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
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It makes me laugh when the climate alarmists harp on about “sceptics” claims about tinfoil hat conspiracy theories that Governments are inventing the AGW theory because they want an excuse to tax and control us more.
Not a conspiracy theory at all. It is documented political fact that governments want to increase taxes and blame those increases on environmental concerns. So-called “green taxes” are a massive and expensive reality already.
“Given a choice between cap-and-trade and carbon taxes” is a false choice. Pick the lesser of two very bad evils and you still have a very bad evil. The real choice is between free markets and government regulation. Markets *always* find the best option because they integrate the will of all the people, even those who choose not to participate directly. Government *always* finds the sub-optimal solution because it moves on the whims of a few who are remote from the real forces in play and subject to external influences out of proportion with their real importance.
Taxes on CO2 will not bring emissions down one bit, when gas prices were approching $ 4 a gallon in 07 people wher still filling up thier SUVs and groaning when full. They started hanging for sale signs in the gas guzzlers and started findings things to cut out of thier budget to fill up ths vehicles hence no money to eating out, Hi-tech toys fancy toys for the kids,etc.. And with oil prices jumping up again here comes the double dip recession because here go again no descretionary income for the fancy things in life, more unemployed because sales go down again, you get the idea. the revovling door of the economy. The professor is right it is nothing more than a tax for the GOV., but the money will not go for what the poli. want they will have to fund the ever increasing unempolyed. This irks me to no end that these polis. have know idea what they are doing up in D.C. except filling thier own pockets. The U.N. wants the GOV. to send them all this money to help the developing countries, but I say we have already done that by OUTSOURING OUR INDUSTIES AND JOBS there so now thier economys go up while ours goes to hell and a hand basket and the world will still expect the US and Europe to buy the crap to keep them up , well guess what they are going to bring all to a stand still . This world is full of IDIOTS and this good Prof. can count himself among THEM. Iam done RANTING now, need to before i trash this computer.
So, Bill Nordhaus and the Chernobyl industry want us to phase out carbon?! Really?
Did I misread or did he fail to mention cutting subsidies to nuclear and carbon power in favour of ‘greener’ solutions like windmills and perpetual-motion technology?
Makes one wonder what all this money the world is coughing up could do if put towards a multi-decade plan to transfer solar from orbital height to earth-side doesn’t it? That would sink the big green dream though, and carve a horrible rift between James Hansen and the whirlygiggers. Not to mention the trouble it would cause ‘His -gavinness’ in that he would have to stop playing on his blog and have to do ‘space-y’ stuff again.
I can just imagine, “What do these Republicans think we are, a space agency?? Grrrr, rant, growl, (insert strawmen and near-endless stream of corresponding faked-up insults). -gavin”
it is that we need to correct this market failure
Between 1970 and 1974 in the US we built 66 GW of coal fired plant.
Between 2005 and 2009 we built 8 GW of coal fired plant.
Summer nameplate capacity of coal fired plants in the US has been flat since 1990 at 330GW. US coal consumption expressed in tonnage has been flat for most of the last 10 years.
The amount of CO2 being emitted by US coal fired plants has been dropping as the utilities shift from high BTU Eastern Coal to lower BTU Western Coal.(CO2 is a function of BTU’s/lb). The effect is masked in generating statistics as less coal is being burned in older inefficient plants and more coal is being burned in new more efficient plants.
Nameplate capacity of natural gas fired plants in the US went from 180GW in 1998 to 400 GW today.
Even if I force myself to believe in CAGW I don’t see a market failure.
Coal fired generating capacity was capped by market forces 20 years ago.
“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”
======================================================
Yep, make people mad as hell everyday………………
With the majority of the population going into retirement age, fixed incomes, etc
Exactly how will this play out
“BillD says:
January 6, 2011 at 3:53 am
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.”
By having interests on both sides of the ledger, Exxon-Mobil, BP, GE and other multi-national companies will benefit no matter which way the wind blows (literally). However, most of the API is made up of small independent producers. Their focus is oil and gas. In the U.S., thanks largely to federal regulation and control, the their sphere of opportunity, both onshore and offshore is shrinking rapidly.
US Constitution Article 1 Section 8:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
US Constitution Article 1 Section 7:
All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.
———-
Somehow I do not see taxes on carbon any time soon.
Dodgy Geezer says:
January 6, 2011 at 2:52 am
Unfortunately, taxes probably will work.
I say,
SURE, for THEM . . . . !!!
The “Bulletine of Atomic Scientists” was founded by a clique of ultra-left individuals (I believe including Oppenheimer) who were rife with GUILT because of helping develop the atomic bomb.
In the 70’s, ’80’s and even into the ’90’s one of their primary goals was to destroy NUCLEAR POWER.
I give them about as much credance as the K.K.K. when it comes to credibililty. They are also strongly associated with the Union of Concerned Scientists. A blatantly anti-nuclear power group which has consistently refused to give out any membership or credentials list.
You “get what you pay for” with these advocacy groups. Worth ignoring.
Dodgy Geezer says:
January 6, 2011 at 2:52 am
Unfortunately, taxes probably will work.
Dodgy – your response was almost 100% accurate, however you stated it would not cut carbon (CO2) emissions. In that you are wrong. Since the onerous tax would stagnate economies throwing the world into another 30s type depression, CO2 emissions would be cut by default. No work, no emissions.
Since nothing that they propose to do will slow climate change—CO2 does not drive our climate—there must be an ulterior motive.
“Additionally, a carbon tax could be a useful means to cut budget deficits while meeting environmental objectives.”
Aha! It’s a brand new revenue stream that generates money hand over fist – a revenue stream for the sake of a revenue stream – and serving no purpose but to fund government spending.
This goes right along with redistributing wealth, but it hurts everybody and everything as it would raise the cost of everything and every activity. It is the typical punitive incentive program that the liberals love, as it hurts to have (being taxed extensively) and hurts even more to try to solve (alternative, more expensive, less efficient energy) will being concurrently taxed.
Oops! Even if you go out and purchase alternative energy sources for your needs, you will still be screwed by the higher cost of living (of everything else) and the concurrent lower standard of living (you are visibly poorer) caused by the tax.
If they had their way, we would just have our salaries direct deposited in toto to the IRS.
Which leads us to a wealthy, big government with undeserved amounts of spending money. Imagine what favor they can buy with more government programs. Nanny state, here we come.
But, caution is required:
Thomas Jefferson, “A government big enough to give you everything you want, is strong enough to take everything you have.”
These are highly complex things climate, eco-social-philosophy and taxation. Sorry boys but just like physics and metaphysics no simple [answer?] to complex questions. Nordhaus and the others should know this. We know many of our numeric models relating to the hard sciences are inadequate or suspect. We also know the models of taxation, economics and all social (soft) science are fuzzy at best and downright wrong at worst. This kind of propaganda and ideology discredit those who espouse it.
In slight defence and clarification of Nordhaus’ positions:
read this review of his work by another liberal (Dyson), one intelligent enough to reject de-industrialization and the basic AGW science (he says the data is poor or missing, and that even if CO2 is a problem, straightforward changes to agricultural and silivicultural practices would achieve more, faster, and at a fraction of the cost).
Nordhaus takes AGW as a “given”, but his DICE (and somewhat more advanced regional RICE) models (which he runs for 100 yrs into the future, btw, not 1000, since no significant change occurs beyond 100) soundly reject the drastic Gore-Stern mitigation ideas. Carbon tax comes out slightly positive. Kyoto was mildly negative, about the same as doing nothing.
Of course, if you remove the AGW assumption, all mitigation schemes are serious net losers. The only one with a major “plus” in all circumstances is the ‘low-cost backstop’, a cheap low-emissions widely available energy source (hypothetical). Dyson figgers that might come from biotech. My money is on mini-fusion (focusfusion.org).
Mod: typos: “silviculture” and “data are missing”.
Revealing research Max, nice. The ironies are too deep to ignore though, I think.
Especially since the UCC took up with the nuclear industry post-Chernobyl and now seem game on the globalization of a nuclear technology, materials and waste at a time when what’s already out there was threatening to, and since has, come back to haunt us as security/terrorism threat.
Quiet the PR job it’s been for nuclear, makes me wonder if most high-school grads would recognize the name Chernobyl. Being the next cheapest option after fossil-fuels is merely an added bonus, I guess.
Strange bedfellows.
tume says:
January 6, 2011 at 6:30 am
“So in US, do you have enough Tea partyers in the new Congress to do the same?”
Not yet, but we made a very good start in Nov 2010, in part because the ‘Tea Party’ encompasses many from the fields of engineering, physics, mathematics, economics and the sciences. Add a healthy contingent of ‘balance the damn budgets and get out of debt’ common sense pragmatists from sectors like farming, small business, and partially reformed former liberals, and we have the coalition known as ‘The Tea Party’. Like minded folks from various ethnic groups are showing up at Tea Party functions in small but steadily increasing numbers as well, in counter point to the claims of popular media pundits. The trends are positive, the ‘base’ is widening, and the pragmatists are becoming far more active at all levels in politics.
Please note: The Tea Party is not a 3rd political party in the US. It fermented and spontaneously fomented in opposition to the Progressive Socialist agenda et.al. that has been driven by the democrat controlled government of the last 4 years. The Tea party functions (currently) as a continual goad and warning to all politicians (Democrat, Republican, Socialist/Communist, and Independent) that the majority of American citizens oppose the Progressive Socialist agenda et.al…. and the next election is coming. It is my fervent hope, and based on my observations at Tea Party functions sincere belief, that it reflects a return to reality based decision making combined with direct, unambiguous communications to the pols.
The good news is: none of this is going to happen in the US (except California, which can serve as a warning to the rest of us). The era of “give us you money and everything will be fine” is over.
If these yo-yos ever succeed in passing their ‘globalization’ legislation, whether cap-and-trade or carbon taxes, I almost hope they end up destroying fiat currency altogether. Then they will get to participate in poverty along with the rest of us.
Considering that such a situation would require bartering one’s own skills or production to survive, they would also be the first ones to starve.
US Constitution Article 1 Section 8:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
US Constitution Article 1 Section 7:
All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.
———-
Somehow I do not see taxes on carbon any time soon.
================================
Taxes, no, but the Obama Administration can levy huge carbon FEES on power companies, which would then pass those fees on to the consumer. Government has learned the fine art of semantics (“It depends on what your definition of “is” is.”)
Never forget the level to which they will stoop to attain their goals. Remember, when the Health Care bill was being discussed, the requirement to buy health insurance was promoted as ‘not a tax’. Now that the courts are involved, the same people claim the law is legal because it IS a tax.
“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.”
Not likely.
What they will do is order you to pay a VAT on your exhalations, having added value to the air you breathe by converting some of it to CO2.
Even better, let’s do the [CO2] research on the actual effects of near-current levels on terrestrial vertebrates that do not burrow (where [CO2] builds way up). Then the MURDERS attacking carbon dioxide can be exposed for what they are.
Several murine and rat studies on extremely high concentrations tell us nothing. I have mentioned several times what happened when I searched more than 20 000 academic references to find studies. I finally tried growth because animal science researchers found vitamins by the growing calf’s or piglet’s requirements. And I finally found two studies on chicken eggs showing that they grow a little better if [CO2] is allowed to build up while they are incubating (so that’s why birds like human-built birdhouses–[CO2] builds a bit in those, too).
This remains pathetic and we need to do better.
And tis IS the most crucial issue even if you only care about the attack on your freedoms or pocketbook. It is an emotional thing. Even AGW howlers often understand that CO2 is good for plants. But they think CO2 is bad for people, and many people do not know the difference between CO and CO2. They’ll fight reality as long as they think CO2 hurts THEM.
I think commentators on this site need to read Professor Nordhaus’ papers on the subject of climate change and how to respond to the alleged costs before dumping on him. He was one of the few prominent academics to challenge the economic analysis underlying the infamous and, oft-cited by eco-terrorists, Stern report. He is written numerous papers challenging the view that the “science is settled” and the U.S. (and the world) needs to take draconian measures to curb global warming. He has been one of the foremost proponents of the view that evidence to date does not support any drastic measures to curb carbon emissions. On the other hand, he has argued that there is enough evidence to support a small carbon tax, and to put in place the required structure so that the carbon tax could be increased quickly if evidence mounts that carbon emissions are contributing to global warming. While I think such a strutcure would be dangerous because politicians and activists would soon come up with reasons why carbon taxes should be raised, I don’t think Professor Nordhaus should be condemned without a careful reading of his proposal.
William Nordhaus is a Sterling Professor of Economics at Yale University, CT.
Here’s a plan. We stop funding all universities and invest the savings in windmills. This should reduce economic activity and so carbon output. We would then bulldoze places like the Yale University and use the rubble to form the foundations of a new carbon neutral housing estate for the poor.
William Nordhaus can stay at home and so reduce his carbon footprint by negating his need to travel to the university. We would then have a trickle down dribble up win win situation with positive outcomes for all stakeholders.
Mustafa,
you say you think such a structure as Nordhaus has suggested is dangerous, but he shouldn’t be condemned for proposing it. Do you see a contradiction there?
BTW, Nordhaus’s proposal is based on two flaws. 1) The concept of market failure. Although this is a well known economic concept it can only be applied when externalities are known and quantifiable. The flaw is in the assumption that CO2 emissions have a large negative externality. 2) He then throws a ‘bone’ into the pot by arguing that in any case a carbon tax will reduce the budget deficit. As an economist he should be familiar with the ‘Laffer’ curve of diminishing taxation revenues. Taxation does not create anything – it merely transfers payments from private individuals to government. If it was possible to reduce deficits with massive tax hikes, we would now be living under massive tax hikes.