One of the main points I took away form Dieter Helm’s “Carbon Crunch” is that “the current approach to Climate Change is not working and it is not likely to work any time soon!” He describes the Kyoto Protocol, with its “plan” to implement “Cap and Trade” agreements in 2020 for the developed countries, hoping the developing countries will follow suit, as being the current world approach, which, by the way, doesn’t include the US, which seems set on endless debate. “We” have be done very little for over 20 years now!
Further, he argues that the concept of “Cap and Trade” with carbon certificates within the Kyoto Protocol is a top down approach better applied in a world that has perfect knowledge of emissions and the costs necessary to obtain the needed reduction. Furthermore, Cap and Trade lends itself more to big business politics, which usually supports the stats quo. No big change there!
If we are not insane, we need to do something different. But what?
One of three major recommendations Helm makes is a “carbon price,” as he prefers to call it, or as others call it a “carbon tax.” By whatever name, it involves employing the Market in reducing carbon emissions. The idea is that a cost be associated with the use of carbon fuels and that the cost be passed through the marketplace. Then businesses and individuals in the market can decide what to buy (products with more or less carbon embedded or required for lifetime operation), using cost as a part of the decision. Over time, the desired effect of reducing carbon emissions is achieved, as the carbon tax is adjusted to whatever level is necessary to achieve the reduced carbon emissions needed.
The tax would be levied on big users or developers of carbon, such as oil companies and refiners, coal mining operations, natural gas companies, etc. There are relatively few of these entities, so the administration would be relatively clean. These entities will pass on the cost to their customers, such as distributors, manufacturers, service providers and commercial enterprises. Who in turn would pass them on to consumers. While businesses might be tempted to roll in an “admin fee” with the tax charge, most businesses would be hard pressed to do that as competitive products would then gain a further cost advantage.
This does bring up an interesting question: How would imported goods be “taxed?”
And another couple of questions, how would the new tax revenues be used? How can we tax carbon but not put an undue burden on those least able to pay?
Most timely, responding to Obama's challenge senators Bernie Sanders (VT – I) and Barbara Boxer (CA – D) recently introduced a bill that would create a carbon fee of $20 per ton of carbon, which would mostly be returned to households. Listen to Living on Earth’s interview of Bernie explaining their bill and climate change reality here (click stream to listen, or read below picture).
Dan Gibson is the Reporter and Chief Coordinator of Our Energy Independence Community (http://www.OEIC.us). Previously he performed home energy audits for five years in NYSERDA’s Home Performance program and new home ratings in the New York ENERGY STAR Home program. He is currently building a 100% Solar Home - no, it's not finished yet. He can be reached at DanG@OEIC.us.