, Indians, Canadians and Japanese to be implementing theirs properly. Every major component in an assembled good becomes a problem. Carbon tax works when all countries implement it, but what’s the equilibrium given current starting conditions?

ajb 5y ago
Then you also need to tax the uncertainty...
- fuoqi 5y ago
  And of course no one will exaggerate this "uncertainty" as a cover for protectionism. /s
  - UncleMeat 5y ago
    Perfect can't be the enemy of good. We are on a clock. Something has to be done.

flooow 5y ago

1) Tax carbon at the source - yes, that means every oil well and coal mine pays a whopping great tax before any fossil energy leaves the front gate. Prices will adjust all the way down the supply chain 2) Use this huge income source as global helicopter money, the dividend every person in the world gets from allowing other people to destroy their global shared ecosystem 3) Create various green energy projects into which citizens can invest their dividend 4) Planet does not become unliveable mad-max hell within our lifetimes?

Mountain_Skies 5y ago
Sounds like a way to end up with women forced into having children they do not want.
- Jensson 5y ago
  Concentration camps full of women and children so the dictator can collect all that sweet carbon money.
- flooow 5y ago
  Nah, you don't get your dividend until you are 16.
fuoqi 5y ago
>Prices will adjust all the way down the supply chain Hitting the poorest most, since rise in energy prices has a cumulative effect on everyday spending. Also "adjustments" can very easily lead to shocks if not done carefully. And don't forget, we are talking about it in a highly inflationary environment. To summarize: small mistakes in introducing such policy can easily lead to a sizable civil unrest. >Use this huge income source as global helicopter money So effectively you pay back money to people which they additionally spend due to the increased prices. In the best case scenario, additional spending and such UBI may equalize each other, but more realistically I think the former will be bigger than the latter. And I am not even touching the matter of exports becoming less competitive on global markets against countries which do not implement such policies. So I don't think that most people magically will be able to invest into green projects en masse. Yes, eventually everything will stabilize and we will have an economy with properly taxed carbon externalities, but my point is that it's very easy to make mistakes on this path with very drastic consequences. And I would advice against magic hand-wavy thinking.

jillesvangurp 5y ago

Of course they work. Fuels have historically been taxed quite highly in some countries. EVs are doing well in those countries and these countries tend to be a bit ahead of the curve in terms of adoption. Financial incentives help so they are a useful tool. One caveat here is that governments also hand out subsidies and a much more effective way to penalize carbon emissions is simply to stop subsidizing it and then add the carbon tax on top. Yes, EVs get subsidized too. But it's peanuts to the many billions the oil and gas companies still continue to get their hands on to perpetuate the problem. Whenever you hear oil companies defend blue hydrogen what they are really talking about is getting payed (with tax money) for the process of pumping insane amounts of natural gas for the next few decades so they can use that to produce hydrogen. That's "the hydrogen economy": pumping yet more gas to speed up how quickly our planet heats up. They'll emphasize how important that is and how green it is (or could be). Never mind that it is completely unprofitable to capture carbon at scale and of course tax payers are going pay for them pretending that it's going to be meaningful amounts. That's the game right now in terms of handouts. We're talking tens of billions being allocated for this madness. Companies often double dip even and get also get subsidies for cleaning up their act (or pretending to) while also taking full advantage of governments wielding their power on their behalf, public spending on their infrastructure (e.g. pipelines), leniency when it comes to environmental issues, permits, and public money generally being used to clean up their mess. A carbon tax would go towards balancing that; but only a little bit. Eliminating subsidies for carbon producers would cost the worst offenders the hardest and actually level the playing field in terms of cost for the alternatives that they've been allowed to unfairly undercut in pricing. The irony is that getting rid of the subsidies is somehow more controversial than carbon taxes. That's how messed up our world is. We're actively paying to destroy it quicker currently. Every time you pay your taxes.

DisjointedHunt 5y ago
Energy runs the world. It isn’t as one dimensional as you paint it. Governments don’t simply subsidize burning coal. . . They do so as a means to meet the growing demand of their people for electricity. India for example, has one of the most expensive fuels sold in the world thanks to immense taxation. Even with one of the lower per capital incomes in the world, they are a massive energy market because ENERGY IS NEEDED FOR SUSTENANCE. We need to realize that what sounds like a great idea on paper to minimize one dimension is actually counter productive when we factor in many more.

DisjointedHunt 5y ago

I’ve never been more astounded than when in the company of absolute geniuses in Silicon Valley, watching them discuss the economics of a carbon tax without having once encountered a real world carbon tax credit trade or having seen the dishonesty of the entire system. Tl;dr: It isn’t a system to “inform one of the behavior one needs to change most urgently” as the author puts it. It’s a transfer of wealth from the economies that impose it to the economies that find a way to leverage the arbitrage. Going green doesn’t need to be a punitive process, Infact, all indications from our efforts over the past decade indicate that punitive measures are far from perfect. The incentive for solar and wind energy, for example, has saddled places like Germany and California with systems that dont scale with growing demand, leading to temporary large burns of dirty coal or arguably worse, cutting off power to whole cities for hours. Intelligent societies solve problems through innovation. A billion dollars to five or so independent contractors to set up efficient modular nuclear reactors with some entity like the Army Corps of Engineers or experts from the energy department assisting with oversight and safety would completely change the game over night. You can still fly to meet your family and cities can run public infrastructure around the clock carbon free for any demand load we can imagine for the next century. The issue is precisely the idiots who come up with the ideas of a carbon tax. Bureaucrats. Won’t be around by the time the idea fails so the blame falls to someone else. The legal and regulatory barriers holding nuclear back in the US right now is one of the gravest mistakes of the coming century.

mpbeauj 5y ago

Carbon taxes are a terrible idea. The reason the capital markets can't solve climate change is because it's not a real pain point that people care about (even though they claim to), so taxing people doesn't solve the underlying issue. The simple solution is make consuming products that are bad for the environment really annoying/painful to the point where not buying them is the best option. Nothing else will do more good for the environment.

sleepysysadmin 5y ago

Gasoline prices have little impact on demand. https://www.eia.gov/todayinenergy/detail.php?id=19191 https://www.eia.gov/todayinenergy/detail.php?id=19191 For this reason alone Carbon taxes do not work. In my jurisdiction, we already have over 100% tax on gasoline. Partly for road building purposes, but still obviously not impacting usage. Hybrids coming around ~2000 certainly had a visible effect but it wasn't enough. Which is why Rivian, a company which has delivered no cars, is worth 97 billion. Tesla is worth a trillion. Whereas Ford is only worth $78 billion. We must get to EV transportation asap. We must electrify our railroads. We must electrify our planes. In fact, carbon taxes are bad. Very bad right now. Because prices are inelastic it makes the tax regressive and anti-compounding. So gasoline prices go up. Trucking immediately is more expensive. Products prices go up. But because product prices are higher, inflation etc. trucking gets more expensive. Alberta recently had a carbon tax and allowed this circle to run for some time. An interesting thing happened. The prices didn't go higher. This is a problem. The price available to oil value crashed instead. So while WTI was about $50/barrel. WCS from Alberta went to $5/barrel. The albertan oil industry couldn't sell their oil. The trucks weren't running. Alberta repealed their carbon tax which nearly immediately fixed the problem. Their economy was basically halted. No trucks running means people will soon stop eating. Imagine 10 years from now. We have maybe 30% of vehicles gone EV. Who owns those? The rich. The rich no longer pay the 100% tax for building roads. Who is paying for the road tax and carbon tax? the poor buggers driving the 15 year old shitmobile. The poor end up paying and the rich dont? Pretty regressive.

jaybrendansmith 5y ago

This used to be a conservative and Republican idea. I'm grown up enough to admit that they are right: The market is absolutely the best way to decide who pays based on the cost of the externality, in this case, Kg of Carbon Dioxide in the atmosphere. We need this to start now, so it can be phased in over 10 years. We need to get all the big nations to jump off this cliff with us at the same time. The alternative is crazy. Yes there will be winners and losers, there always are. It will be very hard on some folks in the midwest, and the 150 coal miners left, and the fossil fuel companies and people in that industry. I hope they've all diversified into solar and wind by now. It's all too late, they suppressed this change for 20 years now. In that time, average temperature has risen by .8 degrees where I live. Time to put on the big boy pants and make the hard decisions, folks.

DisjointedHunt 5y ago

No. Carbon taxes are an accounting trick. Just fucking deploy modern nuclear technology. Run trains and heating and industrial heating for entire cities limitlessly with a predictable dollar budget. Zero carbon emissions. The problem I have with this entire line of argument is how in reality you have nations such as China generating significant volumes of carbon credits in exchange for that sweet cash generated by gullible nations. We have the Department of fucking Energy and a thousand other agencies that have researched and operated this technology for decades in the most grueling environments (Nuclear Submarines and other classified domains) and it is more than ready for large scale commercial use. Imagine having limitless power to run projects of Earth scale -> Literally convert saltwater of an ocean into freshwater and pump it continuously into deserts or inland. . . Turn off natural gas heating entirely in the northern hemisphere thanks to electric heating . . The possibilities are endless.