James Hansen backs John Humphreys Carbon tax.

Well not directly so as I’m jut kidding, however today’s Wall Street Journal op-ed carries a piece that is absolutely jaw opening. It seems James Hansen, described by the WSJ, as the spiritual father of AGW proponents is going home: his political home that is -the moderate free market wing of the Republican Party (something he always claimed to be the case). Good for him.

Hansen supports a carbon tax lobbing a huge broadside at the big government tax grab that is cap and trade by Washington politicians (and ELSEWHERE)

Hansen’s views about AGW haven’t changed one bit in that he thinks carbon emissions are highly dangerous to earthly life form and would like to see the end carbon of emissions as quickly as possible.

The piece says:

“No, the spiritual leader of the climate-change movement hasn’t recanted. Global warming threatens “not simply the Earth, but the fate of all its species, including humanity,” he writes in his manifesto, which is tame by Mr. Hansen’s normal rhetorical standards. (He likes to compare carbon to the Holocaust: “those coal trains will be death trains — no less gruesome than if they were boxcars headed to crematoria.”

Hansen surprises me in what he is quoted as saying in the opinion piece.

“But Mr. Hansen also had the honesty to follow his convictions to their logical conclusion, while reproaching his followers — President-elect Obama among them — for not doing the same. To wit, Mr. Hansen endorses a straight carbon tax as the only “honest, clear and effective” way to reduce emissions, with the revenues rebated in their entirety to consumers on a per-capita basis. “Not one dime should go to Washington for politicians to pick winners,” he writes.”

And

“A tax should be called a tax,” Mr. Hansen writes. “The public can understand this and will accept a tax if it is clearly explained and if 100 percent of the money is returned.”

And

“Beltway sachems prefer posturing that disguises the cost of rising energy prices, such as cap and trade. This “subterfuge,” as Mr. Hansen terms it, shifts the direct burden onto businesses, which then pass it along to consumers. Congress may flatter itself that it is saving mankind, but what the Members really want is a cap-and-trade windfall that they can redistribute in the green pork of Mr. Obama’s “new energy economy,” whatever that means.”

“…..Mr. Hansen also favors a complete phase-out of coal-fired electric power, arguing that it be replaced by advanced nuclear, which could be capable of recycling radioactive waste within a decade. He adds: “It is essential that hardened ‘environmentalists’ not be allowed to delay the R&D on 4th generation nuclear power.” We’d like to see him debate Al Gore on that one.”

If only the GOP begins to use Hansen to help argue the case of introducing an offsetting carbon tax. In fact if only the Liberal party flew him over here and helped argue the same.

11 thoughts on “James Hansen backs John Humphreys Carbon tax.

  1. To convert an ETS to a carbon tax they just abolish the permit auctions and instead sell the permits at a fixed price (this is also how they ought to begin to reform the tax license scheme). They can still call it an ETS if the politics demands that they do so, but in practice it would be a carbon tax.

    Cap and trade could be a tax grab. However lets not forget that whilst technically better than cap and trade a carbon tax could also be used as a tax grab. The key point is that either way the revenue should be recycled into tax cuts in other areas.

  2. Cap and trade is the creation of a fictitious market, so it’s not the same as a carbon tax.

    Secondly I can’t see how a cap and trade could be seen to be a revenue neutral as that isn’t the intention. Creating neutrality would be far to cumbersome. So any government choosing an ETS has at the outset the idea of a tax grab.

  3. An Emissions Trading Scheme as proposed in Australia is as I understand it a system where by CO2e emission permits are sold via auction on a periodic basis. If you emit CO2e without a permit you are in breach of the law. As such if you want to emit a given quantity of CO2e you will need to buy a corresponding quantity of permits. You will need to buy these permits at auction or in a secondary market and they can then be used to permit the emission of the corresponding quantity of CO2e (at which point the permit is then extinquished). It is a capped system because the quantity of permits sold at auction during a given period is fixed. Obviously the price varies depending on variations in demand.

    If you remove the quantity fixing (ie the cap) and instead fix the price then anybody can emit CO2e so long as they pay the fixed price to do so. In essence this is what a carbon tax is.

    Neither a carbon tax (emission permits sold at a fixed price) or an ETS (emission permits sold in a fixed quantity) is more or less fictitious than the other. They both entail the government selling permits (ie selling permission) in one form or another. A carbon tax sells permission in unlimited quantity at a fixed price. An ETS sells permission at an unlimited price in a fixed quantity.

    An ETS could be revenue neutral if all the revenue raised from the auctioning of permits was used to reduce other taxes. In fact Turnbull has in the past insisted that he will hold Rudd to account on the issue of revenue neutrality for the proposed ETS. However I would agree that an ETS is less likely to be implemented in a revenue neutral way simple because it’s impact on the final consumer price is more volatile and hence it’s cost impact to the consumer is less transparent and it is easier to obfuscate with political spin.

  4. In terms of CO2e mitigation it is silly in my view for politians to set up a system which says we wish to restrict emissions “whatever the price”. It is far more sane to decide that emissions cause a problem and here is the price we are willing to pay to avoid that problem.

  5. Terje… that is not true. And ETS and a tax are fundmentally different approaches, as I go to pains to point out in my CIS monograph on the topic.

    An ETS has fixed quantity supply. A tax has a fixed price adjustment. The difference is important. It’s the same as the difference between a tariff and a quota in trade theory.

    Under an ETS, the effective “tax” will get steadily larger as time goes on.

    Also, an ETS would have to sell permits to release co2 over a period of time longer than a year (or there is no certainty), and then letting people trade. This creates stake-holders who will then lobby against the ETS being removed. Indeed, once they have permits they will lobby for fewer permits (ie higher tax) in the future to increase the value of their permits.

  6. John – what have you been smoking? I explain that an ETS and a carbon tax are different because the first fixes quantites and the later fixes price. You then claim this is untrue before stating that an ETS fixes quatities and a carbon tax fixes price. You seem to insist that we disagree even as you make a set of statements that mirror (almost exactly) my set of statements. If there really is some disagreement here I’m not seeing it.

  7. Opps… I misread your first sentence and then responded. Mea cupla.

    Though I do think it’s better to call it a tax, because that makes it easy to get rid of it later. A trading system sounds friendly. Taxes sound nasty. And if you call it a trading system, the pressue to make it a trading system will be significant.

    But no excuse. I misread your comment. You were right.

  8. Apology accepted. You did however force me to think a bit harder about the forms that an ETS might take and how some forms might be more readily entrenched than others. For instance if you sold all the emission permits for the next 20 years all at once you would have a system that was politically much more difficult to end than if you merely sold the emission quota approximately one year ahead of time. The taxi licence plate problem does seems to be somewhat harder to end because it entails a license in petuity rather than something that must be renewed on a regular basis. As such taxi plates are a rare and valuable entitlement that is reusable again and again whilst a system of emission quotas that get used up (consumed and extinquished) is a somewhat easier system to dismantle or to reform into a tax.

    I don’t know enough about the specifics of the Rudd ETS to know where it fits on the spectrum of ETS possibilities. Perhaps somebody else can shed some light.

    As it stands I’m fine with a revenue neutral carbon tax, quite concerned about an ETS but long term a techno optimist in that we will move beyond all this either way. Of course as Keynes said we are all dead in the long term.

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