[lbo-talk] The Planet is Fine

[nathan tankus]

I think there is some confusion about what the point of a carbon tax
is. it is not to reduce consumption. Only the neoclassicals think that
every good has high elasticity so that taxing carbon will
automatically reduce emissions by reducing consumption. There is an
alternative argument. if you look at it in competition terms ( please
forgive me for discussing such vagaries) energy sources that don't
dump an incredible amount of carbon (or any kind of pollutant) are at
a competitive disadvantage to those who do. if alternative energies
become more cost effective and start gaining market share, extractive
energy companies will simply start pushing more costs onto third
parties. You can already see this now with the tar sands affair. they
are much more environmentally devastating even as the energy return on
investment is much lower then the prevailing norm. putting carbon
taxes (and carbon tariffs) makes it very monetarily costly to pursue
that business strategy.

Of course, returns to scale and other such benefits these industries
have accrued as the dominant forces in the energy sector still make
them much lower cost industries then "clean" alternatives, but a
carbon tax would be a disincentive to emission increases and be an
incentive to emission reduction. it is no alternative to public
expenditure and investment in clean technology but it is a powerful
weapon to encourage international industries reliant on U.S markets to
lower emissions and to prevent a Gresham's dynamic from worsening
emissions. I think it is prerequisite successfully averting the worst
case scenarios of climate change. It is much easier to find out how
much carbon taxes a given company is paying then how well they are
being regulated making it a better tool for political action.

p.s one interesting policy I've heard tossed around is passing an
executive order for federal buildings to switch over to purchasing
alternative energy sources. some who work in the industry that that
would be all that was needed to create the returns to scale to make
some of these technologies competitive.

-- 
-Nathan Tankus
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