1. Thread:
Riots in France, 2nd rejection of carbon tax in Washington State, and u-turns in Germany and Ireland, all since Oct:
Are carbon taxes are dead, and we should look to plan B on climate?
My piece here: thetimes.co.uk/edition/irelan…
Or: josephcurtin.com/single-post/20…
Riots in France, 2nd rejection of carbon tax in Washington State, and u-turns in Germany and Ireland, all since Oct:
Are carbon taxes are dead, and we should look to plan B on climate?
My piece here: thetimes.co.uk/edition/irelan…
Or: josephcurtin.com/single-post/20…
2. Climate dumbassess have been lining up to dance on carbon pricing's grave.
@WSJ_Online ’s Ed Board were among the 1st to sound the death knell, arguing that nothing better reveals “the disconnect between ordinary voters and an aloof political class”: wsj.com/articles/the-g…
@WSJ_Online ’s Ed Board were among the 1st to sound the death knell, arguing that nothing better reveals “the disconnect between ordinary voters and an aloof political class”: wsj.com/articles/the-g…
3. Even the orange elephant in the room was using these developments to stick the knife in:
4. But there is a real question: when the next window of opportunity opens up for climate action in the US or China or Ireland, how much faith should political leaders place in pricing carbon?
5. For four decades economists led by recent Nobel Laureate, Prof William Nordhaus of Yale University, have promoted this single solution..
All we need do is make polluters pay for their damage to reduce emissions to their optimal level & drive investment into cleaner options.
All we need do is make polluters pay for their damage to reduce emissions to their optimal level & drive investment into cleaner options.
6. The downside (which I have encountered in 100s of occasions as a #climate policy advisor and nerd) is that other approaches...
....like providing subsidies for green technologies or clean electricity....
.....have often been dismissed by these purists as too costly.
....like providing subsidies for green technologies or clean electricity....
.....have often been dismissed by these purists as too costly.
7. For example, some economists have lined up to criticise the most successful climate policy in history:
German subsidies for solar PV in the 1990s and 2000s...which have driven cost reductions globally and opened up space for decarbonisation from India to Mexico....
German subsidies for solar PV in the 1990s and 2000s...which have driven cost reductions globally and opened up space for decarbonisation from India to Mexico....
8. The carbon pricing orthodoxy is promoted by the World Bank and the OECD, and by think tanks like the US-based @TheCLCouncil, who argue that there is “increasing convergence” around the idea across the political spectrum. clcouncil.org/media/The-Divi…
9. But when theory has confronted reality, the results have often disappointed.
Since the 1st tax in Finland in 1990, prices have spread to about 40 countries, and to many jurisdictions within the US, however only 13% of global emissions are covered....blogs.worldbank.org/opendata/chart…
Since the 1st tax in Finland in 1990, prices have spread to about 40 countries, and to many jurisdictions within the US, however only 13% of global emissions are covered....blogs.worldbank.org/opendata/chart…
10. In most cases, the price is set well below $10/t adding less than $3 dollars to a barrel of oil—a faint signal lost amid the noise of market fluctuations.
Even with higher prices, including BC and Norway, the impact on emissions has been modest to non-existent.
Even with higher prices, including BC and Norway, the impact on emissions has been modest to non-existent.
11. The house is on fire, climate science informs us.....
....but these solutions involve little more than tinkering with the heating controls....
.....and there is a risk that high enough carbon prices will never be politically acceptable!!
....but these solutions involve little more than tinkering with the heating controls....
.....and there is a risk that high enough carbon prices will never be politically acceptable!!
12. A recent paper from @NatureClimate recognized this. Authors argued that the key focus when designing carbon taxes should be enhancing public—and therefore political—acceptability. nature.com/articles/s4155…
Others such as @JesseJenkins @noahqk have done excellent work on this
Others such as @JesseJenkins @noahqk have done excellent work on this
13. They propose that revenues should be “strategically recycled” to build stronger supporting coalitions supporting taxes, by:
1. funding green investments targeting affected communities,
2. By directly paying out cash transfers to households.
1. funding green investments targeting affected communities,
2. By directly paying out cash transfers to households.
14. Lump sum transfers, the authors argue, are preferable when trust in Government is low, because they avoid the need for increases in public spending.
These transfers are also perceived as fair and are highly salient for citizens..
These transfers are also perceived as fair and are highly salient for citizens..
15. At least there have been no riots in countries like canada and Switzerland that have experimented with these approaches: ourworldindata.org/carbon-pricing…
16. There is also some evidence that introducing a carbon tax at an initially low rate that slowly increases over time may also enhance public acceptability.lse.ac.uk/GranthamInstit…
17. And if we truly see pricing as a silver bullet panacea, the rate must increase until demanding targets are met, as proposed by @TheCLCouncil clcouncil.org/media/The-Divi…
18. The conclusion from recent research is therefore that a “carbon fee” rising annually, and paid out directly as a “dividend” to households, may be the best where distrust in Government is high, such as France, the US or Ireland....
....BUT.....
....BUT.....
19. There is no evidence nor guarantee that high enough carbon prices will ever become politically feasible, and it's probably therefore unwise to put all our climate eggs into the carbon pricing basket!
But what is the alternative?
But what is the alternative?
20. Plan B on climate shifts the focus away from making fossil fuels more expensive to making clean technologies cheaper...
..by stimulating the market for low-carbon tech in buildings, transport, power & ag sectors to drive deployment, economies of scale and learning by doing.
..by stimulating the market for low-carbon tech in buildings, transport, power & ag sectors to drive deployment, economies of scale and learning by doing.
21. E.G: minimum efficiency standards for vehicles, buildings and appliances have proven remarkably effective in many countries, while tax credits, grants and guaranteed prices has already delivered breakthroughs for solar PV and wind power technologies.
We know this works...
We know this works...
22. More controversially, Plan B acknowledges that efforts to restrict the supply of f. fuels are a legit part of the solution—every time Keystone XL pipeline is delayed, or a license to extract f. fuels is revoked, or a coal plant is mothballed further to a legal challenge...
23. ...this creates uncertainty for investors. Uncertainty increases the risk premium attached to dirty investments and therefore the cost of investment capital, which in turn makes green projects more attractive...
24. Of course, carbon prices are great and they make green tech more attractive, and help keep fossil fuels in the ground....it's just that they cannot be exclusively relied upon...
25. The window for effective action is closing fast.
It would be a mistake to endlessly wait around for the perfect carbon price to arrive, because like Beckett’s Godot, the key protagonist may never appear on stage.
It would be a mistake to endlessly wait around for the perfect carbon price to arrive, because like Beckett’s Godot, the key protagonist may never appear on stage.
26. Plan B recognizes that a total war on carbon, fought on multiple fronts and with multiple weapons, has now become essential /ENDS.
ps: I have missed out on many of the people doing the best work on carbon pricing and taxes such as @GernotWagner
