Bishop Hill The limits of carbon taxes
Aug 5, 2012 Climate: WG3 Economics Richard Tol's latest discussion paper looks at carbon taxes and wonders just how much you get by way of emissions reduction if you stipulate that you are not going to increase the overall tax take. In some countries the answer is not very much - if your current tax take is low then you can only impose a small carbon tax. If you try to impose a higher tax in these countries, they will (theoretically at least) drop out and their emissions will remain "out of reach".
Different levels of carbon tax are discussed -
a stabilization target of 650 ppm CO2 equivalent would require a carbon tax of $6/tCO2e, in all countries, on all emissions, of all gases. A target of 550 ppm CO2e would require a tax of $29/tCO2e, and a 450 ppm target would need a $143/tCO2e tax. These are the three price levels shown in Figure 3
When you plug these tax levels into the equation carbon tax take = current tax take, you get the following answer for the 450ppm target, which Tol tells us is equivalent to the EU's 2°C target:
For $143/tCO2e, the carbon tax revenue is greater than 100% of tax revenue for more than 10% of emissions; and greater than 10% for all countries. Such a carbon tax would not be fiscally prudent in many economies. $143/tCO2e is the tax needed to meet the 450 ppm CO2e target, which roughly corresponds with the 2°C target of the EU and UN (den Elzen et al. 2007).
As Pielke Jr notes, this appears to mean any proposed carbon taxes must be low.
Reader Comments (58)
One of the many, many studies Richard wrote was co-authored by another true believer, Claudia Kemfert. She was the first associate professor in Germany without a habilitation and is the head of the Department Energy, Transportation and Environment for the German Institute for Economic Research (DIW). She (still) appears every little while on the fu**ing TV and in other corrupt MSM media.
Quality control prevented a greater harm for the DIW in 2008 when she submitted for the institute a study in which she advocated the privatization of the railways (titled "Die Privatisierung der Bahn – mehr Wettbewerb). It was found during the review process that she had copied nearly a fourth of the text out of the Wikipedia article Deutsche Bahn without citing her source. She alleged as excuse that is was a co-author of the study who did this. Strangely, her study mentioned no co-author (which is probable against the codex of the DIW). She never disclosed the name of the dubious co-author of that study (I am (quite) certain it wasn't Richard!).
Norbert Röttgen, the true believing hardliner and former German Minister of the Environment (till May 2012), wanted her in North Rhine-Westphalia for the position as Secretary of Energy in case he would win the election - but the election in March 2012 was a disaster for him and the so called Christian Democratic Union (- without the MSM reporting about that spurious study). So, fortunately, Germany has been spared Kemfert as Secretary of Energy. Nonetheless, SNAFU!
Of course, Richard Tol is not responsible for what she has done in that case!
Peter Glover at Energy Tribune has done a nice take down of Tim Worstall's conversion to carbon taxes.
http://www.energytribune.com//articles.cfm/11365/Worstall-Carbon-Tax-and-Floating-Polar-Bear-Syndrome
"In a nutshell, TW’s case is that a simple bureaucratic change of tack to manipulate the free marketplace is the way to go to achieve the goal: state manipulation of the climate. Not exactly the kind of argument I ever expected a committed free marketeer to make. No wonder University of Houston Professor, Larry Bell, commenting on the new bipartisan mood for compromise among some conservatives in the U.S., tags Carbon Taxomania: “stupidity-on-steroids”."
Of course, the real deal about carbon taxation is that it would be a "global" tax, at a level decided by the UN, something it has been pushing for a long time, and would finally give it World Government status. Ban Ki Moon's "High Level Panel of Eminent Persons on Climate Finance" after Copenhagen, included Chris Huhne, Nick Stern of LSE, (advisor to Idea Carbon, HSBC, member of Schellnhuber's Potsdam Science Advisory Committee, advisor to the EU), Christine LaGarde, George Soros, Deutsche Bank and a couple of third world dictators amongst others. They were pushing for a carbon tax of $25 dollars per ton and also recommending bunker fuel taxes, air fuel taxes and a whole raft of other taxation, with the aim of raising $100 billion a year by 2020 for re-distribution to developing nations for renewable energy projects, (in the case of China and India, mostly coal!).
The "Copenhagen Accord" has not gone away, and they don't give up, hence we have this new softly softly initiative, using "skeptic-friendly" economists like Richard. Get it into the public consciousness, internalise it and then it becomes not a question of "why"? but, "how much"? It took 8 years for the Kyoto Accord to become the Kyoto Protocol. Like the EU, they happily play the long game.
http://scienceandpublicpolicy.org/originals/high_level_climate_finance.html
The issue is stark: the IPCC 'consensus' is plain wrong. Because there cannot be any CO2-AGW, there is no reason to tax it.
Tell the UN to go away and all the home-grown people who earn money from defining where we whould tax CO2 and how to distribute the money.
Aug 8, 2012 at 5:04 PM | spartacusisfree
Spartacus,
I read the article that you referenced, and it apperas to agree with your theories, and also those of mydog, Huffman and Nickolov & Zeller. If there is no mistake in the calculation then this is surely a game changer.
Bishop - do you think that this is worth a new thread of its own, in order that other scientists can comment on it and interpret it?
"Peter Glover at Energy Tribune has done a nice take down of Tim Worstall's conversion to carbon taxes."
Peter Glover has manfully and firmly grasped the wrong end of the stick. As he does when discussing carbon taxes and myself.
Here's my position so that he and you can understand it.
1) If climate change is a problem,
2) If climate change is something being driven by human activity
3) If climate change is sufficiently a problem that we must do something about it
4) Then, and only then, is a carbon tax the correct and complete solution to that problem.
5) In the UK we already pay emissions taxes of about the correct amount for such a carbon tax. We're just not paying them in quite the right places. Too much on petrol, not enough on farming emissions, just to give an example.
Glover (and others) want to argue about points 1 through 3. I don't. For the government, the bureaucracy, the people who actually inflict things upon us, are already convinced of them. My aim is to point out that even if 1-3 are true, then signing up to the Greenpeace, FoE, Caroline Lucas, Monbiot, Chris Huhne vision of what we should do is *still* a bad idea.
All of which puts me firmly in the William Nordhaus, Richard Tol camp. *If* there is a problem then here is the simple and economic solution.
As to the carbon tax being global and paid to the UN. Words fail me: sure, there are idiots proposing that but not me. I argue precisely the opposite, that other UK taxes should be lowered to compensate for environmental taxation. Even Gordon Bleedin' Brown understood that one (no, really, when he introduced Landfill Tax he reduced employers' NI to compensate).
For there is no argument that climate change means that the general level of taxation should or must be higher. Only an argument that climate change (see 1-3 again) means that different things should be taxed.
Hell, what's wrong with the idea that we might want to tax pollution instead of incomes? Bads instead of goods?
"...there is no argument that climate change means that the general level of taxation should or must be higher"
Of course there is an argument! Why do you think we are discussing this? Most people here (I think) hold the opinion that all carbon taxes are nothing more tham a money making scam and will have no effect at all on the Earth's climate.
Tim, it appears to me that your "camp" thinks - like the UN - climate change means CO2 emissions. I think that equation is Orwellian.
Roger Longstaff: Gosselin shows the same data for 0% humidity I used from Hottell, which validates MODTRAN. Above ~200 ppmV, CO2 in dry air is in IR self-absorption. What I did not anticipate was that as RH increases, self-absorption apparently occurs earlier but we cannot assume it.
IR emission from the surface in CO2 bands [for example] turns off atmospheric self-absorption by competing for inactivated CO2 molecules. Atmospheric emissivity to the surface increases reducing surface emissivity, forcing IR into the atmospheric window, the real GHE, hence no CO2-AGW.