Can any of Environmental Defense's three main points stand up to scrutiny?
ED: A carbon tax can be gamed as easily as a carbon trading scheme.
CTC: A carbon tax may be subject to gaming, but cap-and-trade positively invites it. USCAP concedes that some allowances will be given out (not auctioned) at the outset, which means protracted, high-stakes negotiations ("a giant food fight," a leading utility executive called it) over free allowances that will be worth billions. How will these be allocated? What baseline year? Watch earth burn as the polluters jockey for the baseline giving them the most allowances! With a carbon tax, by contrast, any tax preferences or exemptions will at least be visible and locked in, and thus potentially removable. This difference is part of why former Commerce Undersecretary Robert Shapiro wrote recently that carbon taxes, compared to cap-and-trade, "are much less vulnerable to evasion and market manipulation, providing a more stable and transparent system for consumers and industry alike."
ED: "A cap is the only way to guarantee the emissions cuts scientists say we need to avert the worst impacts of climate change. No one knows what level of carbon tax will produce what level of emissions cuts ... Guess wrong on a tax and we're all co-starring in a big-budget disaster movie."
CTC: Thanks guys, but the movie has already started. Here's what The Financial Times said about it last month:
Getting the amount of emissions a little bit wrong in any year would hardly upset the global climate. But excessive volatility or unduly high prices of quotas on carbon emissions might disrupt the economy severely. [Carbon] taxes create needed certainty about prices, while markets in emission quotas [i.e., cap-and-trade systems] create unnecessary certainty about the short-term quantity of emissions.
And how confident is ED that cap-and-trade won't come with the dreaded "safety valve" (lift cap if price too high) that will blow its vaunted emissions certainty to smithereens?
ED: "A carbon cap can pass Congress and a tax can't."
CTC: A carbon tax may be the turtle, but as sure as the hare lost its lead, a cap will be sidelined for years as the financiers, lawyers, and consultants work out the details -- which they've been doing for four years and counting for the much-touted RGGI compact for capping Northeast U.S. utility emissions. That aside, the climate issue is moving very fast. We have a rare confluence of events that may actually make it possible to go the right route. It would be tragic to lock in an ineffectual approach that would block more effective action. A revenue-neutral carbon tax is no longer anathema, and it's past time for ED and its brethren to give it the consideration it deserves.
Counting Senate votes on climate and energy
The Climate Post: Has the political climate changed?
Comments View as Flat
GreyFlcn Posted 1:38 am
26 May 2007
I wonder
Is there any sort of way to do a "tax shift"
Or feeebate approach to it.
For instance, the government collects taxes from a specific sector, and then hands out those taxes uniformly towards lead performers in the industry.
Although perhaps the more ethical way would be to hand out the tax in a way which prevents carbon taxes from being regressive.
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mwcsmokey Posted 9:21 am
28 May 2007
carbon tax shifting
GreyFlcn:
There is in fact a way to do this. Simply give every taxpayer a flat rebate. This makes the carbon tax revenue neutral, maintaining the same overall tax burden as before the tax. Furthermore, for those who use less energy than the average taxpayer, the rebate would be a little more than they paid through products and services throughout the year and those who use more carbon-intensive products and services would receive the same rebate but it would not fully pay them back for their energy use. When you consider that low-income groups generally have fewer and smaller vehicles and houses than those of higher-income groups, the carbon tax would in fact be a progressive tax.
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James Dailey Posted 7:58 am
30 May 2007
cap and trade v carbon taxes - no joy
hmmm.... I suppose I should care about this debate - carbon tax vs cap and trade, non? I mean I am currently talking about launching a new cap and trade based business model, (aimed at Clean Development Mechanisms in developing countries), so I really should care. Admittedly. But, the thing is, such debates, while meaningful I am sure on the policy level, give me no joy. I want action not the long slow windup. I guess I side with Tony Kreindler just because he's more rational. but. really, whatever...yawn, ennuie.
Unfortunately, my feeling is that we have grossly and seriously mis-understood the climate disruption effects currently happening and about to happen. 75% of the time I believe we'll figure this out in the next decade and then attack the problem of weaning ourselves from a fossil fuel civilization using a host of tax incentives, cap and trade systems, amazing new businesses, and just plain better technologies and more respective living within limits - as the saying goes "the stone age didn't end cause they ran out of rocks!". The rest of the time, especially this past week, after reading the news from the southern pacific ocean (CO2 levels way, way higher than expected by the models and antartica looking even more dubious) I think we are right now (meaning in this decade now) totally screwed %^$#$... and I mean that we are on the climate cliff and we have so much momentum, we are going to go over it, and its not very funny. What is funny is that the scientists have been bending over backwards to be conservative and thoughtful...err, scientists, and I think the rest of us have tin ears. In such a scary scenario, things fall apart and the center cannot hold, yadda, yadda,...and such debate and posturing will be utterly irrelevant and completely meaningless...dithering about your shirt color as you head over the cliff --- and the main questions will become:
So, anyway, I ignore that scenario 75% of the time, and try to stay focussed on the optimism and use whatever tools are available. Cap and trade, taxes, whatever, just so that we are doing something that gets us moving in the right direction. Isn't there room for both anyway - tax credits for trading regime credits? As I say to any who will listen, cheer up I guess, we could be living on a planet controlled by a madman bent on spreading his personal religious creed and directing his planet-spanning war machine to control the flow of oil (should I say spice). It seems like ignoring the sixth great exinction and the rather fascinating atmospheric-ocean chemical experiment ongoing is en vogue. Where is that bottle of ennuie again?
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