Have you seen the cap and trade bill? Have you seen how many exemptions are in it? We’re dealing with political reality here, not with some academically pure vision of an enlightened policy.
Yes, carbon taxes can be gamed as well. But it’s harder. It’s a very visible tax, and it won’t be so easy to change it up or down. But cap and trade is a very fiddly, technical system involving all sorts of calculations the public doesn’t understand to set annual carbon caps, and the effect of lower a cap or raising it can dramatically affect the prices of credits. The system is wide open for gaming.
Any individual might just buy his or her way out, but we know for certain that adding taxes to carbon will reduce emissions, and we have a pretty good idea of how much they’ll be reduced by.
This is not a feature. Basically, you’re creating ‘peak oil’ in reverse. You’re telling business that this is all the carbon that will ever be available. As the economy grows and demand for carbon inevitably increases, prices for carbon credits could skyrocket on speculation and hoarding. There will be immense pressure on government to raise the caps anyway, and that will likely happen. Which means your cap and trade system is no less predictable than a carbon tax. It just changes the cause of the unpredictabilty to the fickle, feckless nature of today’s body politic. I rather think that’s a bad tradeoff.
So… you want to turn this into a political fight? Well, good luck with that. You need the buyin of everyone if you’re ever going to be able to make a policy stick that has the effect of costing people in real terms. You aren’t doing this with your buddies on the left, no matter how many politicians you currently have in the Congress. If you don’t have a large percentage of everyone else with you, it ain’t happening. So I suggest you drop the ‘nasty Republicans made us do it’ line of attack.
I don’ think people understand the difference between emissions of things like CFCs and the emission of CO2. One is a pollutant - a byproduct that can be scrubbed or eliminated which still being able to make products cost-effectively.
CO2 is not a pollutant. It is the inevitable byproduct of the conversion of fossil fuels to energy. It’s created in truly gigantic amounts. Even sequestering it looks extremely hard to do.
So you could almost eliminate CFC production without much harm to the economy. Refrigerators and air conditioners went up in price a bit, etc.
With C02, if you need the energy, you’re going to get it. So if you reach a cap on CO2, energy production stops. If you want a growing economy, then either you have to convert to renewable energy fast enough to keep up with economic growth plus enough more to begin to retire the old fossil energy sources. If you can’t, then economic growth stops unless the cap is raised. If you refuse to raise the cap, then as growth in the economy pushes us close to it, havoc will ensue. There will be energy shortages, huge price spikes in carbon credits, etc.
Your way is intrusive, risky, and very liked to be gamed and watered down over time due to its flaws. A straight carbon tax is much easier to apply, and it doesn’t have the effect of causing wild price spikes in energy. It’s simply a cost that is known and absorbed into the price.
So, no problem doubling volatility? That’s awfully glib of you to toss off. We didn’t handle the volatility in energy prices well at all. It caused huge distortions in the economy. It damned near bankrupted California. It caused major swings in the demand for SUVs, which helped bring GM and Chrysler down. It caused over-production of low-energy products, and under-production of high-energy products.
I didn’t mean carbon tax increases would be linear. What I meant was that the response curve of the market is linear to the price. The response curve of the market as it approaches a hard ceiling will be exponential in terms of the price of energy, until it passes the price of renewables. And if we don’t have enough renwables available, then while we wait for them there will be energy shortages and the economy will get hammered.
Which is why you need to make it revenue neutral. Then it’s not a tax increase - it’s a restructuring of the tax code. It’s moving my tax from my income to my carbon emissions. People who conserve more than they do now will actually see their taxes go down. People who already have carbon footprints below the median will see their taxes go down immediately.
You can get a tax like that passed. Emphasize that the net effect of the tax is that everyone is starting from the same tax level they already have, but now as they begin to conserve their taxes will decline.
But if you tell everyone you’re going to drop a big tax on them, and use the money to build trains and hire workers to make buildings more efficient, your propsal will be doomed.
No, I’d say government has destroyed the political viability of tax increases because it has repeatedly demonstrated that raising taxes does not fix the problems they were purported to fix, but instead simply grew the size and scope of the government. The government lost the people’s trust. It’s not the Republican’s fault.
Again, you’re simply asserting that either bill would inevitably be equally bad, but all the evidence is that cap and trade is likely to wind up substantially worse, simply by its nature.
Here, you might want to read the Carbon Tax Center’s page on this.
And finally, here’s a quote for you, from Robert Shapiro, who was the head of the climate task force:
The Democrats are pushing hard for Cap and Trade, because they are politicians and they prefer a system they can micromanage, because it will bring a lot of lobbying money and a lot of campaign donations. But it’s a much inferior system, and the very reason they want it is exactly the reason to not give it to them.
Look, this is what you need to understand: If you price carbon correctly, then you no longer need to worry yourself with light transit or any of the other schemes to reduce carbon. The market will find its own way to whatever future mix of transportation, goods, and services people want. If light rail can’t be competitive in an environment where all its competitors are being taxed for their carbon, then there’s really no good reason to build it.