Last week a Terra Rossa reader wondered how I could think cap and trade is a better – and more conservative – solution to climate change than a carbon tax.
Here’s how…
First, both a carbon cap and a carbon tax assume there has to be some kind of signal to the marketplace to reduce carbon emissions. And let’s face it, without such a signal we’ll keep pumping carbon into the atmosphere. We’ve been doing it for decades. So which signal is better?
With a tax, the government picks the winners and losers in the marketplace. It penalizes consumers and the auto industry in order to get some other energy alternative to rise to the top. And by the way, it would send lots and lots of revenue to Washington, DC where it can be spent on any number of government programs, or at best, recirculated to taxpayers through government-chosen methods and amounts.
Cap and trade, on the other hand, would apply to all carbon-emitting industries equally, and it would establish a system that allows the marketplace to pick which clean energy alternative is best.
I know the idea of a carbon tax has become popular among some on the Right. I hope they’ve not been driven to the idea of a tax simply because cap and trade most recently has been associated with Al Gore. Let’s not forget that the idea of cap and trade is the brainchild of President Reagan’s former Secretary of State, George Schultz. And the idea was put into practice by President George H. W. Bush to reduce acid rain-causing sulfur dioxide emissions – and it is a huge success, reducing SO2 emissions at a fraction of the cost many opponents (and even supporters) had predicted.
So this conservative will choose a market-based cap and trade system over a new government tax any day.
This entry was posted on Monday, January 21st, 2008 at 1:45 pm and is filed under Cap and Trade . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
January 21st, 2008 at 11:13 pm
Actually, it’s with cap-and-trade that the government picks winners and losers. Based upon what’s in Lieberman-Warner, there is a powerful push for the government to make polluters the big winners, but providing them with free allowances and massive windfalls. Who will pay? Not the polluters! Benefits will go to polluters and costs will be passed through to consumers.
With a revenue-neutral carbon tax, as proposed by the Carbon Tax Center and many of carbon tax supporters listed on the Supporters pages at http://www.carbontax.org, the winners will be the environment and those among us who reduce our emissions of carbon dioxide (whether directly or indirectly). Contrary to Tucker’s post lots of lots of revenue will not go to Washington. It will immediately be rebated to all Americans or used to offset payroll taxes.
It’s silly to suggest that carbon taxes have become popular on the right because of some reaction to Al Gore. Read what conservative economists and organizations such as the American Enterprise Institute have to say about carbon taxes at the Carbon Tax Center web site. You’ll see that they support carbon taxes for the right reason — because carbon taxes are consistent with sound economic theory.
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