US Conservatives Crack the Door on the Carbon Tax

December 13, 2011

Bloomberg in Businessweek: 

For most countries, the simplest and clearest way to hit the price target would be with an outright carbon tax. The economic benefits are well known: By letting markets work, a tax achieves a given amount of emissions abatement at the lowest cost. The world needs to cap its greenhouse gas emissions, but there’s no obligation to do this in the most expensive, painful or disruptive way.

Climate-change campaigners made a great mistake early on in opposing this approach — arguing, in effect, that sin should be prohibited not taxed, and that cuts of a certain size had to be assured. The cost of this inflexibility is now apparent: Insist on known and guaranteed cuts in emissions, and the wheels of international cooperation turn too slowly.

So far, explicit carbon taxes have not been widely adopted (though where they have been, as in British Columbia, they have worked). It’s not only environmentalists who aren’t enthusiastic. In many countries, especially the U.S., conservatives are bitterly opposed as well. A carbon tax, after all, is a tax.

Yet with many countries in a fiscal crisis, a carbon tax is more attractive than before. A carbon tax could lift some of the burden from spending cuts and increases in other taxes. As this sinks in, what was once politically impossible may soon be merely hard.

Jim Hansen’s Conservative Climate Plan – Republicans for Environmental Protection:

Hansen describes himself as a moderate conservative and is registered to vote as an independent. More importantly, he has been shopping around a framework for climate legislation that conservative elected officials might find interesting if they find themselves in a problem-solving mood.

Hansen’s proposal is simple, far simpler than the 1,400-plus pages of the Waxman-Markey cap-and-trade bill that passed the House in 2009 but will die when the 111th Congress closes up for good later this year.

Hansen’s proposal makes use of market principles, by prodding the market to tell the truth about the costs of carbon-based energy through prices.

It would not impose mandates on consumers or businesses, create new government agencies, or add a penny to Uncle Sam’s coffers.

Hansen calls his approach “fee and dividend.” A gradually rising fee would be imposed on carbon-based energy sources at the points where they enter the economy – at mine mouths or ports of entry, for example.

Carbon-based energy imposes costs – on the environment, public health, and national security – and those costs would be made more obvious in the marketplace through the fees. Energy prices likely would go up. How much and for which uses of energy would depend largely on market dynamics.

Revenues collected from carbon fees would be returned 100 percent to the public through dividends. Hansen estimates that a $115-per-ton carbon fee would add a dollar to the per-gallon price of gasoline but would raise enough revenues to pay every adult American as much as $3,000 per year.

How would Hansen’s plan affect individuals? That would depend on how they exercise their right to make free choices.

Those who wish to use carbon-based energy with abandon would be free to do so – knowing up front that they would pay the environmental and other costs of using lots of carbon-based energy rather than shift those costs onto their fellow citizens.

Those who acknowledge the market signal and change their purchasing decisions could avoid some or most of the higher prices. Depending on the choices they make and the size of their dividends, they might even come out ahead financially.

Businesses would seek out more opportunities to improve their energy efficiency. Other businesses would sell products and services that enable them to do so. Low-carbon energy sources would be more competitive with high-carbon sources.

The idea behind the bill could be described in a 1-minute elevator speech. As legislation, Hansen’s approach could fit onto a few pages. The bill could be read and understood by anyone – voters and lawmakers alike willing to put in a few minutes of time.

Transparent. Market-based. Does not enlarge government. Leaves energy decisions to individual choices. Takes a better-safe-than-sorry approach to throttling back oil dependence and keeping heat-trapping gases out of the atmosphere.

Sounds like a conservative climate plan.

10 Responses to “US Conservatives Crack the Door on the Carbon Tax”

  1. daveburton Says:

    Impose a massive new tax that falls disproportionately on the poor, make American industry even less competitive in the world market and thereby put even more Americans out of work, and then hand out $3000 government checks. That’s what Jim Hansen calls “conservative?”

    I wonder what he’d call “liberal?” (Channeling Walter Cronkite: It ought to scare you to death!)

    And all for no environmental benefit at all.

    Such a plan might get support from some of the more foolish liberal Democrats, but he certainly won’t get any conservatives to sign on.

    Ol’ Jim seems to never stop working to further solidify his reputation as a nutter.

  2. There’s only one nutter here and it is you, daveburton. Denial of ACC and it’s influences is in effect denial of the greenhouse effect. Do you deny that greenhouse gases exist? Perhaps you deny that heat-seekng missiles work? No? The same science led to the establishment of our current knowledge on the effect of co2 and water vapour as greenhouse gasses. Let’s face it, you might as well deny all science – join the flat-earthers or the Creationists, you’d fit right in!

  3. In order to get 60 senate votes (in a saner political environment) the fee and dividend approach will require a slight adjustment to more equitably distribute the cost. A large part of the country disproportionately depends upon coal. Cap and Trade was a clumsy way to address that issue. IMO, allocating a portion of the dividend to underwrite accelerated depreciation of coal fired electric generators would get broader support. Inhofe’s tribe won’t vote for anything that doesn’t subsidize fossil fuels, but there are a few (very quiet) rational Republicans.

    • astrostevo Says:

      Aussie person here. From what I gather Mitt Romney and Jon Huntsman are the main candidates for the rational science accepting faction of the Republicans right? Both secretly pretty much support or accept the science of climatology and reality of HIRGO and the need to address it but have been publicly forced to recant that and pay lip service to the tea-baggy denialist Republican mainstream? If elected they’d probably be halfway reasonable and not such a nightmare as a more extreme climate contrarian Republican candidate would be? Huntsman I gather has no real hope of winning but Romney is still the favourite for the nomination?

      In any case while Obama accepts the science he can’t do anything unless Congress changes and that’s not likely?

      So it might not be too bad if Romney got elected in 2012? Maybe?

      • greenman3610 Says:

        Romney is not likely to be able to backtrack from his current position – since he already flipped once on the climate issue, from being pro-science when he was governor of liberal massachusetts.
        Moreover, the type of bureaucracy and judicial appointments that any republican would make most likely would not be supportive of the science position. The judges, especially, are critical going forward.
        In any case, Newt Gingrich is now the front runner – and in pretty good shape right now for the early primaries. He seems to have won over the far right with his proven ability to ruthlessly lie and dissemble.
        While he was formerly pro-science, as well, he is also not likely to be
        able to walk back.

        Huntsman probably has no chance, unless he’s positioning for 2016.

        Best thing for humanity is for the repubs to nominate say, Gingrich – who has no chance in hell of
        winning – to get roundly and soundly trounced and crushed, and then to begin a rebuilding process that will include purging the flat earth elements from their party.

  4. astrostevo Says:

    “So far, explicit carbon taxes have not been widely adopted ..”

    Australia has finally passed a carbon tax after a long and very politically destructive debate this year. The Aussie carbon tax wills tart ant $ 23 per tonne of carbon emitted, be paid by the biggest polluters, rise gradually and transform into an ETS (Emissions Trading Scheme.)

    Its been one of the biggest political issues isinmy nation with Prime Minister Julia Gillard leaidnga minority colaition govt withe the Aussie Greens party fighting against the conservative Liberal-National party coalition. (Yes, we call our conservative party the Liberals – they’re really NOT!)

    Tony Abbott opposition Liberal party leader is essentially a climate change denier, who took over by overthrowing former leaedr malclom Turnbull who was agreeing with the earlier ETS proposal. (Long story.) Both parties agree on a 5% reduction target.

    I’m not sure how well this will work out, whether its a good idea or not but I do think we needed to start taking serious action against Human Induced Rapid Global Overheating (HIRGO) as I prefer to call it.

    Hansen still wants to get us below 350 ppm atmospheric Co2 right? Can his idea actually do that within a reasonable timescale?

    • Thanks for the new acronym – HIRGO.

      From inside the USA national political trenches, it feels like we’re a couple of years behind you. However, many regions, utilities, and even federal regulations are as progressive as the stakeholders will allow.

      Getting to 350 ppm in short order is a huge order. Implementing incentives enough to stop adding more CO2 and then to sequester the current overload (using biological and mineralization methods) probably won’t happen until there’s an in our face catastrophe. At that point, the biggest challenge will be keeping up with the feedbacks. There’s also a depressing way to look at it.

  5. […] reported on Monday.5. Carbon tax getting discussion/promotion in Bloomberg Businessweek (h/t Climate Denial Crock of the Week): “The best instrument for coordinating climate-change efforts is the price of carbon. The […]

  6. […] Carbon taxation removing discussion/promotion in Bloomberg Businessweek (h/t Climate Denial Crock of a Week): “The best instrument for coordinating climate-change efforts is a cost of carbon. The impact of […]

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