This is from a press release embargoed until 00:01 today (it says). I don’t know why, there’s nothing new here, because Nordhaus said the same thing well over a year ago in this Guardian article where he says “taxation is a proven instrument”. Um, well no, it hasn’t been proven with carbon emissions yet perfessor. This fellow’s view rather reminds me of the view of Leona Helmsley, who famously said: “We don’t pay taxes. Only the little people pay taxes…,”
Carbon taxes are the answer to the stalled climate negotiations
London, UK (January 6, 2011) – For global warming policy, the 2009 United Nations Climate Change Conference (Copenhagen Summit) was a major disappointment. Designed to negotiate a successor to the Kyoto Protocol, which expires in 2012, the Summit concluded without a binding agreement because of deep divisions on the distribution of emissions reductions and costs. In addition, the United States failed to take action on a carbon cap-and-trade bill in 2010. Confronting this policy vacuum, leading climate economist William Nordhaus argues in the Bulletin of Atomic Scientists, published today, that carbon taxes are the best approach to achieve significant emissions reductions.
William Nordhaus argues that the cap-and-trade approach used in the 1997 Kyoto Protocol will not accomplish the goals of slowing climate change. As currently designed, it is both economically inefficient and ineffective and should be supplemented or replaced. Additionally, a carbon tax could be a useful means to cut budget deficits while meeting environmental objectives.
Emissions of carbon dioxide are externalities – social consequences not accounted for in the market place. They are market failures because people do not pay for the current and future costs of their emissions.
“If economics provides a single bottom line for policy, it is that we need to correct this market failure by ensuring that all people, everywhere, and for the indefinite future, face a market price for the use of carbon that reflects the social costs of their activities,” Nordhaus states.
He says that it is necessary to raise the price of carbon to implement carbon policies so that they will have an impact on everyday human decisions, and on decision makers at every level in every nation and sector. At present, incentives and levels of involvement vary, and where some countries have implemented strong emission control measures, they only cover a limited part of national emissions. For example, the European Trading Scheme – Europe’s effort to initiate a cap-and-trade structure – covers only about half of EU emissions.
Economic evidence suggests the cost of this limited participation is high. Participation will have to involve everyone by the mid 21st century if the aim of keeping global temperature change within the 2 degrees Celsius target of the Copenhagen Accord is to be achieved.
Given a choice between a cap-and-trade system (such as is embodied in the Kyoto model), and a carbon tax system (such as is used for limiting gasoline or cigarette consumption), Nordhaus favours taxation: “Countries have used taxes for centuries,” he says. “By contrast, there is no experience – as in zero – with international cap-and-trade systems.”
A carbon-tax model also provides a friendly way for countries to join a climate treaty. Countries considering joining under the current Kyoto model have to weigh up concerns about the long-term impacts of climate change with heavy pressures that big countries could apply. Under the carbon-tax model, by contrast, countries would need only to guarantee that their domestic carbon price would be at least at the level of the international norm – a relatively straightforward and transparent choice.
How do we modify the Kyoto Protocol to include tax-type models? Some have suggested a hybrid approach combining both quantity and price approaches. An example of a hybrid plan would be a traditional cap-and-trade system combined with a floor carbon tax and a safety-valve price. The Kyoto treaty might also be broadened, to allow countries to fulfill their treaty obligations if they have a domestic regime with a minimum carbon price attached to all emissions.
One further impetus for climate-tax legislation comes from the need to curb the growing budget deficits in many high-income countries. A carbon tax would provide an important revenue source, and a carbon tax is the closest thing to an ideal tax that can be imagined, he argues.
“The international community should move quickly to replace the current cap-and-trade structure by one in which the central economic mechanism is a tax on greenhouse-gas emissions,” Nordhaus concludes.
This title is embargoed until 00:01hrs GMT January 6th, 2011 for a copy please contact: jayne.fairley@sagepub.co.uk
William Nordhaus is a Sterling Professor of Economics at Yale University, CT. He has served on several committees of the U.S. National Academy of Sciences (NAS), including the Committee on Nuclear and Alternative Energy Systems, the Panel on Policy Implications of Greenhouse Warming, and the Committee on Implications for Science and Society of Abrupt Climate Change.
Author contact information: william.nordhaus@yale.edu
Tel: 001 203 432 3598
The architecture of climate economics: Designing a global agreement on global warming by William D. Nordhaus is published today (6 January, 2011) in the Bulletin of the Atomic Scientists Volume 67, issue 1. The article will be free to access for a limited period from http://bos.sagepub.com. The Bulletin of the Atomic Scientists is published by SAGE.
The Bulletin of the Atomic Scientists
The Bulletin is an independent nonprofit 501 (c) (3) organization that publishes analysis and conducts forums about nuclear security, climate stabilization, and safety in the biosciences. Founded by Manhattan Project scientists from the University of Chicago, it links the work of scholars and experts with policymaking entities and citizens around the world. An international network of authors assesses scientific advancements that involve both benefits and risks to humanity, with the goal of influencing public policy to protect the Earth and its inhabitants. The organization’s scientific advisory boards include 19 Nobel laureates, ambassadors, leading scholars, distinguished NGO officials, and public policy experts. The Bulletin is closely followed in Washington and other world capitals and uses its iconic Doomsday Clock to draw international attention to global risks and solutions.
SAGE is a leading international publisher of journals, books, and electronic media for academic, educational, and professional markets. Since 1965, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students spanning a wide range of subject areas including business, humanities, social sciences, and science, technology, and medicine. An independent company, SAGE has principal offices in Los Angeles, London, New Delhi, Singapore and Washington DC. www.sagepublications.com
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
I think he’s absolutely correct in thinking that cap-and-trade is total nonsense which will have no effect at all beyond relocating UK steel jobs to India, whereas a world-wide carbon tax could well have the effect he desires.
That in no way means that the effect he desires is in any way desirable for the sane folk of the world.
The opening remarks of this article are, erm, remarkable:
For global warming policy, the 2009 United Nations Climate Change Conference (Copenhagen Summit) was a major disappointment.
Exactly how do you tell when a policy is disappointed?
So it was never about saving the planet after all, who’d a thought that eh?
“One further impetus for climate-tax legislation comes from the need to curb the growing budget deficits in many high-income countries. A carbon tax would provide an important revenue source, and a carbon tax is the closest thing to an ideal tax that can be imagined, he argues.”
The Australian Greens leader said pretty much the same thing, although embellishing the offerings a “carbon tax” would fund (Hospitals, education, transport etc etc), going into the eelction last year.
We truely are living in the age of stupid (In the name of saving the planet).
“Emissions of carbon dioxide are externalities – social consequences not accounted for in the market place. They are market failures because people do not pay for the current and future costs of their emissions.”
What exactly are the ‘current’ costs of my carbon dioxide emissions and how do you calculate them? Presumably since my carbon dioxide emissions act as plant fertilizer I should get paid for them!
Unfortunately, taxes probably will work.
Not to cut CO2 emissions, but to provide a regular cash infusion into the activists and politicians. Can you see a politician of any nationality or persuasion turning down the opportunity to apply a new tax?
The problem with Carbon Trading is that it only benefitted the bankers. Carbon taxes will benefit the politicians, who are the ones who make the rules….
Sigh, so many professors, so few brains between them.
I agree with Ceri Phipps. When it is shown that CO2 is harmless, in fact beneficial, will I be paid for the current and future benefit of my emissions?
The good professor has, no doubt, come across the phenomenon of ‘fuel poverty’. Fuel poverty can in part be illustrated as poor pensioners in the colder regions having to choose between heating and food. Carbon taxes raise fuel prices (and all prices through the resultant inflation for all goods and services) pulling evermore people into fuel poverty and dependency on the State.
That concerns me enormously.
Great idea — it will solve 2 huge of problems:
1. The retiring baby boomers. A lot of the have no pension to speak of, and the sooner they die off from the cold, the cheaper the welfare bill gets.
2. The overpopulation of Britain. As the poorer cities will no longer be able to afford enough electricity, theft will become endemic and utilities will no longer be able to police and maintain their installations and entire towns will get taken off the grid and the population there will shrink ‘naturally’ from cold and diseases. This will elegantly solve the problem of there not being enough power stations and thus, power cuts in places where it would cramp ones’ style will be avoided.
Either way, the above in Nr. 1 is already happening albeit on a smaller scale. Currently the UK has 30k surplus death due to weather killing old and sick folks before their time, and that is before Professor Death and his fellow killers have even started their campaign in earnest.
The last time I read this kind of tripe was in a book on Karl Marx & his Socialism viewpoint on society. The only difference was in the nomenclature. Free-enterprise capitalism is bad, environmentalism is good! Curiously the solutions to all the worlds ills is for these Intellectual Socialist Elitists to be in charge of everyone else, be unelected, undemocratic, unaccountable, & most disturbingly, unsackable!
Here in the PDREU/UK island province, gas prices are goinf through the roof, petrol/diesel prices are ditto, as is everything else. VAT is up, so will commoditiy prices, I suggest infaltion will be at 5% by end of year at the latest as the public sector workers (many low paid) cannot afford to heat their homes, run their cars, or buy the essentials, unemployment will rise dramatically, etc. Everything is rosey!!! All thanks to a socilaist government not looking where it should have been & chasing Utopia, & the latest bunch of chinless wonders being twice as ignorant! Watch out you chaps ‘n chapesses from the colonies, you’re next! So if you treasure you freedom, give your current White House incumbent a good drubbing come election time. Curiously enough, the price of bagged coal hasn’t risen that much!
I’ve always wondered why a worldwide energy tax, weighed by a country’s GDP, never got any traction.
I agree a carbon tax could be more efficient than cap-n-trade but the real question is where the money goes. If a non-trivial portion of it goes to effectively reducing GHGs THEN we’re talking about a real solution!
The Professor is right, and that is why what he proposes will never happen.
Irrespective of whether AGW is real or not, or a real problem or not, the United Nations sponsored IPCC, etc, was never really about curbing CO2 emissions. It was about generating a large revenue stream to the UN and then to the developing countries that control the UN through their majority (of votes).
Cap and Trade transfers $100 billions to the UN and Developing countries. A carbon tax transfers nothing, because all revenues flow to national governments.
Which is why the UN and the Developing countries will never accept a carbon tax which will reduce CO2 emissions (as the Professor points out), instead of the current cap and trade, which has little or no effect on CO2 emissions.
I seriously doubt this man has to worry about filling up his car with fuel, or heating his home like hundreds of millions of ordinary people have to do. It costs me over €75 to fill my car up with Diesel, mostly because of tax. People will change to alternatives, but there is none to fossil fuels that is good enough yet.
There are far more damaging emissions from the burning of fossil fuels that give people cancer. C02 as I believe, is harmless to human health at the levels in the atmosphere. Yet here the emphasis is on C02 emissions.
Deforestation and industrial pollution of rivers to name a few, is also going to harm the planet a lot more than C02 emissions!
I’m not a climatologist, but as far as I am aware from this wonderful site is the FACT satellite records show this year is half a degree behind the warmest year, that being 1998, correct me if I’m wrong. IF 2011, 2012+ starts to get cooler and cooler, will we still be told Global warming is causing the cooling like this year?
There will be no end to it , but one thing I know. Eventually the Global warming debate will be over, and they will find something else to make up, like maybe the possibility of an Alien invasion being the biggest threat to the planet, and we will have to increase tax, Alien invasion tax. We will have to make bigger better weapons!
This particular Nordhaus, I have read, reckons it a good idea to run his economic computer models 1000 years into the “future.” These are the models that our dear politicians and bankers used to wreck the economy recently. We are in the same territory as with the climate modellers, and a closely related insanity.
Like the Met Office, they seem to imagine that they can defeat chaotic systems by using bigger computers. Edward Lorenz (1963) and Henri Poincaré (1880-something) already knew better.
It seems that for those on the political left, and for politicians of all stripes, the solution to every conceivable problem appears to be a new tax.
If governments really could solve every problem by taxing us more we should have all been living in Utopia long since.
Carbon taxes are really incredibly naive. What happens when a government taxes? It gets money to spend! And what does it spend it on? On goods and services which consume fossil fuels – and do government’s tax themselves? No!
Indeed, if anyone really wants to know the real basis of this baloney in is in the endogenous growth theory so espoused by Gordon Brown which led to the decade of debt-financed debt-bubble growth and souring house prices where the economy apparently soared with no obvious means of support — except the global warming type belief that it could soar without real economic means of support (HENCE THE COLLAPSE)
How is this related?
Endogenous growth theory, was the theory that you could grow an economy without there being any need to increase material consumption. It all stemmed from the incredible growth of computers which apparently sold items like CDs which contained little material and whose overwhelming value was just the information on the CD (hence Micro$oft). Economists looking at the dot com (bubble) imagined that this was a new paradigm in economics … that from now on economies would grow without the need for greater consumption of material resources like fossil fuel or iron, rare earth metals etc. What a way to get over the impending resource crisis!!
Likewise the “renewable energy” powered world or “hydrogen economy” is simply an extension of this endogenous growth theory to energy. The idea is that we can create energy without ever having to consume resources to do so. The extension to this on the fiscal front is the idea that if you tax people for consuming real materials, that somehow they will all start to inhabit the fairytale world of endogenous growth theory and hydrogen powered economy where everyone does nothing all day except buy and sell information and watch their “ZERO” carbon house price rise.
Of course, it is all fanciful nonsense. Take e.g. a windmill (or as those countries that don’t have a viable wind industry call them “windturbines”). Each of them contains hundreds of tonnes of steel. That steel doesn’t come energy free … it requires vast quantities of coal to produce. Then it requires transporting along purpose built roads all of which also consumes energy mainly from coal. Solar panels are likewise energy expensive to produce.
Even apparent “renewable” energy from farmed plants is nothing of the sort. Farming consumes vast amounts of fossil fuel energy in the machinery, transport, fertilisers, pesticides and even simple things like the energy used to transport the water the farmer uses. Land drainage and even the roads and buildings of a farm all add to the “carbon footprint” of a modern farm which is absolutely massive. The result, I was told, was that a farm producing bio-diesel would need to retain half the crop on the farm for their own use. Add to that the cost of transport off the farm, utilities and the carbon footprint of all those civil servants and there is probably nothing left. I.e. The average farm is probably a net carbon consumer not producer!
If you really want to wind up the eco-nutters just remind them that the only real source of 100% renewable energy is naturally grown organic material like tropical rainforest trees – or fresh polar bear meat!
But back to carbon taxes. THEY DON’T WORK! Even if the intention were to displace fossil fuel use by “renewables”, most of that change in behaviour would result in substantial indirect carbon use … after all even people making huge profits from cutting down the Amazon and transporting “carbon free” in bio-diesel powered ships … even they have to spend their ill gotten gains … and what do they do … they buy carbon intensive luxury goods from China!
There is only one 100% guaranteed way to reduce carbon usage: to reduce the size of the world economy! Either to reduce the per person economic activity or to reduce the number of people in the active economy! Anything else is just displacing carbon usage in one part of the economy and boosting it in another. Money raised by taxes have to be spent … and unless someone suddenly discovers that carbon-neutral economies can produce cheap goods and services, those Carbon Tax $ will be spent on carbon consumptive goods and services from economically vibrant countries that don’t give two hoots for carbon taxes! (Except as a wonderful way to undermine their economic competitors!!!!)
The real irony, is that China is now becoming a major windmill manufacturer. They are selling this luxury good to pander to the green conscience in the West built from 100% from the Chinese coal-powered economy.
It’s carbon free in the West … and no unsightly industry (or jobs) to upset the eco-nutters, but its 100% carbon based production from the growing super-power who doesn’t have to worry about home-grown eco-nutters destroying their economy!
A little knowledge is a dangerous thing.
Unfortunately, as regards the climate, what drives it, what is the ideal temperature for the planet and how conditions will change if there is some warming, we know little and understand less.
Given this state of knowledge and understanding and given that there appears to have been no significant warming for about 12 years and given the economic harm that will be inflicted on western economies by decarbonising and given that this will all be futile since this decarbonisation will be more than off-set by the industrialisation of developing countries such as China and India such that on a global scale there will be no reduction in CO2 emissions, any sane person would conclude that the best action is to do nothing at this stage, monitor the situation and adapt if necessary.
The western economies are already in deep trouble due to the financial crisis. The last thing that is needed is more tax. In fact less taxation is what is needed to stimulate these economies and to create growth. Given the need to address the budget deficit I accept that the scope to reduce taxation at this stage is probably limited, however, the idea of increasing it, and the idea that this would be good, is sheer madness.
If all of this CO2 dogma turns out to be untrue and a scam, there will be a backlash. There is every likelihood that over the next 10 years or so, global temperatures will drop. This will make people increasingly more sceptical and more reluctant to pay green taxes and green subsidies. People will begin to question the waste. As there is evidence that some of the data is poorly compiled if not deliberately skewed to show a warming bias and given that there appears all but no correlation between temperature and CO2 concentrations either on a geological or recent timescale, people will begin to conclude that it was so obviously a bad hoax that they will not accept that the politicians were duped and will not believe the politicians when they say that they thought that they were acting properly and in the best interests of the world.
It is amazing how much clearer things become with hindsight. For example, it will suddenly become obvious that windmills were a hopeless idea and the people will not accept that the Politicians could ever have concluded that implementing that energy policy was the right thing to do. The people will question the 100s of billions wasted on that project, especially if the lights go out (as appears likely in the UK unless we build some real power stations very soon).
I think that there will be a lot of problems for the politicians in 10 to 15 years time and I believe that this will also put back the environmental movement. We live in times where there is a lot at stake, and strangely, in times when inaction is the best course of action.
@Ceri Phipps: “Presumably since my carbon dioxide emissions act as plant fertilizer I should get paid for them!”
Oh, Ceri, you comic genius!
So, in addition to us all being subjected to a tax to curb emissions of a harmless gas, what the governments need to do is set up feed-in tariffs for CO2 emissions. That is, just as those with oodles of dosh are being paid for installing their own solar PV units on their own property for their own benefit – subsidised by the rest of us – all of us who emit CO2, which benefits all plant-life, can be paid pro rata for doing so.
You know what, governments are just so stupid they’d do it: they’d tax us for emitting CO2 because to them it’s a pollutant, but they’d also pay us for emitting CO2 because it’s good for plants.
The UK has proven that fuel taxes (which is what a carbon tax is in reality) do not constrain emissions other than by reducing overall economic activity with resulting increase to poverty.
Over 80% of UK petrol (i.e. gasoline) price is tax. This was achieved by the ‘fuel price escalator’ which increased taxation on petrol by a percentage each year until there was widespread civil disobedience in response. At that point the then government stopped the ‘fuel price escalator’ and reduced the tax on petrol by 1p per litre.
Yesterday the present government increased tax on petrol again. It remains to be seen if this will induce another round of civil disobedience in response: further tax increases can be anticipated if it does not.
But, importantly, this degree of taxation (whereby almost all the fuel price is tax) has had no discernible effect on fuel usage. Instead, it has increased the cost of everything that directly or indirectly relies on the use of the fuel. This increased fuel cost has reduced economic activity.
Simply, fuel taxes only reduce emissions by reducing affluence for all and thus increasing the poverty of the poor. And the UK has proved this.
Richard
Philip Bradley says:
“Cap and Trade transfers $100 billions to the UN and Developing countries. A carbon tax transfers nothing, because all revenues flow to national governments.
Which is why the UN and the Developing countries will never accept a carbon tax..”
Governments will just funnel the carbon tax revenues to the UN. They’ll find a way.
Since the “do nice things for poor countries” ploy didn’t work, lets switch to a simple appeal to greed… “free money for your government, and you won’t be blamed for the taxes since it’s for their own good and everyone is doing it.”
Demented thinking indeed.
This person is a perfect example of lunatics wanting to take over the asylum.
Even Marx didn’t dare to state as openly and clearly that his real target was an utter destruction of the civilisation as we know it.
Who is paying his salary I wonder. And especially why.
A little knowledge is a dangerous thing.
Unfortunately, as regards the climate, what dives it, what is the ideal temperature for the planet and how conditions will change if there is some warming, we know little and understand less.
Given this state of knowledge and understanding and given that there appears to have been no significant warming for about 12 years and given the economic harm that will be inflicted on western economies by decarbonising and given that this will all be futile since this decarbonisation will be more than off-set by the industrialisation of developing countries such as China and India such that on a global scale there will be no reduction in CO2 emissions, any sane person would conclude that the best action is to do nothing at this stage, monitor the situation and adapt if necessary.
The western economies are already in deep trouble due to the financial crisis. The last thing that is needed is more tax. In fact less taxation is what is needed to stimulate these economies and to create growth. Given the need to address the budget deficit I accept that the scope to reduce taxation at this stage is limited, however, the idea of increasing it, and the idea that this would be good, is sheer madness.
If all of this CO2 dogma turns out to be untrue and a scam, there will be a backlash. There is every likelihood that over the next 10 years or so, global temperatures will drop. This will make people increasingly more sceptical and more reluctant to pay green taxes and green subsidies. People will begin to question the waste. As there is evidence that some of the data is poorly compiled if not deliberately skewed to show a warming bias and given that there appears all but no correlation between temperature and CO2 concentrations either on a geological or recent timescale, people will begin to conclude that it was so obviouisly a bad hoax that they will not accept that the politicians were duped and will not believe the politicians when they say that they thought that they were acting properly and in the best interests of the world. The people will start asking the politicians why they went a long with this bandwagon when there is no hard scientific evidence supporting the AGW theory or that a warmer world would be a bad thing.
It is amazing how much clearer things become with hindsight. For example, it will suddenly become apparent that there was no hard scientific evidence supporting the theory, that scientific method was thrown to the wind, that it was patently obvious that windmills were a hopeless idea and the people will not accept that the Politicians could ever have concluded that implementing that energy policy was the right thing to do. The people will question the 100s of billions wasted on that project, especially if the lights go out (as appears likely in the UK unless we build some real power stations very soon).
I think that there will be a lot of problems for the politicians in 10 to 15 years time and I believe that this will also put back the environmental movement. We live in times where there is a lot at stake, and strangely, in times when inaction is the best course of action.
I think that it’s interesting that the CEO of Exxon-Mobil favors a CO2 tax while the American Petroleum Institute is against the tax.
Follow the money – more snouts in the trough.
We should remind these clowns, on a daily basis:
There is no evidence at all that anthropogenic carbon dioxide has in the past, or will in the future, change the Earth’s climate.
You’re kidding me that this guy is a Professor in Economics, aren’t you? I was thinking what Richard said:
Indeed. Unless there’s a “clean” alternative (there isn’t), buying behaviour must remain the same.
How can you tax energy while everybody needs it. It is just a tool of control. In The Netherlands the energy tax is higher than the cost of energy itself.