Lauren R. Stevens: Better climate for carbon tax

Tuesday December 11, 2012

WILLIAMSTOWN -- The quiet but distinct call of the carbon tax bird is heard in the land.

And that is heartening.

The likely best approach to dealing with global climate change had seemed to be permanently politically impossible but, through a remarkable collection of circumstances, is now - maybe, perhaps - possible.

Those circumstances are diverse, such as the Democratic victories or, maybe more important, the Republican losses in the last election; the US of A moving to become a net oil exporter; the need for sources of income as we crest the so-called fiscal cliff; and of course Hurricane Sandy, which has increased a sense of urgency.

In any case, climate change publicist Al Gore is for a carbon tax; always has been. Right- wing think tanks are considering the advantages, as are more progressive thinkers. Utility companies are opposed, but gas and oil companies prefer it.

A cap-and-trade approach to limiting carbon emissions died in the Senate in 2010 and some people think just as well. One problem with cap-and-trade is that it encourages people to use up to the cap; that is, if you reduce your carbon, that frees up someone else to emit more - even though the cap lowers as time goes by. It is, after all, trading in a common. Chief Seattle seems to have warned about that when he asked, "How can you buy or sell the sky?" A carbon tax is indirect, like a sales tax. It taxes the carbon content of fuel at some point on that fuel's cycle.

Thus it is called a pigovian tax, not as you might surmise because energy hogs get hit but after economist Arthur Pigou. In theory it should add to the cost of fuel the social cost of climate change, so that consumers pay full freight. Thus you might pay a surcharge on your gasoline purchase, for instance.

Unlike a direct, income tax, it is regressive, though; that is, poor people tend to pay a higher percentage of their income. A carbon tax should address this inequality by adjusting tax rates or returning some of the income to those hit hardest. Another disadvantage of a carbon tax is that it doesn't encourage development of methods for carbon sequestration.

Opposition was, and remains, high to any efforts to limit carbon emissions. Canadian Liberals lost a recent election in part due to proposing cap-andtrade. In 2010 U.S. congressional races, Republicans scored some victories by hanging cap-and- trade around Democratic necks.

So it is unlikely that the U.S. will make any electrifying proposals at the current U.N. climate talks in Doha, Qatar, and Obama probably won't put a carbon tax on the table in the present negotiations over the fiscal cliff.

On the other hand, the carbon tax avoids the use of unpopular regulations to limit climate change. It is the most efficient way to deal with the issue. And it could provide a significant revenue source to reduce the deficit. Therefore it seems possible that a carbon tax will emerge in post-cliff discussions about tax reform - perhaps palatable to some more as a way of raising revenue than combating climate change.

But it will do both.

At least, that's how it looks from the White Oaks.

A writer and environmentalist, Lauren R. Stevens is a regular Eagle contributor.


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