Over the past century, average global temperatures have increased by 1.3 degrees. Higher temperatures have been linked to rising carbon emissions. Scientists warn of devastating effects if the earth warms by another two degrees. As Washington faces another debt showdown, support is rising for a carbon tax as a free-market solution to climate change. And California’s new law puts a cap on carbon emissions. But opponents argue these policies kill jobs and burden low-income consumers. For this month’s Environmental Outlook: the economics and politics of reducing carbon emissions.
The first part covers the environmental problem (Coral Davenport, energy and environment correspondent for National Journal), the second a carbon tax (Elizabeth Kolbert, staff writer for The New Yorker) and the third is the climate-change-isn't-a-problem perspective (Jeff Keuter, president of The George C. Marshall Institute).
The first and second parts were good as an introduction to the issue. From the transcript:
You have to transform the way you get energy because as was also mentioned, we're producing CO2 with, you know, at this point, virtually all activity that is associated with modern life. So people have looked at this problem very, very seriously and very carefully and many of them -- and economists generally have agreed that the most effective and cost-effective way to do this would be to put a tax on carbon emissions, on the carbon content of fuels and that that would spur -- on the one hand, it would encourage -- it would sort of level the playing field so that energy sources that don't produce carbon, say wind or solar power, would be more competitive.
Right now, they're much more costly than burning coal. And on the other hand, you would also spur a tremendous amount of energy conservation, right? Because all of the fossil fuels that you were burning would be more costly. So it's using the power of the marketplace to try to drive a very, very substantial reduction in carbon emissions.
The first part of the third part is very tedious as each of the guests offered their perpectives on whether climate change is a problem. The latter part of the third part was great as the panelists debated the economics and politics of a carbon tax. For example:
DAVENPORT 11:29:48I actually have talked to Grover about this. I asked him a few weeks ago specifically about this. I said, what if there was this carbon tax that was -- that cut, you know, you had a carbon tax, but you cut a payroll or income tax. And he said to me that would not violate his pledge. You know, he has a...
It ended with a discussion of California's cap-and-trade policy:
REHM 11:30:12No new taxes.
DAVENPORT 11:30:13...no new taxes. And he got hit so hard immediately by the fossil fuel industry. He had allies -- you know, his friends all over the right came out and just hammered him. This one fossil fuel lobby gave him their Dim Bulb of the Day award. And a couple hours after that happened, he effectively seemed to reverse his position.
I stopped listening when they opened the phones.
So, Elizabeth, which is better, California's approach or a national carbon tax?
Well, I should say that from an economics point of view -- and I'm not an economist but I've spoken to many economists about this issue -- a cap and trade and a carbon tax are equivalent. They should function equivalently. Now in point of fact, you know, both are subject to political manipulation. I think a -- people would say a carbon tax is simply easier to administer. But the effect of a cap and trade, the whole cap and trade program, you know, was developed so that you could avoid using the word tax.
But they are -- the effects should be the same. You should be raising -- as Coral mentioned, you're just raising the price of emitting CO2. You're imposing a price on emitting CO2. I should say right now that is cost free. So what we're doing is, you know, we're just releasing large quantities of what is -- in fact, it is a naturally occurring substance. Certainly we are all breathing it out, but it is also a pollutant. And so we're just releasing it without any cost. And if you incorporate the cost that this is imposing on society into the price of doing that, you will change the way people do things.