Don't Waste Your Time Hoping For A Carbon Tax

Over the weekend James Hansen, a prominent global warming activist, said he hopes that the cap and trade legislation fails. His reason: It “introduces speculation and makes millionaires on Wall Street,” and “we need a much more effective approach.”

Well that sent Joe Romm, another prominent environmental advocate, in a serious tizzy. He unload with a bajillion word screed on Grist, that basically says, “Don’t be stupid, cap and trade is the best option we’ve got for ourselves. And besides, have you ever looked at how complicated the tax code is?”

Grist: Let’s be very clear here, since there are obviously a great many smart people who keep pushing a carbon tax instead of cap-and-trade, who are wasting a lot of time tilting at windmills, so to speak, when they should be building them instead (with the help of Waxman-Markey):

  1. A carbon tax, particularly one capable of deep emissions reductions quickly, is a political dead end. Neither the Obama administration nor senior members of Congress support a carbon tax. Quite the reverse. Obama (and Clinton and Biden) campaigned on a cap-and-trade system. That is the only game in town. Now you can choose to play checkers when everyone else is playing chess, but don’t be surprised if everyone else starts to criticise or ignore you.
  2. A carbon tax that could pass Congress would not be simple. Advocates of a tax argue that simplicity is one of its biggest benefits. Again, those advocates seem bizarrely unfamiliar with the tax code in spite of the fact that they pay taxes every year. And those advocates seem unfamiliar with what happened the last time Congress tried an energy tax. Does anyone think a carbon tax could be enacted into law that did not have various exemptions or that did not allow companies to pay part of that tax by purchasing offsets? Get real, people. Again, we ain’t playing checkers here. The Waxman-Markey cap-and-trade bill isn’t complicated because its authors want a complicated system. It is complicated because this is a complicated issue and various powerful interests get to weigh in and influence the outcome to protect their interests. The same would be true of a carbon tax bill.
  3. A carbon tax is woefully inadequate and incomplete as a climate strategy. Why? Well, for one, it doesn’t have mandatory targets and timetables. Thus it doesn’t guarantee specific emissions results and thus doesn’t guarantee specific climate benefits. Perhaps more important, it doesn’t allow us to join the other nations of the world in setting science-based targets and timetables. Also, a tax lacks all of the key complementary measures — many of which are in Waxman-Markey — that are essential to any rational climate policy, but which inherently complicate any comprehensive energy and climate bill. Also, the notion that you could return all the money of a tax back to the public is rather naïve at best and counterproductive at worst.

 

Via Environmental Capital

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