Washington Post Proposes a $43 / ton Carbon Tax, Rising 3% Per Year

Washington Post Proposes a $43 / ton Carbon Tax, Rising 3% Per Year


Guest essay by Eric Worrall

Despite massive ongoing social unrest triggered by an attempt to introduce carbon taxes in France, greens still think they can get away with it.

Why I’m (slightly) less pessimistic about global warming

By Robert J. Samuelson
January 20 at 6:35 PM

We have yet to discover or create some low-cost fuel that would replace fossil fuels (oil, natural gas and coal), which provide roughly 80 percent of the world’s energy. Most nations aren’t willing to scrap the energy status quo — the very basis of modern civilization — before having a practical substitute.

Under one proposal, the government would slap a $43 tax on each ton of CO2. That would equal about 38 cents on a gallon of gasoline, says economist Marc Hafstead of Resources for the Future, who studied the plan. It would raise about $180 billion in the tax’s first year, he says. If the “dividend” — the tax rebate — were distributed evenly, that would be about $1,400 per household.

Meanwhile, if the tax were increased 3 percent annually, there would be (according to the estimates) a dramatic reduction in U.S. fossil fuel use and greenhouse gases. Without the tax, projected CO2 emissions would be 5.4 billion metric tons in 2035. With the tax, the total would be 3.6 billion metric tons, a 33 percent decline. Still, this would hardly eliminate greenhouse-gas emissions.

Read more (paywalled): https://www.washingtonpost.com/opinions/why-im-slightly-less-pessimistic-about-global-warming/2019/01/20/4c2b3122-1b52-11e9-88fe-f9f77a3bcb6c_story.html

The source of this idea is the “Economists’ Statement”, a manifesto produced by a high profile group of economists and other financial personalities including former Fed Chairman Alan Greenspan and former Treasury secretary George Shultz;


Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations.

I.          A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.

II.         A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.

III.        A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long- term investment in clean-energy alternatives.

IV.        To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.

V.         To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices.

Source: https://www.econstatement.org

All these carbon tax ideas seem to assume fossil fuel use is elastic, that using fossil fuel is a simple choice; people can choose to use less fossil fuel. But delve into the issue and lot of that elasticity disappears.

As President Macron of France discovered, if you are a rural worker, hopping on a bus is usually not an option; you need fossil fuel to get to work, to operate agricultural machinery, and to transport farm produce and supplies.

The Washington Post author admits there is currently no practical substitute for fossil fuel.

Food producers whose businesses survived the imposition of carbon taxes would have no choice other than to keep using more or less the same amount of carbon taxed fossil fuel as they currently use, but they would have to pass the additional costs on to consumers.

I suggest a “solution” which creates substantial upward pressure on the price of food is unlikely to benefit disadvantaged people.

Superforest,Climate Change

via Watts Up With That? http://bit.ly/1Viafi3

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