Nudging out support for a carbon tax
nature.com
nature.com
The Ontario government is fighting against the federal revenue-neutral carbon tax and has instituted a small grab-bag of subsidies for businesses doing green refits.
So in essence, they're taking a neutral system that put money to taxpayers and turned it into a subsidy on corporations that pollute, and claiming it as a populist victory. And the public ate it up.
I've heard nonsense like "I recycle and don't litter, why should I have to pay a carbon tax" as if those things are related.
Warning: strong political opinions below.
What we're seeing is really a replay of the ACA reaction in the US. Obamacare was a rejigged Romneycare, which was a rejigged Heritage Foundation plan which was a reaction to the Clinton's healthcare plans. It was a conservative, market-friendly approach to solving an issue... until it was actually implemented. Then we found out it was just a talking point meant that was never meant to be acted upon, a mere cover that allowed conservatives to pretend they were interested solving an issue.
Likewise, the tax-and-rebate scheme is basically most conservative and market-friendly approach to tackling climate change that actually produces results. But now that it's actually been implemented, the Ford/Kenney/potential-Scheer governments are reacting by repealing it and replacing it with nothing that produces results. Because they don't have the guts to say simply "No, we don't believe in this and we're not going to do anything about it"
After Carbon tax, company gets $20 tax. Price becomes $120. Government says to consumer, here's $20. Consumer and company see no difference. Government cost goes up to maintain the scheme.
This is why people say the carbon tax/price must go towards non carbon ressearch/products.
The recycling part is as least a little related. The recycling of metal requires less energy than the creation of new metal from ore, especially for steel (cars) and a aluminum (cans). So recycling metal does contribute to the reduction of carbon emissions.
Basically, it's a plan for a carbon tax along with a rebate program (similar to UBI in my opinion) so that the least well off financially don't get crushed by things like higher gas prices.
You'd think everybody could get behind it, right? I got $300 on my tax rebate as an advance for this year's carbon pricing.
Of course the conservatives hate it, because their carbon plan is "no."
And they're on track to win in November.
However, in practice, I am still yet to see a right-wing party that gives a damn about the environment. Be it at the European level, national level, regional level or even at the city level. Go to any random city in my region, read the platform of left-wing parties, and you will typically see bike lanes, bus lanes, pedestrianization, etc. Read the platform of right-wing parties, and you will see more asphalt, more lanes, more parking spaces. City-level elections are supposed to be much more about the candidate, and less about the party, but they still spontaneously group like that.
It shouldn't be like that, and maybe in some other countries it's not like that, I'm not claiming this is universal. But in my country, it certainly is like that.
But because we can now spend the money on other things instead, we might find that it's worth buying the electric car instead of the gas car.
People won't be forced into rapidly giving up their current patterns of life and work. It also avoids objections from conservatives about creating more governmental regulations, subsidies, complicated carbon credits, and interest groups. And like the very popular Social Security it's simple to explain.
For concreteness, you would get $300 per month. That would equal the increase in prices you'd see at the gas pump, your electric bill, and in products. Change nothing and nothing in your life changes. Replace these higher priced carbon intensive products with better alternatives and you have extra money you can spend on other stuff.
That doesn’t make sense though. What’s the incentive to switch to a lower carbon tax if you get all of the tax rebated to you at the end of the month? If you don’t get it all back, then it’s not equal to the price increases.
Now, a fun wrinkle is that on average, most of us are below average. Sorry, joke. What I mean is that the median output is below the average output. That's because it's not a linear curve, but a slope where the byper-wealthy have disproportionate weight. So because the median is below the average, it's also a progressive scheme in that the majority of participants will be at break-even or better.
(If everyone does this, the carbon dividend would of course decrease, but by then the goal will have been reached.)
I predict that industries in countries that adopt a carbon tax earlier will end up with a competitive advantage.
I doubt anyone then would have predicted that two of the U.S. big three would declare bankruptcy and that Toyota, then manufacturer of podunk little cars, would become the #1 manufacturer, but it happened.
Had U.S. regulations met consumer demand, U.S. manufacturers may have innovated what consumers wanted instead of more chrome, tail fins, size, etc. Regulation came eventually, but too late for the industry to avoid bankruptcies, unemployment, and so on.
In fact, regulation didn't stifle innovation but directed it. Engineers can innovate around safety and efficiency as much as on speed and tail fins. I'd rather have 100,000 mile warranties and electric cars than more chrome, which U.S. market forces created.
Today, regarding the environment, the governments that regulate to reflect citizen demand for clean air, land, and water will create markets and companies that beat ones that don't. I hope current U.S. policy doesn't bankrupt more future U.S. markets and companies.
America loves to do things via tax code, which is why the US tax code is famously so complicated, but that time is gone. The answer isn't a new tax to nudge the market. The answer is not an incentive to please stop polluting. We don't need 10% reductions here and there. We need massive reductions everywhere, preferably with active capture that pushes carbon emissions into negative territory. We cannot afford to fund green energy by taxing non-green energy. Coal cannot fund solar. Coal has to stop. We need rules to say that burning coal is now illegal. We need rules that mandate solar+wind as a fixed percentage of energy generation. We need massive rewrites to the rules that limit the deployment of new nuclear technologies. The opportunity for politically-friendly market-based (ie American) approaches has passed. It is time for governments to pass absolute rules forbidding some behaviors and mandating others. If that offends political sensibilities, those political sensibilities need to be set aside.
(1) Burning more than 100kg of coal per year is illegal.
(2) All new houses must include 10m2 of solar panels per resident.
(3) Windmills are, by law, not "an eyesore". No more complaining about them spoiling your retirement view.
(4) Those who cannot articulate the difference between a millisievert and a microsievert, between fission and fusion, are not allowed anywhere near the planning meeting for any new power plant.
For a concrete alternative with incentives: https://citizensclimatelobby.org/basics-carbon-fee-dividend/
A massive $600 billion dollar per year incentive based nudge.
https://en.wikipedia.org/wiki/Tetraethyllead : EPA mandated reductions of lead in gasoline worked.
Not to mention the thousands of little things (drunk driving, slavery, universal suffrage, speed limits etc) that were overturned relatively successfully without any market-based approaches. There is a right-wing philosophy that all government actions are inherently inefficient, but the reality is that laws work. It is possible to ban a behavior on day one and see it substantially reduced on day two.
"From the Korean and Japanese data, we used our models to show that emissions of CFC-11 from north eastern China had increased by around 7,000 tons per year after 2013, particularly in or around the provinces of Shandong and Hebei," said Luke Western, a University of Bristol atmospheric modeler. "We didn't find evidence of increasing emissions from Japan, the Korean peninsula or any other country to which our networks are sensitive."
https://www.cnn.com/2019/05/22/health/china-cfc-pollution-en...
Drunk driving is still not solved, and Uber/Lyft have done more to reduce drunk driving in huge parts of the US with poor public transportation than harsher penalties.
Laws outright banning things don’t work when a huge chunk of the population will do it anyway. See, prohibition, the war on drugs, etc.
Incentivize alternatives, don’t ban without a replacement. Otherwise it will just disrupt and get overturned a few years later.
How about this: The top US tax rate in the 50s was over 90%. That's a good number for the upper bracket of a progressive carbon tax. In short, large companies are no longer allowed to make profits while emitting carbon. They can continue to operate, but as investment vehicles they will be dead.
Yep, but the effective rate was similar to today because of so many deductions.
Also, what is a “large company”? I would rather Tesla makes a profit despite it emitting carbon and some small coal power not be allowed to profit just because it only employs 300 people.
Just tax carbon output, don’t create all of these half-baked rules trying to punish companies for being large rather than trying to solve the solution of CO2 output.
Perfection cannot be the enemy of the good. A standard tactic to oppose any new regulation is to show how it might not be perfect in certain circumstances. That draws out the debate. Draw debate out long enough and the proposed law dies. If solar+wind+nuclear is no longer the best approach in ten years, we can cross that bridge when we come to it.
>(1) Burning more than 100kg of coal per year is illegal.
No problem, we’ll just burn bunker fuel instead, or 1000kg of wood. Too bad you didn’t just limit carbon instead.
>(2) All new houses must include 10m2 of solar panels per resident.
Nice, a tax on the poor to force a rollout of an energy source with no baseload story that won’t work on a huge chunk of homes due to location and/or orientation. Solution here is to obviously pick the cheapest possible thing that qualifies as a solar panel. Too bad you didn’t incentivize energy generation.
>(3) Windmills are, by law, not "an eyesore". No more complaining about them spoiling your retirement view.
This is a joke right? Legislating speech around the appearance of a pervasive man-made object? That’s as dumb as “CO2 is, by law, not ‘a problem’. No more complaining about it risking our future.” The best way to get people to talk about how ugly they are is to ban talking about how ugly they are.
>(4) Those who cannot articulate the difference between a millisievert and a microsievert, between fission and fusion, are not allowed anywhere near the planning meeting for any new power plant.
This sounds good on paper, but it’s the politicians that hold the ropes here and they are ignorant and listen to the populace. This is why things like the green new deal exclude nuclear energy and effectively accept fossil fuels as base-load by doing so. Politicians cater to their base, not what is right for society or what is logical.
This is true for all democracies.
I am not sure rules is what holding nuclear back. Here is an interesting comment https://www.youtube.com/watch?v=2SXxJWUv-x4&t=77m59s
1) In the absence of this pairing it just looks like a government-growing cash grab to a segment of the population.
2) People who aren't even convinced of the dangers of AGW can still support it.
But there's massive opposition.
There seem to be two main arguments:
1. The tax is too small to make any real difference, so we might as well scrap it. (I don't understand this one either, and it's only true for current levels, the tax is supposed to increase every year.)
2. China and the States aren't anything, so anything we do is meaningless and just disadvantages us. (The answer to this argument is Nobel prize winning Bill Nordhaus's carbon club proposal)
It looks like the carbon tax opposing conservatives are going to win the election in October. It'll be a shameful time to be a Canadian. We have the highest CO2 emissions per capita and most of the country won't be doing anything about it.
If the tax becomes large enough to make a real difference to how people live, then there would be enough public support to scrap it, or at the very least freeze any increases. That means it'll only work if technology advances fast enough that we can lower our emissions enough to meet climate goals without compromising quality of life. But that would be a reduction of over 10% a year, every year. Yeah, that's what "limiting to 2C" would actually mean. http://www.climatecodered.org/2014/01/radical-emissions-redu...
Trudeau has also supported the oil industry at every turn. The extraction and burning of the remaining oil in Canada is itself more than Canada's fair share of global emissions to limit heating to 2C. https://www.nationalobserver.com/2015/07/08/news/tar-sands-v...
As for the carbon club, existing agreements like NAFTA stand in the way of creating a carbon-pricing trade bloc. The most plausible place for it to start would be the EU after the UK leaves, but even then, I doubt there will be any politicians fighting for it - for similar reasons as for Canada.
BC’s tax was gradually introduced, starting at a low rate. Also, the government of the time gave rural and low income people a large credit right away. I was poor at the time on account of being a startup founder (LoL) and I recall getting hundreds of dollars in the mail very soon after the tax launched.
And, of course, even something that is revenue-neutral overall will have some winners and losers: SUV owners will pay more than those commuting with public transport. Poorly isolated single-family homes in the south relying on air conditioning through the summer will be more expensive compared to flats in northern brick houses, etc.
And this is liberal, polite, progressive Canada, doing a case-study in how Conservatives fight against even the most conservative of carbon pricing policies.
Those all sound like excellent outcomes in terms of linking behavior to carbon emissions via a price-signaling mechanism.
Logically, it's impossible to simultaneously incentivize people to emit less and not have the current high emitters feel some incentive to change.
(Edit: removed one extraneous negation in the last sentence.)
In general it takes more energy to live in colder climates than warmer ones.
So a better comparison would probably be a large house up north vs a small apartment down south.
Then, once a lot of carbon producing machines are out of use, introduce a carbon tax to help push the remaining ones out?
Luckily most carbon intensive activities have alternatives.
Electricity and power generated from carbon emitting sources on the other hand have a much more elastic demand curve. E.g. if your energy bill is cheaper with renewables, no one would choose to go with fossil fuels. Likewise with electric vehicles. If the cost of tanking up an EV is significantly lower than an internal combustion vehicle, people will switch for purely economic reasons.
You can look at the lack of a carbon tax as an incentive on fossil fuels which socializes the externalities.
> To summarize, our analysis of the association between cigarette taxes and adult cigarette use suggests that adult smoking is largely unaffected by taxes. At best, cigarette tax increases may have a small negative association with cigarette consumption, although it is difficult to distinguish the effect from zero, and in practical terms implies that it will take very large tax increases, for example, on the order of 100%, to reduce smoking by 5%. This finding raises questions about claims that, at the current time, tax (price) increases on cigarettes will have an important beneficial health impact through reduced smoking. It may be that in a time (2010) when the median federal and state cigarette tax is approximately $2.40 per pack, further increases in cigarette taxes will have little effect because the pool of smokers is becoming increasingly concentrated with those with strong preferences for smoking. Alternatively, as cigarette taxes and prices continue to rise, smokers are taking other steps to thwart the impact of the price increase such as switching brands and increasing purchases on the black market. Notably, we rule out border crossing as an important explanation of the small tax elasticities.
The pool of carbon emitters is not concentrated with those with strong preferences for emitting carbon. Cigarette taxes were already high at the time of the study. Anyone serious about carbon tax to counter global warming says that the tax needs to be very high.
If we get to the point that most people are carbon neutral, carbon taxes are high, and would need to be far higher for a 5% reduction in emissions from people with strong preferences for carbon emitting activities, great!
"The weight of evidence is that the excise tax increases continue to be the single most effective tool for reducing tobacco consumption and prevalence"
https://www.health.govt.nz/system/files/documents/pages/eval...
A carbon tax is a way for all of us (people) to deal with the problem, while the corporations that created and caused it get a 'get out of jail free' card.
Not necessarily. It could make it easier for them to be outcompeted by competitors that don't rely as heavily on petroleum usage
Either reduce your polluting ways or lose business to a company that does.
It seems eminently reasonable that end consumers will and should end up paying.
If you impose a carbon tax, utilities that today create electricity from fossil fuels will have additional incentives that end customers feel to switch to non-carbon sources. It will also provide some small amount of back-pressure against the "no nukes" and "herp, derp, no cancer-causing windmills"
Either way, I care much more about fixing the problem than assigning blame.
A carbon tax, in particular, looks like it would be very easy for a multinational to escape. It's reason #{xyz} to move your facility across the border and out of American jurisdiction.
If we can't get them to pay taxes already, won't a carbon tax simply be yet another tax which is disproportionately paid by small businesses and individuals, and not the actual biggest polluters, while driving more manufacturing jobs overseas to countries which don't have such laws?
The idea is that carbon-priced countries get together and form an internal free trade agreement, and tariff carbon-intensive goods from outsiders.
Because of the political complexity of implementing this, Canada has gone a different way to keep businesses from being uncompetitive against foreign non-carbon-taxed businesses.
Canada uses "output-based allocation" where a relatively green business in an industry is used as a baseline. That is set as a target - create X unit of product with Y units of carbon emissions, and your carbon emissions are untaxed. Every carbon emission over Y is taxed.
In this way, a comparatively green business within a dirty industry can still compete with foreigners, but for a dirty business, the marginal value of going green is just as high as if there was no exemptions at all.
It's not ideal. It's bureaucratic, tedious, economically suboptimal, and politically complicated since it seems unfair. But it's a good intermediate solution until Nordhaus' full dream could be realized.
The money is rebated directly to citizens in federally-regulated provinces.
Conservatives hate it all anyways because their carbon plan is "no."
At some point, these other countries are sovereign entities, and it's going to be difficult to dig into the on-the-ground facts at each factory and step along the supply chain to determine emissions.
https://climate.nasa.gov/climate_resources/99/graphic-measur...
If company X in country Y wants to trade with the US, they could require that country Y provides full transparency in carbon emissions, where the measurements from space could be used as a checksum.
Even if the last "embargo uncooperative countries" strategy were possible, I think you'd find that all of their domestic production would be carbon-intensive and their exports would all be "carbon neutral".
Carbon tax is just money. More money doesn't solve global warming. In fact I would say money is the reason we have global warming in the first place.
There's a pretty strong argument that overall we're subsidizing fossil fuel consumption more than we're taxing it.