We must tax carbon

Hansen's message to the planet

Posted by Charles Komanoff (Guest Contributor) at 11:02 AM on 25 Jun 2008

Maybe it was the thought of two decades of climate-crisis exhortation, little more heeded than words shouted at a hurricane.

Photo: germuska via Flickr.

Maybe it was the temporizing of the Democrats and the obstructionism of the GOP. Or it might have been the images of cities, houses and farmland of his native Iowa drowned by the latest "500-year" floods.

Perhaps it was all three. Whatever the reasons, the climate crisis' Paul Revere turned it up a few more notches in a speech yesterday (PDF) at a Congressional staff briefing in Washington D.C.

Yet James Hansen's headline-grabbing broadside against Big Oil and Big Coal CEOs may prove less significant than his full-throated advocacy of carbon tax-and-dividend as the highest priority for reducing carbon emissions and abating global warming:

A price on emissions that cause harm is essential. Yes, a carbon tax.

Hansen is no less blunt about what to do with the carbon tax revenues:

Carbon tax with 100 percent dividend is needed to wean us off fossil fuel addiction. Tax and dividend allows the marketplace, not politicians, to make investment decisions ... The entire tax must be returned to the public, an equal amount to each adult, a half-share for children. This dividend can be deposited monthly in an individual's bank account.

What about the impact on struggling families? That's the point of the carbon dividend. Because the vast majority of the non-rich use less energy than the wealthy, they stand to benefit.

Carbon tax with 100 percent dividend is non-regressive. On the contrary, you can bet that low and middle income people will find ways to limit their carbon tax and come out ahead. Profligate energy users will have to pay for their excesses.

Why not have the government invest carbon tax revenues in promising energy technologies? For one thing, says Hansen:

Demand for low-carbon high-efficiency products will spur innovation, making our products more competitive on international markets. Carbon emissions will plummet as energy efficiency and renewable energies grow rapidly. Black soot, mercury and other fossil fuel emissions will decline. A brighter, cleaner future, with energy independence, is possible.

And, speaking like a true Midwestern populist:

Washington likes to spend our tax money line-by-line. Swarms of high-priced lobbyists in alligator shoes help Congress decide where to spend, and in turn the lobbyists' clients provide "campaign" money.

The antidote, of course, is an ironclad tax-and-dividend that allocates all of the revenues to families and/or individuals.

Ironically, as Hansen was addressing the briefing (organized by Rep. Edward Markey (D-Mass.)), detailed quantitative support for his carbon tax prescription was coming from a well-placed Washington economist. A new report by former U.S. Under Secretary of Commerce for Economic Affairs Robert Shapiro calls for a federal carbon tax starting at $14 per metric ton of CO2 in 2010 and rising steadily to $50 in 2030 (equivalent to $82 with inflation).

Ninety percent of the carbon tax revenues under Shapiro's plan would be recycled via rebates on payroll taxes to employees and employers, or their equivalent in direct payments to households. The remaining 10 percent would go to energy and climate-related R&D and new technology deployment. Using the U.S. Energy Department's NEMS consulting model, Shapiro concludes that his carbon tax would reduce CO2 emissions by 30 percent below non-taxed levels while shaving only eight-tenths of one percent off future (2030) GDP.

The report (PDF), Addressing Climate Change Without Impairing the U.S. Economy: The Economics and Environmental Science of Combining a Carbon-Based Tax and Tax Relief, was published by the U.S. Climate Task Force, a project of Shapiro's Sonecon economic advisory company.

While Shapiro's recommended carbon tax falls short of the level that my Carbon Tax Center (and likely Hansen) recommends, his unambiguous rejection of carbon cap-and-trade in favor of a nearly revenue-neutral tax is another sign that the Washington establishment may be ready to move boldly and quickly for the "gold standard" of carbon pricing.

"We must love one another or die," Auden wrote in his oft-quoted September 1, 1939, composed as Hitler's blitzkrieg against Poland was ushering in World War II. Some 70 years later, with a new kind of holocaust looming, Hansen is telling Americans: We must tax carbon, or die.

Auden concluded his poem:

Defenceless under the night
Our world in stupor lies;
Yet, dotted everywhere,
Ironic points of light
Flash out wherever the Just
Exchange their messages:
May I, composed like them
Of Eros and of dust,
Beleaguered by the same
Negation and despair,
Show an affirming flame.

For twenty years, Hansen has shown an affirming flame. Can we now, finally, do likewise?

For story: We must tax carbon
17 Comments | Post a Comment

Next He'll Tax Water...

http://inhome.rediff.com/money/2008/jun/25car1.htm

Genepax unveiled the car in Osaka, Japan on June 12, saying that a litre of any kind of water would get the engine going for about an hour at a speed of 80 kmph, or 50 mph.
Genepax president Kiyoshi Hirasawa, in a mission statement published on the company's official web site, said, "Our mission is to develop technology and products for efficient production and use of energy. By 'efficient,' we mean ecologically and economically efficient. Ecological and economical energy is our business. Our goal is to create energy that is not taxing on our natural environment."
The water needed to run the car could be tap, rain or sea water, the company clarified.

by jabailo at 11:18 AM on 25 Jun 2008

James Hansen & Transformation

Hansen called for "transformative change of direction in Washington in the next year."

Hansen wrote: "Democracy works, but sometimes churns slowly."

Is the USA a democracy? Has it ever been?

Every struggle for fundamental rights denied at the founding of this nation -- for Abolition, equality for women, desegregation, etc., -- has required more than a generation of sustained, collective, super-human effort. And after all that, "victory" under law turned out to be half-assed.

People in each struggle quickly discovered that arrayed against
them were the laws of the land (symbolized by the Constitution), the might of the nation, the great institutions of the privileged founders, along with July 4 fairy tales.

Slavery and the slave system were legal, were constitutionalized.
Denial of women's rights was legal, constitutionalized. Segregation by race was legal, constitutionalized.

People found that they had no remedy under law. Abolitionists, women suffragists, civil rights workers -- they couldn't even rely on the alleged First Amendment. Or after the Civil War, on the blood-soaked 14th Amendment. So they had to go outside the law. To bleed anew. To die.

The Constitution was constructed to make it exceedingly difficult for emerging rabble majorities to gain basics rights, and then to use their rights to make change. The Constitution
was constructed to privilege men of property and their
institutions -- to protect them from any would-be rabble.

Today's corporate denial of worker rights is legal and constitutionalized. Today's denial of municipal self-governance
is legal and consitutionalized. Today's privileging of a few
behind their corporate shields is legal and constitutionalized.

Reversing climate change is not about "emissions." The "transformative" changes Hansen has in mind are in the categories of investment, production, commerce, work and property -- and in the law of so-called "private corporations."

Transformative change will challenge property rights and corporate privilege. Transformative change will require disobedience to sacred theories and precedents and laws that even and especially good liberals hold dear....It will require mass disobedience to raw power.

There are, alas, no "legal" or "constitutional" remedies to transformative.

Take Nature. Hansen suggests trying corporate CEOs for
high crimes against nature. Well, "nature" is merely someone's (or some corporation's) PROPERTY. In the USA today, there is no such thing as high crime against "Nature." Indeed, property "owners" can do pretty much what they want with "their" property. Is Hansen prepared to advocate for the "rights" of nature and biological systems? "Rights" for rivers, mountains,
air, glaciers? For those whom Native peoples called the flowing
people, the standing people, the sitting people, the creeping people...?

But wait! Our courts have decreed that corporate decision-making is a "property right." Corporate future profits are a "property right." So the might of the Nation protects property owners from any misguided, passionate Rabble.

All to say: major change in investment, production,
commerce, work, corporations and "property" (not to mention Empire) will require challenging a thousand years of Anglo-Saxon law and custom, precedent and wisdom...now backed by
great wealth, armed might, custom, habit, and the teachings
of our best schools and universities.

It's nothing personal. That's simply where so much awful history
has landed us.

So shouldn't we be clear that people advocating transformational change are not simply requesting that a few "special interests" get out of the way. They are calling for dismantling our Corporate State...the end of USA Global Empire.

Can we talk about this as we talk about "low-carbon high-efficiency products"? As we talk about "clean energy"? As we inject into "transformative" undoing this nation's anti-democratic and rights-denying laws, precedents, theories, governing mechanisms and endless self-praise?

As we turn to our local governments for remedy and leadership -- in other words, as we turn away from the men and women in the absurd deliberative bodies that have brought today's messes upon this Earth; as we discover ourselves...in the places where we actually live and breathe, where we raise our children?

And as we explore together the terrible histories of violence, rights denial, subjugation, Earthly plunder and denial that
have characterized these United States.

For we might discover that it will be the communal crackings of those histories that will enable the transformations of ourselves, and of our communities.

-Richard Grossman
West Hurley, NY

by Richard Grossman at 2:05 PM on 25 Jun 2008

Great Post Richard

I would only add one thing: The U.S.A. was founded by killing the natives, stealing their land, destroying it, and using slaves to work it. And a poster on Grist challenged by characterization of the U.S. as an evil country!

by Wolverine at 2:16 PM on 25 Jun 2008

Keep these issues separate

The climate policy debate centers on two basic questions: (1) Should emissions be capped or taxed? (2) Who gets the money (or the allowances - which are equivalent to cash)? What Hansen and most people fail to recognize is that these are two completely separate issues. Any method for distributing tax revenue can be applied equivalently to cap-and-trade by auctioning allowances and spending the auction revenue in the same way. Conversely, any method for freely allocating allowances can be applied equally well to either auction or tax revenue.

It is important to keep these two issues separate, because taxes have significant advantages irrespective of what kind of revenue allocation is used. For example, if the U.S. Acid Rain program had been implemented as an emission tax, with tax revenue refunded according to the same allocation formula that is used for allowance distribution, then the achieved SO2 emission reductions might have been doubled with no increase in emission prices above original expectations. (See my June 23 post on this topic.)

Comparing cap-and-trade to an emission tax, both using the same allocation formula, industry would logically prefer the latter because of the price stability that a tax would provide. (For a good working example of an emission tax that employs "free allocation", see my June 2 CPUC comments, pages 4-6.)

Another important point that Hansen missed is that caps and taxes are not mutually exclusive alternatives. Cap-and-trade with auctioned allowances and a price floor would combine the environmental advantages of both. (See Alan Durning's May 16 post and the recent CBO analysis.)

by Ken Johnson at 3:27 PM on 25 Jun 2008

Response to Richard Grossman

I don't dispute the urgent need to put corporations back in chains, under democratic control. Gus Speth's book underscores this. But I want to address Richard's rhetorical question about whether we will recognize the "rights" of Nature. It is probably useless to address this question to the free marketeers and other components of corporate capitalism. It is more important to address this to traditional liberals who have studiously ignored Nature and the earth's ecosystems in favor of various social justice issues such as sexism, racism, poverty, etc. It isn'tthat these should be ignored. It is that these need to be addressed in the CONTEXT of nature. Ecological sensibility and consciousness is a rare trait among liberals, who have preferred to put ecology on a laundry list of Things We Like rather than at the center of their world view and values. Since Earth Day 1970 ecological understanding has radically decreased even as progressive social justice movements and campaigns have accelerated. Too many liberals still see the environment as an amenity, not as our life support system. Calls for political change start from the viewpoint of human needs and demands, not from a biocentric viewpoint that places humans in an interconnected web where nonhuman species and systems are afforded the rights and deference we afford to humans under the guise of "the rights of man". Overcoming anthropocentrism and the assumption that humanity must take precedence, and that progress is measured only by the improvement of human society, must be our first order of business. In the light of ecological necessity, democracy becomes a subset of an ecologically based society as well as a mechanism to defend all aspects of nature and the earth's ecosystems.

by lorna salzman at 4:35 PM on 25 Jun 2008

Cap and Auction Instead

I admire Hansen and had the pleasure of hearing him speak and meeting him not too long ago. But I find it hard to believe that Democrats are going to introduce anything called a carbon tax in the forseeable future, and I can't blame them. It's suicide. (And most Republicans in Congress are buffoons on global warming -- look up Senator Inhofe, who they made Environment Chair.) We got 48 votes to cut off debate on cap-and-trade this year. We need to get rid of five or six more of the Senate's buffoons, elect Obama, and get cap-and-auction passed in the next year or two -- preferably in 2009. The point is we need a price on carbon emissions. I just don't think a tax is politically possible -- at least not without a long effort to sell it as a replacement for some other taxes.

by davedenali at 5:38 PM on 25 Jun 2008

Simple IQ test

Mr. davedenali: In reference to your post "Cap and Auction Instead", do you have any clue as to what makes cap-and-trade politically viable, while a carbon tax is political "suicide"; and why would an auction be more politically palatable than a tax?

by Ken Johnson at 7:21 PM on 25 Jun 2008
[ Parent ]

lorna

Overcoming anthropocentrism and the assumption that humanity must take precedence, and that progress is measured only by the improvement of human society, must be our first order of business.

i think the best we can do on this is get people headed in that direction. beyond that i'd expect it to be about as successful as any other abstinence program. there's not a species on earth that doesn't prefer itself. for a darn good reason, if you ask me. i mean, i'm glad to be here. but of course that's wired in. if i weren't i'd be defective.

by hapa at 11:37 PM on 25 Jun 2008

The crapmill starts churning again

The High Respectable Inactionosphere has responded to Hansen's speech with yet another incarnation of the 'the globe's cooling' talking point, as well as an online poll.

Folks, be sure to crash the online poll! :)

-- bi, International Journal of Inactivism

by frankbi at 12:11 AM on 26 Jun 2008

Charles,

Isn't it more true that "We Must Price Carbon"?

A Cap and Auction strikes me as a better way to price carbon.

Here's why: A descending cap on carbon would allow the market to arrive at a carbon price based on the scientifically necessary carbon reductions.

That strikes me as better than trying to find the price necessary to drive the necessary carbon reductions.

We don't know what price is necessary, we do know what reductions we need. Let the necessary reductions drive the price.

I'd love you to talk more about why a tax is better than cap & auction to arrive at a price.

by setb at 9:19 AM on 26 Jun 2008

Here's why not

Re "Here's why: A descending cap on carbon would allow the market to arrive at a carbon price based on the scientifically necessary carbon reductions."

Here's why not: Nobody is willing to mandate GHG caps remotely close to the "scientifically necessary carbon reductions" and to enforce such caps at any cost. A tax (or price floor) at least motivates you to spend as much as you are willing to spend on emission reductions - there will be no price erosion or collapse like what occurred with the US SO2 trading program and the EU-ETS. Regulatory price control would provide a stable investment climate that is more conducive to long-term investments in low-carbon technology and infrastructure.

We do not know what reductions are necessary or how much they will cost, but we should know how much we are willing to pay. Let the price incentive drive the reductions until such time as we are able to impose environmentally sustainable caps.

by Ken Johnson at 11:17 AM on 26 Jun 2008
[ Parent ]

Hapa

Your argument, heard constantly from anti-environmentalists (though I realize that you're not one, I've read many of your posts) -- that all species prefer themselves and that, therefore, if the bears, for instance, were in charge they'd be destroying the planet, too -- is anthropocentric B.S.

First, humans have intellectual capacities that, coupled with their ability to stand and walk upright and use their opposable thumbs, gives them great powers that other species lack. With those powers come responsibilities. Unfortunately, with the general exception of hunter-gatherer societies, humans have not exercised those responsibilities and have instead used their powers to destroy ecosystems, pollute every inch of the Earth, cause extinctions -- including the current great extinction -- and unnaturally alter our atmosphere. All this is done by overconsumption and overpopulation, and there's no evidence whatsoever that other species would engage in this behavior if they could.

Second, this argument is completely without merit, because it makes a nonsensical and oxymoronic assumption, which is that other species that we know of could act like humans. What differentiates humans from other species are the attributes I listed above. If bears, for example, had those attributes, they wouldn't be bears.

Third, the big problem with that argument is that it give humans a lame excuse to just keep destroying the Earth. It's like a kid saying, "(s)he does it, too!" Even if you think that other species can evolve to be like humans in the ways I described so that they'd be capable of doing the same harms, shouldn't humans be setting a better example?

The natural proclivity to prefer one's own species is fine when living in nature. When humans began living in civilization, i.e. when they began using agriculture, they should have reigned in that proclivity and began to recognize the importance and rights of others. Humans have a choice: they can either do that, or they can perish, unfortunately taking many species and ecosystems with them, and possibly making this planet uninhabitable for life as we know it until the sun burns out.

by Wolverine at 1:24 PM on 26 Jun 2008

wolverine

oh no no no no. i don't blame or position bears in our place doing the same. or ever really imagine bears driving cars, outside the circus, and i know that's a trick. you can tell because the car only goes around in a circle. but anyway.

nor do i put a sit around pointing out biological imperatives in daily human life though you know it's not hard to see some of them in operation.

all i meant was to say that species-centrism, which for us includes a hefty social pressure sensitivity, makes genuine individual ecological insight -- without the constant reminder of actual resource constraints -- very hard to create or maintain. and when you pair that species-centrism with our unique capabilities you get the rest of nature getting out-competed.

i don't think that's necessarily our destiny but it is how the whole shebang is set up and for us to have wiped out ecosystems by growing out of our niche -- maybe because our niche was fundamentally changed by the glacial period -- that doesn't surprise me at all.

it's to us to discover that we as a river jumped the levees and to find a new course that lets the rest of nature grow. but it's not an inherent responsibility and that's part of our trouble. we just don't have to built-in wiring to make this leap of understanding easily. we have a hard time seeing past our own tribe's grasp of the environment.

and as that social grip on reality got further from the physical, into the metaphysical -- everybody seems to get to the point where they feel like their gods are irrelevant to their lives, those gods being various metaphors for important physical and social limits to be taught, but with time you just beat those old limits, and then you tumble -- with that dynamic always at work, our wiping out the world in which we live is so predictable, and so regular, you can see the predictions and the results throughout history.

my feeling is that we got where we are more through error than trial. our competitive advantage is we're ass-stupid reckless but can insulate our own groups from the worst of the consequences. this is a very different idea than that of us as essentially rational.

my favorite justification for this is that, if we were built from the ground up to take responsibility for our actions, we wouldn't have such complicated court systems.

by hapa at 2:53 PM on 26 Jun 2008

You're not making sense

Yeah, I don't think what people are willing to pay should be the standard. I'd start with what needs to happen to save the world, and go from there.

If your main issue is political cowardess, why not just institute a weaker cap? At least then we'd have a system in place that allowed us to crank carbon down based on science when "we are able to impose environmentally sustainable caps".

In case you haven't noticed, the word TAX is powerfully unpopular politically.

We do have at least a fair idea of the necessary reductions-- 80% by 2050 would be a start.

And the EU and SO2 markets failed because they weren't actual markets (permits were given away).

And finally, if nobody is willing to mandate the necessary ghg reductions we're all screwed.

by setb at 1:33 PM on 27 Jun 2008
[ Parent ]

Author replies

Setb --

You want more on "why a tax is better than cap & auction to arrive at a price." Well, a graduated (ramped-up) tax will set the price (or the tax part of the fuel price, which will be substantial) years ahead, permitting what we call "carbon-critical decisions" to be made w/ reasonable knowledge of the price. A cap at best does that only indirectly, and probably volatilely.

You refer to "scientifically necessary carbon reductions." There is no such thing, other than "as much as possible as quickly as possible." The knowledge of how many ppm the atmosphere and climate can stand is not here and won't be for a long time. We have to slash/smash carbon emissions to the maximum extent possible, period.

Repeat: there is no magic reduction level or rate for CO2 ... other than as much as possible.

Richard -- I don't disagree w/ you.

Lorna -- Thanks for your eloquence.

kjohnson -- You're saying it better than I am.

Charles www.komanoff.net

by Charles Komanoff at 7:47 PM on 27 Jun 2008

Set tax versus variable cap

I have done a number of financial turnarounds for businesses. Put simply, if you don't have set targets, making choices on how you are going to improve operations becomes very difficult. Carbon tax sets the target. Carbon cap & trade sets a moving target, making it very difficult to establish management strategies.

by RussellLowes at 8:21 AM on 29 Jun 2008
[ Parent ]

Charles,

Quick questions:

How would the tax be set? Would it be based at all on achieving some specific level of carbon reductions?
What would those reductions be based on?
Why is it better for politicians to set the carbon cost vs. the market & science?

(I'm sorry, I just don't agree that we have no idea how much we need to reduce carbon. What about 80% by 2050? Would that be such a bad place to start?)

I'd like to hear more about how/why a steadily declining cap (say 2 percentage points/year) would create such volatility in price. I can't believe that we wouldn't be able to forecast carbon costs based of reduced carbon supply years ahead of time. Cap & Trade created price instability because of offsets, giving away of permits and offramps.

Is it really that different pushing down supply vs. demand?

by setb at 1:34 PM on 01 Jul 2008

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