Welcome to the Carbon Tax Ticker
Though spring will soon turn to summer our economic crisis shows few signs of abating. Crises have a way of shifting the Overton window and carbon taxers hope that their proposals will fit into the matrix of post-pandemic policies. As of late May, it’s too early to prognosticate on that probability.
Tilting at windmills.
Utility Dive, May 2020 op-ed:
Taxing carbon emissions would increase the price discrepancy between natural gas and coal and appropriately build into the prices the cost of CO2 emissions on the economy and our society. Once this is in place, the electricity market will work diligently to reoptimize how it generates reliable power, and even one meaningful change will be a boost to natural gas markets.
But such a policy is not narrowly targeted toward natural gas, and that’s a good thing.
As the United States transitions away from coal-powered electricity generation, households and businesses across the economy need reliable alternative sources of electricity. Right now, as wind and solar energy become a larger and larger share of electricity generation, their intermittency is a challenge, and we don’t yet have large-scale, affordable storage technologies.
Because a carbon tax is technologically neutral, it would provide a strong incentive not only for greater natural gas utilization, but also for a host of innovations, including large-scale electricity storage, carbon capture and sequestration, and renewable energy generation technologies.
IER’s Take
The carbon taxers are so enamored of the industry changes they expect a tax will beget that they fail to explore with any precision the justification for the tax they assert is so strong. A carbon tax “prices the cost of CO2 emissions on the economy and our society,” claim this op-ed’s authors, Deborah A. Carroll, Kelly A. Stevens, and John W. Rowe, chairman emeritus of Exelon Corporation and advisor to the Alliance for Market Solutions. Commonplace though it may be, the claim is incredible. The alleged costs of emissions will be experienced over time and the experience will vary for each actor—some will even benefit. Because of those factors, any expression of a precise “social cost of carbon” in present-dollar terms is little more than arbitrary conjecture. The utility industry’s swallowing of this ill-conceived idea is disappointing.
That’s a horse of a different color.
Forbes, May 2020 column:
Carbon tax discussions rarely seem to mention that a better approach would be to convince Americans of the benefits of environmentally friendly choices, rather than to tax greenhouse gas emissions. The ecological damage of modern life is real, and it’s a problem for humans now and in the future, but tax isn’t an ideal solution. The best strategy is to appeal to reason and self-interest to persuade people to stop polluting, not to inure them to a little extra pain at the cash register.
So go buy native flowers and find them a suitable spot in the garden. You’ll make the native pollinator population much happier (turf grass is useless to bees and butterflies); you’ll improve the aesthetics of your neighborhood (no one honestly believes that turf grass is either interesting or beautiful); and you’ll reduce the need for a carbon tax (or at least help forestall further discussion until the next recession).
IER’s Take
I respect this argument. Rarely do we encounter climate commenters who see suasion as a viable means to the societal change they seek. There are certainly arguments for why self-interested people will hold to their habits and preferences—Adam Smith’s remark on the man of humanity in Europe losing sleep over his little finger while snoring through the ruin of a hundred million people in China comes to mind—but before clawing for the levers of state authority all political arguments should begin as moral pleas.
There is much that has been neglected in this realm by the carbon taxers. An alternative, to sketch this out a bit, is to convince companies that they can be successful by offering their customers goods and services that factor in an estimated carbon price. An example is an airline offering a higher priced ticket that funds a carbon offset. If the climate movement convinces people that factoring those costs into their economic activity is right, the companies that make the offerings will thrive. Of course, that leaves such companies vulnerable to competition by others who choose not to implement such policies. But if it’s the non-adopters who win out, that’s an indicator that the sentiment of the public in favor of self-sacrifice wasn’t very strong. I think this is the reality that carbon taxers fear: people simply aren’t on board with giving up the aspects of their lives (air conditioning, travel, etc.) that bring them comfort and satisfaction.
So the carbon taxers turn to the state.
Bonus Content — My latest at National Review
“The Paris Agreement’s Beijing Problem”
On November 4—the day after the 2020 election—the United States will officially exit the Paris climate agreement, fulfilling the vow President Trump made in 2017 and finalized last year. The Paris Agreement’s advocates, should a 46th president be inaugurated in January, will urge that the country re-join immediately. The international agreement, its advocates assert, gives humanity its best chance to limit global temperature rise to manageable levels. But their hopes rest on a dubious expectation: that China will comply with the steep emissions reductions the agreement’s goals demand.
Though the Western world drove the hydrocarbon-fueled industrialization of the 19th and 20th centuries, with the United States at the forefront, it is now China…Click here to continue reading.
