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Why is a carbon tax wrong? It seems very similar in principle to your proposal?

epistasis 4y ago
I think a tax on certain sectors can work fine. Especially those sectors with no other options, and that must simply pay to extract the CO2 from the atmosphere that they put into it. However, an economy-wide tax ignores the differing amounts of technological development difficulty, access to capital, and political influence that varies so widely between sectors. So a carbon tax on electricity generation sources works ok to incentivize a switch and internalize the externalities, but it's pretty equivalent to the general ITC/PTC subsidies that have recently been passed, with the exception that they are sector specific. An economy wide carbon tax does almost nothing to incentivize decarbonization of steel or concrete, as the tech isn't there, nobody has spare money to invest in a solution, and the tax wouldn't necessarily increase the price of end products much. They need very specific industrial policy in these sectors to develop alternatives and put them into production. Finally a carbon tax creates an entirely unified political coalition, across many sectors of the economy, to oppose the tax. So setting the tax at a level that is right to incentivize change is guaranteed to be nearly impossible, because od the breadth and political strength of the opposition to it. Specific carrots and sticks for each sector are what can drive real change in each sector. If it was 1980, I'd be supporting a carbon tax. But we need to move far more quickly now to change our economic production systems than a carbon tax could ever conceivably achieve.
- elihu 4y ago
  I think a blanket carbon tax at least creates a situation where everyone is paying , in some way, for the externalities they're causing. If some industries don't want to decarbonize because the tax is rounding error to them, then maybe you'd need additional rules or regulations, or maybe we need public investment in some new technology. I can't think of a case where exempting some group from a carbon tax would be good policy. There is a pretty good argument though that a carbon tax would be regressive, and probably should be compensated for in some way so that poor people don't come out worse off, such as by reducing income tax in the lower brackets. I think the hardest sector to decarbonize is going to be the military (with the exception of some small percentage of navy ships that are nuclear powered). I could see plug-in hybrid army vehicles eventually being a thing, though. Being able to run off of either diesel or electricity provides a lot of logistical flexibility. You can save the petroleum for when you really need to move long distances.

I think a tax on certain sectors can work fine. Especially those sectors with no other options, and that must simply pay to extract the CO2 from the atmosphere that they put into it. However, an economy-wide tax ignores the differing amounts of technological development difficulty, access to capital, and political influence that varies so widely between sectors. So a carbon tax on electricity generation sources works ok to incentivize a switch and internalize the externalities, but it's pretty equivalent to the general ITC/PTC subsidies that have recently been passed, with the exception that they are sector specific. An economy wide carbon tax does almost nothing to incentivize decarbonization of steel or concrete, as the tech isn't there, nobody has spare money to invest in a solution, and the tax wouldn't necessarily increase the price of end products much. They need very specific industrial policy in these sectors to develop alternatives and put them into production. Finally a carbon tax creates an entirely unified political coalition, across many sectors of the economy, to oppose the tax. So setting the tax at a level that is right to incentivize change is guaranteed to be nearly impossible, because od the breadth and political strength of the opposition to it. Specific carrots and sticks for each sector are what can drive real change in each sector. If it was 1980, I'd be supporting a carbon tax. But we need to move far more quickly now to change our economic production systems than a carbon tax could ever conceivably achieve.

elihu 4y ago
I think a blanket carbon tax at least creates a situation where everyone is paying , in some way, for the externalities they're causing. If some industries don't want to decarbonize because the tax is rounding error to them, then maybe you'd need additional rules or regulations, or maybe we need public investment in some new technology. I can't think of a case where exempting some group from a carbon tax would be good policy. There is a pretty good argument though that a carbon tax would be regressive, and probably should be compensated for in some way so that poor people don't come out worse off, such as by reducing income tax in the lower brackets. I think the hardest sector to decarbonize is going to be the military (with the exception of some small percentage of navy ships that are nuclear powered). I could see plug-in hybrid army vehicles eventually being a thing, though. Being able to run off of either diesel or electricity provides a lot of logistical flexibility. You can save the petroleum for when you really need to move long distances.