Carbon Tax is a Poison Pill

This may piss off some people I respect a great deal. Nonetheless, after hearing it in several off-the-record conversations in D.C. last week, I believe it's something that needs to be said publicly:

The 111th U.S. Congress is not going to pass a carbon tax. Calls for a carbon tax, to the extent they have any effect, will complicate and possibly derail passage of carbon legislation.

It's possible that a carbon tax (and/or cap-and-dividend) bill will be introduced. One or both might even make it to a full vote, though I doubt it. But they won't pass. If you want carbon pricing out of this Congress, cap-and-trade is what you're getting. It follows that your energies are best spent ensuring that cap-and-trade legislation is as strong as possible.

Them's the facts.

Through some process I find truly mysterious, the carbon tax has become a kind of totem of authenticity among progressives, while cap-and-trade now symbolizes corporate sellouthood. Across the interwebs, lefties now proclaim with absolute confidence and no small sanctimony that we should entrust our children's future to economists (whose historical contribution to environmental policy has been hostility, doomsaying, and an unbroken record of error) and the Congressional committees that control tax policy (climate champions all). "Pay to pollute," once the scourge of the green movement, is now the sine qua non of keepin' it real. It is baffling.

It doesn't seem to daunt these folks that their hostility toward cap-and-trade and support for carbon taxes has been taken up by a growing cadre on the far right, including Exxon CEO Rex Tillerson, economist Arthur Laffer, Sen. Bob Corker (R-Tenn.), and yes, even climate wingnut Sen. James Inhofe (R-Gamma Quadrant). Hell, throw in a refunded gas tax and you get America's Worst Columnist© Charles Krauthammer too. Are we to believe that these folks understand the threat of climate chaos, want to reduce climate emissions the amount science indicates is prudent, and sincerely believe that a carbon tax is the best way to accomplish that goal?

Perhaps, if we slept through the last decade, we might believe that. Having been awake (and watching in horror), we understand that it's a poison pill. It's a way to avoid legislation at all if possible and secure the weakest possible bill if not. It's a way to exploit disagreements within the climate coalition and derail momentum. That's what they do. As usual, they're fighting a knife fight and the left is holding a grad school seminar.

(Incidentally -- and I realize this is open to dispute -- for my money nobody's more savvy about this than Corker, who is honing in on points of contention or weakness and exploiting them for all they're worth.)

On a policy basis, I believe carbon tax advocates like James Hansen are wrong on the merits, convinced by arguments that are tendentious, airily academic, and/or overly conservative. I believe both carbon cap-and-trade and taxes have advantages, but ultimately that a well-designed C&T system is preferable to a well-designed tax. The most important thing is designing well, since either policy (contra tax advocates) is subject to loopholes, corruption, and gross insufficiency.

But that discussion is largely beside the point now. For a brief window of time we have a Congress and president ready to really do something on carbon pricing. What they're ready to do is pass a cap-and-trade bill. They'll face implacable opposition, which will be speaking in a single voice and with a simple message. If progressives don't wise up, they'll enter yet another battle with a cacophony of clashing messages and strategies, and will be easily divided and outplayed. If the progressive grassroots plays a role in scuttling the best hope for climate legislation the nation has ever had, it will be a bitter irony indeed.

grist.org

Comments

[FirstForty]

A carbon tax or floor price for fuel is essential if we are to migrate to a green economy. So long as the price of oil floats and can go as low as it is now, investment in green wont happen. Innovators need to have a solid view of the market for their goods. A look at the price of Solar Energy shares will confirm this. Look at the market for SUVs last summer....­gone...poo­f... It was only when gas got over $4/gal would SUVs die off.

The carbon tax should be offset with an equal offset in income taxes. This way we stop taxing work and we guarantee a market for thousands of entrepreneurial ideas that will otherwise never be developed.

[SturmDrang]

The best thing about a carbon tax is that it is a tax paid by the people (us!) and not by Exxon, Chevron or a coal company.. Chevron and Exxon love a carbon tax because it is like the gas taxes already collected at the pump. You never hear them fight against those excise taxes since they get to pass them along, penny for penny, to their customers. A carbon tax will be just like that - it won't be a tax on Exxon, it'll be a tax on you - that's why Tillerson, the Exxon Chairman likes it. Like all sane people, he'd rather have someone else pay than pay himself. Also, they know that almost all of us hate to pay more and more taxes, so Tillerson gets to put on a green cloak while endorsing something that voters are likely to oppose - and politicians thus unlikely to vote for.

And since we're the ones who use the gasoline (or the electricity generated from coal, etc.), we're the only ones who can actually reduce our use of gasoline or coal and thus help the environment. So reach real deep into your pockets and pay up - and like it. Better you than Exxon or Chevron!

[OkieMon]

yeah and bush's 150 dollar a barrel oil has been just great for the worl economy....

[FirstForty]

No, no the carbon tax has to be offset with a decrease in income taxes. Only then will it work.

[vippy]

More taxes for people, yes, that should work alright along with the higher insurance rates where now even less people can afford it. All makes sense to me!!!
If Europe has higher emission standards along with higher mpgs per car then my question is why
can't the USA do the same? And it has nothing to do with the SUVs, mind you, in fact, even though their gas prices are much higher you now see much bigger cars in Europe.

[avraamjack]

Both proposals are a bad idea.

Cap/Trade is a bureaucracy that will generate Republican voters.

Carbon Taxes, without cheap plentiful alternative energy, will also generate Republican voters.

It would be nice if the Democrats do not screw up really badly.
.

[cheforacle]

So what is your "good" proposal to fight global warming or do you deny its existence?

[Sneaky]

Stop trying to fight a natural process and roll with it. Humans didn't cause "global warming" (or "global climate change" as it's being called, since scientists are discovering it's not exactly getting warmer around the world), nor can we "reverse" or "stop" it.

[avraamjack]

Massive investment in clean alternative energy which will vastly increase the available supply of alternative energy.

Dirty energy sources can be discouraged once the supply of plentiful economical clean energy is established. Taxes may be acceptable at that point. Subsidizing clean energy may also be a good idea.

Taxing imports from highly polluting countries may also be acceptable at that point. This may motivate faster international green efforts.

Without economical copious clean energy supplies, taxes and bureauacratic solutions are all pain and no gain. Smart Republicans would acquiese to these requests.

This seems intuitive to me but I would be surprised if it were only my proposal.

.

[avraamjack]

Massive investment in clean alternative energy which will vastly increase the available supply of alternative energy.

Dirty energy sources can be discouraged once the supply of plentiful economical clean energy is established. Taxes may be acceptable at that point. Subsidizing clean energy may also be a good idea.

Taxing imports from highly polluting countries may also be acceptable at that point. This may motivate faster international green efforts.

Without economical copious clean energy supplies, taxes and bureauacratic solutions are all pain and no gain. Smart Republicans would acquiese to these requests.

This seems intuitive to me but I would be surprised if it were only my proposal

[DaveBerzack]

I read this article expecting an interesting perspective on an important issue. While there's a lot of name calling and finger pointing, it doesn't propose one reason why a carbon tax would be ineffective. When gas prices spiked last year here in Georgia, people actually thought about their driving habits and reconsidered their giant SUVs. It's obvious that we can't rely on individual altruism to affect global change. But if you change the parameters, people will change their behavior.

[likeicare]

I, too, think the carbon tax or the cap-and-trade, or whatever the hell they're calling it, is a bad idea.

It's peoples' thinking that needs to be changed -- we're still locked in a 19th century mindset about our energy sources.

I'd like to see more emphasis on personally sustainable energy solutions, where an individual or a family could secure/pro­duce/susta­in their own energy supply, without ever having to include the Big Boys/thugs in it at all.

[FearlessFreep]

"Are we to believe that these folks understand the threat of climate chaos, want to reduce climate emissions the amount science indicates is prudent, and sincerely believe that a carbon tax is the best way to accomplish that goal?"

Yeah.

[ld]

This is an excellent article. The environmental movement has happily swallowed poison pills over the years. That's alienated a number of "moderates" that I know from work - they know that there are real problems but they see that the "solutions" are bad. MTBE's are an excellent example.

Also, I liked your metaphor about the right being in a knife fight while the Left is doing seminars. I think that about captures reality . . .

[montyc]

europe's cap and trade has been a total flop. People , company's are going to use the energy they need to produce what we want. Cost will be passed on to consumers.Cap and trade will harm the middle class and poor without effecting the rich what so ever. Many, many more people die from cold than from heat. Any Carbon dioxide increase could be of benefit to the worlds hungry. Many greenhouse operator's will tell you they add carbon dioxide to the house to increase production. This carbon dioxide does not increase the temp of the greenhouse. Carbon dioxide if increased to 600ppm would increase world food production by 50%. Thats not a bad thing.Carbon Dioxide is not poison, most of us drink it every day.Soda pop and beer come to mind.If more people would leave the city and take a road trip they would realize most of this country is fairly empty and clean. its the cities that are dirty. Trees and plants love carbon dioxide.

[saibotchilizm]

Anyone who tells you "Carbon dioxide if increased to 600ppm would increase world food production by 50%" doesn't know what they don't know.

No one has any idea what 600pm will lead to in terms of agricultural production. It could very well make the current bread-baskets of the world unarable.

Our agriculture is based on years (sometimes centuries, even millennia) of knowledge of a climate in rough equilibrium. By throwing a wrench into that equilibrium, we may have brought ourselves into a world where we don't know how to grow food.

[montyc]

Greenhouse growers for years have been using elevated carbon dioxide levels to increase crop production. That is Empirical Data not Theoretical Science. Carbon dioxide may verywell be an effect of global warming not the cause. The ocean releases carbon dioxide as it warms. Water covers 70 % of the planet. The point is we may harm more people trying to do something about carbon dioxide increases when there is no danger. The sky is not falling. It was global cooling, the next ice age back in the 70's when i was in school. It became global warming a few years ago. They are now starting to see error in the projections, so they are now calling it climate change.It's about money and power nothing more. Look a the governments climate data.Its been cooling for a while now.

[holyhandgrenaid]

a carbon tax bears with it that poisonous word 'tax'

a proposal by the Liberal Party in Canada and their former leader Stephan Dion torpedoed the party's bid for control of government in October. I feel a Carbon Tax would, if it managed to pass, would be designed to fail

It woulod also run the risk of ending the careers of many who supported it in congress

[observer151]

It would have been better, more saleable, and understandable if it had been called a 'credit' instead.

Credits can be both positive and negative - you get a positive credit if you reduce your energy footprint, and a negative one if you don't.

It's progressive since the value of a credit can be indexed by income level, thereby benefiting those who need the credit most (lower income people/families).

A Cap & Tax solution is easier to game and it will the the same people who brought you Enron and the toxic assets crisis waiting in the wings to do so.

[Kassandra]

You don't need to convince me! I won't sign ANY petitions for the "Cap and Trade" Deal. Especially after hearing that climate change is largely irreversible:
http://features.csmonitor.com/innovation/2009/01/27/climate-change-could-be-irreversible-for-1000-years-gulp/

AND we can't go Noocluar......there isn't enough uranium left in the earth's crust to make it viable, even if we "decide" to rip the earth apart. GAD!

[idaresay]

Kass you must start thinking... on your own... not convinced huh? a couple of years ago some fool on a fool's errand from MIT gives a talk and says ... oh no!!! there's not enough uranium to last for over 20 years if we adopt nuclear energy... later that year... after 20 years of not mining for new uranium... we discover enough uranium to put the world well over 200 years of supply... I wonder what they could find if they looked for it? after 40 years of not looking for any oil or building any refineries... we don't have enough gas to last for ever and ever... but after looking in North Dakota we find the largest development of natural gas and recoverable oil ever found in the world... topping some 3 trillion barrels of oil... 500 years worth... wow... and i thought the lights were out on this society... but oh... the carbon dioxide... the sky is falling... and now the most inconvenient truth... global cooling for one year temperature reduction of .7 degrees has just ruined the global warming theory... possibly for the last 100 years of histerical evidence.

[Sneaky]

Get 'em. Well said.

[HeevenSteven]

I would never expect congress to take the best and smartest means to any end.

[Jashand]

Dave,

Congress will not pass Cap-and-Trade: it's a blank check for carbon prices. Price spikes killed the Calif smog trading program RECLAIM. Electricity generators ran out of permits. The governor popped the cap.

Reps Larson (D-Conn) and Inglis (R-SC) are working on revenue neutral carbon tax bills; Sens Corker (R-Tenn) and Dodd (D-Conn) are reportedly interested too. Corker sent out a Dear Colleague letter last week noting the flaws in cap-and-trade. Rep Stark (D-Cal) has introduced a carbon tax bill already.

A bipartisan carbon tax could pass this session and be implemented immediately. Cap-n-trade takes years to implement, as we saw with the EU and the five year effort to allocate allowances, offsets, granfathering, banking, etc in the NE states' RGGI program.

Do we really want another poorly understood financial instrument (cap-and-trade)? A revenue-neutral carbon tax with a corresponding reduction in payroll taxes could reduce emissions and stimulate employment at a key moment. "Tax what we burn, not what we earn."

See www.carbontax.org for information and www.pricecarbon.org to send letters and petitions to Congress.

[glitzqueen]

I have great respect for "Grist" and most of its positions, but this is just plain WRONG. Carbon trading is just another derivatives scam, and one that could be even bigger than that created by securitization of mortgage debt.

The Wall Street boyz want cap-and-trade as their shiny new toy, but the last thing we need is one more stupid bubble capable of bringing the world down with it, when it bursts. A simple carbon tax is the answer.

I've blogged at some length about this; if anybody's interested, please see http://dandelionsalad.wordpress.com/2008/05/21/carbon-trading-is-just-another-derivatives-scam-by-the-other-katherine-harris/

[timm0]

Agreed.

People believe cap and trade has worked through the 80s and 90s to reduce pollution. However, they conveniently ignore the spectacular exodus of industrial production from this country to China and elsewhere. It was easier and cheaper to relocate than to deal with the program.

The worst idea yet is an international cap and trade. I'm sure India and China will adhere to those deals. Yeah...

If companies have to choose between investing in cleaner technology, paying carbon tax, or paying a [non-existent but needed] tax for moving manufacturing overseas - then we may actually start to get the behavior we need.