A National Carbon Tax: Another Option For Carbon Pricing

Dec 22: In early December, the Environmental and Energy Study Institute (EESI) held a briefing on the issue of a "carbon tax" as opposed to a "cap and trade" system to control carbon emissions. The controversial topic has been debated for years but is still unsettled in the political discussions of methods to address climate change. The immediacy and simplicity of the carbon tax system is still attracting attention. Speakers at the EESI briefing included: Representative John Larson (D-CT) and sponsor of America's Energy Security Trust Fund Act (H.R.3416 of 2007); James Hansen, PhD, Director of NASA's Goddard Institute of Space Studies; Gilbert Metcalf, PhD, Professor of Economics, Tufts University; Robert Shapiro, PhD, Co-Founder and Chairman, Sonecon; former U.S. Under Secretary of Commerce for Economic Affairs; James Hoggan, British Columbia Public Affairs Advisor; Chair, David Suzuki Foundation; and Brent Blackwelder, PhD, President, Friends of the Earth (Moderator).

In his presentation NASA's James Hansen summarized the carbon tax benefits saying, "A rising price on carbon emissions is the essential underlying support needed to make all other climate policies work. . . A rising carbon price is the most effective way to encourage compliance with codes designed to increase energy efficiency. A rising carbon price is needed to decarbonize the economy and move the nation toward the era beyond fossil fuels. . . The public will support the tax if it is returned to them, equal shares on a per capita basis (half shares for children up to a maximum of two child-shares per family), deposited monthly in bank accounts. No bureaucracy is needed. . . The tax will spur development of renewable energies and other no-carbon or low-carbon energies. . . A carbon tax is honest, clear and effective. . . The carbon tax has social benefits. It is progressive. It is useful to those most in need in hard times, providing them an opportunity for larger dividend than tax. It will encourage illegal immigrants to become legal, thus to obtain the dividend, and it will discourage illegal immigration because everybody pays the tax, but only legal citizens collect the dividend. . ."

Last February, the Congressional Budget Office (CBO) released a report entitled, Policy Options for Reducing CO2 Emissions [See WIMS 2/13/08], which said that carbon taxes are the “most efficient” means of reducing global warming pollution. CBO Director Peter Orszag, who oversaw the preparation of the report has now been nominated by President-elect Obama to be the Director of the Office of Management and Budget. Obama is on record as an advocate for a federal cap and trade system with "strong annual targets that set us on a course to reduce emission to their 1990 levels by 2020 and reduce them an additional 80% by 2050." [See WIMS 11/18/08]. Perhaps, Orszag presence in the Obama Administration and the strong position of NASA's James Hansen, will raise the issue for Presidential reconsideration. Hansen has already prepared an 8-page draft letter to President-elect Obama that discusses the urgency of addressing the climate change issue and the reasons a carbon tax is the best approach (See contact information below).

Following the CBO report release, Friends of the Earth (FOE) commented saying, "This underscores the fact that a carbon tax is a serious policy option that should be considered alongside other ways of fighting global warming. A majority of Californians already support a corporate carbon tax, and with leadership from top elected officials, the majority of Americans might ultimately feel the same way -- especially if revenue from such a tax were returned directly to middle class voters through tax rebates or other mechanisms."

Even one of the most cynical climate change opponents, Senator James Inhofe (R-OK), Ranking Member of the Environment & Public Works Committee, commented on the report saying it shows that carbon taxes are the “most efficient” way to regulate CO2 emissions and “could offer significant advantages” over the cap-and-trade approach [See WIMS 2/22/08]. . And, New York City Mayor Michael Bloomberg, at the 2007 Mayors Climate Protection Summit in Seattle [See WIMS 11/06/07], and at the February, 2008 United Nations General Assembly thematic debate on Climate Change said, "Cap-and-trade is an easier political sell because the costs are hidden -- but they're still there. . . A cap-and-trade system will only work if all the credits are distributed from the start -- and all industries are covered. But this begs the question: If all industries are going to be affected, and the worst polluters are going to pay more, why not simplify matters for companies by charging a direct pollution fee? It's like making one right turn instead of three left turns. You end up going in the same direction, but without going around in a circle first."

Access the EESI briefing website for links to available presentations and a video (click here). Access the Hansen draft letter to Obama (click here). Access Hansen's Columbia University website (click here). Access an article on the carbon tax issue and many links from the Worldwatch Institute (click here). Access links to previous EESI briefings on the carbon tax issue (click here). Access various WIMS-eNewsUSA blog posts on the carbon tax issue (click here). [*Climate, *Energy]