A carbon tax is climatically useless

 Guest post by Chipp Knappenberger – reposted from Master Resource by request

“No matter how much you pay with a carbon levy, virtually nothing is received climatically…. No matter the level of domestic action that we take, it will pale in comparison to the rapid expansion of carbon dioxide emissions in other parts of the world.”

How much global warming will result from U.S. emissions over the course of this century, and how much of that could be prevented by a carbon tax? These two questions have the same simple answer—virtually none. One or two tenths of a degree a century out with–and without–a carbon tax makes the whole climate debate a peculiar exercise.

The Intergovernmental Panel on Climate Change (IPCC) estimates that the earth’s average temperature will increase somewhere between 1.1°C and 6.4°C over the 21st century, depending on the assumed pathway of anthropogenic emissions (both greenhouse gases and aerosols) and the actual (but unknown) climate sensitivity.

A temperature rise towards the low end of this range is not worth worrying too much about (the ‘lukewarming’ position), while a rise near the higher end of the range is potentially much more problematic (the alarmist position). And while lukewarmers and alarmists stray apart when it comes to the amount of climate change they are expecting, they are bound together by the fact that there is practically nothing that can be done to change the situation, either way. Why? They use the same math.

But you won’t hear many alarmists admitting to that fact—if they did, you would never have heard of the terms like “cap-and-trade” or “carbon tax.” Instead, you’d be much more familiar with words like “planning” and “adaptation.”

How Much U.S.-Side Global Warming?

Lest alarmists protest, let’s work through the numbers to see just how much “global warming” is being caused by U.S. economic activity.

In other words, how much of the IPCC’s projected 1.1°C to 6.4°C of warming will the U.S. be responsible for in the next century? The answer is about 0.08°C of the low end estimate and about 0.35°C of the high end estimate (according to an IPCC-like analysis*). Using the IPCC’s mid-range scenario, carbon dioxide emissions from the U.S. contribute about 0.19°C of the total 2.96°C global temperature rise.

Yep, that is it. For all the incessant talk as to how the highly consumptive U.S. lifestyle—from SUVs, to air conditioners, to big screen TVs and huge portion sizes—is leading climate catastrophe, the sum total of our contribution to “global warming” this century will amount to the neighborhood of about 0.2°C. Not five degrees. Not two degrees. But about two-tenths of a degree Celsius. And even this number may be on the high side if the climate sensitivity is lower than about 3°C (see here for more on recent findings concerning the climate sensitivity).

So all the U.S. carbon dioxide emissions restriction tactics—EPA regulations, cap and trade schemes, carbon taxes, efficiency programs, guilt-inducing ad campaigns, etc.—are aimed at chipping away at this already tiny 0.2°C. Big deal.

When considering any of these options, you have to ask yourself (or your representatives in Congress) how much are you willing to pay—in dollars or inconvenience, or both—to avert some portion of this 0.2°C of global temperature increase and its accompanying inconsequential and impossible to measure climate change?

Avertable Climate Change

No matter how much you pay with a carbon levy, virtually nothing is received climatically.

Consider the effect of the Waxman-Markey Climate Bill that was passed by the U.S. House of Representatives back in the summer of 2009. That cap-and-trade scheme was designed to step down U.S. carbon dioxide emissions ultimately by 83% by the year 2050. This would have taken a monumental effort that was sure to be disruptive in any number of ways.

The net climate result? Instead of 0.19°C of warming coming from the U.S. by the year 2100 (assuming the IPCC mid-range scenario), our contribution would have been reduced to 0.08°C—for a net “savings” of about 0.11°C of “global warming”. (See my analysis here.)  This amount is of virtually no environmental consequence and was repeatedly cited as one of the reasons that this legislation died in the Senate.

Much the same holds true for the present day fad for a carbon tax. The talk of a carbon tax—or more rightly a carbon dioxide tax—was bolstered recently by superstorm Sandy and its aftermath (widely, but wrongly, blamed on anthropogenic climate change). A tax on carbon dioxide emissions would be felt from the gas station to the grocery store and everywhere in between as virtually every aspect of our modern life benefits from cheap carbon dioxide emitting, fossil-fuel produced energy.

A carbon tax has become so trendy that even “no new tax pledge” champion Grover Norquist briefly flirted with it before quickly reconsidering.

And for good reason. For about the only thing that a carbon (dioxide) tax in the U.S. will not do, is produce a detectable mitigation of anthropogenic global warming and any associated effects.

The U.S. Energy Information Agency recently projected the impacts on carbon dioxide emissions in the U.S. out to the year 2035 resulting from a carbon dioxide tax of $15/per ton emitted (beginning in 2013 and increasing by 5% per year out to 2035) and for a tax of $25/ton of CO2 (beginning in 2013 and increasing by 5% per year out to 2035). The EIA projections are shown in Figure 1. I have continued the same emissions reductions pathway out from 2035 until the year 2100—admittedly, this is a shot in the dark, but at least is gives us something to work with.

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Figure 1. Energy Information Agency estimates for the future course of U.S. carbon dioxide emissions resulting from a $15/ton tax on carbon dioxide emissions (solid blue line) and a $25/ton tax on carbon dioxide emissions (solid red line), 2010-2035. I have extended these projections to the year 2100 (dotted lines).

When I substitute these carbon tax pathways for U.S. carbon dioxide emissions for the one already included in the IPCC mid-range scenario, I calculate that the amount of “global warming” contributed by the U.S. drops from 0.19°C by the year 2100 to 0.13°C and 0.08°C for the $15/ton and $25/ton carbon tax respectively (Figure 2).

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Figure 2. Amount of total global warming (red bars) and the U.S. contribution to the total global warming (blue bars) over the 21st century under three different scenarios. BAU= business-as-usual as portrayed by the IPCC A1B mid-range emissions scenario; $15/ton CO2=$15/ton tax on U.S. carbon dioxide emissions as prescribed by the EIA to the year 2035 and extended to 2100; $15/ton CO2=$15/ton tax on U.S. carbon dioxide emissions as prescribed by the EIA to the year 2035 and extended to 2100.

A global warming “savings” of 0.06°C to 0.11°C across this century is of no scientific consequence, while a tax of carbon dioxide emissions of $15 to $25 per ton is sure to be of significant personal consequence (and, my guess, only very temporary, i.e., until the next election cycle).

Conclusion

Any tax on carbon dioxide is clearly a case of not getting what you pay for. You will pay a lot, and receive nothing in return, or at least nothing that you will ever realize, or that could be proven.

What is working against any form of a carbon tax is that the U.S. plays only a minor role in the future course of global warming driven by anthropogenic activities. The rest of the world—primarily the developing countries like China and India—is where the rubber meets the road for climate change. No matter the level of domestic action that we take, it will pale in comparison to the rapid expansion of carbon dioxide emissions in other parts of the world.

Instead of trying to make an expensive repair a very small and inconsequential leak, I would think that our attention ought to be directed at determining just how big the coming flood may be, and make our plans accordingly.

Appendix: Methodological Note

I have used the Model for the Assessment of Greenhouse-gas Induced Climate Change (MAGICC) for my analysis of the effect of U.S. emissions on projected global temperature rise. MAGICC is sort of a climate model simulator that you can run from your desktop (available here). It was developed by scientists at the U.S. National Center for Atmospheric Research.

There are many parameters that can be altered when running MAGICC, including the climate sensitivity (how much warming the model produces from a doubling of CO2 concentration) and the size of the effect produced by aerosols. In all cases, I’ve chosen to use the MAGICC default settings, which represent the middle-of-the-road estimates for these parameter values (e.g., climate sensitivity equals 3.0°C).

I’ve had to make some assumptions about the U.S. emissions pathways as prescribed by the original IPCC scenarios in order to obtain the baseline U.S. emissions (unique to each scenario) to which I could apply the various emissions reduction schedules. The most common IPCC definition of its scenarios describes the future emissions, not from individual countries, but from country groupings. Therefore, I needed to back out the U.S. emissions.

To do so, I identified which country group the U.S. belonged to (the OECD90 group) and then determined the current percentage of the total group emissions that are being contributed by the United States—which turned out to be about 50%. I then assumed that this percentage remained constant over time. In other words, that the U.S. contributed 50% of the OECD90 emissions in 2000 as well as in every year between 2000 and 2100.

Thus, I am able to develop the future emissions pathway of the U.S. from the group pathway defined by the IPCC for each scenario (in this case, the B1, the A1B and the A1FI scenarios). The Waxman-Markey and carbon tax reductions were then applied to the projected U.S. emissions pathways, and the new U.S. emissions were then recombined into the OECD90 pathway and into the global emissions total over time.

It is the total global emissions that are entered into MAGICC in order to produce global temperature projections. My results are largely insensitive to minor changes in these assumptions.

35 thoughts on “A carbon tax is climatically useless

  1. The Fiscal Cliff: Repubs – reduce spending; Dems -raise taxes. The Carbon Tax unfortunately is an irresistible solution. Heck you could reduce (income) taxes even more to make the Republicans happy and they would probably go along with raising cash on carbon dioxide.

  2. @Phil,

    Not only have they looked at a carbon tax here in the US, they also have suggested a VAT. Nancy “We have to pass it so you can see what’s in it” Pelosi and others have been pressing this for years. Now with the new senator-elect and wind scammer, Angus King (I, Maine), rest assured both taxes are still on the table.

  3. Crafting your own separate health care plan, separate from Obamacare, paid for by taxpayers? $35,000.00 a year. Being able to steal citizens money, so you can give it back to a grateful voting bloc? $16,000,000,000,000.00, and counting. Creating a trillion dollar revenue stream out of thin air, with no strings, and no way to prove whether or not it is justified? Priceless.

    Time for a pay-raise, and to on to tackle that pesky second amendment thingie.

  4. It brings in more revenue to the state coffers and the Green Economy is like the former colonies that wanted to industrialize overnight. The end goal means the economy has to be under state control and/or direction. That’s why I use the French term Dirigiste. It fits.

    Communism didn’t get rejected because the Statists discovered they believed in real markets and the consumer’s right to make it own choices. It just didn’t bring in enough revenue to government bureaucrats to fund their druthers. Especially after the Saudis turned on the spigots.

    http://www.invisibleserfscollar.com/if-facts-wont-cooperate-there-is-always-pedagogy/ is one of my original posts explaining what the UN is really up to with this Sustainability gambit. And why the West tradition of the autonomous individual and personal liberty are even more despised in this vision than a coal mine.

    Taxes that impoverish the middle class and non-politically connected business owners just increase equality of results without outright getting rid of private property. You just tax the benefits and regulate its use. If someone asserts socialism you hide behind technical private ownership.

    Ultimately it is to be a distinction without a difference.

  5. VAT is an insidious economy destroying tax and should be resisted. It is a tax which slowly but steadily destroys an economy from within.

  6. A carbon tax doesn’t reduce emissions. All it does is shift economic activity from the private sector to the public sector.

    There is no reason to think that public sector spending is carbon neutral.

  7. What we need is a good solid war. Kill off several hundred million people and things should look better. But don’t give the job to the western nations. They have the technology but not the stomach. The Arabs don’t have the technology but have the stomach.

  8. JWR- Carbon does not cause warming- at all. Its increase is an effect of warming not a cause. We had 4000 ppm ( (10 times today’s levels) during the peak of the last ice age.

  9. Australia’s Labor Government introduced a carbon tax on 1/7/2012, after a pre election promise NOT to have a carbon tax. It was originally sold as a climate saver, but when that could not be justified it was sold as a ‘clean energy future’ or ‘green investment’ or some such silliness. It pretty quickly just became another tax sold to welfare minded voters as some bucket of money that could buy them some free stuff. They dont even pretend it will save the planet anymore, they don’t need to because they have taken the money and are running.

  10. J Martin says:
    December 3, 2012 at 3:00 pm
    VAT is an insidious economy destroying tax and should be resisted. It is a tax which slowly but steadily destroys an economy from within.
    ————
    Why do you say that?
    A vat is just what we call a “fair tax” system.
    Charge a tax on new goods sold.
    Why do you think it’s a bad idea?
    cn

  11. George Steiner says:
    December 3, 2012 at 3:16 pm
    What we need is a good solid war. Kill off several hundred million people and things should look better. But don’t give the job to the western nations. They have the technology but not the stomach. The Arabs don’t have the technology but have the stomach.
    ———————————
    Maybe our government should give them guns.
    cn

  12. Chuck Nolan,

    A VAT is an insidious tax that is not only charged on “new” goods, it is added to every step in the production process. It is a hidden tax that consumers do not see when making purchases. It raises the cost of everything, necessarily killing job creation.

    And show me a VAT that has ever gone down. It is just too easy to raise the VAT percentage.

    The central problem is not even the VAT, it is the idea that the government needs more tax revenue, when what they really need to do is cut their out of control spending.

  13. “D Böehm says:
    December 3, 2012 at 6:46 pm”

    VAT, in the UK at least, is not levied on every good and/or service. Certain items are excluded. In New Zealand it’s called a GST, so too in Australia. However, unlike the UK and Australia, the GST in NZ is levied on EVERYTHING. Everyone in the NZ economy effectively becomes an unpaid GST collector for the Govn’t. I cannot say if the VAT/GST is good or bad, all I know is that it adds 17% and 10% to selected items in the UK and Australia respectively and 15% on EVERYTHING in NZ.

    The EU zone has an ETS, one or two countries, like Romania, are excluded. NZ has an ETS which recently has been “wound back” a bit excluding industries such as agriculture and forestry. NZ also did not vote to commit itself to the second round of Kyoto targets.

    And in the “lucky country”, Australia, we have a GST at 10% and a carbon tax at $23/tonne CO2 to stop climate change (Australia’s contribution to emissions is ~1.5% of the ~3% total human contribution of the ~390ppm/v total CO2). The top 500 polluters were down sized to 250 of which most are energy companies/utilities including Snowy Hydro and Hydro Tasmania. And ever since every day we hear in the MSM factories, refineries, farmers all closing up shop and moving offshore.

    Ford closed its doors recently, as it has with most plants in the EU zone, leaving Holden (GM) propped up by the Federal Govn’t. Hoden’s profits last year were ~$92m. Holden received grants from the Federal Govn’t of ~$92m.

    And to top it off, my power useage was 30% less than the last quater and yet the bill was more. Thanks to the carbon tax, the tax that cannot be spoken about under threat of $1.1m fines!

  14. Patrick,

    Thanks for the VAT-related information. VAT’s are the worst kind of tax. There is resistance when a sales or income tax increase is proposed, because voters can see the cost. But a Value Added Tax is invisible to the average person. That’s why politicians love their VATs.

    There is not a tax that cannot be reduced by cutting spending. THAT is what must be emphasized. As it stands, taxes are job security programs for government bureaucrats. That needs to change. I am not a job creation servant for bureaucrats. Government must begin discussing what expenditures should be cut, not what taxes should be raised. We are already taxed enough too much!!

  15. The GST is similar to income tax. Its purpose is to let the government see how much everyone makes, so they can take the maximum bite possible.

    80% of the economy in the US is driven by the top 2000 companies. They could pay all the taxes in the form of a sales tax, with small business and wage earners tax free. The cost of the taxes would be reflected in the price of goods ultimately, which happens no matter how the tax is collected.

    The difference is that millions of lawyers and accountant would be out of work and would be forced to do something productive for a living.

  16. RealClimate complained when Chip posted this a few years ago, with the title The Tragedy of Climate Commons. Gavin posted an allegory about fishermen and how they needed to cut back on fishing but the wealthiest fisherman wanted things to be done equally. Problem is, Gavin’s numbers were stuck in the past, and the new emissions numbers cause his allegory to fall apart, as the US no longer is responsible for 40% or even 20% of resources.

  17. D Böehm says:
    December 3, 2012 at 6:46 pm
    And show me a VAT that has ever gone down. It is just too easy to raise the VAT percentage.

    ———–

    Canada’s GST. Reduced from 7% to 5% by the current Conservative government.

    Your point is well taken, but just answering your question. I suppose one could argue the GST is not a VAT, but my thinking is that it’s a distinction without a difference. YMMV.

  18. Calling that model MAGICC is a Freudian slip. Letting the scientific mask slip for a moment. They probably cracked themselves up.

  19. For those who believe that the sole purpose of a carbon-dioxide tax is to raise money for the exchequer, perhaps you should first think about how much money can be raised in tax from a booming economy compared to one brought to it’s knees by green policies.

  20. To Bloke down the pub:

    I think lots of posters here would agree that the purpose of a carbon tax can be summed up with the
    ancient quote:

    The power to tax is the power to destroy.

    –Daniel Webster

  21. Given that tax is penalty and generally used to discourage behaviour the govt does no like, is it a safe assumption that govt does not like private wealth and income?
    Our GST is a fraud, claimed at 5% now but in reality every one has to charge a handling fee for the otherwise unpaid tax collecting services imposed by the govt. The interest costs of waiting for the revenuers to refund you add up. The end result is more productive hours stolen by govt idiocy. We now find ourselves working longer at compliance issues than on income earning, so productivity keeps falling in Canada and as you folk in the USA are about to see, the why should I work for rewards I will never see mentality, will grow exponentially .It is well entrenched in our canadian workforce already.

  22. “Some commuters have resorted to sleeping in their cars rather than driving home from work to save money on petrol, a survey has revealed.”

    http://www.telegraph.co.uk/motoring/news/9720629/Commuters-sleeping-in-cars-to-save-money-on-petrol.html#

    “The motoring organisation argued that the high tax take should be enough to persuade the Chancellor to postpone the 3p-a-litre fuel duty rise planned for January, the AA said.”

    We have carbon taxes everywhere, they’re just given different names.

  23. Chuck Nolan says:
    December 3, 2012 at 6:32 pm

    Why do you think it’s a bad idea?
    cn

    Just to jump back in here, VAT taxes have the highest compliance cost (wasted effort that doesn’t even generate revenue), is the easiest to hide changes or preferences in, and like all sales taxes is regressive as the lower your income the higher the likely percentage of your income is spent consuming.

    Given that preferences for certain products or industries are easily hidden, it’s an open invitation for corruption or “stealth mandates.” It’s an almost perfectly directed tax on internal trade, and encourages single-source solutions to products (making and selling your own products to avoid taxes on creators and distributors), incentivizing inefficiency and monopolies.

    Basically, you should be horrified by the idea.

  24. D Böehm says:
    December 3, 2012 at 7:44 pm
    …There is not a tax that cannot be reduced by cutting spending. THAT is what must be emphasized. As it stands, taxes are job security programs for government bureaucrats. That needs to change. I am not a job creation servant for bureaucrats. Government must begin discussing what expenditures should be cut, not what taxes should be raised. We are already taxed enough too much!!
    _______________________________
    You have got that right!

    If the amount of tax EVERYONE pays had to be handed over to a tax collector every month there would be rebellion in every country worldwide the next day. But the politicians are crafty. They take a small bite here and a small bite there.

    How many times have you heard. “half or 46 % of Americans pay no tax”. But we all pay property taxes directly or indirectly throught rent. We pay fuel tax, phone tax, sales tax.

    Regan pointed it out very clearly.

    … they are fools in thinking that business somehow is getting a special break. Who pays the business tax anyway? We do! You can’t tax business. Business doesn’t pay taxes. It collects taxes. And if they can’t be passed on to the customer in the price of the product as a cost of operation, business goes out of business. Now what they’re going to do is make it easier for demagogic politicians–and you’ve got plenty of them in the state legislature–to say to the people, look, we need money for this worthwhile project but we’re not going to tax you, we’re going to tax business, now that we can do it by a one vote margin. So they’ll tax business and the price of the product will go up and the people will blame the storekeeper for the rise in the price of the product, not recognizing that all he’s doing is passing on to them a hidden sales tax.

    If people need any more concrete explanation of this, start with the staff of life, a loaf of bread. The simplest thing; the poorest man must have it. Well, there are 151 taxes now in the price of a loaf of bread–it accounts for more than half the cost of a loaf of bread. It begins with the first tax, on the farmer that raised the wheat. Any simpleton can understand that if that farmer cannot get enough money for his wheat, to pay the property tax on his farm, he can’t be a farmer. He loses his farm. And so it is with the fellow who pays a driver’s license and a gasoline tax to drive the truckload of wheat to the mill, the miller who has to pay everything from social security tax, business license, everything else. He has to make his living over and above those costs. So they all wind up in that loaf of bread. Now an egg isn’t far behind and nobody had to make that. There’s a hundred taxes in an egg by the time it gets to market and you know the chicken didn’t put them there!
    link

    One year I figured out the amount of overt taxes I paid. Property tax, fuel, state and federal, sales, SS, medicaid, medicare and anything else I found. It totaled over 65% of my gross income. Now add in the extra 50% hidden tax in every thing I bought and the hidden tax of inflation I figure my actual tax was close to 80% of my income or more.

    Just how much more wealth do they think they can squeeze out of the middle class?

  25. If you think the USA carbon tax is stupid, try the UK one, since UK emmisions are so small we could all drop dead and stop everything and China would make it up in a few weeks!
    As an aside, VAT is not invisible, we all know the rate, currently 20% on most things with some exceptions such as electricity (!!) and children’s clothes. Complex tho, since it is due on each stage of the commercial transactions leading up to the final consumer product or service, with companies claiming back their VAT input costs (so the pay the VAT on the value they add). Thus, a separate set of VAT accounts, and room for various scams….and lots of bureaucrats!

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