The most efficient solution is a carbon tax that fully captures externalities. But $10/gallon gas would cause riots.
I'm all for that once someone comes up with a rigorous, apolitical calculation for what that value is. It's much easier to identify the existence of unpriced externalities than it is to quantify them. I know people associated with the IMF have attempted to do so[1], but they still admit the calculations are "contentious".
[1] https://www.imf.org/~/media/Files/Publications/WP/2019/WPIEA...
is this something that exists in the realm of economics (nee "political economy")?
Would you agree that the longer we wait, the higher that number will be (Because we will need more drastic reductions, faster)?
> apolitical calculation
Economics is, by nature, political. If we're waiting for that criteria to be met, we are going to be waiting forever.
Which is just code for "I'll never support this because I'll never believe you". Dismissing something as "policital" is the easiest out. All it takes is for your political enemies to support something and you have a built-in excuse to refuse to believe it. That is exactly the behavior that led to the circumstance we're in right now, where literally half the voting population of the USA straight up refuses to recognize scientific consensus.
So... this isn't helpful. If you really want good analysis, get in there and help with it. Or at least be willing to accept something as "good enough". But what you wrote there is nothing more than a fancy excuse.
I don't believe this is possible for something as wide-ranging as the effects of increased climate change.
Every paper that attempt these estimates use a 'local' projection of (predicted change) * (current prices to mitigate those changes).
But even ignoring the huge error bars around the scale of changes we'll see, the large-scale changes that reach across all of society will also change all the prices as well; not to mention it's not easy to predict far future prices anyway.
This also ignores the fact that the marginal impact of a ton of CO2 in the future depends on how much CO2 is then in the air, which means you're now in the realm of predicting what current politicians will do ... which is inherently political, since it'll make some people look good or bad.
Supposedly, Carbon Engineering is on track to do that for $100/ton CO2.[1] One gallon of gasoline produces 20 lbs of CO2.[2] So 100 gallons makes a ton of CO2 and $100/ton would add $1/gallon to the price of gasoline, not counting a little extra for the energy expended by refineries and so on, and the cost of sequestration.
Climeworks is also targeting $100/ton, and Global Thermostat thinks it can do half that at scale, while the CarbFix project has demonstrated permanent sequestration in basalt formations for $30/ton. [3]
[1] https://www.greenbiz.com/article/case-investing-direct-air-c...
[2] https://www.fueleconomy.gov/feg/contentIncludes/co2_inc.htm
[3] https://qz.com/1100221/the-worlds-first-negative-emissions-p...
Surely that's more or less an upper bound to the cost of the externality? If it were higher, we would undo it by scrubbing the air, if it were lower, scrubbing wouldn't make economic sense.
I don't think "Let's put the absolute maximum tax on this" is a strategy that works very often.
So we can't just say that the cost of damage must not be so high, or we would already be cleaning it up. There is no "we," there's individual actors and messy politics, full of entities making personal profits who are good at influencing politicians.
On top of that, the costs aren't even paid by us today, they're paid partly by our future selves decades hence, even more by future generations, and impossible to exactly predict. That makes it even easier to focus on today's personal profits and ignore the externalities.
Put another way, this is a public goods problem, where individual efforts make little impact unless everyone does them. Everyone is better off if the problem is fixed, but individually profits more by freeloading. The game theory says individual contributions go to zero. Once again, the only solution we have is political.
And finally, the technology to clean up the mess for $100/ton is just now beginning to emerge. We're not doing it already because we can't do it yet.
Most climate economists estimate the cost of carbon at several hundred dollars per ton. So yes, the cost is higher, and yes, we should scrub the air, once we're able.
You’re already in the game. The clock is ticking and not playing is not an option.
The issue isn't $10/gallon gas. The issue is $10/gallon gas suddenly.
If everybody knows that gas is going to go up every quarter for the next 10 years, things will adjust. Businesses will start making long-term decision around the increase. People will buy smaller cars and will start screaming for mass transit.
https://theconversation.com/heres-what-the-carbon-tax-means-...
Considering the hysteria that $10/tonne is causing in Canada, I don't think my riots statement is hyperbolic either.
Then you have the fact that transport, and hence fuel, affects the price of most goods, so fears of a recession (decrease in purchasing power) are not unfounded.
Also consider that, while justified as addressing a "tragedy of the commons scenario", rarely do such tax dollars go towards mitigating the externalities in question. The tax would sting less if it was being spent building renewable energy rather, than initiatives that are charitably described as contentious and perhaps more accurately described as pandering. If we could avoid the graft and self-dealing usually associated with federal spending, that would likely cut down on the complaints as well.
And giving the carbon tax back to people as a dividend is not pandering, it's making a highly regressive tax progressive.
Giving money directly to people is the purest and most effective form of economy pumping. So while carbon-intensive businesses are hurt other's will benefit; recession fears are completely overblown.
And the carbon tax is the most efficient form of carbon mitigation strategy. Did you see the recent news about Doug Ford's plan being twice as expensive as the carbon tax?[1] And it is imposes the costs almost exclusively on industry, increasing the chance of a recession much more than the carbon tax it would replace.
1: https://nationalpost.com/news/politics/costs-of-ontario-clim...
300$/ton * 8.65kg = 2.6$ per gallon (0.6$ per liter)
100$/ton * 8.65kg = 0.87$ (0.23$ per liter)
30$/ton * 8.65kg = 0.26$ (0.07$ per liter)
7 cent per liter seems quite acceptable. And people are reporting that some companies are targeting that price point for sequestration. Please correct my if I miscalculated something.
People would have to switch to smaller, more fuel efficient cars as they did in Europe, where this is roughly the average price.
You want a carbon tax, put it where it belongs, tax vehicles that return less MPG and priced beyond average car price purchases of the middle class. That Vette over there, bam, 10k extra. That Ferrari, 50k. See that lovely Audi S5 sport coupe, tack on another 10k there too. Tax small planes, tax motorcycles beyond a certain CC and size, but never tax the fuel. To encourage a change in what is an acceptable method of transportation means taxing what you don't want more of, not punishing those who are least able to withstand it let alone are not causing it.
Pretty sure that's already what europeans pay.
Carbon fee and dividend can avoid the regressive effects of a plain flat carbon tax.