Is Now the Time for a Carbon Tax?

By Peter Galuszka

With the 2012 election decided, there seems to be some movement towards considering establishing a carbon tax to cut greenhouse gases and mitigate climate change.

Despite the Kyoto Protocols of 1997, which the U.S. did not sign, and a slew of renewable energy projects in places such as Europe, there has been zero progress on actually reducing carbon dioxide. The goal way back in the 1990s was to reduce CO2 to about five percent of what they were in 1990 by this year.

According to Oxford professor Dieter Helm, writing in an op-ed piece in the New York Times, any progress in CO2 reduction has been overwhelmed by new emissions in places such as China, which gobbles up coal and plans many more coal-fired electricity plants to meet its enormous energy appetite.

Congress abandoned a cap and trade system for carbon in 2010 although several states, such as Illinois and California have some version of it. A system of cap and trade was useful for in 1990 program that has helped reduce sulfur dioxide emissions. Some regard setting carbon limits and then selling rights to pollute under that was the most economical and efficient way to go even though anti-coal experts such as James Hansen oppose it.

Now, there are balloons being set aloft to see how a carbon tax might work. A Washington Post editorial thought a tax on carbon would be a good idea and not just to stave off climate change. The Post quotes Resources for the Future, a think tank, as projecting that a tax on emitters of a ton of carbon of $25 could raise $125 billion a year in new revenue  — more tax money than would be provided by eliminating the deduction on home mortgages.

The idea is that big utilities would be forced to shift from high carbon fuels such as coal to less-carbon ones such as gas or wind. Coal prices have been badly undercut by cheaper gas at the moment and coal’s percentage of the U.S. electricity mix has gone from about 45 percent to somewhere in the mid-30s, depending one whose estimate it is.

This is not cast in concrete, however. Coal markets are notoriously cyclical and volatile and coal could just as quickly regain its cost advantages over competing natural gas. Some coal firms are already beginning to see their income statements become somewhat less ugly than before. A partial recovery is already predicted next year as gas prices start to rise. (In Europe, for other  reasons, gas is already three times as costly as in the U.S.).

Now that the election is over and Obama has won, Big Coal and its allies don’t have the momentum they did to paint him as an out-of-control regulator. Nor does Obama have carte blanche in Congress to push one idea or another.

There are problems with a carbon tax, to be sure. Lower income electricity consumers will need some kind of subsidy so they don’t pay an unfair price for power. And if Europe establishes a carbon tax, and China does not, then China gets an automatic and unfair export subsidy, Helm says. Any carbon tax would have to be part of a global agreement, including one on energy imports.

The plus side includes new ways to drum up revenue. Another is that if utilities are forced and have a legal excuse to reduce carbon, they may be more inclined to develop and install carbon capture technologies that may involve burning coal, although the general trend would be away from it.

The simple truth, however, is that the U.S. needs to start doing something about carbon dioxide or face more superstorms like Sandy. Blaming China can’t serve as an excuse much longer.

24 Responses to Is Now the Time for a Carbon Tax?

  1. before we get to the Carbon Tax – we ought to be thinking about our electrical grid and why it fails not for hours but days in places like New York and New Jersey.

    I think a lot more non-partisan agreement is possible on upgrading the grid than global warming even though I believe that Sandy ought to be a potent hint of what to expect if we continue to deny.

    and I predict – a huge expanding market in permanently-installed backup-generators and maybe even rooftop solar panels that would provide – at the least minimal power for off-grid survival until the they get the grid back up.

    Rooftop solar panels can help provide minimal but vital power when the grid is down.

    Perhaps now is the time to be thinking about off-grid alternatives that can also feed power back into the grid when the grid is up and reduce our reliance on fossil fuels.

    we’ve become so polarized on so many issues that we’ve overlooked common-sense approaches to issues especially in disaster scenarios.

    Is a house with solar-powered LED lights even if cold is better than a cold-dark house?…

    • Above-ground power lines is why it takes days to get your power back. If your lines are underground, barring someone cutting the line or an earthquake (not impossible any more), the only way you’re going to lose power is if something happens to one of the stations.

      The reason they’re not all underground? Surely you don’t need me to tell you…

      As for generators and the like, each individual will do a C/B analysis of whether a generator is necessary. If you live in NY, where this type of storm is infrequent, it doesn’t seem necessary, but a number of people (whole neighborhoods, in fact that are subject to frequent losses of power) here in HR have generators.

  2. You avoid the regressive nature of the tax by graduating it by kWh used per month. Since less affluent people tend to have smaller homes they would never reach the kWh’s required to start paying the tax. However, larger homes would move through the graduation like higher incomes move through higher tax brackets (at least, in theory).

    People with large homes generally have the capital required to implement energy saving technologies. Given a graduated carbon tax (based on kHw’s per month) they will certainly do that.

    All of this will be goodness until the largest contributor to Virginia state politicians (i.e. Dominion Resources) realizes that its plants are no longer providing an adequate profit to its shareholder base. When that happens, Katie bar the door. You’ll see one member of the General Assembly after another dreaming up ways for Dominion to take in the same level of revenue despite a reduction in electrical usage.

    It is time for a carbon tax.

    It’s time to clean up the environment.

    However, if you want to see enemies of the environment you need only look toward Virginia’s US Congress delegation – especially Cantor and Goodlatte and Virginia’s state legislature. They can deal with the laws and regulations as they are now formulated. Lord only knows how they’ll react to … gasp …. a carbon tax.

  3. JeezUS H. Keeeeriiist!

    If Obama had offered that as a campaign promise, he would have been consigned to the gates of hell forthwith.

    If Romney had been elected, this idea would be buried deeper than HELL.

    hard to figure out DJ – he’s ALL over the map on these things!

    • LarryG:

      I’ve told you before … I don’t like government entitlements because they never seem to work. I am fine with higher taxes for infrastructure, economic development or to clean up the environment.

      Whether you agree with me or not, I am not hard to follow.

    • Do you know what’s really over the map? What’s really crazy?

      It’s how every sensible policy for addressing environmental issues like climate change, acid rain, et cetera, originally came from conservative economists like Charles Pigou, and was discussed in great depth in conservative publications in the late 80′s, only to be disclaimed as “socialist” by the GOP over the last 4 years.

      That’s what’s all over the map.

  4. I’d still like to know how the Middle Ages was so much warmer than today; why the Medieval Periods was so much colder; and what is the normal range of temperatures for the earth. How did we see those big changes without a large-scale release of carbon? I think it is very reasonable to ask these questions, but don’t expect an answer. I have a good friend who worked on Capitol Hill for Democrats for years who asks the very same questions.

    My prediction for a carbon tax. If enacted, most of the trading would be done, not by companies that produce carbon, but by Wall Street, hedge funds, etc. The cost of electricity would be detached from real economic costs or even the carbon tax and carry a premium related to Wall Street trading. The effect of this trading would be to slow economic growth. If I’m wrong, tell me why.

    • “I’d still like to know how the Middle Ages was so much warmer than today; why the Medieval Periods was so much colder; and what is the normal range of temperatures for the earth.”

      The Black Death, which killed a 1/3rd of Europe, caused significant reforestation in Europe. As did the multiple epidemics that swept through the Americas starting in 1492. The mini-ice-age looks to have been caused by the CO2 withdrawal of that era.

      ” I think it is very reasonable to ask these questions, but don’t expect an answer.”

      If you want to learn more, the American Institute of Physics can help: http://www.aip.org/history/climate/index.htm

      “My prediction for a carbon tax. If enacted, most of the trading would be done, not by companies that produce carbon, but by Wall Street, hedge funds, etc.”

      Cap & trade and the carbon tax are not the same thing. Before asking these questions, try to get your terms right.

      • Hmmm, interesting theory, ocshwar. So, the Little Ice Age was caused by reforestation and CO2 withdrawal, which, in turn, was caused by the Black Death. Vaguely plausible. How, then, does one explain the temperature decline that occurred after the *Roman* warm period and before the Medieval Warming Period. Depopulation caused by the barbarian hordes and reforestation in the territories of the old Western Roman Empire?

        That assigns a really big role to deforestation/deforestation. In raw acreage, how did those historic deforestations compare to the deforestation occurring today as a driver in changing CO2 levels in the atmosphere?

        • where is the observed data to support these suppositions?

          I’m not ruling things out. We know that there were a number of very large volcano eruptions as well as wildfires that could and did wipe out regional forests – far more than mankind which at that point in time was not a large population of humans.

        • The main driver today doesn’t have as much to do with deforestation. Fossil fuel emissions are high enough to dwarf CO2 withdrawal from reforestation in countries like our own US of A.

          Anyway, while there is literature on a link between population swings and the Little Ice Age, there is not yet any regarding cooling during the late Roman Empire. Possibly since the late Roman cooling was not as pronounced as the Little Ice Age:


          Some researchers have proposed that human influences on climate began earlier than is normally supposed and that major population declines in Eurasia and the Americas reduced this impact, leading to a cooling trend. William Ruddiman has proposed that somewhat reduced populations of Europe, East Asia, and the Middle East during and after the Black Death caused a decrease in agricultural activity. He suggests reforestation took place, allowing more carbon dioxide uptake from the atmosphere, which may have been a factor in the cooling noted during the Little Ice Age. Ruddiman further hypothesizes that a reduced population in the Americas after European contact in the early 16th century could have had a similar effect.[74][75] Faust, Gnecco, Mannstein and Stamm (2005)[76] and Nevle (2011)[77] supported depopulation in the Americas as a factor, asserting that humans had cleared considerable amounts of forests to support agriculture in the Americas before the arrival of Europeans brought on a population collapse. A 2008 study of sediment cores and soil samples further suggests that carbon dioxide uptake via reforestation in the Americas could have contributed to the Little Ice Age.[78] The depopulation is linked to a drop in carbon dioxide levels observed at Law Dome, Antarctica.[76]” (from wikipedia)

    • re: ” I’d still like to know how the Middle Ages was so much warmer than today; why the Medieval Periods was so much colder; and what is the normal range of temperatures for the earth.”

      I did not realize that we had detailed observations from that time period.

      The references provided only go back to the 1880s. Are the folks who provide these charts not providing data from earlier periods?

      http://www.c2es.org/facts-figures/trends

      is there a site that provides the earlier observations?

  5. TMT,
    Not sure how a carbon tax would be traded so. I could easily see how a cap and trade system would be affected.

  6. essentially what a carbon tax will do – is make energy more expensive – and in turn spur more efficiencies and conservation.

    Obama was hammered for suggesting this.

    Romney/Ryan said that Obama’s support of this proved he was a “socialist” who believed in social engineering and the govt involving itself in the “market”.

    Romney/Ryan said that Obama’s policies would result in “job killing” regulations and that he fostered a war on coal and a war on the Keystone pipeline.

    I though that Romney/Ryan drew some serious blood on the issue.

    Remember.. there is a global conspiracy of scientists to lie to us about global warming… and changes to head it off.

    Even Jim Bacon has said that he disagrees with making expensive changes when we don’ t know enough to make that decision.

    so what gives?

    I’ll be hornswaggled if we now head in this direction without the GOP blowing a gasket.

  7. this would be a good time to talk about Ronald Reagans stand on climate change – from Ozone.

    ” Ordered U.S. diplomats to negotiate a strong treaty to begin phasing out ozone-depleting chemicals. The resulting Montreal Protocol was ratified by the U.S. Senate in 1988 and entered into force in 1989. The Montreal Protocol, which President Reagan called a “monumental achievement,” has resulted in a 95 percent decline in production of the targeted chemicals. The atmosphere’s protective ozone layer has begun to recover.

    The Montreal Protocol has produced a significant climate stewardship benefit because ozone-depleting chemicals have heat-trapping properties. Thanks to the Montreal Protocol, emissions of heat-trapping gases equivalent to nearly 5 years of global carbon dioxide emissions have been prevented since 1990. President Reagan’s leadership made that enormous climate stewardship achievement possible.”

    from: ” Timeline of Ronald Reagan’s Environmental Accomplishments”

    http://www.climateconservative.org/TimelineofRonaldReaganEnvironmentalAccomplishments.html

  8. And now for the funniest part (in my demented mind, just ask Larry) – it’s not global warming that we need to look at or worry about it’s the all too soon to be ice age. Here are several links
    http://www.canadafreepress.com/index.php/article/43811

    http://www.dailymail.co.uk/sciencetech/article-2093264/Forget-global-warming–Cycle-25-need-worry-NASA-scientists-right-Thames-freezing-again.html

    http://www.theregister.co.uk/2012/11/09/peat_ice_age_coming_only_co2_can_save_us/

    http://www.theregister.co.uk/2012/11/12/antarctic_ice_growth_investigated/

    http://www.theregister.co.uk/2012/08/29/frozen_euro_winters_linked_to_low_solar_activity/

    Basically to me it appears (once again) that we don’t (scientists don’t) really know what they are talking about. As I, and others who don’t buy the man is causing ‘global warming’, have said, it a cycle. The history of the earth shows time and time again that we warm up and we cool down; typically we warm up a bit more than usual before the BIG cool down. So no, no flipping carbon tax, Obama will just waste the money like he’s done with our taxes so far. Nope, I’m betting on the global cooling and an additional $6 trillion dollars added to our national debt over the next four years.

  9. The GS skeptics remind me a lot of the GOP and the polls.

    so Accurate, were you also a Poll “skeptic”?

    :-)

  10. Poll skeptic? How could you be? One day Romney’s ahead, the next day Obama. As feared, the worst man won, but when you promise to give everything to everyone, people fall for it. Obama was/is this century’s ‘chicken-in-every-pot’ president; so it added $6 trillion dollars to the deficit, what’s a little money between friends?

    • Accurate:

      Great work! Your simple comment has LarryG in another of his dithers.

      He starts by claiming that presidents don’t have budgets but then continues with a BS percentage lie about President Obama’s budgets.

      He continues by trotting out the Liberal lie that Obama is a small government president – every year is another stimulus year!

      Then, he moves on to call the governor of Alaska a bimbo (I wonder what you call Biden?) and the former Governor of Massachusetts a racist.

      Hope and change is on display in his comments.

  11. re: Poll “Skeptic” – when is the last time Obama SIGNED a budget?

    Last I heard all the right-wingers were saying it was more than 1000 days.

    If Obama has not signed a budget how can HE spend money?

    Who approved the 16 trillion in debt if Obama did not sign a budget?

    ” Who Is The Smallest Government Spender Since Eisenhower? Would You Believe It’s Barack Obama?”

    http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/

    see this is just like the poll “skeptics” you boys just believe what you wish – hang the facts.

    of course the other problem is that the GOP goes out of it’s way to call all Blacks “takers” and all Hispanics “illegals” and Romney makes no effort to show he’s not in bed with those racists – it’s a problem.

    but as long as ya’ll want to believe that people voted for chickens-in-pots… and will continue to lose elections… good stuff!

    I have voted GOP before and some day may again but I could not vote for the Geezer when he had a bimbo for VP and I could not vote for Romney when he’s in bed with racists and unable/unwilling to disassociate himself from the scourge of the GOP.

    that’s what lost the election Accurate… the polls show that. They actually showed that prior to election also but the GOP “skeptics” were “deniers”.

    • Oh Presidents do have budgets but they on pieces of paper until Congress approves them as both of you well know or ought to know.

      What is being spent under Obama – every single penny – has been approved by Congress and almost all of it the Congress under Bush.

      When Obama became President – neither side could agree on a new budget so they just kicked the can down the road via CRs continuing resolutions.

      but you boys know that but still play this silly game.

      re: small govt President.. not at all.. we know he believes in Govt more than the GOP does but the truth and the facts about his own spending is undeniable unless of course you simple must believe what you wish like the GOP did with the polls … it’s called “confirmation bias” these days and 98% of the GOP and people who like the GOP seem predisposed towards it.

      What’s really shocking here is that DJ is a businessman and he’s just as clueless as many others who really don’t want to know the truth just confirm their own prejudices.

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