<vhttp://www.carbontax.org/blogarchives/2007/11/02/bloomberg-to-urge- carbon-tax/>
And the original report on the NYT website, including the text of Bloomberg's speech:
<http://cityroom.blogs.nytimes.com/2007/11/02/bloomberg-calls-for-tax- on-carbon-emissions/>.\
Bloomberg takes the correct line on a carbon tax vs. the more popular cap-and-trade schemes:
> To raise the cost of carbon, we can take either an indirect
> approach — creating a cap-and-trade system of pollution credits —
> or a direct approach: charging a fee for greenhouse gas pollutants.
> The question is: Which approach would be more effective? I’ve
> talked to a number of economists on this issue, people like Gilbert
> Metcalf at the National Bureau of Economic Research, and every one
> of them says the same thing: A direct fee is the better approach —
> but for the politics. There’s that phrase again: “But for the
> politics!”
>
> Cap-and-trade is an easier political sell because the costs are
> hidden — but they’re still there. And the payoff is more uncertain.
> Because even though cap-and-trade is intended to incentivize
> investments that reduce pollution, the price volatility for carbon
> credits can discourage investment, since an investment that might
> make sense if carbon credits are trading at $50 a ton may not make
> sense at $30 a ton. This price volatility can also lead to real
> economic pain. For instance, if 100 companies release higher
> emissions than they had planned for, they all have to buy more
> credits, which can create a very expensive bidding war. That’s
> exactly what’s happening in parts of Europe right now, and it’s
> going to cost companies there billions of dollars.
>
> There are also logistical issues with cap-and-trade. The market for
> trading carbon credits will be much more complex and difficult to
> police than the market for the sulfur dioxide credits that
> eliminated acid rain. And there are political issues — because the
> system is subject to manipulation by elected officials who want to
> hand out exemptions to special interests. A cap-and-trade system
> will only work if all the credits are distributed from the start —
> and all industries are covered. But this begs the question: If all
> industries are going to be affected, and the worst polluters are
> going to pay more, why not simplify matters for companies by
> charging a direct pollution fee? It’s like making one right turn
> instead of three left turns. You end up going in the same
> direction, but without going around in a circle first.
>
> A direct charge would eliminate the uncertainty that companies
> would face in a cap-and-trade system. It would be easier to
> implement and enforce, it would prevent special interests from
> opening up loopholes and it would create an opportunity to cut taxes.