Another Carbon Tax Scheme based on Pigou model from 1920’s

From the UNIVERSITY OF EDINBURGH comes yet another plea for carbon taxes as a way to “limit” our wallets  climate change

Carbon levy could limit impact of climate change, study suggests

A decades-old tax system may offer an economical solution to the problem of catastrophic climate change, according to a new study.

A consumer tax levy on fossil fuels could provide a means of lowering their use or encouraging the adoption of cleaner alternatives, the research suggests.

Such a system – adopted from a tool devised by the economist Arthur Pigou in the 1920s – could help avert dangerously high global temperatures and sea level rises.

Current economic policies for reducing the use of fossil fuels are unlikely to be as effective, the study finds.

The results emerge ahead of the upcoming COP22 climate change talks in Marrakech, Morocco, at which delegates will seek to enforce targets to keep global temperature rise to less than 2C.

The proposed levy – known as a Pigouvian tax – would offer a way to balance the competing needs of supporting economies while at the same time limiting the impact of man-made greenhouse gas emissions on the environment.

A key facet of the carbon levy is that all revenue would be recycled directly to households.

The policy would likely encourage the development of green technologies, and reduce consumption. Such a system has been successfully introduced in British Columbia, Canada.

Researchers at the University of Edinburgh, who carried out the study, designed a simple, readily understandable model of climate economics.

They took into account the costs to society of climate change, the costs of adopting new technology, how the climate is likely to respond to change, and future changes in costs.

They found that under existing economic policy conditions, global temperatures are likely to continue to rise strongly this century.

This is the case even when future greenhouse gas emissions are moderated in the most cost-effective way possible, with strategies that seek to optimise reductions in the use of fossil fuels.

The research, published in Anthropocene Review, also show that global temperatures exceeded 1.5C above pre-industrial levels five months after the Paris Climate Agreement.

Professor Roy Thompson, of the University of Edinburgh’s School of GeoSciences, who carried out the study, said: “Estimates vary over future costs of climate damage and of potential savings from emission abatements. But what is now evident is that society needs to take much firmer action.”

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85 thoughts on “Another Carbon Tax Scheme based on Pigou model from 1920’s

    • Phillip – On costs – offer a way to balance the competing needs of supporting economies while at the same time limiting the impact of man-made greenhouse gas emissions on the environment.

      First they need to show there is ANY impact of man made emissions. Then prove how Limiting something that has no effect is going to change anything.

      • First prove that there is an impact.
        Second, prove that the impact is harmful.
        Only then move on whether your changes are going to affect that impact.

  1. Follow the money. Who get’s the money to do what? “All revenue recycled to households”. To do what with it? How much is “skimmed”. A tax is a tax is a tax, and they can pretend it’s saving the world, or as a last resort after the world looks to be saved, it’s wealth retribution from one household pocket to another pocket on the same pair of trousers (less the skim).

    • Corruption raised its ugly head in BC as soon as the carbon tax was implemented. Schools, hospitals and other taxpayer funded facilities were looted via the carbon tax.

      Instead of upgrading inefficient boilers, schools and hospitals and the like paid thousands upon thousands in carbon taxes, due to a government legislated requirement that they be “carbon neutral”. Something that is physically impossible in a cold climate like BC. These carbon taxes stripped the public facilities of the funding they required to improve insulation, upgrade boilers, etc, etc.

      Friends of the government got hundreds of millions to fund projects for private companies. Projects that would have gone ahead regardless. A straight forward give away of public money to private interests.

      And the Auditor General was trashed publicly in the press, 2 days before he released a report critical of the Carbon Tax and its impact. Only the government was aware of the contents of the report ahead of time, which speaks strongly that they were behind the criticism, trying to protect their friends.

      Otherwise, who can say what will happen to election fund donations, come the next election. If you want your friends to donate tens of millions to your re-election, it helps to shove hundreds of millions in public funds in their direction ahead of the election.

    • I am sure they would put it in a “lockbox” or something similar, completely safe like they did for Social Security here int he good old US

  2. Yet another tax to finance the new priesthood of climate change. At least the Catholic Church built St Peter’s church when it was selling indulgences.

  3. Never let it be said that these oh-so-dedicated climateers shy away from “recycling”. They should have paid more attention to an unnamed PR operator from “one of the world’s leading environmental organizations”. This person told Fred Pearce, circa Dec. 2009:

    It has always been hard to persuade the public that invisible gases could somehow warm the planet, and that they had to make sacrifices to prevent that from happening. It seemed, on the verge of Copenhagen, as if that might be about to be achieved.

    But he says all that ended on Nov. 20. “The e-mails represented a seminal moment in the climate debate of the last five years, and it was a moment that broke decisively against us. I think the CRU leak is nothing less than catastrophic.”

    Source: http://e360.yale.edu/feature/climategate_anatomy_of_a_public_relations_disaster/2221/

    I’m not sure where the authors might have gotten the idea that “system has been successfully introduced in British Columbia, Canada.”

    My guess would be that the authors’ ears have been bent by now former IPCC-nik, Andrew Weaver, and/or Ottawa-based self-promoter Stewart Elgie, whose record is considerably less than stellar – as was confirmed by the office of BC’s Auditor General.

    A few years later, Weaver and/or Elgie’s baby, “Pacific Carbon Trust”, was dissolved, downsized and taken over by the Province. Furthermore – notwithstanding all Weaver’s whining and wailing in his role as the only Green Party member of the BC Legislative Assembly – there have been no rate increases in this particular example of daylight robbery since 2011.

      • Smart Prosperity Institute, formerly Sustainable Prosperity Canada
        […]
        Stewart Elgie, Founder and Chair. of Sustainable Prosperity Canada

        Funny that an organization which claims to be Canada’s “leading source of research and insights for a stronger, cleaner economy” is considerably less than transparent about its early October PR blitz – in which Elgie succeeded in embroiling our know-nothing Minister of the Environment & Climate Change, Catherine McKennna, as well as TELUS honchos and those of other high profile companies.

        There may be a trace of this now-former BIG splash (which did TELUS no favours in the eyes of many subscribers) somewhere on their new, improved site. But. alas, their developers neglected to provide a search engine – and a quick scan of their scant pages leads only to more hymns of self-praise.

        YMMV, however, I’m not sure who might have awarded SP the designation of “leading source of research and policy insights”. But, that aside, it seems that “SmartProsperity” officially ditched its “SustainableProsperity” roots and (very fine print!) © circa October 24/16. See: http://institute.smartprosperity.ca/release/sustainable-prosperity-takes-new-name-smart-prosperity-institute

        Now Chairman Elgie’s much expanded stable boasts of inter alia an Executive Director and sixteen other staff. Your guess is as good as mine as to where they might have acquired the funding for such an expansion. Oh, and they have a new, improved logo, to boot. So this must make the switch totally kosher!

        If one didn’t know better, one might be inclined to conclude that Elgie – who has not shown himself to be the most honest of creatures – was attempting to divorce himself, his “leading source” and his much-expanded stable from their considerably less than honest and/or admirable past.

      • Also interesting about Elgie’s past connection to EcoJustice Canada which now has an interlocking Board with EarthJustice U.S.

  4. To quote: “A key facet of the carbon levy is that all revenue would be recycled directly to households.”

    Yeah, right….

    • A key facet of the carbon levy is that all revenue would be recycled directly to households.

      Especially to ones which will return the favor by voting for candidates who support such schemes.

    • And if your household income is above a certain limit, don’t be looking for a check. If it’s below another limit, look to receive more than you spent in carbon tax payments. Another day, another scam.

  5. OT but somewhat related: they turned on those 77 600-foot monsters that now surround us, about a week ago.

    Last night as we stood in the back yard, we could hear the woosh-woosh-woosh of the blades… the closest one being over a mile away. So much for quiet nights. Oh and our electricity will get more expensive.

    • No, no, no! Many climate consensus true believers have posted here and elsewhere that wind power is perfect power. That wind power presents no environmental issues at all. Only KKKoch paid denialists spread contrary rumors. How dare you to say otherwise! /sarc off

  6. The only solution is to scrap all tax breaks, guaranteed minimum prices and subsidies to the Power Generation Companies and impose a tax per tonne of CO2 generated by them for remedying and accommodating in the future all directly related problems and effects of those CO2 emissions as determined by Stern and others. Then scrap all priority supply of renewable energy supplies and let the free competitive market dictate what Power Supplies we use. Low and behold, even allowing for the costs of most outrageous forecasts of CAGW effects, the Wind Turbine, Solar Panel Supply, Nuclear Power companies would shut down and even proposed Tidal Barrage projects would be abandoned as they would all in no way ever be competitive.

  7. The hotheads say that CO2 is warming the earth — and they believe it!

    But the truth is that it is space aliens projecting thoughts into the minds of the hotheads making them believe in global warming. The hotheads need to be issued tin foil helmets to ward off these alien thought projections. So equipped they will be able to look out their windows and NOT see 40 million climate refugees wandering the earth, Not see oceans rising faster than in the time of Noah, and Not see super storms, super droughts and super floods devastating the landscape.

    So we need to push back against the aliens and free the hotheads who have fallen under their control. I suggest we crowd fund the manufacture and mailing of tin foil helmets to all identifiable hotheads. (Admittedly those living in their parents basement will be hard to locate but a blind mailing to any university professor is almost an assured hit.)

    Eugene WR Gallun

    • The only answer is to launch a fleet of IPBMs (interplanetary ballistic missiles) immediately to wipe out the aliens on Venus with nucular Armageddon. This will require monies to be diverted from ACGW to the arms manufacturing industries post haste! The Precautionary Principle demands it.

  8. Your wordpress ads keep knocking the page up to their advert, making your site undeadable. Did it to me FOUR times as I was typing this. Had to scroll all the way back down to find my place again.

  9. The COP22 climate change talks in Marrakech will start next week and last for 11 days, 7-18 November. Could Marrakech have been chosen because the weather is likely to be pleasantly warm then?

  10. According to Pigou’s original scheme, people are al;ready paying ABOVE the appropriate ‘Pigou tax’ level for carbon.

  11. I think this is also called: carrot and stick or fee and dividend. Calling it Pigouvian tax is surely a branding error. Sack Climate Catastrophe Inc. marketing dept.

    It’s something I’ve argued for in the past, but only for the electricity sector where it would be easy to implement.

  12. A key facet of the carbon levy is that all revenue would be recycled directly to households

    That old hoary chestnut again!

    The whole objective of the carbon tax, supposedly, is to wean us off fossil fuels. And once that has happened, there will be no carbon tax revenue to share out.

    Instead we will all be stuck with expensive renewables.

    But there is another, deeper problem. The proposal implies that there is a practical alternative to fossil fuels. While there may be a fringe role for wind/solar, there is no realistic prospect that they can reliably provide all, or even most, of the energy the world needs.

    • Except that we won’t all be stuck with renewable sources because China, India and others are exempt and will therefore have lower costs to suck all manufacturing in, thus decimating western economies. You could go down the route of introducing or raising tariffs to even costs out.

      For this to work – and I use the term work very loosely here given the sheer stupidity of it all – all countries would have to be included.

      • This is stupid.
        There is no amount of tax that will control temperature, period.
        Plus, if gas was $100 per gallon Al, Leo and their ilk would not change their lifestyle.
        More planes, boats and automobiles along with their mansions.

      • “mikerestin November 2, 2016 at 5:11 am

        Plus, if gas was $100 per gallon Al, Leo and their ilk would not change their lifestyle.
        More planes, boats and automobiles along with their mansions.

        I think the cost of going to the cinema will increase to offset their emissions.

      • Even if we did put in tariffs to compensate for higher energy costs making our stuff more expensive than imports, you still have the problem that you have completely killed your export market. The stuff our companies are making is more expensive than the stuff other countries companies are making.
        The only way to fix that would be to subsidize exporters, the result of which is the American taxpayers are being taxed in order to subsidize consumers in other countries.

    • These are good points to which I add another straight from price theory
      That is a price change (from a tax)
      has effects which can be analysed from two complementary stand points.
      1 A change in price of commodity A can
      affect demand for competing or complementary products B or C and D
      This is known as the relative price effect.

      2 If the change in price is big enough it also
      has an income effect as it lowers real received
      Incomes as consumers have to spend more to maintain their previous levels of use leaving less income available for other goods or services

      However if the consumers are compensated
      for the tax increasing prices of say electricity
      then the income effect is nullified
      This means the tax increase has to be higher than need be as only the relative price effect is then at work to affect demand
      Lest I be misunderstood let me make it clear that I am not arguing for a carbon tax but to
      support the intuitive reactions of posts questioning the return of a carbon tax to households
      While that is the populist politician response it just means any carbon tax used that way
      is less effective so its rate has to be higher
      to get a given effect- in Australia’s case reducing our previous international competitive advantage based on low cost electricity from base load power generators using plentiful black and brown coal
      The dopey Australian government kept the compensation payments going even after
      the carbon tax here was repealed thus addimg to an already high and growing budget deficit

    • In Australia, climate change is simply passing Oct 31st to Nov 1st, like spring to summer. We are going to burn next week, apparently!

  13. Economics is just about the most perverse thing there is. There are always negative consequences. Here’s an example that deals with taxing the smoke from a factory.

    [the factory] will reduce its quantity of production or buy the necessary technology to reduce its smoke rate. With the advent of clean air, neighbors may move into the area. This immediately increases the marginal social cost of smoke, which would require a tax increase on the factory. Essentially, each time the tax increases, the population increases and the marginal cost of the status quo increases again, so the factory is punished for making conditions good enough that people want to move there. link

    The article doesn’t say it but the obvious result is that more jobs move to China.

  14. Pigouvian taxes were taught when I took my masters prelim year back in 1958 before climate change was thought up and were seen
    as using the pricing system to mitigate
    externalities such as air or water pollution.
    So there is nothing conceptually new in
    such policy measures.

    However what is new is the claim that global
    temperatures are 1.5 c above pre industrial levels.
    Does the research cited back up that claim?
    Every thing I have read on that topic suggests the increase lies between 0.6 to 0.8 c.
    Can anyone shed light on this claim?

    • Easy. They took the upper end of the already-exaggerated increase converted to F, which would be around 1.5, then simply switched the F to C, and voila. Simple mistake for the Climate Zealots to make. Even more disturbing, though, is their pretense that all of that increase is due to man’s CO2 emissions, which, even assuming the Carbonistas’ own ideology is true, they know is a lie. But they can try to fool laypeople with it.

      • Climate modelers don’t believe it’s a lie, Bruce. They’re incompetent enough to think their models are accurate about future global temperature.

  15. We are surrounded by crooks these days. The most profitable industry is run by climate crooks, experts in solving imaginary problems. You know – Mundus vult decipi…

  16. The Anthropocene Review — a new pseudoscientific journal dedicated to the end of the earthen blight known as “humans”. With over two years of religious dogma such as “The Anthropo-scene: A Guide for the Perplexed”, this journal acts as an explosive outlet for human expressions of self-flagellation … the likes of which we haven’t seen since the plague years. In fact, the entire journal is dedicated to re-imagining the plague as people along with methods to inoculate the earth from us.

    I remain perplexed.

  17. “Professor Roy Thompson, of the University of Edinburgh’s School of GeoSciences, who carried out the study, said: “Estimates vary over future costs of climate damage …”

    So now it is “climate damage”.

      • It’s almost as if the UNEP’s PR powers that be have been desperately searching for a magic buzz-phrase to replace “global warming” – on which they had relied for years.

        But it really wasn’t working too well after Climategate. The latest and greatest from the PR propaganda power machine, that I saw via twitter, is “climate hazards”.

        Not to mention that the IPCC is also hitching its wagon to the “sustainable development” jargonaut – albeit many years after now-disgraced Pachauri had declared that it should be done!

        Amazing, eh?!

  18. Totally off topic: When I access this website, after about ten seconds the screen skips down to the ads just before the comments. I try to get back to what I was reading, but the screen skips again, often time after time as I am trying to toggle up or down. Am I the only one experiencing this phenomenon? It doesn’t affect other websites.

  19. A key facet of the carbon levy is that all revenue would be recycled directly to households.

    Notice, they did not say the revenue would be “recycled” to all households. Which means it will end up going to the households of the bureaucrats and the households of their cronies.

  20. The Law of Unintended Consequences has a way of thwarting every effort makes at a ‘social engineering’ project. The utopianists and humanistic idealists are consistently played as fools and useful idiots.
    The most common unintended consequence is that resource$ intended for the project get diverted to politicians, their friends, families, and sycophants.
    In the words of ‘Deep Throat’ – “Follow the money.”

  21. This makes as much sense as raising taxes on food in order to reduce the amount of land used for agriculture.

    • Raising taxes on energy has the added benefit of making food more expensive at the same time.
      I only wish I was being sarcastic.

  22. On net, CO2 is a significant benefit for mankind.
    Adding a few tenths of a degree to the temperature is beneficial (Even if the wildest of the spectualtions were to come true and the temperature were to go up 2 to 3C, that would still be beneficial)
    Adding CO2 to the atmosphere makes plants including plants that we eat, grow bigger and faster.
    Based on this any Pigouvian tax should be negative.

  23. But we’re saving all the higher latitude countries from being overrun by ice sheets and runaway glaciers. That’s got to be worth something, doesn’t it?

    /doublesecretsarc

  24. It’s further on down the wish list for Hillary and the true “toxic” goal of the Party. After all, selling Presidential pardons is a limited revenue stream.

  25. Who gets to decide what is “green” and what is not? Certainly, only government will give itself a monopoly on that determination. Anyone who disagrees, no matter how polite and peaceful they may be, will be dealt with by the full power of government, starting with the SWAT team in full body armour with their MP5’s at the ready. This is so important that environmentalists are willing to send their own grandmothers off to reeducation camps should they deny the “consensus”, of government grant recipients at prestigious universities.

  26. “…what is now evident is that society needs to take much firmer action.”
    It’s only “evident” to those who need it to be, in the make-believe world of Climateland™. Meanwhile, back in the real world, it has never been evident that we needed to do anything, let alone take “firmer action”.

  27. Since 93% of GW is in the oceans why are we even debating the 1% atmospheric issue. If the top 10 climate research institutions cannot explain the oceans warming why burn a candle on this foolishNess

  28. “They found that under existing economic policy conditions, global temperatures are likely to continue to rise strongly this century.”
    And the opposite is also true – under any conceivable changed economic conditions global temperatures are also just as likely to continue to rise.

  29. Wow, it’s a tool from the 1920’s!! Should we also reject marginalism because it was from the 19th century? And do you know how old calculus, 0, and geometry are? Why, they’re positively ancient!

    C’mon, Anthony.

  30. at which delegates will seek to enforce targets to keep global temperature rise to less than 2C.

    How can they demonstrate that their actions had any effect, one way or another? It’s like the old joke about keeping elephants away by doing (X). “Well, it works, doesn’t it? Do you see any elephants?

  31. For your information Chromebook says this site is trying to download scripts from ‘unauthenticated sources”

  32. Here in the United States, all new taxes and tax increases need to be pared with federal budget cuts as part of the President’s balanced approach to deficit reduction. The President is already years late with the budget cuts that are suppose to go along with the tax hike on the rich and the ACA taxes. What budget cuts are proposed to go along with this new carbon tax?

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