[lbo-talk] The Planet is Fine

Doug Henwood dhenwood at panix.com
Tue Dec 20 08:09:01 PST 2011

On Dec 20, 2011, at 10:57 AM, Andy wrote:

> On Tue, Dec 20, 2011 at 10:51 AM, Carrol Cox <cbcox at ilstu.edu> wrote:
>> Damn it -- can't you debate a point in a straightforward way without making
>> some stupid moral sneer at unnamed parties that disagree with you. This is
>> juvenile.
> Could you explain what the point of debate is?

A carbon tax? It would be a way of raising the cost of fossil fuels and, one hopes, reducing their use. Quoting myself from a few years ago (with some comments appended below):


> These work by setting maximum emissions for polluting entities, be they individual factories or power plants or entire countries, based on historical baselines; these limits decline over time. Entities that come in under the limits are free to sell their remaining emissions rights to entities that can't make the limits. An early version of cap-and-trade was the 1990 domestic US agreement to limit acid-rain-causing sulfur dioxide emissions by coal-burning electric utilities. Cap-and-trade was at the core of the Kyoto Protocol: Individual countries were capped and then free to sell their credits, and countries themselves were expected to develop cap-and-trade systems for their own polluters. Despite US rejection of Kyoto, the European Union established a cap-and-trade system to meet its obligations under the protocol.
> The record of these models is mixed: The acid-rain-reduction agreement is seen as fairly successful; sulfur dioxide emissions are more than a third below what they would have been without the program. But SO2 emissions are mostly limited to power plants; by contrast, greenhouse gases come from millions of sources, from factories to lawn mowers, a more daunting administrative task.
> The EU carbon scheme has had a less auspicious history. Launched at the beginning of 2005, some 12,000 installations were covered, responsible for about 45 percent of the Union's carbon dioxide emissions. Other greenhouse gases, and more installations, would be incorporated into the system in later phases. For the first sixteen months of the system, carbon permit prices more than tripled, only to collapse in April 2006 on the revelation that a number of countries had given their industries such generous caps that the industries were already in compliance and had no need to reduce emissions. This is just one of the problems with cap-and-trade schemes. Consider the burden of monitoring many thousands of sources--just what should their baseline emissions levels be, anyway? The temptation to cheat, to game the system, would be enormous. Already an entire industry has grown up around the trading system--analysts and brokers and traders who hope to make money from the scheme but contribute not much of anything to saving the planet. Also, cap-and-trade permit prices are tremendously volatile, more so even than the stock market. Volatility makes long-term planning very difficult.
> A far better approach would be to tax carbon. A carbon tax would be simple--gasoline, coal and other fuels would be taxed based on their carbon content--and nearly impossible to evade. It could be introduced quickly, unlike the multiyear phase-in of the complicated EU cap-and-trade system. The tax rate could start low and then increase, to allow energy users to adjust. Unlike the market volatility of CO2 and SO2 permit prices, a carbon tax would be predictable, making it much easier for businesses and consumers to plan ahead. And as Charles Komanoff of the Carbon Tax Center argues, at least part of the proceeds of the tax could be rebated to poor and middle-income households through the income tax system, neutralizing any inequities. The unrebated balance could be used to subsidize alternative energy research and production. Given the historical successes of government funding of basic research in computing and medicine, there's every reason to believe the products of this work would be very promising.

Many environmental radicals hate carbon taxes because they use the price system rather than regulation or something stronger. If Patrick Bond is reading, he can tell us how the better approach would be to "keep the oil in the soil and the coal in the hole," though it's not quite clear how that would work or what would keep the lights on over the years it would take to make a transition to clean energy.


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