19 Nov 2013
This was the 3rd presentation at IER’s Carbon Tax conference earlier this year. Here’s the original blog post, but below I reproduce my highlights:
- 2:00 – 4:00 Green explains that in 2007 he and his colleagues looked at the impact of a $15/ton carbon tax. They thought it would be a better policy than cap-and-trade, let alone more explicitly command-and-control regulations, especially if the revenues were used to offset other taxes. They weren’t “for” a carbon tax, but thought it was better than some popular alternatives.
- 4:00 – 5:00 Green said he noticed that the groups inviting him to present in favor of a carbon tax, never ever supported the other elements in his case. They didn’t want to roll back other regulations, or calibrate the carbon tax to the economically “optimal” point.
- 4:55 Green says that in 2011 he wrote a mea culpa, admitting that his “friends in the free market movement were right,” and that a carbon tax would be a step on the path of “carbon seduction.”
- 5:55 Green explains that a tax on carbon, is not really a tax on “bads,” because it applies to a major source of inputs in the economy.
- 7:15 Green says that to test the sincerity of a “market” supporter of a carbon tax, ask if the person would agree to throw out the CAFE standards once a carbon tax is in place. No environmental advocate would ever agree to this, even though in theory the carbon tax should replace all of the other regulations.
- 8:45 Green points out that if we “fix” the regressivity of a carbon tax by refunding money to poorer households, then it partially defeats the purpose: It is supposed to alter behavior by changing the relative price of carbon intensive activities.
- 10:15 Green says he has never seen a policymaker seriously propose a textbook carbon tax in the U.S. Political considerations always make the proposal deviate from the “optimal” configuration.
- 11:00 – 11:30 Green says that even the relatively sensible tax imposed in British Columbia, had only a “shelf life” of five years before environmentalists wanted to double the rate and decouple the revenues from tax neutrality. In other words, they wanted to take the money to spend on their own pet projects, which was not part of how the BC carbon tax was originally sold to citizens.
- 12:20 – 13:00 Green walked through examples of U.S. “trust funds” that have been looted for other purposes. In other words, we can see in practice that a “dedicated” environmental fund from a carbon tax would eventually be raided for general revenue purposes.
- 13:00 – 14:00 Green explains that unilateral U.S. action would not significantly affect the trajectory of global climate change, even according to the standard models.
- 14:00 – 15:00 Green warns conservatives that environmentalists do not want “efficient” pricing of carbon. In particular, he reminds us that Alberta has a carbon tax, and that certainly didn’t stop environmentalists from opposing the Keystone Pipeline in the most sweeping terms. So it is simply not true, Green emphasizes, that by going along with a carbon tax, conservative champions of the market can “take the issue off the table.”