November 19, 2012


10 reasons a carbon tax is trickier than you think (David Roberts, 11/19/12, Grist)

Here are 10 reasons for a more tempered and realistic attitude toward a carbon tax.

1. It's conservative.

There's a reason so many conservative (and neoliberal) economists support carbon taxes: They fit comfortably in a worldview that says problems are most effectively solved by markets, with minimal government intervention.

Current markets have a flaw: They do not reflect the external costs associated with carbon dioxide emissions (namely, the impacts of a heating planet). The answer, economists argue, is to determine the "social cost of carbon" and to integrate that cost into markets via a carbon price, tax, or fee. With an economy-wide, technology-agnostic carbon tax in place, the market will eliminate carbon wherever it is cheapest to do so, insuring that we don't "overpay" for carbon reductions.

Implicit (and often explicit) in this view is the notion that other attempts to tackle carbon -- say, EPA power plant rules, or fuel-economy standards, or clean-energy tax credits -- are merely backdoor, inefficient ways of pricing carbon. If you get the social cost of carbon right and levy an economy-wide tax that prices all tons of carbon equally, then you have optimized the market, carbon-wise. All other regulations and subsidies will only serve to disrupt market efficiency. They are sand in the gears, as it were. [...]
7. The carbon lobby will want to axe EPA regulations in exchange.

Exxon has been supporting a carbon tax (notionally) for several years, but it's made clear that it sees such a tax as "an alternative to costly regulation." This is what everyone's favorite dirty-energy lobbyist Frank Maisano recently wrote (behind a paywall):

No carbon tax should be considered before serious regulatory reform is undertaken. The U.S. EPA is moving forward on an approach that regulates carbon, which is akin to fitting a square peg in a round hole. Not only is it legally dubious, but it is not likely not work in practice, either.

Suffice to say, the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped. 
Posted by at November 19, 2012 7:57 PM
blog comments powered by Disqus