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April 20, 2008


We just need a carbon tax

I disagree. The problem with the carbon tax is that it is an artificial restriction on the use of energy that can be repealed as easily as it was enacted. What are needed are incentives not penalties.

When you say "carbon tax" most people think you're telling them to turn the lights out, ride a bicycle to work and put an extra sweater on in winter. You might have heard how well that played for Jimmy Carter in the 1970's. Any Democratic Congress which just enacts a carbon tax will define the next 20 years of Republican talking points. The result will be (at best) seesawing environmental laws and increasing damage to the environment.The Democrats will always have the poorer hand, because they'll be seen as punishing consumers arbitrarily.

You may laugh at John McCain's "gas tax holiday", but there are plenty of people who can tell you exactly how much extra they pay on every gallon of gas. It's stamped right on the pump in many states.

The only counter is to demonstrate that there are efficient, effective and workable technologies that can solve our environmental problems without sending us back to a third world standard of living. In fact, the argument should be made that America as a highly advanced, innovative, forward looking, optimistic country can make a fortune solving both the energy problem and the environmental one.

The two approaches aren't mutually exclusive, but a tax is actually closer to a free market approach than a government subsidy for research.

If you tax a limited resource (like fossil fuel) you shift some of the price setting power away from the supplier.

A tax acts as an incentive because it creates demand for efficient products and efficient technologies (that save the consumer money).

These are technologies that can be used here and exported.

The hybrid automotive technology that Toyota and Honda developed and use in some of their vehicles is being licensed to the US automakers, for example.

Changing behavior (and, more importantly, implementing efficiencies) takes time. The sooner you start the better. Countries that have had higher fuel taxes (mostly since WWII ended) have homes that are built to be far more energy efficient (and energy use per capita that is lower).

The two approaches aren't mutually exclusive, but a tax is actually closer to a free market approach than a government subsidy for research.

Free markets don't solve fundamental societal problems. At best they allow the most effective companies to make money - but there's a big difference between a "greener" company and a "green" one.

Global climate change is a fast approaching problem with potentially catastrophic consequences for the world's population. Solving or even mitigating the problem will require aggressive, directed, focused action. A carbon tax is a passive, indirect and unfocused action and will be completely ineffective if any of the major players fails to enact or enforce it. It is at best a tiny part of that solution and not even a necessary one.

Reductions in emissions come in part from conservation, in part from alternative energy sources, in part from new technologies and in part from government controls (or mandated standards).

Innovation comes about most effectively in response to a commercial need (providing a more cost effective product, or finding a way to reduce a cost). Taxes are a way to stimulate that innovation because it raises costs at a basic level. As individuals, communities and industries seek alternatives eventually innovators find solutions (products) that make economic sense.

IMHO, larger (and, by plan, growing) US fossil fuel taxes should have been instituted thirty five years ago, after the initial "oil shock". We would have taken some of the price control away from the oil-exporting countries and given it to ourselves. We would have given ourselves a better incentive to become more energy independent.

A tax on emissions can work the same way as a consumption tax in terms of fostering innovation. Industries are more likely to find the best practical solutions and to do it quickly. That's superior to creating government programs to "manage" or to fund innovation.

Taxes are a way to stimulate that innovation because it raises costs at a basic level.

Sure, but a more precise means of focusing innovation is to create a large scale targeted goal and typically, only a government initiative can create a long-term, sustained effort - especially when there may never be a monetary payoff.

No combination of tax penalties or incentives would have created the Apollo program, which was one of the most innovative in history.

Likewise, Japan and Korea didn't become economic powerhouses by becoming free-marketeers. They had systematic programs, subsidized by their governments to create the industries that now dominate much of our commerce.

I'm with you in theory but disagree about the effectiveness, overall, of Government run programs of this type (that is, trying to advance innovation).

In the space program, for example, the Federal Government "owned" the project and "owned" the outcome (its success or the failure). Yes, there were benefits for US industries that worked with NASA but they were suppliers to an end user.

In terms of the US auto industry, as another example, the government tried to "negotiate" efficiencies (such as fleet efficiencies) but the auto-makers generally "gamed" the system (for example, by getting an exclusion for heavy vehicles (SUV's) from the fleet fuel standards, and by contending that greater efficiencies were generally overly difficult to achieve).

The US government also tried to initiate automotive innovation. We subsidized hybrid technology, under an agreement that the automakers would bring it to market, but the automakers couldn't deliver. (The Japanese started their own program to be competitive and did succeed. So Detroit lost twice, as Japan capitalized on our own forward planning and on our failed execution).

Japan and other nations have had comprehensive programs. These included planning energy needs (power plants) and higher fuel taxes and stricter efficiency standards for appliances and home construction, etc. I don't really know about government initiated innovation programs that other countries have had success with...there may well be some we could emulate.

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