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Carl Pope: Winning The Carbon Tax Debate

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"Carl Pope: Winning The Carbon Tax Debate"

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By Carl Pope, via  Take Part

Serious—and less serious, but surprising—conservatives and Republicans are beginning to suggest that a tax on carbon might be on the table next year as part of comprehensive tax reform. Carbon taxes fit conservative tax theory: They hit consumption, not savings or investments; are market-perfecting, instead of distorting; and are easy to collect.

So it might be a real chance. That makes this a learning moment for the climate movement. Can we remember that carbon taxes are a tool, not a panacea, a step towards low carbon economics and not its essence, and a part of a political strategy, not a magic elixir that substitutes for strategy?

Or, as we did with cap and trade, will we invest this modest opportunity with pixie dust-like qualities that obscure the unavoidable trade-offs and risks?

A carbon tax—even a modest one—would be progress. It would generate revenues, and if climate advocates can bring power to the negotiating table, those revenues in part might be devoted to other aspects of energy innovation, like paying for renewable power incentives.

It would send a market signal to investors—meaningful in the electricity sector, where a $20 per ton levy means a significant $0.02 advantage for renewable over coal power. But $20 per ton is a trivial $0.20 on a gallon of gasoline or diesel, certainly not enough to move investor or consumer behavior. This is one reason why you can also make a case for an additional levy on oil, higher perhaps on imports, to provide a real incentive for efficient, electric or bio-fueled vehicle purchasers.

Innovators in Action: Carl Pope on Energy from TakePart on Vimeo.

It would put in place one important piece of an eventual, global, harmonized carbon fee, as economist Jeffrey Sachs has proposed—the best idea thus far for eventually sending the bill for climate disruption and repair to those who properly owe it: fossil fuel consumers.

But like any pricing mechanism on carbon, a tax doesn’t resolve the myriad advantages which lock-in fossil fuel wastage, ranging from distribution monopolies for oil companies to lender indifference when approving mortgages—the stuff that constitutes the left-hand, already profitable side, of the McKinsey carbon abatement cost curves.

The increased cost of jet fuel as oil rose from $40 to $100 per barrel amounted to an effective tax of $150 per ton on carbon. Studies by Brighter Planet show that a typical airline, using the same planes and fuels, can cut their fuel bills and carbon emissions at least by a third through operational and routing reforms. But the long-run up in jet fuel prices produced virtually zero in the way of such changes. Fuel price is easy to exaggerate as a force for reform. Institutional inertia, sunk costs, split incentives and infrastructure lock-in are far more important in the energy sector than economists concede—or would like us to recognize.

It would also be an important symbol. A a statement that yes, the threat of climate disruption is real, that carbon is harmful and not beneficial, and that something will need to be done. It’s symbolic importance is probably the biggest barrier to having it happen—the hard-right has come out swinging at the notion of some kind of deal being cut around a carbon tax, with denialist central, the Heartland Institute, proclaiming: “Carbon dioxide is not a negative externality, it is a measure of energy use…the source of prosperity, innovation, and opportunity. The emerging consensus of scientists and economists is that CO2’s effects are either too small to be noticeable or will produce net benefits, not harms.”

But while symbolic victories score very highly in the hot-house of the policy world, they have less long-term impact on the public than we tend to think.  Few Americans, for example, could even tell you that every month they pay a tax on their telephone bill to guarantee universal access for all Americans—even though that tax is prominently listed on their phone bill.

So the biggest danger for the climate movement in a carbon tax debate is that we will let the symbolism trump the substance, and instead of bringing power to the negotiating table to insist on a tax package that moves us forwards closer to a low-carbon future, we will roll-over as we did on cap-and-trade and say “any carbon tax means our support for a tax package.”

It’s the strategy we craft and the negotiating power we wield that will make the carbon tax debate a meaningful step forward—or a serious setback—in our quest to cool our warming world.

Carl Pope is the former executive director and chairman of the Sierra Club. This piece was originally published at Take Part and was reprinted with permission.

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21 Responses to Carl Pope: Winning The Carbon Tax Debate

  1. Leif says:

    Progressives cannot allow the GOP to get the credit for a functional transition to a Green Awakening Economy. This is an effort for the well being of humanity, not for a feather in the cap of either the Democrats or the GOP!

    • Nick Bentley says:

      Actually, if conservatives end up feeling that they’ve led the charge, and that they “own” the idea, that, to my mind, would be a good thing. People who are devoted to a party tend to object to anything the other party does just because it did it. We don’t want that dynamic here. So I say: let conservatives lead, if they want.

  2. “…the best idea thus far for eventually sending the bill for climate disruption and repair to those who properly owe it: fossil fuel consumers.”

    Umm, Carl: I don’t think the average person has much of a choice about consuming fossil fuels. If people want to eat, heat their houses, drive or even bus to work they are currently stuck in a system that demands that fossil fuels drive everything. (Even bicycles are manufactured with fossil-fuel energy.)

    It’s the fossil-fuel monopolists who need their profits taxed, not the end consumers (at least in most cases).

    This is a chicken/egg proposition. We need the carbon tax so people will look to efficiencies and alternatives. But we also need to provide the alternatives, or the average person will have nowhere to turn, and no alternative but to pay outrageous profits to the monopolists for basics.

    The carbon tax will only be useful if it hits corporate profits and uses the income to build a green energy economy.

    • catman306 says:

      Why not put a tax directly on the stock dividends of fossil fuel corporations? Investing in those corporations would no longer be nearly so profitable to the stockholders who would move some of their money to green energy corporations. The fossil fuel corporations would lose the ability to buy a Congress that appears to favor them in every profitable way.

      • That’s the general idea. Force the fossil fuel companies to invest in renewable energy, either through taxation — and using those revenues to build a green economy — or some kind of trade system in which their revenues are redirected “voluntarily” in lieu of taxes. (Ultimately, they would regain the money spent as the investment in renewables paid off.)

        It’s unlikely that any of this will happen, of course, but if the idea isn’t out there, it certainly won’t catch on.

  3. Jeff Huggins says:

    Please

    Please put my head in a vice — and close the vice all the way! — if we have to endure endless years upon years of watered-down measures that we accept because they may be “politically feasible” and represent so-called “progress” even though they won’t get the job done. The job? Achieving actual reductions in GHG emissions, and fossil fuel use, according to the steep profile of reductions required to maintain a stable and favorable climate.

    People in politics apparently don’t realize that the politicizing of all this, and the resulting two-little-two-late half-hearted measures undertaken because “let’s be realistic” and “after all, it’s progress”, undercut both credibility and motivation.

    Let me repeat: they undercut both credibility and motivation.

    Too many people who think they are being politically pragmatic, and in that way “credible”, actually undercut their credibility in larger ways, and they undermine the motivation-building effort. If we genuinely need X-Y-Z reductions in the use of fossil fuel, “or else!”, and if that is indeed a correct conclusion according to the scientists, then ask me to show up to “battle” to fight for those reductions, and I will! But if we genuinely need X-Y-Z reductions and you want me to commit my activism time and energy towards achieving a change in policy that will only achieve a very small fraction of that reduction, and will require yet another huge change in policy four years from now, and in the meantime will commit us to mediocrity, forget it. Time is a factor. Nature is the ultimate judge.

    The credibility of the movement is based on what science is telling us about the real reductions in GHG emissions required to maintain a reasonably safe, sane, and stable climate. Period. The credibility of the movement is lost, or very substantially diminished, the moment it calmly settles for anything less than what’s necessary.

    (This is not intended to be critical of Carl Pope. I’m sure he understands the problem, I think. But it’s intended to raise a flag of warning regarding where the whole “modest carbon tax” idea could be headed, and where it could land us, if we don’t think carefully.)

    As I’ve said elsewhere, all the options should be on the table: a robust carbon tax; various forms of cap-and-trade, or fee-and-dividend; nationalization of the oil and coal companies; and etc. The requirement of any option is that it must result in the required reductions. (We aren’t playing games here, are we?) Among the options that we can trust to result in the necessary GHG reductions, we (the public) can choose the one that is best from all other standpoints. But that necessary requirement shouldn’t be negotiable.

    Cheers,

    Jeff

    • Brian Eister says:

      Jeff – I agree with you that bargaining, and accepting choices which inevitably have the same outcome (a world which can not sustain us) represents a failure to act as the stakes demand. However, it is important to keep in mind that our policymakers are bound (among other things) by popular consensus. To be able to pass a policy which would save humanity and give our grandchildren a future, several things must happen.
      -The real stakes must become clear to the population
      -The population must understand that the policies being considered are structured in their favor
      -The grass roots must make the width and depth of the will of those who understand tremendously clear

      I am writing now to discuss the third point. We know that as things stand, our grandchildren have no future. We know that we are leaving them a world of thirst, hunger, forced migration from coasts, and the world-wide reality of conflict which these circumstances will necessarily bring about.

      Do we, who know this, live as though we are facing an emergency of this magnitude? Do we ACT as though we are facing an emergency of this magnitude? I have not yet met one who does. Let’s not point blame at the policymakers; let’s point the blame at ourselves, as the ones they represent, for not finding a way to DEMAND this by methods worthy of the situation, and thereby creategrass-roots cover and a grass-roots MANDATE.

  4. Jeff Huggins says:

    Sorry: I meant too-little-too-late, of course.

    Jeff

  5. with the doves says:

    It gets tiresome hearing how Republicans are becoming more accepting of climate stuff like a carbon tax … and as evidence we are presented with people like moderate ex-legislators driven out by right-wingers, George Schultz (Reagan era guy), and now Arthur Laffer (another Reagan era guy).

    Fact is, today’s Republican Party rejects climate science and works for the fossil fuel industry. Real Republicans in Congress are not going to support a carbon tax.

    The excitement around bipartisanship is misplaced, to put it mildly.

    Rather than get excited about fringe Republicans showing signs of sanity, we should be urging Democratic leaders to make the case to the people and building up support that way.

  6. Huon says:

    Actually, a moderate carbon fee IS a panacea. Archimedes said ” Give me a place to stand, and a lever long enough, and I will move the world.” Give me a $10 carbon tax (with $1.50 yearly increases) and I will save the world.

    Tech will supply the levers: Renewables and nuclear will replace coal. Electric cars will replace fossil fuel models (with oil at current prices, this will happen anyway). And heat pumps will displace natural gas.

  7. Merrelyn Emery says:

    This is the most regressive form of tax imaginable. It will increase inequality in the world’s most unequal society and if you want to throw a good dash of chillie into your existing recipe for social upheaval and violence, just go ahead and try it, ME

    • Mulga Mumblebrain says:

      A carbon tax must rise at a set rate, so that business gets the ‘certainty’ it loves while insisting that the serfs come to love ‘risk’. Further the receipts must be hypothecated to renewable, not nuclear, research, development and installation, and to tax rebates entirely weighted to the poor and middle, to redistribute wealth and increase economic fairness and justice. The grotesque levels of economic inequality in the world today are the root of most of the evils we face.

  8. I think a modest carbon tax will help the situation modestly.

    Nothing wrong with that – think of it as driving one wedge worth of GHG emissions reductions.

    So at the same time as Carl gets a carbon tax going (well, good luck, I hope so), others need to be working on other strategies for many additional wedges worth of climate mitigation.

    While many governments are not ready to move, I’ve been posting about the realistic strategy, described in Nature Climate Change, to get the first 20% or so of global reductions that we need through coordinating a “grand coalition of the willing”.

    That could buy the planet enough time so that in five or ten years, when the U.S. government and others really start to mobilize in the face of overwhelming disaster… It’s not too late to make a difference.

    I think the combination has a real fighting hope – more so than any other practical strategy I’ve heard.

  9. Mike Roddy says:

    Carl, how about a carbon tax on industrial forestry? None of the Big Green organizations has dared to suggest that, even though emissions from logging are just as real as those from tailpipes and smokestacks.

    • Good point, Mike. The blanket tax exemptions for Big Timber in Oregon amount to another subsidy of carbon pollution.

      When the real value to society of intact forests is ongoing carbon sequestration – carbon sequestration that really works, today – unlike the mirage of industrial
      sequestration.

  10. Dan Miller says:

    What Carl should be fighting for is Fee and Dividend: A rising fee on CO2 paid by the fossil fuel companies where 100% of the money collected is distributed to every legal resident on a per capita basis. Most Americans would make more money with the dividend than they pay in higher product prices (so it’s the opposite of regressive), and conservatives should like it because it doesn’t increase the size of government and doesn’t pick winners or losers. It is also probably the only want to get the fee high enough (~$100/ton after 10 years) to actually make a difference. A tariff on goods coming from countries that don’t have their own fee would protect our industries and encourage all countries to implement their own fee (after all, the U.S. CO2 emissions have been dropping while worldwide emissions have increased by the most ever).

  11. Artful Dodger says:

    A carbon tax—even a modest one—would be progress. It would generate revenues,…

    Uh, no. The proposal from this tiny group of Republicans is for a revenue-neutral tax on Carbon. That is, no net revenue to the Federal Government.

    Since it’s a wealth redistribution scheme, you just know this is also designed to fail. More delay and false hope while the world slowly burns.