I'd prefer a gas/carbon tax to cap-and-trade

Market based solutions are the best way to reduce greenhouse gases. I’d prefer a carbon tax, preferably a revenue neutral form in which funds gained are paid back to citizens on a per person basis. The tax would not be intended to produce revenue. It should be phased-in, increasing in small increments each year, to give people time to adjust. I would begin with a gas tax first because oil dependency is a big foreign policy problem beyond global warming. If  I ran the 2009 legislative session I would put a revenue neutral gas tax out for a referendum vote.

 

The problem, unfortunately, is that the public does not seem to support any form of a carbon tax, and perhaps is especially opposed to a gas tax. Thus, various levels of government are working on a variety of cap-and-trade systems. They are, in my opinion, second best methods. They seem very complex, and, depend ultimately on the threat, if not the reality, of raising the cost of any form of energy that emits carbon. Like opposition to a carbon tax, I think that once the public understands this, cap-and-trade systems have the same political liabilities as a carbon tax. Better to go for a revenue neutral gas tax that can be more easily explained.

 

The Oregon Business Magazine article “Pollution for Sale: Ready or not, the carbon market is coming to Oregon. Expect big winner – and big losers.” by Ben Jacklet sets out some of the cap-and-trade issues that will be before the legislature (here ):

The opportunities and costs of Oregon’s climate change strategy are certain to be matters of intense political maneuvering in the 2009 Legislature. No other issue more clearly delineates the growing division between an established manufacturing economy that employs hundreds of thousands of Oregonians and an emerging clean-tech economy with far fewer jobs but growing clout. Putting a tradable price tag on the pollution that causes global warming would grant a huge advantage to the clean-tech sector, already a beneficiary of significant state subsidies, at the expense of some of the state’s largest employers.

 To a certain extent the overall result of the transition would be a version of out with the old and in with the new, except the biggest winner of all may end up being the timber industry.

The Western Climate Initiative, a collaboration between seven states and four Canadian provinces, is establishing a regional cap-and-trade system for facilities that emit more than 25,000 metric tons of carbon dioxide equivalent per year. Businesses and utilities will receive allowances for their emissions based on historical data, with the allowances decreasing over time. To comply, they will have to become more energy efficient, purchase carbon credits from other businesses, or pay for offset programs to store carbon or decrease its flow into the atmosphere. Businesses that exceed their emission reduction quotas will be able to bank their carbon allowances, or trade them as if they were oil or wheat futures….

What might it cost consumers?

The question is, does the upside of these emerging trends outweigh the downside of significantly higher power rates? Angus Duncan, president and CEO of the Bonneville Environmental Foundation and chair of the Oregon Global Warming Commission, believes it does. He argues that advances in energy efficiency will ultimately cancel out the increase in electricity rates, which are expected to go up about 30% under cap and trade. “Prices will go up, but consumption will go down,” Duncan predicts. “The cost of compliance will be right around zero.”

A further note, as proposed, the cap-and-trade proposal would not go into effect until 2012 with the transportation components (not yet set out) going into effect in 2015. In this, they seem to have the priorities backwards. Transportation should come first.

I’m trying to keep an open mind, and will study more on the cap-and-trade proposal. Maybe I’ll work up more enthusiasm for it.

And then, there is still China, adding one or more new coal power plant per week.

Comments

[christian louboutin]

Market based solutions are the best way to reduce greenhouse gases. I’d prefer a carbon tax, preferably a revenue neutral form in which funds gained are paid back to citizens on a per person basis.

[pandora]

A further note, as proposed, the cap-and-trade proposal would not go into effect until 2012 with the transportation components (not yet set out) going into effect in 2015. In this, they seem to have the priorities backwards. Transportation should come first.

[pandora Bracelets]

The question is, does the upside of these emerging trends outweigh the downside of significantly higher power rates? Angus Duncan, president and CEO of the Bonneville Environmental Foundation and chair of the Oregon Global Warming Commission, believes it does. He argues that advances in energy efficiency will ultimately cancel out the increase in electricity rates, which are expected to go up about 30% under cap and trade. “Prices will go up, but consumption will go down,” Duncan predicts. “The cost of compliance will be right around zero.”

[christian louboutin sale]

The question is, does the upside of these emerging trends outweigh the downside of significantly higher power rates? Angus Duncan, president and CEO of the Bonneville Environmental Foundation and chair of the Oregon Global Warming Commission, believes it does. He argues that advances in energy efficiency will ultimately cancel out the increase in electricity rates, which are expected to go up about 30% under cap and trade. “Prices will go up, but consumption will go down,” Duncan predicts. “The cost of compliance will be right around zero.”

[louboutin]

To a certain extent the overall result of the transition would be a version of out with the old and in with the new, except the biggest winner of all may end up being the timber industry.