TT's Lost in Tokyo

Marlo Lewis of CEI has a rather schizophrenic post up at Rob Bradley's MasterResource blog - one of my favorite "free market" fossil-fuel industry-funded sites (unlike the NRO's "Planet Gore", MasterResource actually allows comments!) - regarding the proposal by leading "alarmist" climate scientist Dr. James Hansen (of NASA and Columbia U.'s Earth Institute) that the federal government adopt a "tax and dividend" climate policy instead of a "cap and trade" approach.

Lewis notes that Hansen recently testified in front of the U.S. House Ways and Means Committee about Hansen's "tax and dividend" proposal, but while Lewis calls Hansen's per capita rebated carbon tax proposal "clever", Lewis puzzlingly fails to compare Hansen's proposal with the cap and trade alternative that the Obama administration supports and that Congress (and industry) appears to favor.  Instead we get some poorly grounded speculation about the effects of a carbon tax and complaints about the political viability of a transparent carbon tax - all of which points not only ignore the more opaque, rent-seeking prone and heavy-handed cap and trade alternative, but by implication suggests that those who prefer an opaque and back-room deal prone cap and trade approach have made the correct political calculation.

Nor does Lewis make any mention of all of the support that carbon taxes have received, not only from economists, but from a wide range of others, including Exxon`s Rex Tillerson and various neocons, conservatives and libertarians (George Will, Congressman Bob Inglis, Jon Adler, Barbara Thoring, etc.), at least in comparison to cap and trade.

As a result, one is forced to wonder just whati it is that Lewis is trying to achieve - is he trying to sabotage a government-lite carbon policy, so that government-heavy policy is more likely to prevail?  If so, why?  Or does he really think that opposing EVERY carbon pricing policy is the most effective way to delay and/or influence ultimate policy outcomes?  I for one am confused.

My more extensive (and less high-level) comments to Marlo Lewis on his comment thread are copied below:

Marlo, first, I’m afraid I don’t follow you on the science. We can’t stop our still growing GHG releases on a dime, much less the short- to medium-term feedbacks from water, methane and albedo changes, and long-term will persist for centuries, and the water cycles, the oceans’ pH and world’s biota are changing noticeably and fairly rapidly, even without significant further increases during the past decade - yet what is it, precisely, about our ability to change our influence on the system or to control responses that gives you comfort? Why do you seem to think it is “conservative” for our nation and others to do nothing in light of our remarkable and uncontrolled global climate experiment?

BTW, surely you are aware that Hansen has earlier offered extensive information that paleoclimate records indicate that long-range climate rsponse to a CO2 doubling is on the scale of 3 degrees C. Did you miss that? Or were you more eager to say that Hansen’s reference to more recent studies about facts some how implies that Hansen is “dissing” models? What’s the point anyway, other than point-scoring - if facts appear to indicate that long-term sensitivity is relatively high, should we be ignoring that and placing our faith in models instead? Should facts not further inform models, or policy-makers?

Second, while you note Hansen’s attack on cap & trade and his “tax and dividend” proposal “quite clever”, you fail to offer any opinion on the realative merits of these quite different proposals. Instead, you offer some sniping criticisms of tax and dividend, as if you are hoping that the consequence will be that the Obama administration, Dems and rent-seekers generally will turn away from climate policy altogether. But isn’t that nothing but wishful thinking, and shouldn’t libertarians and others who prefer to avoid the monstrosity of cap & trade be trying to encourage the efforts of those whose proposals would be much less economically damaging? Isn’t Hansen’s proposal far preferable over cap & trade, and the kind of industrial planning that Jon Adler says is inevitable from the EPA under EPA vs. Massachusetts without legislative action?

Exxon and a host of others (as noted at the blog posts linked at my name) have come clearly down in favor of carbon taxes over cap & trade; perhaps you may at some point care to favor us with your own comparative views.

It seems to me that Hansen’s proposal is clearly preferable; it could be easily implemented and monitored, would not involve large new bureaucracies, would be much more transparent and less susceptible to rent-seeking, would provide market signals on GHGs while having no fiscal impact, would be grounded in the principle that the atmosphere is owned by citizens and not government (or by corporations that are given or purchase rights to emit GHGs), and, by being refunded per capita to citizens would be generally progressive.

Third, as for your criticisms of Hansen’s proposal:

- carbon taxes will hit coal use more heavily than petroluem or natural gas, so focussing first on “pain at the pump” smacks of pandering, especially as revenue recycling may eliminate the pain completely;

- older, dirtier coal plants are already uneconomic and generate tremendous costs to health and property that are not costed to producers or consumers; taxing carbon is a great way to end some of the nonsense incentivized by the CAA. Your speculation about power supply and electricity prices is nothing more than speculation, but oil and gas-fired plants could be brought on line relatively quickly;

- as for the “green stimulus” effect, it is ironic that you fail to see that the fact that “There is no guarantee people will use their dividends to buy hybrid cars, energy-efficient appliances, or green energy” is in fact an argument IN FAVOR of rebated carbon taxes as opposed to cap and trade, as the first allows much greater economic freedom and is thus more conducive to wealth creation. Further, not only is dividending the tax proceeds a great way to make sure that the government doesn’t have an even larger pot to dole out mandates, subsidies and other goodies to favored industries, but the right could trade its acceptance for such a tax for elimination of existing subsidies to ethanol and solar.

- your point about labor productivity is fair, but it ignores the social cost of carbon. Has forcing polluting industries for the ’60s on benefitted society and improved productivity as a whole the whole? Or is it simply more important to allow certain classes of producers and consumers to profit while continuing to shift costs to others?

- as for “massive” transfers, this is all “would” and “could” without any backing, and it completely ignores all of the massive wealth transfers involved in the way we presently regulate power generation and energy (and have refused to regulate GHGs). I’m happy to have more information, but let’s not forget that the whole purpose is to have a closer alignment between profits/benefits and social costs.