Sunday, 29 November 2015

Nobel Laureates and Other Climate Experts to Paris Negotiators: Tax Carbon

A letter composed by the Carbon Tax Center calling for a carbon tax as the basis for international climate negotiations boasts of an impressive list of signatories: three Nobel Laureates in Economics, three former Cabinet Secretaries (one of whom, Steven Chu, also received the Nobel Prize in Physics), two Vice-Chairs of the Federal Reserve Board, and some other people that have done a few things in their lives, like teach Economics at Harvard.

What is perhaps most important to note about using carbon taxes as a basis for negotiating a climate treaty is that while international negotiations will always be fraught, a carbon tax treaty would at least look more like what international treaties look like: countries promising to observe some code of conduct -- human rights for prisoners of war, reducing trade barriers, and harmonizing taxation for border straddlers like me. It is much more intuitive for countries to agree to do something -- phase out subsidies and tax carbon -- than it is for countries to divvy up responsibility, a divisive exercise that led to the ill-fated Kyoto Protocol, which allowed China to triple its emissions over the time period since. The strength of such an approach is also, admittedly, a weakness: unless something is specified about the collected carbon tax proceeds, a carbon-taxing signatory would be free to somehow channel proceeds to affected fossil fuel stakeholders. But if the approach is paired with a commitment to phase out fossil fuel subsidies, then at least carbon tax proceeds are likely to be distributed in such a way as to decouple emissions from proceeds. Above all, one thing would be important about a carbon tax-based treaty: countries raise revenues, keep them, and spend them in a way that they control. That intrudes upon sovereignty concerns less than other approaches, and avoids some of the finger-pointing exercises that have plagued previous Conferences of Parties.

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