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Exxon CEO and Climate Alarmist Agree:

In a speech in Washington, D.C., Exxon CEO Rex Tillerson argued that a carbon tax is preferable to a cap-and-trade system for controlling greenhouse gas emissions. As reported in the WSJ, Tillerson noted that a carbon tax would be a "more direct, a more transparent and a more effective approach" than cap-and-trade. "Mr. Tillerson said a cap-and-trade system would be costly, bureaucratic and create a 'Wall Street of emissions brokers.'"

The Center for American Progress' Daniel Weiss responded that Tillerson's apparent endorsement of a carbon tax "could be a ploy because few observers believe such a tax is politically feasible in our Congress." Yet none other than NASA's James Hansen, who believes dramatic emission reductions that will actually reduce atmospheric concentrations of greenhouse gases, are necessary "to preserve nature and humanity," argues that cap-and-trade will stimulate special-interest rent-seeking and create bureaucratic morass without having an appreciable impact on emissions and "will practically guarantee disastrous climate change."

A carbon tax is difficult politically because no politician wants to be seen as calling for higher taxes. Yet a cap-and-trade system will only be effective to the extent that it replicates the effect of a tax on carbon-based energy sources, and a cap-and-trade system is (in the real world, as opposed to theoretical models) is likely to be far more costly and difficult to implement and far more prone to special-interest manipulation (as I argued here). Now that the likes of Tillerson and Hansen (and others) can agree that a tax is preferable -- particularly if revenue neutral -- perhaps it can become politically possible.

Related Posts (on one page):

  1. Exxon CEO and Climate Alarmist Agree:
  2. A Climate Deal for Conservatives:
Closet Libertarian (www):
Cap and trade is a tax. A complicated tax. It might be better where different companies are using different technologies and thus have a high surplus from trading permits. But I don't see that as the normal case and is just one favorable factor to counter the complexity and vulnerability to special interests.
1.9.2009 2:48pm
JoeSixpack (mail):
It is a particular political skill to disguise something that is politically unpalatable as something completely different that sounds great but basically has the same effect. Voters prefer indirect taxes, and that's what a cap and trade system would be. It the same as CAFE standards in place of a gasoline tax, payroll taxes paid by employers instead of employees, "tax cuts" in the form of checks mailed to people who don't any pay taxes in place of welfare payments, etc. etc.
1.9.2009 2:49pm
Houston Lawyer:
Before its demise, Enron was a huge proponent of cap and trade. They, being the smartest guys in the room, wanted to set up the trading desk and otherwise position themselves to benefit from the system. Cap and trade is a lobbyist's wet dream.
1.9.2009 2:58pm
Splunge:
Now that the likes of Tillerson and Hansen (and others) can agree that a tax is preferable -- particularly if revenue neutral -- perhaps it can become politically possible.

Er...because you think the CEO of Exxon has influence among the people driving the agenda here? That's a bit of an odd perspective.

I suspect the very fact that the CEO of Exxon supports a carbon tax makes the passage of one in a pseudo-populist Congress less likely. Gee, if the man from Big Oil likes it, it must be bad for the trees 'n' children 'n' other living things. Forget it!
1.9.2009 3:45pm
Thorley Winston (mail) (www):
So basically a direct carbon tax would likely to be politically more difficult to implement but less harmful in its operation whereas an indirect cap and trade tax would likely be easier to implement politically but more harmful in its operation.

I'm agnostic on the issue of AGW but I would say this -- if you actually believe that human behavior is causing or is a substantial factor in causing the Earth's temperature to change in a way that would on net be harmful to human beings and you believe the government should force people to change their behavior to prevent or mitigate that harm, then I think the prudent course would be to go for the direct tax over hoping to conceal it indirectly. The only way I see of getting the public to accept the changes that you believe they should make is to do it as transparently as possible and be up front about the costs you're expecting them to bear. Trying to conceal those costs or pretend that they don't exist with fanciful promises of new "green technologies" while pushing for changes that coincidentally enable your supporters to find a new way of looting the public isn't going to work unless the looting is the actual end of itself.
1.9.2009 3:50pm
JB:
Cap and trade is a tax. A complicated tax.

Which is why a straight carbon tax is superior. Complicated taxes have loopholes, require extensive policing, and are potentially rife with inefficiency. Simple taxes are superior in all of these respects.

What should the cap be set at? Where in the production/consumption cycle should it be applied? How often should it be adjusted? Those questions are easier to answer for a straight tax than for an ungainly trading apparatus.
1.9.2009 3:52pm
Sagar:
The whole CO2 induced global warming is a hoax (for money, power, and control), and the Cap &Trade is a dishonest way of stealing money from Peter to pay Paul.

If the goal is to reduce the use of carbon based fuels, they should have the honesty to directly tax it at the source or at usage. Also, when it becomes apparent that there is no evidence of 20 ft ocean level increases this tax could be sunset.
1.9.2009 4:16pm
David Larsomn (mail):
Why on earth are we contemplating a civilization-wrecking confiscatory taxation regimen to address a problem that exists only in the schemes of con-men and the minds of deluded lemmings? What's next, pledge a ten trillion dollar tax increase to fund programs to eradicate witchcraft?
1.9.2009 4:38pm
Thales (mail) (www):
David Larsomn:

Are you actually paid by ExxonMobil, or are you just a sucker that does its work for free?
1.9.2009 4:46pm
FWB (mail):
If it were not for the fact that the annual industrial additions of C to the atmosphere account for 0.73% of the total atmospheric C at any given time, there might be a reason to pursue some course of action. The total recent C additions are 6 billion metric tonnes per year with atm C being 824 billion metric tonnes at any given instant.

None of the models I have seen include equilibrium with the C in the oceans, a process that occurs very rapidly. If one takes CO2 free water from a source and walks across a 20 ft room, CO2 from the air will dissolve in the water at levels sufficient to easily measure in a lab by titration.

The oceans contain 42000 billion metric tonnes of C at any instant. The partitioning factor between the air and the oceans greatly favors the oceans. Some ignorant PhD at Yale stated the oceans were "saturated" with CO2 but the PhD should have kept her mouth closed. Le Chatelier's Principle comes into play and any change to the CO2 on the left side of the equation (air) will force a shift in equilibrium to the right (water).

Do humans cause problems? Or course. To what extent is the question and what expense should be applied to manage human contributions.

NA and Europe will benefit from warming. Longer growing seasons will occur and crops varieties will be able to be grown in the more northern regions that could not be grown there in recent times.

Just like the Freon-12 lies about the ozone hole, the CO2 lies will cost the people. Interestingly, one can go to many foreign countries and obtain Freon-12 at low cost. It is primarily in the first world countries where the people are forced to pay exorbitant prices for alternatives. I can list a number of lies by omission in the science texts and reference books about Freon-12, such as the fact that Freon-12 is water soluble (dissolves in the oceans), condenses out of the air at the tropopause because of its boiling point, etc.

Science has been politicized for more than 30 years. As always follow the money. If one wants funding, one will design experiments that result in reports that the funding agency desires.
1.9.2009 4:49pm
blcjr (mail):
The only proposal I've heard of that I would take seriously is Ross McKitrick's "T3" tax.
1.9.2009 5:07pm
Elliot123 (mail):
A toothless cap and trade system is best. It lets members of the consensus feel good, and lets the rest of us go about our business. Kumbayah.
1.9.2009 5:12pm
giovanni da procida (mail):
FWB, I'm confused. Are you saying that there is no AGW? Or that it's effects will be beneficial to Europe and North America?

Which models specifically didn't account for oceanic uptake? That is a serious flaw in a carbon model. I took a quick look at a few recently published modelling papers, and all had uptake by the oceans (for example Shurgers et al. 2008).

It is true that as atmospheric concentrations increase, more CO2 will be absorbed into the oceans. As CO2 levels in the ocean increase, the pH of the ocean will decrease:

CO2 + H2O = H2CO3 = HCO3− + H+

(as the CO2 on the left side of the equation increases, some will become carbonic acid in the center of the equation. As the CO2 and carbonic acid increase, then more H+ ions will dissociate, leading to a lowering in pH). The problem with this is that it may decrease the amount of oxygen produced by phytoplankton in the open ocean (which produce about half of yearly oxygen production) and also may decrease biological oceanic carbon sequestration.
1.9.2009 5:21pm
Sarcastro (www):

A problem that exists only in the schemes of con-men and the minds of deluded lemmings?

Totally! The world is totally behind the Global Warming Truth crusade! They're just secret about it in polls and everything.
1.9.2009 5:21pm
Thales (mail) (www):
The Economist, that bastion of anti-capitalist sentiment and purveyor of hysterical scientific falsehoods, has been calling for a carbon tax for years, citing the EU's failure to rationally adjust the cap in its cap and trade system (i.e. its vulnerability to rent seeking). In the current issue, there's a fairly sober assessment of the damage to our oceans done by carbon-triggered acidification and other environmental harms such as overfishing and dumping of waste (there are two agglomerations of plastic the size of the U.S. floating in the Pacific).
1.9.2009 5:41pm
Curt Fischer:

If it were not for the fact that the annual industrial additions of C to the atmosphere account for 0.73% of the total atmospheric C at any given time, there might be a reason to pursue some course of action. The total recent C additions are 6 billion metric tonnes per year with atm C being 824 billion metric tonnes at any given instant.


This is a conflation of the emissions rate and the atmospheric level of CO2. When you fill your pool with a garden hose, the flow rate of the hose per hour might not be very large compared to the pool volume, but either way the hose eventually overflows your pool. See here if this concept still is unclear to you.


None of the models I have seen include equilibrium with the C in the oceans, a process that occurs very rapidly. If one takes CO2 free water from a source and walks across a 20 ft room, CO2 from the air will dissolve in the water at levels sufficient to easily measure in a lab by titration.


You must not have seen very many models. CO2 dissolution in the oceans is included in the vast majority of models that I have seen. It doesn't happen as fast as you think. IIRC, the mean residence inorganic carbon in the ocean is 100 years. That means it will take a long time for the oceans to take up the extra CO2 in our atmosphere.


The oceans contain 42000 billion metric tonnes of C at any instant. The partitioning factor between the air and the oceans greatly favors the oceans. Some ignorant PhD at Yale stated the oceans were "saturated" with CO2 but the PhD should have kept her mouth closed. Le Chatelier's Principle comes into play and any change to the CO2 on the left side of the equation (air) will force a shift in equilibrium to the right (water).


I agree that the ignorant should keep their mouths closed! Let's ignore people who spread false and irrelevant climate claims!
1.9.2009 5:46pm
Guest12345:
The difference between a tax and cap &trade is that a tax will go to the government where it may be used to offset spending. Cap &trade will allow individuals with large disposable incomes to buy carbon credits to later sell at a profit with the money going into their bank accounts (or mattresses.) As long as the "cap" is intended to be a value suitable for a particular economy, that is the amount of carbon allowed is appropriate for economic growth, then basically this is putting the brakes on on that economy until the various participants manage to pay the bribe to get the carbon credits released back into the market.

Unless there are restrictions on a carbon market, such as only people who have the capability to use credits can buy them, and credits expire quarterly, and anyone with expiring credits is fined a substantial amount (at least double the average credit price for that quarter). Without controls like that, you're going to be burdening the overall economy in excess of what is necessary to cut carbon emissions.
1.9.2009 5:58pm
A. Zarkov (mail):
If we must tax carbon emissions because we believe they increase global temperature then make the tax a function of global temperature change apportioned pro rata on carbon emission.

If the temperature change is zero for a given year then no one pays anything. If the temperature goes up (say) .1 deg, then make the total world tax = W(.1). Then you pay some fraction of W according to how much carbon you emit. Thus if I own a private jet, then I pay according to the amount of jet fuel I consume. Ditto for the automobile driver or the operator of a coal-fired power plant. Under this scheme if average global temperature starts dropping, the tax is effectively canceled. If global temperature really starts to climb, then the tax increases. If a country refuses to pay then their exports get hit with a tariff. We can use the IPCC model, and demand elasticities to calculate the function W(ΔT) to stabilize the average temperature.
1.9.2009 6:16pm
Andy Freeman (mail):
I note that the carbon tax justified by the proponents' argument for economic costs of AGW is around $0.20/ton.

Is there any reason to believe that the actual tax rate will be under $1/ton?

Note that one problem with the "tax to take care of damages" argument is that the money gets spent elsewhere and the folks who thought that they'd get money from the tax keep coming back and asking for more, hoping that eventually they'll get what they thought that they were promised from the beginning.
1.9.2009 6:19pm
SFBurke (mail):
A revenue neutral carbon tax is definitely the best approach. I am generally skeptical of the global warming alarmists, particularly because the solutions all seem to coincide with their previously held political positions. But the fact is that their is a strong political desire to do something. So a revenue neutral carbon tax phased in over several years is probably the least economicaly damaging alternative. Charles Krauthammer had an interesting piece in the Weekly Standard recently advocating for a revenue neutral gasoline tax. He noted several benefits that would bring (such as reduced dependence on foreign oil) that would be worthwhile whether or not one is worried about climate change. Whatever the precise scheme, it would make sense to offset the tax revenue with a reduction in payroll taxes -- which might actually help stimulate the economy.
1.9.2009 6:22pm
Sua Tremendita (mail):
Such lame, gradual solutions are a joke. Bring back the solution pioneered and prefected by such illustrious reformers are Stalin, Mao and Hitler. Amen.
1.10.2009 1:36am
Brian Macker (mail) (www):
<i>"... James Hansen, who believes dramatic emission reductions that will actually reduce atmospheric concentrations of greenhouse gases ..."</i>

Who cares what that idiot has to say. He was the one who suggested that people be brought up on criminal charges for spreading doubt about global warming. What now scientists aren's suppose to be skeptical. The guy hasn't a clue about how science is suppose to operate.
1.10.2009 9:32am
man from mars:

Why on earth are we contemplating a civilization-wrecking confiscatory taxation regimen to address a problem that exists only in the schemes of con-men and the minds of deluded lemmings?


What's so great about civilization? What was it that Douglas Hofstadter wrote, something about how many people argue it was a mistake to have come down from the trees in the first place?
1.10.2009 11:59am
Oren:

Which is why a straight carbon tax is superior. Complicated taxes have loopholes, require extensive policing, and are potentially rife with inefficiency.

On the other hand, C&T offers potentially increased efficiency from trading between producers that can more easily mitigate their output and those that can do so only at great expense.

Whether or not this benefit is enough to offset the increase bureaucratic demands of C&T is tied up in the details and administration.
1.10.2009 3:22pm
man from mars:
From Douglas Adams, Hitchhiker's Guide:

And so the problem remained; lots of the people were mean, and most of them were miserable, even the ones with digital watches.

Many were increasingly of the opinion that they'd all made a big mistake in coming down from the trees in the first place. And some said that even the trees had been a bad move, and that no one should ever have left the oceans.
1.11.2009 12:37am
Dan Weber (www):
If it were not for the fact that the annual industrial additions of C to the atmosphere account for 0.73% of the total atmospheric C at any given time, there might be a reason to pursue some course of action.

Is this supposed to make me think everything is okay? Adding 0.73% might make any individual year seem small, but for those of us who manage to keep on living, years have a way of adding up.

I'm not sold on AGW, but I'd love to see the income tax be replaced with a carbon tax, purely on economic grounds.
1.11.2009 1:12am
Ricardo (mail):
If it were not for the fact that the annual industrial additions of C to the atmosphere account for 0.73% of the total atmospheric C at any given time, there might be a reason to pursue some course of action.

In other words, the CO2 concentration in the atmosphere will double in about 100 years. This is best illustrated by a graph shown here:

http://www.nybooks.com/images/tables/2008061244img1.gif>

In other words, the natural world is not absorbing CO2 as fast as we can produce it. The amount in a given year may be small but as it accumulates and accelerates with global economic growth, it will become a problem.

This is why realists on this issue sometimes advocate (as yet infeasible) carbon capture technology to prevent carbon emissions from reaching the atmosphere in the first place. Ignoring emissions though is incredibly foolish.
1.12.2009 3:44am

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