Sunday, February 01, 2009

Conservative carbon-tax convert con job

Whether it's intentional or unintentional, the mini-wave of conservatives like Jonathan Adler saying they would support a carbon tax to prevent cap-and-trade legislation are really offering a poison pill. As Dave Roberts says:

The 111th U.S. Congress is not going to pass a carbon tax. Calls for a carbon tax, to the extent they have any effect, will complicate and possibly derail passage of carbon legislation....If you want carbon pricing out of this Congress, cap-and-trade is what you're getting.

I think the same is true for 100% cap and dividend, where all the money raised from carbon auctions has to be distributed to taxpayers. While sending some of the money raised back to taxpayers wouldn't wreck a deal, I think sending 100% of it back would, as well as cut off a source of funding for research, mitigation, and yes, adaptation to climate change.

The good thing about a carbon tax is that it's compatible with cap-and-trade. Once the cap system is in place, a carbon tax will reduce the economic incentive to emit carbon, and then reduce the auction price. Carbon taxers who really believe what they say should get a good cap system in now, and then work on a carbon tax that if significant enough, would end up overshadowing the cap system.

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