Yes, We Have No Carbon Tax

About 12 hours after President Obama won re-election, Bloomberg News ran this tantalizing headline: “Obama May Levy Carbon Tax to Cut U.S. Deficit, HSBC Says.”

A carbon tax could finally put a price on greenhouse gas emissions, but the Obama administration says it's not on the agenda. Photo: ##

The article suggested that a $20-per-ton tax on carbon emissions, rising gradually over time, could help reduce the deficit by half within a decade.

Within the same story was the antidote to the optimism the headline may have evoked: The founder of the world’s biggest carbon trading exchange said Obama probably won’t seek to install such a program in his second term, but that something might be possible around 2020. As Philip Bump wrote in Grist, it’s best to take with a grain of salt what some guy from HSBC — based in Great Britain — says is a political possibility in the United States. “His finger might not be that close to the pulse of what the White House is thinking,” Bump wrote.

Indeed, the Bloomberg story cited absolutely no reason to think Obama was considering a carbon tax, except that it would be a good idea. And it certainly would be a good idea — incentivizing efficiency, raising revenues, and just maybe slowing the march toward catastrophic climate change.

Indeed, it might be our only hope. The day after the Bloomberg story ran, Oxford economist Dieter Helm wrote in The Guardian that carbon emissions are rising faster now than before the Kyoto Protocol was ratified (in every country in the world except the United States and Afghanistan) and the only way to make a real dent in it is to tax carbon.

But then the White House extinguished the flame of hope right quick.

“The Administration has not proposed nor is planning to propose a carbon tax,” a White House official told The Hill.

After the failure of cap-and-trade legislation during his first term, Obama seemingly doesn’t want to wade back into those waters. Though the President did at least acknowledge the threat of climate change in his acceptance speech, and in the post-Sandy political environment, it’s fair to think there might be a little more openness to pricing carbon.

While a carbon tax has the added benefit of harnessing market mechanisms — which should theoretically appeal to the GOP — it would be an enormous challenge to get the idea past Republicans who a) still don’t believe global warming exists and b) have traded their souls to Grover Norquist. One of the most stalwart supporters of a carbon tax, Pete Stark, just lost his bid for re-election in California. Plus, Obama has signalled that immigration is first on his to-do list, after the so-called “fiscal cliff” gets sorted out.

Speaking of which, one scenario where a carbon tax could conceivably gain traction is through a “grand bargain” in budget negotiations between the White House and Congressional Republicans. Is it likely? No, but as Slate’s Matthew Yglesias wrote last week, a carbon tax is a pipe dream worth talking about.

20 thoughts on Yes, We Have No Carbon Tax

  1. We don’t need more taxes!!! And definitely not carbon taxes!! If you want to lower the CO2 in the atmosphere, just plant more trees. or better yet stop the deforestation.  Plants breathe in CO2 by the way.. 
    What about the other pollutants such as NOx, soot, Sulfur dioxide, ??? Where’s the tax on them??? 

    Sooner or later, the carbon tax will be placed on us humans, because we humans breathe out CO2. even just cycling or standing still. Be careful what you ask for… 

  2. Well dealing with Sandy destruction and storms like her doesn’t come for free! It makes sense that we would contribute the “clean up” in proportion to the amount we contribute to the destruction…

  3. With a carbon tax, each person pays (at least partly) for the damage they do, rather than leave it to others to pick up the tab later. Pay your own way — a novel concept!

  4. who gets to set the carbon tax? Who is the authority here? 
    who says this is the “damage” this person did and he/she have to “pay” for it?? 
    What’s the formula or equation for this taxation? Who gets to make and change that formula??  Eg. If your equipment outputs so-and-so amount of CO2, you have to pay something percentage..  Well, what happens if that equipment’s CO2 output is you or your lungs? At first some CO2 taxation organization won’t include humans, What happens later on they decided to include to tax the human body for making CO2? 
    Over time, the tax rate will onlyrise.. 

    I hope its not some foreign body such as UN or the World Bank who sets the carbon tax rate… where we have no representation or say.  Remember “No Taxation without Representation” ???

    If you want to offset the CO2, plant more trees and plants.. drive less, bike or take mass transit, walk. Relocalized the manufacturing. Buy more local. Boycott the big-mart stores where everything is shipped from overseas, thus creating more CO2. Simplify your life. 

    Why tax?? 

  5. I hope Ms Snyder is wrong about how unlikely it is that Congress or the President will support carbon taxes, but I fear she may be right. Why is it that these smart, well-paid, powerful government people refuse to see that carbon taxes could solve two otherwise insoluble problems: government deficits and climate change?

    Oh, yes, corporate persons with a lot of money already are even more powerful.

  6. I hope Ms Snyder is wrong about how unlikely it is that Congress or the President will support carbon taxes, but I fear she may be right. Why is it that these smart, well-paid, powerful government people refuse to see that carbon taxes could solve two otherwise insoluble problems: government deficits and climate change?

    Oh, yes, corporate persons with a lot of money already are even more powerful.

  7. Carbon tax == contemporary gas tax. 
    What we need is to call the gas tax we have now a carbon tax and be done with it.  Think about it.  As cars get more efficient (i.e., produce less carbon), the “gas tax” gets less effective.  Nobody wants to raise this tax – fine, call it a carbon tax, and we can all hate it equally.  Congress (and state governments) can seal the deal by spending the proceeds of this tax for asthma care and air quality improvement. With that out of the way, we need to set a tax for vehicle-pound-miles travelled – the only way for a motorist to pay fairly for the damage they do to the roads.  Miles travelled would be tracked by GPS.  The tax can be mitigated by an individual by choosing to sell their travel information data to Google et al.  

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  9. For a whole host of reasons, I see a carbon tax as a political non-starter unless it can be traded for something else.  Of course, I do wonder what would happen if Obama put a carbon tax of similar revenue-generating import up as an alternative to raising taxes on the rich (essentially, offering the GOP the ability to “keep the Bush tax cuts” in exchange for this).  Not that such a deal would be likely, but it would be an interesting offer to see placed on the table.

  10. One of the major hurdles of implementation of any carbon tax is that it would require some form of global uniform standard to accrue carbon emissions. Otherwise, you’d just be trading emissions at home for emissions elsewhere with zero net effect.

    Since major manufacture exporters, such as China and Japan, have little interest on hurting themselves, it is very difficult to envision collaboration that would address the need for some carbon accounting standard.

    More than that, measuring carbons emissions is not really a simple business as one might portray. It is easy if you are measuring fuel burning or electricity production emissions, but things get tricky easily. If you employ a leaner and more efficient method of construction to substitute for an existing (but very energy inefficient) building, do you get to amortize emissions over time or right away? Will the Pandora box of indirect emissions be opened? How will emissions be transferred throughout supply chains (easy with electricity inputs, extremely challenging with agricultural raw materials or components, for instance).

    A whole industry of “CO2 charge avoidance” would emerge, with countries establishing favorable regimes, emission provisions etc. 

  11. @c44dc01f8107c1b33104b538f33b734d:disqus The problem is that it is virtually impossible to evade gas tax by fueling abroad. And importing you own fuel is a non-starter. At most a tiny proportion of drivers could cross into Mexico or Canada if gas were cheaper there, but that is it.

    A carbon tax would me much more difficult to pass over certain supply chains. If they tax carbon based on energy consumption in US, for instance, manufacturing firms still in US could just close shop and move elsewhere, exporting their products. 

  12. Again, please see the link that Komanoff posted below in the very first comment.  ( Most the questions raised below are answered–how to measure carbon emissions, at what point in the emissions stream to effectively tax it, how a carbon tax can be revenue neutral, why no one is or will ever suggest taxing people breathing, etc. 

    As to how to deal with off-shoring of carbon emissions, we would indeed have to be more responsible about this than we have been with off-shoring all our other pollution. We could either refuse to trade with countries that don’t impose carbon taxes at similar levels, or we could levy a tariff on all imported products based on the level of that country’s gross fossil-fuel burning carbon emissions. (We would no doubt have to estimate in cases where self-reported numbers are unreliable.) This would have an added benefit of on-shoring manufacturing jobs back to the US.

    With a carbon fee and dividend program, people would actually make money as long as they kept their usage below that of the average energy-squandering American. This is not difficult to do! All it takes it takes is simple behavioral changes and/or very small investments of money that will paid back with lower fuel bills. But there simply must be a price signal or people will not change their energy consumption and carbon emissions patterns. And these carbon emission patterns need to drop immediately.  Not by 2020 or 2030. Any plan that talks about doing something 2020 and beyond is a plan to do nothing because it will be too late. It is hypocritical greenwashing designed to distract and pretend, pure and simple.

    We are talking about our grandchildren living in a resource-constrained future where they have a chance to learn to live in balance with the planet, or our grandchildren living in a future truly filled with squalor, death and misery.  Once the climate tipping point is past, human beings will pay any price to go back but it will be to no avail. And they will wonder why their ancestors thought driving SUVs and air conditioning the outdoors was more important than water, food and survival of their progeny.

  13. There should be a methane tax, too. And some other ones. A noise tax would be appropriate. Anywhere you see adverse affects, especially on health or environment.

    We do none of this.

  14. Are you supporters stupid?  I’m watching this Charles Komanoff on C-Span just shaking my head.  “…eventually, people with 2 and 3 car garages should have to convert them for small families..,gradually….”  OMGosh…  So you think China, Korea, India, Russia, South America, the Middle East…or anyone else is going to jump on board with this?  UH NO.  But we Americans should just give more, do more, because we are going to save the world?  I need to be driving one of these tiny death traps I see on the road?  I am so sick and tired of people telling me what I need to be doing.  You do not live in a free country when someone is telling you, you have to buy healthcare, pay a tax if you have a larger family and drive a bigger vehicle, pay more because its our civic duty to reduce the budget.  STOP SPENDING AND WASTING the tax payer money. .  Some of you people must be living under rock.  Travel the US in your foreign Prius..  Most of it is not like NYC, LA, San Francisco, DC, Miami, Detroit.  I do not need my government closer than my toilet paper.  I am quite capable of making decisions that are best for me and my family.  I don’t need any of you people telling me I need to pay more so China can pollute more and in the end, nothing changes, except the bottom line of my measly paycheck. Just unbelievable. Let’s force people to change their way of life.  Thanks, but NO THANKS.  Get a life.

  15. @yahoo-RUCZ3WV6HSJR7CB2P7AWM7PEYI:disqus, see the comment above by @KarenLynnAllen:disqus about encouraging international adoption of a carbon tax through trade policy. We have plenty of leverage with the countries whose economies are based on their exports to the US. If they don’t want to collect their own carbon tax, we can collect one at the border and keep it for ourselves.
    Since everybody hates China so much I’m sure they won’t mind Chinese-manufactured consumer goods being slightly more expensive at the Wal-Mart. Taking into account the real costs of shipping, we may even start to see American-manufactured products once more sold at locally owned stores, where people can make better than measly paychecks.

    We only get to extract all the oil, gas, coal and burn it one time. We’re hitting the point where nature itself is forcing a change of lifestyle, and nature isn’t nearly as gentle and predictable as a carbon tax.

  16. @yahoo-RUCZ3WV6HSJR7CB2P7AWM7PEYI:disqus I’m a big supporter of letting people do whatever they want-at least up until the point where myself or others have to live the consequences of their bad decisions. For example, driving a larger vehicle (in fact driving any motor vehicle, including a Prius) has negative externalities such as pollution, acid rain, opportunity cost for land used for roads/parking lots, congestion, higher obesity rates, etc. All of these things affect me, some more than others. Negative externalities are why we no longer allow smoking in work places or restaurants, and soon won’t allow it anywhere except the home or car. Just as a person’s decision to smoke has negative consequences for those around them, so does a decision to live a more energy intensive lifestyle. Since we’re not just simply going to tell people they can’t drive, or can’t fly, or can’t consume more, the only thing left to do is to tax these things to partially pay for their negative externalities (and also to discourage them). Ideally, I’d love for there to be a carbon tax but for governments to not collect a cent. That would mean we were doing everything we currently do without using fossil fuels. Just doing nothing and hoping all these problems associated with fossil fuel use will go away on their own is magical thinking. They won’t. Fossil fuels will only cost more as they’re used up. These price swings will cause major economic disruptions. Securing increasingly rare fuel supplies will require heavy military spending. And dealing with the consequences of pollution, such as off-the-chart cancer/asthma rates, already costs society a small fortune. Those are already a bunch of great reasons to get off the fossil fuel habit even if global warming didn’t exist. In fact, when I discuss these things with people I don’t even mention global warming. No need to with all the other reasons.

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