Post on 14-Dec-2015
transcript
Carbon taxes -Reducing carbon-dioxide
emissions by putting a price on carbon
Welcome!
The rise of the C tax
and its recent stumble
Overview
• Reasons for a C tax• Pigouvian-tax game - what’s a C
tax & how will it work• Economic impacts of a C tax• 2 current versions of C tax• What you can do• Questions!
Why a carbon tax?
It’s time for Bob to talk about the reasons we would want to consider a carbon tax.
Thanks, Bob!
• Incentives• Innovation• Changes in behavior and technology
What have you already heard about C taxes?
. . .
Externalities
• Who knows what an economist means by “externality?”
Pigouvian-tax game• Nutritionists and medical doctors say
that we consume too much salt. How can we fix that?
• Apply a tax• A model of an economy reducing
consumption of a good with externalities by taxing it
Pigouvian tax
• Arthur Pigou• Externalities• Impact of externalities on consumption• A tax applied to a market activity that
generates negative externalities (costs for somebody else).
Social Costs
External Costs= Pigouvian tax
Private Costs
Salt
Health effects
DeliveryMarketing
ProcessingTransportation
MiningExploration
Fossil Fuels
Global warming Damage to environment Damage to property Health effects
DeliveryMarketingProcessingTransportationMiningExploration
Social Costs
Components
• 3 goods - cherries, salted almonds & unsalted almonds
• 3 salt-tax levels - none, low and high• 3 income levels - 20, 30 and 40 cents per
round• 3 rounds– Round 1 - pre-tax– Round 2 - low tax– Round 3 - hi tax
Volunteers / employees
• Qualifications– Willing to eat cherries, almonds and
salted almonds
• 3 roles– Producer– Banker– Worker
Pre-tax round
• Pay wages• Purchase goods– Prices• Cherries 10 cents• salted almonds 2 for 5 cents• unsalted almonds 2 for 5 cents
• Consumption
How to tax
• Game– Problem - Salt isn’t a separate good in our
model economy. Can’t tax it directly.– Solution - Tax the good with added salt
• Carbon– More complicated
Taxing carbon - a misnomer, ...
• CO2 is the real problem.• Except that some other green-house gases
are even more potent.• Fossil fuels differ in the amount of CO2
they emit when burned.• We don’t buy carbon or carbon dioxide by
themselves very much.• Carbon is converted to CO2 at many
places in our economy.
CO2 equivalentsFrom 2013 IPCC AR5 p714
Lifetime
(years)
Equivalent tons of CO2
Global-warming-potential time horizon
20 years 100 year
sMethane 12.4 86 34
Nitrous oxide 121.0 268 298
HFC-134a (hydrofluorocarbon)
13.4 3790 1550
Pounds of CO2 emitted per million Btu of energy(From Energy Information
Administration)
Fossil fuelPounds of CO2 /
million Btu of energyCoal (bituminous) 205.7Coal (subbituminous) 214.3Diesel fuel & heating oil 161.3Gasoline 157.2Propane 139.0Natural gas 117.0
Some answers
• What to tax?– Tons of CO2 equivalents emitted by each
fossil fuel
• Where to impose the tax?– At the mine, well or border– Let the tax percolate thru the economy,
affecting everybody in proportion to their CO2 emissions.
Low-tax round
• Choose tax level to achieve target reduction in salt consumption
• Adjustments to and impacts of tax - by income level– Conservation– Substitution
• Tax collected
High-tax round
• Dividend – Equal amounts– Progressive nature
• Adjustments to, & impacts of tax & dividend - by income level
• Reduction in salt consumption
End of game
What answers has it provided?
What questions has it prompted?
Economic models
It’s time to let Bob tell you about some serious attempts to explore the impacts of a C tax.
Comparison of 2 legislative proposals
• Sanders-Boxer Bill• Carbon Fee & dividend
Comparison of 2 legislative proposals
Sanders-Boxer Bill Carbon Fee & dividend
Tax rateInitial
Increase
$20/ton CO2 and C02 equivalent of methane + 5.6%/year for 12 years
$15/ton CO2 equivalent $10/year til IPCC target reached
Use of funds 60% to households40% to Pollution Reduction Trust Fund (PRTF)
Mitigate impacts of feeWeatherizationJob trainingResearchDeficit reduction
100% distributed to households
Trade impacts Mitigation of impacts on trade-exposed industries thru PRTF
Carbon-fee-equivalent tariffs Rebates for exports
Helping build political will for a stable climate
• Write letters to editors and to members of Congress, and op-ed articles
• Lobby Congress• Join groups• 350.org• 350Vermont• Citizens’ Climate Lobby• National Wildlife Federation• Rising Tide• Sierra Club• Vt Natural Resource Council• . . .
• More than 5,000 volunteer members• More than 1,600 letters to the editor
published last year• More than 480 meetings with members
of Congress or their staffs at annual Conference last month