Hansen’s Tax Plan:
Discuss
Discuss
I know very little about James Hansen’s tax plan. One of the reasons is that Hansen himself said very little about it during his recent well publicized speech commemorating his 1988 presentation to Congress. He blew his powder on more explosive sound bites, distracting everyone from actions he is proposing.
Still, Boris did notice Hansen mentioned this tax plan and is keen to discuss it. So, I’d like to open a formal thread here.
Meanwhile, Tokyo Tom mentioned the plan over at Volokh, and later wrote a post, which includes links to some discussion. So, those who want to learn more about the plan might want to visit the post and read more. In case you miss it, Tom includes a link to Hansen’s 2 page pdf with a very brief discussion of the tax plan and a link to “Who owns the sky” which evidently explains this plan further.
This book review from Amazon suggests the book won’t tell us much more than Hansen’s brief discussion:
Barnes’s system of pricing permits is modeled in part on Alaska’s plan, in which oil companies that drill in the state make payments that are distributed to Alaska residents through a dividend-producing trust. He likewise proposes that the revenues from emissions-permit sales should go to the public, with each citizen receiving an equal monetary share. In this very brief and disappointingly thin sketch of his system (he leaves the nuts and bolts to others), Barnes frequently sounds as if he’s making a repetitive sales pitch. Skeptics on both the left (who may not buy his free-market solutions) and the right (who may object to yet another tax on business) are unlikely to be moved by this book.
On a blog strategy matter, I’m going to throw out some advice to those who support Hansen’s position or the Hansen/Barnes tax plan.
Don’t write blog posts apologizing for or explaining Hansen’s frustration that people aren’t jumping to adopt his vaguely described plans. Don’t write posts suggesting you think people should get creative and figure out some way to punish those with views that differ from yours. Don’t spend time telling readers that because Hansen is from Iowa and has an earned Ph.D., “It might be worthwhile thinking about what, exactly, the man is quite so peeved about.”
It’s not in your interest to encourage anyone outside Hansen’s choir to think about Hansen’s outburst.
If you (or for that matter Hansen) want to focus people’s minds on action,the best way to focus people on action is describe a proposed action in some detail.
You may discover people disagree with you, but consider the alternative: They aren’t even aware of the proposal! And even if people don’t accept your full proposal, if you discuss actions, you might actually find common ground.
Currently, I have no strong opinion about the tax plan. This is primarily because I don’t know much about it. I’ve read the Hansen’s pdf and the newspaper articles and I still don’t know much about it.
So if you think it’s a good plan, and you hope to get people on board, it’s in your interest to spend your own time providing a coherent explanation of the plan. Include details about how the tax might be implemented.
The two paragraphs in Hansen’s pdf provide a very vague description of atax on carbon. Will wood be taxed? If not, people will buy wood burning stoves and fell trees. No matter which carbon sources are taxed, it seems likely the tax will lead to increased food and clothing costs. If implemented poorly, it could favor imports from countries with no carbon tax; thereby encouraging consumption of high carbon footprint bananas and mangoes rather than locally grown apples.
But maybe I’m wrong.
Even if I’m wrong, I know that with tax plan, details matter. So if there are details, describe the features in your own words. Feel free to drop links to further reading, but remember, readers rarely click links. So, exercise your fingertips and type out your argument!
With that, I encourage anyone who admires Hansen’s plan, and actually knows what the heck it is at any level of detail to explain the darn thing.
Comments
Clark (Comment#3757) June 30th, 2008 at 12:33 pm
Sorry to be glib, but if Hansen wants to bet on future climate outcomes, he should follow the excellent policy of this blog and limit bets to cookies, instead of using my money.
lucia (Comment#3759) June 30th, 2008 at 12:46 pm
Boris– Fixed. 
Wood is renewable. That doesn’t automatically cause it to renew. When I lived in Iowa, my lot and those of my neighbors’ were wooded. If there was a tax on wood, we could very well chop trees down and make no effort to regrow. After it’s grown, maybe we’d grow corn or soy like Hansen across the street. (Not making the name up. I lived on Hansen drive, and the farmer across the road was farmed by “young Hansen”. He was only young relative to his mother who was probably 80 or so! )
I’ve never been persuade by exhortations to lead the world. If the action is wise, it’s wise. If it’s foolish, it’s foolish. If the most persuasive arguments in its favor are ‘we can lead the world’, then I suspect the policy is foolish. We should avoid it and hope no one else jumps off that cliff.
So…. what about the bananas and mangoes? If we impose this, do we end up importing bananas and mangoes from El Salvador, the country of my birth, while they figure out it’s in their interest not to impose the the tax and sell us bananas, and manufactured goods?
Boris (Comment#3760) June 30th, 2008 at 1:03 pm
Well, as I said a tariff could be levied. Obviously we’d need to be careful and negotiate with other countries in this regard.
lucia (Comment#3761) June 30th, 2008 at 1:14 pm
Boris– Is that Hansen’s proposal? Or not?
My point is that, as far as I can tell is the proposal is utterly vague. Unless someone describes something in much greater detail than Hansen has, for all we know the plan they envision could result in more CO2 emissions, not less.
It’s not as though people aren’t creative about working around plans. Weren’t CAFE standards supposed to reduce fuel consumption? Didn’t we end up with SUV’s as a work around?
I’m going to the store to buy some bananas now. (The strawberries I planted aren’t bearing yet.)
Boris (Comment#3762) June 30th, 2008 at 1:24 pm
He mentions it. I agree the proposal is vague. I’m looking for a more detailed plan.
Nothing’s growing for me except my hot banana peppers. So if anyone wants to bet cookies against hot banana peppers….
Martin Ringo (Comment#3763) June 30th, 2008 at 1:39 pm
Lucia,
I believe that Hansen is only proposing a policy which 1) imposes an excise tax on carbon emission (no details described) and 2) a 100% refund of the tax in terms of dollars to the individuals who paid the tax. In economics this is called “compensated price change” and the change in the quantity (of the taxed good) consumed is the (Slutsky) “substitution effect.” The idea of the tax and refund is to remove the “income effect” of the increase in the price (from the tax).
Whether or not I agree with Hansen on other point, I agree that effluent taxes are administratively more practical, albeit less politically practical, at this stage than caps. Right now almost all major countries have either tax or price regulation systems for energy services and commodities. And the receipt of taxes is no more corrupting than other excise taxes in contrast to caps which almost beg to have allotments to industries or groups. The refund is a more troublesome point because Hansen seems to assume that the incidence of taxation will be 100%. That is, 100% of the tax will be passed on the ultimate consumer. This result is seldom if ever the case. Hence, the tax will produce a differential effect on one energy industry versus another. Hansen probably doesn’t care, but the result will be not quite the pure textbook substitution effect he was envisioning.
Hansen might also be advocating a carbon tax as opposed to a cap-and-trade because he has looked at things like the ethanol subsidies and decided, from a net-carbon-in-the-atmosphere position, that ethanol is at most a small reduction in greenhouse gases per btu and most likely a net increase. Of course, that won’t make Dr. Hansen very popular in his home state, Iowa.
Len Ornstein (Comment#3764) June 30th, 2008 at 1:48 pm
I contributed a version of this as an “article” to Roger Pielke, last week, but he apparently has chosen not to post it. Lucia has made it relevant here:
STIMULATING INNOVATION BY TAXING CO2- AND ECOLOGICAL-FOOTPRINTS
Invisible impacts (especially future impacts) of products and processes are often overlooked and therefore don’t ‘properly’ influence their market prices. This, and excessive discounting of future risks and rewards, are ‘diseases’ that seriously degrade marketplace efficiency, and are only ‘curable’ by informed intervention.
The deleterious effects of chlorofluorocarbon refrigerants on stratospheric ozone and of industrial sulfate emissions on the acidity of rain, are examples of ‘doubly invisible’ pollutants. Both of these have been successfully ‘cured’ with ‘managed’ markets. CO2 and H2O are invisible gases produced when hydrocarbons are burned. It wasn’t until the 70’s, after the Keeling Curve revealed that atmospheric CO2 was steadily and inexorably increasing, that its also previously ‘invisible’ impacts were carefully reexamined, and Anthropogenic Global Warming (AGW) emerged as a potential threat to world climate, prosperity and to the biome.
Whether the magnitude of the trend is 1º or 2 º C/century, it’s almost certainly not zero (despite the ‘flat’ trend in the last 8 years). AGW needs attention.
Recently, as an alternative to ‘ordinary’ carrots and sticks of subsidies and taxation to stimulate energy-market innovations, Jim Hansen proposed taxing fossil fuels at their sources, and ‘evenly’ redistributing all the proceeds to citizens, as dividends.
http://www.columbia.edu/~jeh1/.....vidend.pdf
If such taxes were high enough, and proportional to the ‘CO2 footprints of fuels’ (the amount of CO2 produced by both extracting a fuel and ultimately burning it), producers and customers should automatically and efficiently turn to other forms of energy which produce smaller net footprints. Hansen seems to imply that such taxing of fossil fuels would be straightforward and ‘easy’.
Until 1800, the main fuel for heating, cooking and power was wood. As populations grew, the forests of the world began to be destroyed at an increasing rate. Old-growth forests in the Northeastern US were decimated by the beginning of the twentieth century. If fossil fuels are heavily taxed, wood will be the first alternate fuel to which many will turn, especially as a substitute for coal. (This, of course, is Lucia’s leading point, above.) In underdeveloped regions like the African Sahel, because of fossil fuel transportation costs, wood is still a first choice.
For Hansen’s scheme to work, footprints will need to be assigned not only to fossil fuels, but to biofuels as well. But this is a MUCH trickier task.
To cartoon the problem:
A fallen dead tree, if harvested for fuel, might actually deserve a ‘negative tax’ (a subsidy to be paid to the user). If allowed to rot, virtually its entire carbon content would have been converted to CO2 and released into the atmosphere. If it’s harvested, that amount equals its negative footprint because that harvested carbon can be used for its energy, rather than being ‘just wasted’ to rot before returning the same amount of CO2 to the atmosphere. This is completely renewable…CO2 in equals CO2 out.
But the same isn’t quite true of any live, forest-canopy tree which is generating net primary productivity (NPP). Like the fallen tree, there’s a negative footprint equal to the harvested trunk. But there’s also a positive footprint about equal to its lost potential NPP, summed from harvest date to its otherwise projected ‘natural death’, (or until an equally productive tree grows from the understory in its place).
Unless, for each tree harvested, such positive and negative footprints are correctly estimated, assigned ‘appropriate’ values…and policed, Hansen’s Tax and 100% Dividend might quickly lead to massive deforestations!
The CO2 footprint of US-corn-ethanol is substantially larger than that of Brazilian sugar-cane-ethanol. But the footprint of the Brazilian ethanol should also contain an additional component. That should at least equal the difference between the NPP of the tropical rain forest (that was cut down…and burned?..to make way for the sugar cane plantation), and the NPP of the sugar cane that replaced it. The equivalent ‘prairie NPP footprint’ for US corn is much smaller. Identical gallons of ethanol therefore can be burdened with large differences in tax. And of two ‘identical’ pieces of wood, one may carry a subsidy, and the other a tax…lots of opportunity for cheating.
And so it goes. Potential NPP forgone by clearing or harvest as well as additional eco-damage and associated “Ecological-Footprints” are not easily computed to construct necessary regulations.
But without them, and without strict policing and enforcement, almost any plans to manage markets (with footprint taxes, trade-and-cap or subsidies…Hansen’s…or others) may easily fail their purpose…like the dumb subsidies for corn-ethanol. Management of AGW is almost certainly necessary, and highly desirable…but “it sure ain’t no lead pipe cinch”!
In the spirit of full disclosure; I’m an ancient professional biologist…and a kind of Jim Hansen/GISS groupie 
Len Ornstein
lucia (Comment#3765) June 30th, 2008 at 2:43 pm
Martin– It’s the “no details described” and the claimed 100% refund that have me worried. But yes, direct taxes are probably better than cap and trade, which has just got to introduce weirdness into the economic system. (”Weirdness is the correct economic term, right? )
Lots of Iowa corn is underwater right now. Maybe the Iowa farmers don’t mind a fuel tax this month. But no, reducing demand for corn, isn’t going to make him popular with corn or grain farmers. Hog farmers might not mind at all though! Also, I’m not sure how energy prices affect farmers in general. How does it impact fertilizer costs? And fuel costs to run tractors etc.? Do higher energy costs have a large or small impact on these?
Len– Being a Hansen/GISS groupie is fine around here. I haven’t seemed to attract many, but there ya’ go.
I agree with you that management of AGW is no lead pipe cinch! That’s why I think the details need to be fleshed out.
Oddly enough, I’ve been for a gas tax since the 80s! I’m one of those people who thought Ross Perot had it right. In fact, I wished we’d imposed a $0.05 gas tax back in 80 and raised it 0.05 a year until now. I wouldn’t have minded some taxes on fuel oil and natural gas. The proceeds could have been used for subsidizing public transportation, general revenue or a number of things. So, a gas tax per se doesn’t bother me.
A gas tax no one can describe bothers me!
What bothers me is the utter vagueness of the plan. Also, I don’t think any old gas tax by itself will automatically result in creation of baseload. There are plenty of places where poverty is the norm. If things are done badly, that could happen here too.
BDAABAT (Comment#3768) June 30th, 2008 at 2:59 pm
@Len: Not great examples…
Acid rain turned out not to be a problem primarily from emissions… see the 1988 National Acid Precipitation Assessment. Ten year, $500 million dollar assessment that showed most of the concerns about acid rain were not due to auto or power plant emissions.
Chlorofluorocarbons: again, not really the cause of anything to do with ozone depletion despite the rhetoric. Limiting CFC production in the developed world did nothing to affect “the ozone hole” and simply increased the price of refrigerants and refrigeration in the developed world.
Carbon taxes are simply another in a long line of taxes that “sound” like they should be good for the environment and sound like they should help all sorts of people, but functionally do nothing except unnecessarily increase prices for those in developed world and continue to repress those in the less developed world. The impact this has is both positive and negative. Example: Positive if you happen to be a company like DuPont, that profited handsomely from the switch from traditional CFCs to newer CFCs. Negative if you happened to be someone who needed to re-fill their home or car air conditioner after traditional CFCs got phased out. Negative if the cost for refrigerators has now increased to the point where many in the less developed world can’t afford them.
What’s the impact of a carbon tax? Let’s see the numbers for actual impact on global temperatures. So far, predictions about what will happen to global temps for a given rise in CO2 have been consistently incorrect (see Lucia’s recent comparisons for Hansen’s predictions, but also see the computer projections used by the IPCC).
One quickly realizes that the cost for implementing these taxes vs. the actual temperature impact is such that it doesn’t make any sense at all.
Bruce
lucia (Comment#3769) June 30th, 2008 at 3:06 pm
Bruce-
I haven’t said predictions are totally incorrect. Hansen 1988 predictions look noticeably high compared to data available to data. The IPCC AR4 projections are hight.
But trends are positive, and it’s likely we could benefit from some action. That said, I think the tendency of advocates to be very vague about what is to be done makes things impossible. Also, I suspect the only plan forward is linked compromises. I’m for doing something to stave off the possible (though not certain) worst consquences. But, I’m also for including provisions to make sure the steps we undertake are rational, and not designed to simultaneously a) fail to reduce CO2, b)throw the economy in a tailspin and c) have unintended consequences like massive deforestation.
Arthur Smith (Comment#3770) June 30th, 2008 at 3:12 pm
A couple of points:
* a carbon tax (or a truly equitable cap and trade system) would have vastly greater impact on coal than on oil prices. That’s a good thing from the “reduction of CO2″ perspective - coal is the worse problem and needs to be addressed first. The reason for the greater impact is simply that the relative price of coal is very low, compared to the price of oil (even when oil was “cheap”), per ton of CO2 emitted. Let’s say the tax is set at $50 per ton of CO2 that would be emitted by the fossil fuel (and is directed only at fossil sources: coal, oil, natural gas). That amounts to $185 per ton of carbon (each ton of carbon results in 3.7 tons of CO2). The effect on gasoline prices would be about 50 cents/gallon, adding about 12.5% to gasoline at $4.00/gallon.
Compare that with the impact of a $50/ton-CO2 tax on coal: right now the most expensive coal in the country is Appalachian at a little over $100/short ton. Coal isn’t pure carbon, more like 75% by weight; also a short ton is slightly less than a metric ton. But that still adds about $125 to the price of each short ton of coal, or an over 100% increase in the price of the most expensive coal in the nation. Cheaper coal, such as the Powder River Basin variety currently sold for less than $20/short ton would see over 500% price increases.
So any such tax would have a much greater impact on coal than on oil. Gas prices are a minor effect. If you need to worry about something, worry about electricity prices. Such a tax would quickly make renewable electricity supplies much more competitive.
* the big issue not clarified that I’m aware of in Hansen’s proposal is how to deal with the CO2 impact of imported goods. Imposing a corresponding tariff ($50/ton of CO2) would require good estimates of CO2 costs of manufacturing in the producing country. It would also likely run into trouble with world trade rules. There’s an awful lot of room for funny business in the import/export part of this problem. Other than that, Hansen’s proposal does have significant merit on grounds of simplicity!
Hoi Polloi (Comment#3771) June 30th, 2008 at 3:12 pm
those who cannot do
elementary school math
will vote for CO2 tax
K (Comment#3772) June 30th, 2008 at 3:17 pm
From his behavior I think Hansen’s tax plan is the same as his other plans “I will say and you will obey”.
Since he doesn’t have that power we can present our own ideas.
I favor a temporary, stepped, increase.
i.e. The federal tax on motor fuel will rise at the rate of inflation plus five percent each year for five years. Then it will revert to the present tax rate unless new legislation is passed.
That forces Congress to review matters in light of what we learn in the next few years. And, faced with the loss of revenue, they will act.
If we merely pass a rising tax w/o an expiration provision then the government has no incentive to make sensible adjustments later.
lucia (Comment#3773) June 30th, 2008 at 3:23 pm
the big issue not clarified that I’m aware of in Hansen’s proposal is how to deal with the CO2 impact of imported goods.
The apples at the grocery store were from New Zealand. They were delicious. Clearly, shipping from New Zealand has got to take more carbon than growing applies in Illinois or Washington state.
Like you, I favor simplicity. Taxing is at least potentially simple. Returning the money? In a pig’s eye! ( Sorry, but in the not so short run, I don’t trust politicians to really return money.)
Darwin (Comment#3774) June 30th, 2008 at 4:19 pm
I found this
http://www.carbontax.org/bloga.....arbon-tax/
maybe it can help focus the discussion.
EJ (Comment#3775) June 30th, 2008 at 4:49 pm
Pie in the sky, this talk of a carbon tax. It is assumed that this tax will have an impact on temperature. I beg to differ.
Before any such action, tax or cap, is taken, a cost/benefit analysis needs to be done, and not by the IPCC.
DougM (Comment#3776) June 30th, 2008 at 5:05 pm
The Liberals in Canada have just announced a carbon tax as part of their platform. It is available at the website thegreenshift.ca (the plan is a 48 page pdf, however there has already been comment by Liberal party members that it is incomplete.) Not everybody thinks the plan is a good one. The premiers of the two largest oil producing provinces have condemned it, as have the premiers of the three northern territories. There has been lots of newspaper articles and columns in the last few days on the subject, and the political oriented blogs have been busy. While the situation in the US is somewhat different, many comments from Alberta and Saskatchewan have proposed an immediate reduction of Canada’s GHG emissions if a carbon tax is imposed. This will be accomplished by Alberta and Saskatchewan separating and become an independent country. It seems there is a little opposition out west.
steven mosher (Comment#3779) June 30th, 2008 at 7:39 pm
has hansen published his idea in a peer reviewed economic journal?
George Tobin (Comment#3781) June 30th, 2008 at 8:39 pm
In fairness to Hansen, I don’t get the impression he was offering a detailed plan so much as stating a desire that the forces of evil be heavily taxed and that the new tax revenue be given to the public as a political incentive to support enactment of the punitive tax. It was a general suggestion presented in a slightly rambling style whose length mimicked the outline of an actual program proposal. The responses on The Blackboard and elsewhere have been far more sophisticated and detailed than the “plan” warrants.
If we were to move to government controlled allocations like cap and trade coupled with a huge new slush fund from carbon producer taxes, I may just have to come out of retirement and don those old alligator shoes because it will be a great time to be a lobbyist. The “refund” from the carbon tax will increasingly be “returned” in the form of new “services” and “public investments”. Washington will be flush, the evil carbon fuel producers will simply pass on the costs (including the additional costs of more lobbyists) and the consumer/taxpayer will get the tab and the shaft. On the downside, it will be nearly impossible to get a lunch reservation at Sam & Harry’s or the Palm.
Len Ornstein makes a good point about the return to wood fuels. The destruction would be broad and deep if we make energy more unaffordable. And the models will never include that particular truth. Wealth is ultimately good for the environment. Poverty is war on the environment. The solution is technology not politics. And if you disagree with me, you hate the planet and should be arrested. So there.
lucia (Comment#3783) June 30th, 2008 at 8:48 pm
George–
Sure, Hansen may not intend to offer a an actual plan. But if no one is offering a plan, then what’s the point about complaining about delayers? Or suggesting CEOS be charged with crimes against nature.
If there is no plan about what to do, there is nothing to delay.
BDAABAT (Comment#3784) June 30th, 2008 at 9:19 pm
To take a page from Bjorn Lomborg, is “human influenced global warming” REALLY the most pressing human need right now??? Should we really take measures that will cost trillions of dollars and will impact people in very tangible ways when it’s not even clear exactly what, if any, the impact of human emissions of CO2 are having on temperatures?
In the same way that one allocates one’s own resources to meet certain specific goals and objectives, it seems quite reasonable to do the same with public funds. And, if one were going to prioritize global human problems and set about ways to address them, one would probably start with things like malaria [500 million cases per year with ~ 1 million deaths and most occurring in women and children], leshmaniasis [~ 12 million of people affected worldwide with women and children primarily affected], cholera {millions affected, thousands of deaths, again mainly in children], etc. In each of these cases of disease, increasing access to inexpensive energy (in the form of CO2 emitting sources like coal and oil) would dramatically reduce or even eradicate the disease. Seems that increasing access to inexpensive energy is of greater benefit to humanity than is limiting access to energy through increasing costs in the form of taxes.
Bruce
Martin Ringo (Comment#3785) June 30th, 2008 at 10:26 pm
Bruce,
It is nice — heck, more than nice — to see someone who remembers NAPAP — don’t forgot the last ‘P’ (for “Program”). And it was $600 million, but you got the important part right: the effect of power plant emissions (the Illinois, Indiana, Ohio to Northern NY and New England pipeline being the most noted) was slight (remember the Red Spruce?), and the acidification of the N. NY and NE lakes was a natural phenomenon. Of course, here in NE there are plenty of people — who matter with regard to environmental regulation — who seemed to have a complete memory lapse with regard to NAPAP and still talk about the terrible acid rain from Ohio.
Re carbon taxes as user fees
Whether we have a carbon tax, cap-and-trade or anything, we should increase the taxes on both gasoline and diesel. The fuel taxes used to more than cover the highway construction and maintenance. Not so today. Fuels taxes are not necessarily the best way to tax highway users, but the mechanism is in place and the tax mechanism is close enough that I am not going to worry about optimality. Again this has nothing to do with climate change, just the user fee.
Re: carbon taxes as effluent taxes
As I look at the 2008 elections, the current Congress, and the opinion surveying of the country, I think there is a better than 50% chance the US will have some kind of energy use restriction coming in 2009. Presuming that this comes to fruition, then there is the issue of what kind of restriction is least harmful to the economy. This is not an argument about the desirability Copenhagen Consensus (Bjorn Lomborg). It is a question of political reality. And alas, I think we are not only likely to have restrictions but we are likely to have them in the form of cap-and-trade. The good news is that given the desire to be re-elected Congress and whoever the new President is will push the painful part fairly far off. Thus, if we continue the current lack of warming trend, we have might have an electoral re-evaluation in four or so years.
PS: cap-an-trade
I am actually a believer in cap-and-trade and have testified to that effect regarding the Clean Air Act of 1990 concerning the SOX emissions. That program was a pretty clear economic success, at least with respect to the costs of abatement. (Probably less than 50% of the median of the cost estimates during the 1990 debates on the bill.) The trouble with doing it with carbon (as opposed to other forms of restriction under the presumption there will be restrictions) is that there are too many possible physical leakages (on coverage) and an almost impossible to control political leakage of allotments. It is the latter that bothers me most, and it will make the “dirty 100″ compromise in 1990 look like child’s play.
MarkR (Comment#3787) July 1st, 2008 at 2:47 am
Here is a test for the genuiness of motives of any tax plan.
Alternative methods of changing behaviour are rationing, and criminalisation. It could be said that taxation of Carbon use was regressive and impacted the poor far harder than the rich.
Rationing cards and Armed Guards, and Prison time as deterents. Surely environmental Husbanders like Hansen should be all in favour of such measures. If not, why not?
MarkR (Comment#3788) July 1st, 2008 at 3:30 am
PS. Also, tax the producers. Taxes on Saudi and Russia at source. Why not?
Dan Hughes (Comment#3789) July 1st, 2008 at 5:48 am
I have a general question. Unrelated to any specific plans as there seem to be none anyway.
Are there any examples of successful applications of taxation of other significantly important aspects of life that have resulted in the degree of curtailment of the activities to the extent deemed necessary for the ‘CO2 problem’?
Or examples for activities that are not necessary for the health and safety of the public?
Or any examples at all?
Oh, a tax imposed on tea just came into my mind.
Thanks
lucia (Comment#3791) July 1st, 2008 at 6:04 am
Dan Hughes– I think the tea tax curtailed tea drinking. People in Boston got angry, but in the end American’s seem to drink more coffee.
Raphael (Comment#3792) July 1st, 2008 at 6:17 am
Being a convservative, when Federal taxes are discussed I always examine the following statement:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States
To which is global warming a threat: common defense or general welfare?
How is it a threat?
Will the tax provide a relief to the threat?
If you can’t answer these questions, tell me why Congress has the power to levy the tax in the first place.
Dan Hughes (Comment#3794) July 1st, 2008 at 7:13 am
Maybe I should not have thrown in that bit about the tea tax; but it did in fact pop in as I was writing.
It detracts from my main question, and I think the question requires serious thought. Do we have any data at all to indicate that the (fuzzily) proposed remedies have any chance for success?
Why is the idea that The Scientific Method should be applied to all proposed mitigation and adoption proposals not considered?
ps
After the tea tax popped up, my next thought was what that precipitated. The subsequent activities went somewhat beyond curtailment of tea drinking
Raphael (Comment#3797) July 1st, 2008 at 7:47 am
Do we have any data at all to indicate that the (fuzzily) proposed remedies have any chance for success?
First you have to define success.
Dan Hughes (Comment#3799) July 1st, 2008 at 8:01 am
Raphael, I have read, I recall, that CO2 emissions must be decreased by 50 to 90 % below the levels of the late 1990s or early 2000s by about mid-2000s.
All corrections appreciated.
Raphael (Comment#3800) July 1st, 2008 at 8:19 am
Dan Hughes,
Corrections aside, should we allow for room in the definition of success for other criteria? Such as the impact on Global Warming, the impact on the economies (Global, National, States, local), or any other impact that can be deemed important?
Dan Hughes (Comment#3802) July 1st, 2008 at 8:36 am
Of course, Raphael.
The objective of applying the scientific method would be exactly to determine all the costs and all the benefits and all the adverse consequences of all proposed mitigation and adoption procedures and processes. If the scientific method is good enough to define the problem way isn’t it good enough for investigation the proposed solutions.
But I’m still looking for examples for which, let’s say taxes, have significantly reduced the consumption of anything. My understanding is that the Precautionary Principle firstly demands that consumption of carbon be curtailed significantly and immediately and taxes (or in general additional costs for carbon) are the method of choice.
Raphael (Comment#3804) July 1st, 2008 at 9:44 am
Dan Hughes,
I was wondering if only the reduction of carbon emissions would be considered a success and if there would be photo-ops of the AGW crowd would be standing on the deck of an aircraft carrier with a banner which reads, “Mission Accomplished.” Which really leads back to the definition of success. Because without it, everything else is just gums flapping in the wind.
I can’t help with the search for a “sin tax” which worked.
But applying theory, price, whether through tax or market forces, can have an effect on demand if the demand is not perfectly inelastic. This is rather clear from all those economic courses I took and never use (except for things like this).
There are (at least; doing this off the top of my head) three economic principles of demand which need to be considered for any given “sin tax”.
1. Price elasticity: Price Good A vs Demand Good A
2. Cross price elasticity: Price Good A vs Demand Good B
3. Income elasticity: Income of consumer vs Demand for good A
All three of these are involved in the Carbon Tax.
1. Carbon tax reduce demand
2. Carbon tax increase demand of alternatives
3. Revenue from carbon tax is redistributed
If all (not to say this is a complete list) of these principles are not examined, any given tax intended to reduce demand could have unforseen results.
But, as I said success would need to be defined first. Personally I don’t think there is enough information on AGW to define success. I’ve been trying to nail down the questions I listed previously in this post, with little success.
Boris (Comment#3805) July 1st, 2008 at 9:49 am
To which is global warming a threat: common defense or general welfare?
General welfare obv.
It could be said that taxation of Carbon use was regressive and impacted the poor far harder than the rich.
The rich use more energy than the poor, so the poor would gain in this plan.
Darwin (Comment#3806) July 1st, 2008 at 9:51 am
Lucia, actually there was a carbon tax proposal put forth by Gore in 1992 and pushed in his book Earth in the Balance. Opposition to that proposal as a central planning device led to the Clinton administration proposing a Btu tax instead in 1993, which was quickly set aside as too onerous for an energy hungry U.S. economy. The GOP attack on the Btu tax, along with Hillary care, helped set the stage for the GOP takeover of the House after 50 years — by attacking tax and spend Democrats. Hansen astutely proposes eliminating the “spend” in order to make the “tax” more palatable. A tax credit would actually make a carbon tax progressive. Cap and trade with permit auctions came about because politicians wanted to levy taxes but make it look like they weren’t — avoid the “tax” label but not the “spend.” ;-).
Boris (Comment#3807) July 1st, 2008 at 9:56 am
Alas, I suck at blockquoting. Third line is MarkR’s.
Re a sin tax. After taxes on cigarettes are raised, pregnant women smoke less and birth weights go up.
Also, apparently the AEI supports a carbon tax. Yeah, I know.
lucia (Comment#3808) July 1st, 2008 at 10:06 am
Darwin–
I would need to read some analysis of how this works to believe the return provision makes this a progressive. In particular, I would need to see that to believe this is as progressive as the current income tax.
When we say progressive, we usually mean that the rich pay a higher fraction of their income in taxes. That is, someone making $1,000,000/year might pay 40% in taxes, while someone making $20,000/year might pay 1%.
I suspect it is true that per capita the wealthy use more energy. So, as a flat amount, I suspect they would pay more in carbon taxes than a poor person.
But, I’m not entirely sure they use more carbon as a fraction of their expenditures. Many, many luxuries would seem at first glance to be less carbon intensive than needs. Heat, and food transported large distances are energy intensive. The poor spend a lot on those things. The poor need to use transportation to get to work, I’m not under the impression they walk. Many live far from work precisely because energy has been expensive, and convenient locations demand a premium on the housing market.
Imported walmart sweaters are no less carbon intensive than cashmere. The rich may buy Ipods, stereos, cell phones etc. Are those particularly carbon intensive? Is cable tv carbon intensive? Compared to paying a gas bill? I know rich people who own horses– is that carbon intensive? My house isn’t leaky because it already has good windows. The same can’t be said for some poorer people I know renting old buildings rural parts of the midwest.
So, given the way we actualy define “progressive” or “regressive”, I’m not sure this particular sort of consumption tax would be progressive?
Does anyone have any analysis? Or just assurances that what amounts to a consumption tax with a return policy must be progressive? If it’s progressive, how progressive is it compared to the current federal income tax?
Raphael (Comment#3814) July 1st, 2008 at 2:26 pm
Boris,
While I agree general welfare is the most likely catagory, I’m not certain the tax is for the general welfare. While I can see how global warming could be considered a threat people living in coastal regions, what about the rest? General means general, not a select group of states.
Lucia,
I hate the way political rhetoric has been redefining the meaning of regressive and progressive taxes. Most of the times I hear the terms, I roll my eyes and ignore the comment (to prevent rants about socialism). The terms have nothing to do with a percentage of income unless it is income being taxed. :-/
There isn’t much stuck in my head as far as hard information carbon by income.
If I recall correctly, its something like:
Estimated Carbon emissions from energy usage by income:
0-80% median income: 35%.
80-120% median income produce: 19%.
>120% median income produce: 45%.
I’m not sure where that tidbit came from as no referenece immediately comes to mind when I recall the information. But, I am sure I could find it again if it’s extremely important.
lucia (Comment#3815) July 1st, 2008 at 2:55 pm
Rafael:
Here’s a link to definitions: http://www.google.com/search?h.....8;ct=title
The top entry is:
A tax structure where people who earn more are charged a higher percentage of their income (eg, the federal income tax).
They all capture the idea that those with higher incomes pay a higher percentage of their income. That’s the way I’ve always understood the term.
lucia (Comment#3816) July 1st, 2008 at 2:58 pm
Oh– on the statitics, those numbers add up to 100%. But what fraction of a low income persons income is spent on energy? It looks like the lower 1/3 of median incomes use more carbon per capita than the middle 1/3. It looks like the poorest group would be walloped on this carbon tax.
Raphael (Comment#3818) July 1st, 2008 at 3:06 pm
Lucia,
Long ago, when I stored the definitions in my memory, a progressive tax was a tax in which the tax rate increased as the value of the item taxed increased. While a regressive tax was a tax in which the tax rate decreased as the value of the item taxed increased. When we talk about income tax, the number one talk about tax in America, everything works out fine, as income is what is the item being taxed. Too much talk about income tax has likely mutated the definitions. *shrugs* I’ll still roll my eyes and ignore the comment.
Here is a back of the envelope look at a carbon tax with revenue redistribution.
PS: The percentages should have been a percentage of the total carbon emissions. I need to find the reference that had those numbers. Give me a few minutes.
Darwin (Comment#3819) July 1st, 2008 at 3:07 pm
Lucia, a rebate would be applied at a flat rate set at the average of households. Poor families, according to the Census studies, consume more as a percentage of their income than wealthier families, but they still consume less overall. As the credit is rebated at a flat amount per person per household, only if poor families used more than wealthier families would it become regressive.
They don’t, so its progressive. It operates, in short, much like flat rate taxes, which as the IMF has pointed out are progressive and, often, more progressive than income taxes, with their myriad tax arbitrage schemes.
Checkout the tables on energy costs by quintile in Alaska (an extreme state for energy usage) http://community.adn.com/sites.....efinal.pdf
Under cap and trade, with the way the allocations were developed and the auctions income going to renewable producers, the result would have been regressive. That’s why Boxer threw in a rebate at the last minute.
BTW.To make the current income tax “progressive” they had to create the Alternative Minimum Tax to deal with all the deductions. The ATM has proven to be a loser for the economy though great for tax accountants. We spend more on them than we ought, and less helping the poor as a result.
lucia (Comment#3820) July 1st, 2008 at 3:09 pm
Raphael,
I’m not an economist. But, I guess I’ve read it used both ways. A tax has a progressive structure is one defined as progressive your way. But, I also see it read as applied relative to a groups income over all.
So, a flat sales tax applied to retail sales, though flat, is often described as regressive. The reason is that poor people must spend nearly 100% of their income of food, clothing and necessities. Others might save some for investments, or spend it on real estate or services that aren’t taxed.
lucia (Comment#3821) July 1st, 2008 at 3:20 pm
Darwin–
I know the general idea. Theory goes like this:
Poor Guy: Pays $30 in tax, gets back $40. He’s gained $10.
Medium guy: Pays $40 in tax, gets back $40. He’s gained $0.
Rich guy: Pays $50 in tax, gets back $40. He’s paid $0.
Of course… this assume the poor really do pay less of the tax in the first place. Given the effect of import/ export etc. I’d still like the analysis taking into account how costs pass along to the consumer in th end. My older sister buys $200 cashmere sweaters, I buy $20 cotton or acrylic. Or maybe wool, but not cashmere.
I’m not sure I see that the tax loaded on the two things is going to result in her paying more of the CO2 tax on individual purchases than I do. After all, it’s not just a matter of her buying more stuff. She buys nicer quality stuff.
Raphael (Comment#3822) July 1st, 2008 at 4:04 pm
Lucia,
I’m not an economist either. But I did sleep at a holiday inn express last night. (I also took a great many economic courses which I never use and likely misremember. ) Though I’ve often wonderd why people use the terms that way, it doesn’t matter how the terms are used. I understand the intent of the usage, even though I disagree with the usage.
I found the reference for those first numbers. The numbers came from table 4. I’m not sure how any of that is useful to the current discussion.
Dan Hughes (Comment#3823) July 1st, 2008 at 4:42 pm
comment 3820 lucia July 1st, 2008 at 3:09 pm
The reason is that poor people must spend nearly 100% of their income of food, clothing and necessities.
Necessities = energy. Plus, the others listed and everything else will include carbon tax.
KuhnKat (Comment#3825) July 1st, 2008 at 6:07 pm
I am against ANY federal tax.
A tax as presented is supposed to accomplish something.
A tax implemented by the federal gubmint will eventually include regulations favoring their favorites. (you pick your favorite evil corporation who corrupts virginal legislators with their money and influence) CFC’s affected only a small, uninfluential group compared to Carbon. Don’t expect comparable results.
A tax implemented by the federal gubmint will have its revenues used for its intended purpose for a very short time after which the revenues will be wasted on (you pick your favorite charity/special interest group that lobbies for more CASH corrupting virginal legislators) I offer Social Security as the best example. Implemented with the best of intentions, it is now a bleeding hole of red ink from the IOU’s with which successive Congresses and Presidents have stuffed it.
Basically it will be perverted to the point it will have little of its intended effect other than to give companies an excuse to raise prices and gubmint to waste more of our money.
Just say NO to federal gubmint regulation and taxes!!! The unintended consequences ALWAYS outstrip the Good Intentions!!
BDAABAT (Comment#3827) July 1st, 2008 at 9:37 pm
Boris: what general welfare is (positively) affected when people can do things less expensively (without the CO2 tax) vs. more expensively (with a CO2 tax)?
In effect, poor people should freeze in the winter and swelter in the summer because they can’t afford to pay for heating and or cooling?
I’d argue that the MUCH greater harm to the general welfare comes when additional tax burdens are placed on people.
Bruce
TokyoTom (Comment#3831) July 2nd, 2008 at 6:42 am
Lucia, thanks for the link.
I’ve just put up another post that pulls together a number of significant recent references on rebated carbon taxes, that may serve as a useful jumping off point for you and others in trying to figure out what Hansen might be talking about.
As Darwin notes, CarbonTax.org seems to be the most useful single site on carbon taxes, starting with their intro box on the right hand side.
I note that Dot Earth had an earlier thread on Hansen’s plan, which was based on various proposals by Peter Barnes.
The LA Times, and NY Times both ran editorials on carbox taxes last year.
And here’s an interesting discussion by George Lakoff, on how difference between Warner-Lieberman and a “Cap and Dividend” approach (of which “tax and Dividend” is a derivative).
TokyoTom (Comment#3832) July 2nd, 2008 at 6:58 am
Lucia, thanks for the link.
I have gathered in a new blog post (http://preview.tinyurl.com/46bbx2
) a few handy references on rebated carbon taxes of the type Hansen is presumably discussing.
I share KuhnKat’s approach, but if our choice is between cap and trade (Warner-Lieberman mega pork) or carbon taxes, I’d take the taxes hands down. They are much more transparent and, IF coupled with a full rebate, both fair and efficient.
(I lost an earlier post with additional links. Oh, well.)
Boris (Comment#3833) July 2nd, 2008 at 7:28 am
Bruce and Dan,
In this plan a 100% dividend is returned to Americans, so poor people actually gain under this plan since they use less energy than rich people. If they decide to conserve energy, they gain even more.
lucia (Comment#3845) July 2nd, 2008 at 11:52 am
TokyoTom’s comment was eaten by the spam filter. He sent a few links that might interest readers. Each describes the tax plan in more details.
http://www.carbontax.org/bloga.....arbon-tax/
http://dotearth.blogs.nytimes......-citizens/
http://www.carbontax.org/bloga.....june-2008/
http://www.nytimes.com/2007/11.....dburn.html
http://www.latimes.com/news/op.....n-leftrail
http://www.carbontax.org/issue.....and-trade/
http://www.carbontax.org/bloga.....4-issue-3/
http://www.carbontax.org/winning-arguments/
http://www.rockridgeinstitute......ive-policy (Lakoff)
http://www.rachel.org/lib/cap_.....071213.htm (Peter Barnes)
BDAABAT (Comment#3847) July 2nd, 2008 at 1:43 pm
To all: Any working examples of 100% tax dividend returned??? Although not my area of expertise and I’d appreciate others insight, it seems really unlikely that poor people will ever get anything close to “benefit” from such a tax plan. Poor people use energy. Poor people buy things that are products or services that are derived from energy. How is a tax on energy going to “help” them???
Also, what are the costs for setting up a carbon tax system… someone will have to count the amount of CO2 derived fuel that each person uses. Someone will have to make sure that people are filling out their paperwork appropriately. Someone will have to ENFORCE the tax. All of which requires, well, energy! How can there possibly be a 100% return?
Bruce
Darwin (Comment#3851) July 2nd, 2008 at 4:04 pm
Bruce, You don’t count what people emit, you count the carbon content of the fuel or material going into the production process. It’s a content in, not an emissions out, which is cheaper to count and enforce. The exception would come from the release of emissions of methane in cement and coal production. Those will reguire monitors, but you aren’t talking about hundreds of thousands of places. As with any tax regime, there is bookkeeping, but it is lower than with a cap and trade and should require less policing.
The question is where to set the rebate at to hold the poor harmless. Under any plan that seeks to curb or limit carbon emissions, there will be a cost and the question is what is the most equitable and efficient way to do so.
A cap and trade system without a rebate hands the poor the cost in higher prices — the budget office has said cap and trade amounts to a tax. You would have to auction the credits and rebate them to hold the poor harmless.
If you do nothing, what is the plan to lower emissions and encourage conservation?
BDAABAT (Comment#3856) July 2nd, 2008 at 7:56 pm
No matter what, prices for everything WILL go up. Why? Producing stuff costs energy. Under this tax plan, the price for energy will go up.
No matter what, there will be costs for administering the program.
Someone pays those costs. All of those costs will be passed along to consumers. Poor people will pay as will rich people.
So…. what’s the point? If one wants to attempt to solve world problems using taxes, then lets start with the really important problems first, shall we? When you get down to it, the effect of human emissions of CO2 on climate is pretty well down the list of priorities… at least viewed from the perspective of harm caused, lives impacted, and overall deaths.
If the goal is to reduce human CO2 emissions, this type of tax isn’t gonna work (see the Kyoto experience). Why? A US based tax will ultimately fail to reduce emissions because there’s no way to enforce it globally. What it WILL do is increase the cost of doing business in the US (and whatever countries go along with this silly plan), it WILL push energy intensive production off-shore, further eroding the US economy and the economies of those who go along with these types of plans. It WILL help those countries that don’t implement these taxes, and you can bet that a whole lot of countries will not go along with this plan.
So, if there are other countries that will continue to develop, continue to emit CO2, will continue to use lots of energy, the result is simply a shift in who it is that’s producing the CO2. Which really turns this into an exercise of economic redistribution.
So, what really is the point? if a tax won’t actually be able to achieve the stated goals, if it won’t be able to reduce temperatures in a meaningful way, if it will negatively impact the economies of countries that implement it, if it de-prioritizes more meaningful programs, what’s the point?
If the point is the feeling that “We have to do SOMETHING!!!”, I’d ask the question: why?
The best evidence to date seems to imply that the addition of human produced CO2 has some effect on temps. What that effect is, no one really knows. Based on the evidence to date, it seems like it’s less than the IPCC projections, it’s WAY less than the Al Gore projections. And the reality is that despite all the rhetoric, despite all the hand wringing, whatever the negative effects of human emissions of CO2 might be, they are still NOTHING compared to the real problems that face the world today.
Bruce
Boris (Comment#3863) July 3rd, 2008 at 8:03 am
Poor people will pay as will rich people.
You seem to be missing the main point of the 100% dividend. Yes, prices will go up, but poor people buy less and use less energy, so they will have MORE money. If they conserve energy they will have EVEN MORE money.
It is more difficult to enforce the plan globally, but you must remember that the world wants to act on global warming and that we can use the threat of tarrifs to encourage other countries to implement a tax.
Finally, your claim that the IPCC is wrong is not backed up by any fact or analysis I have seen.
TomVonk (Comment#3864) July 3rd, 2008 at 8:24 am
I wonder if all posters here are North American .
For there indeed IS a scientific approach to these issues that Dan Hughes mentioned - look at experimental data .
They are all out there .
Europe has 10 years advance on NA regarding the CO2 tax and we now know what it does .
Europe has dozens of years of advance on AN regarding taxes on fuel and we now know what it does .
Europe has 6 years davance on NA regarding biofuels and we now know what it does .
You only need to look at the “lab” results .
The CO2 tax (despite the name “the certificate trading” , it is indeed a tax) had for consequence an increase of power prices .
The biggest emitters being the power companies , they immediately incorporated the tax in the power price and often actually added a bit .
They did it for different reasons - the German who have much of cheap coal increased sharply , the French who are 80 % nuclear amusingly increased as sharply because they could afford to follow the German and stay competitive while making much more profit .
Followed the refiners with another method .
As the refining margins are traditionnaly poor in Europe , some refiners reduced runs and sold the “spared CO2″ … presumably to power companies
That had for result a reduction of production with a sympathetic side effect in form of increasing refining margins .
The consumer paid this whole game and many more similar environmental games .
The growth of purchasing power markedly slowed and EU , first world’s economy , stands now on the board of recession .
Ah yes , I almost forgot CO2 . Well the emissions broadly continued to increase as the economical growth and begin to slow down now because the economical growth is slowing down .
Get a severe recession , that is the surest way to reduce CO2 because the first order corellation of CO2 emissions is with economical growth .
Now to fuel taxes .
In most European countries , taxes make 50 - 70 % of the fuel price .
The NA people probably don’t even dare to say the figure aloud .
They have been introduced and then heavily increased for one open and one hidden reason .
The open reason was energy saving (back then nobody bothered about CO2) and the hidden one was the necessity to increase the state revenues (cause being unemployment , retirement and health care) because the VAT (first revenue source) began to hit its limit .
Today there is not one European country whose budget would survive without fuel taxes .
Raphael got it brilliantly right even if nobody followed up - indeed the gasoline elasticity is extremely low .
It is higher for diesel but as diesel consumption mainly comes from professional activities , here the taxes transit over to the customer .
What happened ?
Well , nothing because gasoline is inelastic and diesel grows like the economy does .
So Europe consumes more fuel today than yesterday and will continue .
There did happen things with the product mix diesel/gasoline but that is a complicated story that is little relevant to the issue here .
Here again a severe recession would be the most efficient way crash the diesel consumption and probable even the specific gasolin consumption .
Last to biofuels or other “renewables” .
Here the politics was unambiguously CO2 driven .
Let’s substitute to emitting fuels fuels with net 0 emission aka biofuels .
But as people wouldn’t do it spontaneously (it is necessary to change cars , modify distribution networks , logistics , not mentionning that it would generally increase the prices) , they must be forced .
So most countries introduced a tax/penalty system (called “general tax on poluting activities”) that forced refiners and marketers to blend a certain amount of bio in the classical fuels . If they do it they pay nothing , if they don’t do it they pay a sever penalty (I won’t go in detail of the mechanism but that’s the idea) .
As the professionals , subject to the tax had not a clue about the prices , the availability and the timing they could only calculate the potential tax and … passed it over to the customer .
Of course then they did all that was necessary to comply with the obligation and in most cases avoided the tax .
The result was that the fuel marketing companies never did so much money in history as since this tax system was introduced .
However the idea of “forcing” a fuel substitution by arbitrary half a…d tax measures was so moronic that now even the generally uneducated public begins to realize that they have been taken for idiots by politically motivated environmentalist measures .
Oil at 140 $ indeed also helped to speed up the waking up .
So what is the lesson ?
Europe (I should rather say some European political morons) declared that it was its “historical role” to lead the world and especially to teach the truth to the ignorant americans , who had yet to see the light of the principle of precaution and the joys of carbon taxing .
As the public only understood the buzzwords (fight against poverty , decrease our environmental imprint , duties to the Third world , save the planet etc) it thought that it was a free lunch .
Of course it wasn’t .
The price paid has been a general and gradual decrease of the standard of living and a general and gradual decrease of economical growth .
In polls in all EU countries the issue No1 has now become the “problem of decrease of standard of living” and people begin to get increasingly nervous with appearing violence trends .
In the late nineties and especially with Bush (refusing Kyoto f.ex) , US have been my hope because I believed that the historical american pragmatismus would prevent them from comitting economical suicide whereas Europe has been known for a thousand of years to periodically exhibit exceptionnal suicidary capacities .
Perhaps the NA would stop us before it was too late .
Now reading what I read in NA media and on blogs like this one , I realize that sadly Europe might have indeed have taught the light to the ignorant americans .
But then we’ll both crash down together well before any hypothetical 1°C temperature increase in 100 years has time to make disappear some forgotten pacific island that nobody cares of .
It makes me fear where my children might flee once the s..t begins to hit the fan in the so called “developped countries” .
Perhaps China or Brazil .
Dan Hughes (Comment#3870) July 3rd, 2008 at 1:14 pm
Thanks for the info Tom.
I’m far far from being a Certified Economist, even farther than being a Certified Climatologist, and I haven’t at all started doing my homework on this subject, but let me say the following.
100% dividend isn’t going to happen. There will be administrative costs, and if the system set in place to accomplish that follows all historical data for such things, it will not be the picture of efficiency, but quite the opposite. Of course the administrative costs could be taken from the general revenues.
If the taxes are collected at the source, like maybe countries that export significant amounts of carbon-based raw materials, how will the distributions of the consumption be determine so as to ensure that everyone gets 100% return on their individual costs. To say that the poor can actually make money requires that the actual amounts paid for carbon are determined on an individual basis. That too is not going to happen. Are methods to ensure that individual costs paid are in fact returned? How do they work? It is easy to see the situation for which a lower-income family spends much larger than the average of its income for carbon-based consumption.
If it’s a 100% dividend method, where does the money for replacing a very significant fraction ( 100% in some cases ) of enormous (and I do mean enormous) infrastructures come from?
It is my opinion that many people, even those that should know, have yet to even begin to grasp the time scales that are associated with displacement of even small segments of infrastructures. Consider the evolution from water power via waterwheels, to conception of the steam engine, to a steam engine that was acceptable to consumers, to electric motors, to distributed electric motors. And of course there is the internal combustion engine branch too also consider. It was not until the power source ( a motor ) got distributed down to where it was needed on individual machines that significant gains in efficiency, productivity, and energy conservation were achieved. And, by the way, an important part of the efficiency gains came only due to large central-generating electricity systems for which power production per unit volume continuously increased over the same time period. As these high-power-density sources are attempted to be replaced by diluted sources having significantly lower density, efficiency will decrease. Or consider the case of wood being displaced by coal and coal (almost) being displaced by nuclear. Both these examples involve time scales of 100s of years, as shown by historical data.
And many people, even those that should know, haven’t yet realized the costs involved. It’s been said that nobody knows what a trillion of anything is. I’m beginning to wonder if most people aren’t even aware of what a (non-UK) billion is.
Finally, taxing the source is based on a false analogy. In all previous cases of the commons being harmed, the harm was at the source, plus those downstream of the source of the harm did not participate in the ‘destruction of the commons’. In the case of carbon and energy, those downstream of the source are in fact the greatest source of the harm, by far. I’m suspecting that movement leaders have decided that yet another attack on Big Whatever will be very much easier to pull off rather than telling those who will in fact bear all the costs that they will be bearing all the costs.
In the cases that I can think of for which those downstream of the primary source did in fact contribute to the ‘destruction of the commons’ the source was more or less outlawed and simply banned from use. Hey, there’s an idea, let’s ban consumption of carbon And at least one of those has proven by historical data to be misguided. In another case, all local distributed sources have been modified so as to effectively reduce the harm.
Have at me.
Raphael (Comment#3884) July 3rd, 2008 at 10:08 pm
TomVonk,
Europe? Please! There should be a study to determine how many Americans can find it on a map. On the bright side, not all Americans are as oblivious. There is an MIT report commissioned by the Pew Center on Global Climate Change which takes a look at the European Laboratory.
Get a severe recession , that is the surest way to reduce CO2 because the first order corellation of CO2 emissions is with economical growth .
While there is some wiggle room in the “Severe” of your recession, the corellation isn’t as strong as you seem to believe. Back in 2004, the Oxford Institute for Energy Studies did a study comparing per capita emissions with per capita GDP. While this is pre-EU carbon cap, it does show that, for developed countries, increase in GDP is not dependant on increase in carbon dioxide.
TomVonk (Comment#3891) July 4th, 2008 at 3:47 am
Raphael
The study GDP/emissions you linked is not better than (or as bad as) similar studies .
The problem here is not so much the figures even if “correct” emission figures are very hard to come by and generally contain a big part of estimations , but the interpretation of the figures .
A simple model explains things better .
Coupling 1 Energy emissions
Coupling 2 Transport emissions
Coupling 3 Energy and transport GDP
The strongest coupling is 2 .
99 % of what you and me consume from pills through refrigerators has been brought to us by a truck .
The trucks emit proportionaly to kg.km transported . Perfect correlation .
The personnal cars also emit proportionaly to kg.km transported but here is a saturation effect and rather a kind of inverse correlation .
As the GDP increases in developing countries , people buy cars so the per capitas emission increase with the GDP .
The important word here being “developing” - the study doesn’t cover countries where this correlation is very strong (China , India etc) . US and most of western europe are saturated so the personal car coupling is weak there .
Coupling 2 is very strong globally with important geographical dispersion .
France with 80 % nuclear power generation and the rest hydraulic is almost completely decoupled .
China with its 1.5 billions of tons of coal production that has been increasing around 7- 10 % (equivalent rates as the GDP) is extremely strongly coupled .
The dispersion of the coupling 3 is great too .
One extreme are saturated , rich , little industrialised countries (f.ex Denmark) where the coupling is very weak .
At this stage it is important to mention the trap of looking only at per capita figures .
It has the merit to eliminate the population variations but a redhibitory flaw that it prevents to see what matters and what doesn’t .
Putting on the same chart Denmark or Belarus with their couple of million people and China (or India) with their 1.4 billions is obviously misleading when trying to estimate GLOBAL trends .
For all practical purposes what matters here are places with :
a) strong and developing industry
b) large and/or fast developing populations
c) starting GDP per capita figures (lower ones increase and higher ones saturate) .
I have amused myself once to calculate what the world will be like once China achieves a per capita GDP equal to the one of Hungary today .
Why Hungary ?
Because their development after the fall of communism was well managed and because their absolute level today is satisfactory to the population without being “too rich” .
Well we’ll add then ONE MORE USA economy to the planet !
If China happened to ambition a bit better than that and come to the level of Portugal , we’ll add TWO USA to the planet .
Useless to say that this will happen with all 3 couplings very strong .
So indeed the fastest and surest way to reduce the overall emissions is to crash the world’s economy or the world’s population (but the latter is harder to do) .
Is the reciprocal true too ?
Well looking at Europe , it appears that increasing energy and transportation prices via CO2 taxes and similar “environmental measures” with no added value leads indeed to the reduction of growth rates and very certainly to the reduction of the purchasing power of the population .
At least for Europe , it is only a matter of time untill the public realizes that it is becoming poorer because of the amplification and acceleration of the “environmental policies” and then the backlash could be terrible .
We see signs of it already today - the fishers in France , Italy and Spain are blocking ports and burning buldings because they don’t accept anymore getting strangled by biodiversity “laws” .
The truckers in many countries are blocking refineries and crashing the trade because they don’t accept taxes on fuel anymore and they promiss that they’ll radicalize if they are not heard .
The average citizen looks at all that rather with sympathy because he is being hit by price increases in the same way and begins to blame politicians (and foreigners) for the reduction of his purchasing power .
As for the US americans , I would not like to be a voter there .
There is no choice - whether voting for McCain (who lives in another century) or for Obama (who is a barometric void) , both promiss CO2 taxes and regulations .
There’s only Al Gory missing but Obama is surely able to catch up with that oversight .
Raphael (Comment#3899) July 4th, 2008 at 8:12 am
TomVonk,
One thing I can safely say is that your posts make me think.
First, there is nothing wrong with using per capita in the study. When comparing GDP with CO2 emissions, the global trends you say matter, don’t. Look at it this way, if the study was about global emissions and global GDP, showing these numbers per capita would not change the ratio of the numbers, only the magnitude. Using per capita allows us to compare GDP and emissions growth in different countries on a common scale.
Second, I will concede that there are sectors included in the GDP which are tightly bound to carbon emissions, but the comparison shows that the change in GDP of a developed nation is not dependant on them. Or to phrase it another way, a severe recession in developed countries will not guarantee a reduction in emissions from those countries.
Third, I will concede that a developing nation’s GDP is closely related with their carbon emissions. But from my perspective, this leads back to the definition of success for the tax.
steven mosher (Comment#3906) July 4th, 2008 at 7:33 pm
now we got astronomers ( hansen) and Linguists ( lakoff) talking about taxes. I engineers can talk about climate science
lucia (Comment#3908) July 4th, 2008 at 7:59 pm
Steven mosher– Well, obviously we are going to discuss climate science. Anyway, what are blogs for?
TokyoTom (Comment#3955) July 6th, 2008 at 8:14 pm
Steven, Hansen’s resume is here: http://www.columbia.edu/~jeh1/cv_hansen_200702.pdf. Are you suggesting that Hansen’s studies and training in solar systems and planetary systems leaves him incompetent not merely to discuss climate policy, but even to research, study and write on the consequences of continuing GHG emissions?
I know that it is controversial for some to think that scientists should ever have an opinion, but I hadn’t heard that Hansen lacks relevant scientific knowledge and expertise on which to ground any concern that he may express.
As for Lakoff, certainly he is “spinning” a particular policy view. How he differs from the sophisticated PR campaigns run by various parties at interest and by politicians is that Lakoff is doing it openly and explictily, for purposes of public debate, rather than trying to manipulate opinion in a clandestine manner.
I linked to Lakoff because he actually has an interesting discussion of the principled differences between cap and trade and a rebated, auctioned cap. Did you not find his discussion useful or interesting?
lucia (Comment#3963) July 7th, 2008 at 6:42 am
TokyoTom–
Steven is indulging is irony. He does that so frequently, those at climate blogs pretty much suspect it the moment they see his name at the top of a comment.
If you hang around climate blogs enough, you’ll find it’s fairly common to read various bloggers and people in comments at blogs suggesting engineers, economists, statisticians and physicists can’t comment on climate sciences and that only climate scientists may do so.
So, Steve’s irony quip is to note that one of the major climate scientist is an astronomer by training (suggesting that somehow people without formal training in climate scientist just might be able to gain some understanding.) The other irony is that climate blogs are now suggesting we learn economics from linguists. The final irony is that many of those working in climate science have degrees outside climate science. The discipline draws heavily from those who were trained in other fields.
In fact, Steve is not saying climate scientists can’t discuss politics.
It just reads that way.
He thinks the absolute opposite. It’s entirely permissible for them to discuss economics. Just as it’s permissible for engineers, economists, statisticians, physicists and even linguists to discuss some results of climate science!
Your links are interesting, and if I know steven, he will read them. Given steves educational background, I can assure you he loves the idea of a linguist writing about economics!
TokyoTom (Comment#3964) July 7th, 2008 at 7:06 am
Lucia, thanks for the exegesis on Steve`s irony. That kind of thing is always the toughest for newbies to judge.
I admire anyone who is still road-testing his view of reality. That`s hard work, as we aren`t particularly well-evolved for that, but instead are hobbled by perceptive filters and cognitive predilections.
Regards,
Tom
TokyoTom (Comment#3967) July 7th, 2008 at 7:40 am
Dan, was #3870 addressed to me, or TomVonk? If to me, then let me respond as follows:
100% dividend isn’t going to happen. There will be administrative costs.
No one particularly trusts politicians not to use new revenues for more social engineering/pork. But conceptually it`s possible to rebate the whole tax, net of administrative costs - which costs would be far lest than the costs of a cap and trade system
If the taxes are collected at the source, like maybe countries that export significant amounts of carbon-based raw materials, how will the distributions of the consumption be determine so as to ensure that everyone gets 100% return on their individual costs. … It is easy to see the situation for which a lower-income family spends much larger than the average of its income for carbon-based consumption.
This is really not so tricky - the wealthy consume far much more energy per person than do the poor, so if revenues are captured across the economy (whether upstream at the point of first sale or midstream or downstream) and the rebated per capita, the result will be progressive, that is, a per capita transfer from the wealthy to the poor and middle class. Thus a rebate would elicit long-term support from voters.
If it’s a 100% dividend method, where does the money for replacing a very significant fraction ( 100% in some cases ) of enormous (and I do mean enormous) infrastructures come from?
The tax would shift demand, increasing it in some directions and decreasing it in others. Investors - the utilities, industry, road and infrastructure builders, lenders and equity and debt capital markets would continue to invest as they do for their own reasons - chiefly because they think they can make money providing something that they think people will pay for.
It is my opinion that many people, even those that should know, have yet to even begin to grasp the time scales that are associated …. And many people, even those that should know, haven’t yet realized the costs involved. It’s been said that nobody knows what a trillion of anything is.
True, but many people DO understand these time scales, which is one of the reasons why many utilities and oil and gas firms are in favor of carbon taxes, because they see the need to start changing the economics now, before a whole new fleet of coal plants that don`t include CCS are brought online.
Finally, taxing the source is based on a false analogy. In all previous cases of the commons being harmed, the harm was at the source, plus those downstream of the source of the harm did not participate in the ‘destruction of the commons’. In the case of carbon and energy, those downstream of the source are in fact the greatest source of the harm, by far.
Sorry, I disagree. The classic cases of pollution all involve upstream sources and harm felt downstream. In the case of industrial pollution, all consumers who were getting cheap products that did not reflect the costs of pollution contributed to the destruction of the commons. This is still going on today with respect to air pollution, ground and water pollution, overfishing, destruction of tropical forests, etc., even when these activities take place abroad. We import cheap goods, while local people or the commons generally feel the harm.
I’m suspecting that movement leaders have decided that yet another attack on Big Whatever will be very much easier to pull off rather than telling those who will in fact bear all the costs that they will be bearing all the costs.
I understand your suspicion, but I think it`s more like this: the enviros want to see action and don`t particularly want to see major polluters given free rights to pollute, so that consumers get all of the costs, but fossil fuel interests like making money while shifting risks to society. Enviros may be reluctantly con
Boris (Comment#3756) June 30th, 2008 at 12:31 pm
I doubt wood would be taxed because it is a renewable resource and can be made carbon neutral.
One point Hansen makes is that the tax can be used to lead the world, so we might need to consider tariffs on countries that do not have such a tax.