Hi, all. I understand that we're unlikely to impose a carbon price (through cap-and-trade, a carbon tax, or a combo plan) high enough to drive significant increases in fuel efficiency--much less high enough to drive a transition to compact, walkable communities and much greater reliance on transit, walking, and biking--but I'm not convinced that we should forego putting increasing taxes on transportation fuels. It seems essential to me that we move toward the internalization of the true costs of all our decisions, including transportation.

Consequently, I'd like to see a True Cost fee phased in on transportation fuels that does its best to internalize not only the climate impact but the air and water pollution that results from gasoline and diesel combustion, the geopolitical consequences, and the military spending that goes to ensure the global flow of oil. It seems to me that we'll never have a sustainable economy without such internalization, and I think we'd be wise to dedicate the funds raised to subsidies that will help us make the transition to a climate-safe, clean energy transportation system. Charge a fee on what we want to discourage and use the proceeds to invest in the alternatives.

"You can never get enough of what you do not really want." - Huston Smith

Ripping a make-your-own video contest. They're just trying to engage their activists. Not exactly the end of the world.

http://www.nwf.org

Interesting, many economists I know support the idea of a carbon tax (or a carbon cap that effectively works like a tax).  Maybe we do hang in different circles.  The rationale is usually along the lines of what Ken was talking about - internalizing the costs of gasoline consumption to the consumer, allowing the consumer to make an informed choice instead of mandating that consumers must buy more fuel-efficient vehicles (economists like consumer choice).  The other thing to remember is that it takes awhile for the vehicle fleet to turnover, although the recent drop in SUV and truck sales should demonstrate that gas prices do matter.

And yes, the tax does need to be fairly large, but if it is phased in gradually that will allow consumers and energy producers time to plan and allocate capital expenditures accordingly.

... of about $400/tonne on transportation fuels. That is effectively what the gasoline price is. The problem is not lack of a tax; it's that consumers don't see the tax until they fill up the tank, after they've already purchased the gas guzzler that will commit them to 100 tonnes of CO2 and more than $40,000 in fuel costs over the vehicle lifetime.

Ken, it doesn't make any economic sense to count the price you pay for gasoline as a price on carbon. To internalize the impact of the carbon emissions from gasoline use, the carbon price has to be added to the current retail price, which reflects the costs of production (extraction, refining, and transportation) and marketing--plus an acceptable profit for the companies as long as we stick with capitalism. Not one cent of the price we pay at the pump now internalizes the climate and geopolitical impacts of gasoline use. You could argue that it indirectly incorporates some of the air and water pollution impacts because it reflects the costs of compliance with government regulations intended to reduce those impacts.

"You can never get enough of what you do not really want." - Huston Smith

John: A gasoline price is a carbon price, in the most literal sense. You are buying hydrocarbon. Semantics aside, from the perspective of conservation incentive, it doesn't matter to the consumer whether or not it is a tax. Actually, a tax may be less effective than a higher import price, because tax revenue gets fed back into the economy (e.g. as decreased income tax), and can be applied to offset the gasoline tax or for other GHG-intense activities.

A more important point is that the carbon price would be much more effective if it is internalized in vehicle prices, so that consumers value the full life-cycle energy savings of fuel economy in their vehicle choices. Furthermore, the technology-forcing incentive does not require higher prices on all vehicles. Lower prices on fuel-efficient vehicles (subsidies or loans) would be just as effective as higher prices on gas guzzlers.

Ken, while the price of gasoline is the retail price one mucst pay to buy a particular form of hydrocarbon energy, it is obviously not a price on carbon in the sense intended by either EDF or Joseph Romm. The whole point of the latter kind of carbon price--which is, more precisely, a carbon dioxide price--is to internalize one of the true costs of our energy choices that the companies who sell fossil energy sources are currently allowed to externalize--the emission of CO2 into the atmosphere from the combustion of coal, oil, and natural gas.

Your idea to tax vehicles is interesting, and I do see some value in trying to frontload the full lifecycle energy costs of one's vehicle purchase decisions, I'm not convinced it's a better strategy than putting a CO2 price on energy sources. For one thing, I think it'd probably be even harder to get support for than a CO2 price because it would be seen as constricting individual consumer freedom. More importantly, as I've already written, I don't think you can have an honest market as long as companies are allowed to externalize a large portion of the true costs of the products and services they sell--people can't make wise choices about what to buy if they aren't given accurate information about what products and services really cost. Consequently, while choosing to try to internalize the true cost of CO2 emissions in vehicle purchase prices would likely coerce people to buy higher-MPG vehicles, it wouldn't influence them to drive fewer miles once they have a vehicle.

"You can never get enough of what you do not really want." - Huston Smith

A cap and trade is by definition a limit on emissions and if enforced WILL lead to whatever reductions are built into the cap

If the cap raises the price of carbon only enough to minimally effect the price of gasoline, which in turn doesn't effect driving very much, by definition this means that the CO2 reductions will be coming from other parts of the economy.

It is likely that in the short run driving wouldn't be effected much but as the cap becomes more binding the price of gasoline would rise significantly and I'm sure driving gas vehicles would decrease a lot.

The first thing to take a major hit would be the coal and natural gas sector and the shift here would be pronounced and then the alternative energy for electricity would be used to power vehicles.

While I don't necessarily think a cap and trade is the best policy if it's done right it doesn't matter whether the price of gasoline goes up $1 or $10 right away, the entire economy will shift towards carbon-free sources as long as the cap is enforced.

We need to focus on the root causes of problems.