Question of the day 15

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1. 

   JMG Posted 5:33 am
   09 Jan 2009

   How about Because he knows that neither one will affect his business at all, and therefore he is free to speak honestly about which one will work better?
   Oil is not the same as coal.  Cap and trade schemes will not reduce oil consumption one iota, as long as there is any coal being burned; heck, a big enough price on carbon and we might see an uptick in the use of oil to make electricity (say Aloha everyone ...).
   
   The 5% Project
   
   
   
   Let's live on the planet as if we intend to stay.

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2. 

   sindark Posted 5:48 am
   09 Jan 2009

   CertaintyThere is a lot of uncertainty in the business community about what some of GHG regulations are upcoming.
   A lot of companies would be happier with a predictable carbon tax, locked in for several years, than continued uncertainty about the viability of different sorts of investments.
   
   a sibilant intake of breath

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3. 

   JMG Posted 5:59 am
   09 Jan 2009

   Or how about Because carbon taxes (or the equivalent, tax relief for non-carbon sources) has a far better chance of making a difference in countries like India?
   See:  http://is.gd/f350
   
   The 5% Project
   
   
   
   Let's live on the planet as if we intend to stay.

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4. 

   GreyFlcn Posted 7:45 am
   09 Jan 2009

   Hate to say itBut it's most likely because taxes don't have volatility.
   Similarly, depending on who sets the price on carbon, the price may be lobbied to be kept low.
   
   (Where as that might be harder with am auction set price)
   
   -David Ahlport

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5. 

   Gar Lipow Posted 9:18 am
   09 Jan 2009

   Why delayiers favor carbon taxesYou will note that over the past year I've shifted from strongly favoring carbon taxes to supporting either carbon taxes or 100% auctioned permits designed to minimize the role of carbon traders. My reasoning is I think what David Roberts is hinting at.
   
   
   I think some in the delayer and denier community have adapted a "do little" strategy. Now that is  not new. I think the giving away of permits under Kyoto, along with offsets was a "do little" path. But I think the new "do little" tactic is to support a carbon tax, but a low one - $25 per ton maybe less if they can get away with it.
   
   
   Now that does not mean we should give up on carbon taxes. Peter Barne's Sky Trust was a way to take the permit system and turn it into a 100% auction system where we set very tight caps - the opposite of what delayers and deniers want to do. And I think we can do the same with a carbon tax if conservatives switch the debate to taxes rather than permits. Fine conservatives, you now favor carbon taxes? Let's levy $250 per ton, and refund it all to taxpayers on an equal basis - essentially the Barne's proposal but built around taxes rather than permits.
   
   
   But at the same time given what is being tried I'm just as open to a Cap & Auction so long as we have 100% auctioning, and as long the we set up the auctioning system in such a way as to ensure that most permits are bought directly for reuse, that we avoid the creation of massive numbers of carbon traders. Basically I want to avoid permit resale and the creation of a large financial community with a strong interest in keeping the volume of permits high.
   
   
   Now I also think that either way of putting a price on permits can take a back seat to regulation and public investment - for a while, but not forever. Public investment can and regulation can take us most of the way we need to go. But in the end we will need a carbon price.

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6. 

   Charles Komanoff Posted 11:31 am
   09 Jan 2009

   Smell the carbon-tax coffee already!David --
   I see a milestone here, David. Not in Rex Tillerson's pro-carbon tax remarks, but in the fact that the first five comments to your, uh, leading question all gave perfectly solid, cogent, excellent reasons why Exxon's CEO -- and the rest of us -- should want a carbon tax.
   Just six months ago, your sarcastic question would probably have elicited the equally sarcastic replies you seemed to be fishing for. The fact that the replies were the essence of sweet reason should, I think, make you reconsider your severe skepticism of late toward carbon taxing. Cap-and-trade is a dead end, and the sooner we move its carcass to the side of the road and unite behind a carbon tax, the sooner we can aggressively get the U.S. and rhe rest of the World off fossil fuels.
   I'm writing from DC, by the way, where six of us carbon tax advocates -- with a combined two centuries of eco-activism ("Gawd, they should all be in wheelchairs!") -- just wrapped up a round of terrific meetings with pro-carbon tax Congressmembers from both sides of the aisle. We are not a stalking horse. We, and a carbon tax in the 111th Congress, are for real.
   Love and kisses,
   
   Charles
   
   Carbon Tax Center
   
   Charles
   
   http://www.komanoff.net
   
   

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7. 

   GreyFlcn Posted 1:22 pm
   09 Jan 2009

   The real question of courseWho/What sets the price of the tax?
   
   
   Would Congress take a vote every few years?
   
   Would there be an entirely independent entity formed, like the federal reserve.
   
   Or would it be something with an automatic percentage increase every year, which is indexed for inflation.
   
   
   Exxon Mobil, I believe, would favor the first option most.
   
   -David Ahlport

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8. 

   Gar Lipow Posted 3:07 pm
   09 Jan 2009

   Good questionThe same question applies to Cap & Trade or Cap & Refund of course. How is the cap tightened.
   One of the big problems of the Kyoto treaty was not to  have an automatic cap tightening, so now the next cap is being negotiated from scratch. (And yeah I understand the political necessity. But being necessary does not keep it from being a problem.) So in either a Cap & Refund or a Carbon Tax system, you need an automatic escalation clause, where stopping the escalation requires a new bill. You don't need to leave to Congress or have a board who can be subject to all sorts of bribery and pressure. Put a formula in place. If Congress does not like the results they can pass a bill to alter it. Let the "60 vote requirement" in the Senate work for the good guys for a change.

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9. 

   Ken Johnson Posted 3:15 pm
   09 Jan 2009

   Maybe ..... it's because he thinks any politically viable tax will be too minuscule to affect Exxon-Mobil's business. But he may be wrong.
   Suppose you levy a carbon fee equivalent to, say, $0.10/gal. Use the revenue to subsidize renewable fuel, such as biofuel or renewable electricity. If renewables make up 10% of the market, then the subsidy would amount to about $0.90/gal. The difference between the fee and the subsidy would be equivalent to a $1.00/gal tax (no subsidy) in terms of the fuel-switching incentive.
   As renewable fuel gains market share, the $1.00/gal incentive would be maintained and revenue-neutrality would also be maintained. So at 50% market penetration, for example, the fee would increase to $0.50/gal and the subsidy would decrease to $0.50/gal. This wouldn't necessarily impact consumers, because they would be buying blended fuels (or using some grid-connected electricity). But it would impact Exxon-Mobil. It might eventually drive them out of business (or at least out of the fossil-fuel business.)
   I think using tax revenue to subsidize new renewable energy could be more effective than, say, bundling up the money in bales and dropping it out of airplanes (or other equivalent proposals).
   
   

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10. 

    Ken Johnson Posted 3:21 pm
    09 Jan 2009

    Gar -Re "So in either a Cap & Refund or a Carbon Tax system, you need an automatic escalation clause" --
    With a Carbon Tax, you don't need an escalation clause because the marginal incentive is maintained at the tax rate, even as technology costs come down and new technologies become economical at the set tax rate.
    With Cap-and-Whatever the simplest "escalation clause" is a price floor. Once prices fall to the floor level, further cost reductions translate into fewer allowance allocations, not lower prices.
    
    

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11. 

    Gar Lipow Posted 3:53 pm
    09 Jan 2009

    small taxesWe just had an experiment with a large increase in both gasoline and home heating price which yielded very small drops. If you put reveue from  a small carbon tax into subsidizing renewable you get an increase until the amount of renewables grows large enough to reduce the subsidy to a tiny amount per power generated. Include efficiency and you end up with that from day one. Sorry, but for a large effect from a carbon tax you need a large carbon tax.  Unless you want to shock the system with a large tax all at once you start with a $50 per ton carbon tax and escalate to $250 per ton. Or maybe higher than that. I'm fine with an escalating cap and minimum(escalating price). But again the cap has to eventually end low. Probably the emissions price has to end up high, though I can imagine scenarios where it doesn't and we still lower emissions.  (Basically an "electricity too cheap to meter" scenario.) At any rate a low carbon price, even recycled into green tech seems unlikely to lower emissions much, and certainly is one hell of a risk. So probably the do-little advocates who want a small carbon tax are right in thinking it won't do much. That is why serious Carbon Tax advocates like Charles want the tax to start either low or moderate, and then escalate to a high rate. Or really what they want is escalation high enough to lower emissions, but they judge that will in fact be not be anywhere near as low as the equivalent of ten cents per gallon.  

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12. 

    Ken Johnson Posted 4:49 pm
    09 Jan 2009

    Gar - high tax or high price?... There is a difference. A high price can imply a high tax on emissions, or it can imply a high subsidy on emission reductions (e.g., via efficiency). In terms of fuel switching incentives, a high subsidy on low-carbon fuel is no less effective than a high tax on fossil fuel.
    A high price does not necessarily imply a high net tax. Case in point: Sweden achieved a 50% reduction in industrial NOx emissions over a 5-year period, at a net cost of approximatly $0.0004/KwH - about five times lower than what a straight emission tax would have cost.
    The small drop in consumer demand resulting from recent price spikes makes the case that trying to reduce consumer demand is more difficult than technology solutions. Trying to reduce consumer demand by the 80% or more required for climate stabilization would be more difficult than switching to renewable technologies.
    In any case, a three-month "experiment" with high prices is not indicative of how the market would respond to high price incentives over years or decades.
    
    

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13. 

    hapa Posted 4:59 pm
    09 Jan 2009

    gasoline experiment not controlled.without basis, positing: that the "easy credit" factor softened the impact of the most shocking gas prices (after summer 2007). then when it got so bad people started yelling for a shift, hell arrived and the waters were further muddied? oil prices will keep wobbling with the rest of it. households are not familiar with seasickness.

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14. 

    amazingdrx Posted 5:19 pm
    09 Jan 2009

    Why?He supports a carbon tax and attacks cap and trade because he really wants neither one.
    Cap and trade is on a fast track with the big money expert crowd, giving it the clear lead to actually get passed.  And it will price carbon, which the exxinmob does not want.
    So oppose it by touting a carbon tax instead?  Yes, because he knows that in any battle to pass "new taxes" the green politicians will not only lose that fight, but probably lose their next election.  Allowing the exxonmob friendlies to replace them.
    Simple plan for a simple minded corporatista.  he only cares about the next quarter's bottomline.
    Because many in the green camp have a blind spot around the political suicide involved in raising any taxes that hit consumers like a tax on gasoline, especially during a recession that could turn into a depression, this is a good move for the mobsters.
    They will fall for this trap, and the limboobs will swiftboat their favorite reformers into oblivion come next election time.
    
    http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

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15. 

    ce1907 Posted 1:23 am
    10 Jan 2009

    neitherno carbon tax; no capntrade; nothing
    it is all dead as a doorknob, Wa#man and Ma4key notwithstanding
    the key fight now is probably "a little smarter" grid (enough to keep utilities firmly in control) and a robust, open architecture smart grid that will support small local generation and sale to grid and aggressive efficiency stuff
    several hurdles, but most fundamental is the computer standard stuff
    bottled up in a cacophony of competing interests, and passively presided over by bureaucrats at NIST whom I am sure will dutifully churn out reports on exciting progress (but never any resolution) for a decade or two
    forget the philosophical tax v trade stuff; that is just talk
    put brains on problem of cutting Gordean Knot of various computer standards

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