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February 6, 2007
A Carbon Tax?

Anne Applebaum offers her solution to global warming, one that she claims any nation serious about the issue can apply without waiting for international accords to come into force. She favors a carbon tax, applied at every level, in order to create incentives for innovation and conservation:

The much-vaunted treaty [Kyoto] creates a complicated and unenforceable system of international targets for carbon emissions reduction, based on measurements taken in 1990. Critics of the American president have condemned him for failing to sign it, conveniently forgetting that the Senate rejected it 95 to 0 in 1997, a margin that reflects broad bipartisan opposition. At the same time, few of the Asian and European signatories are actually on track to meet their goals; those that will meet the targets, such as Britain, can do so because their economies rely less on industry than they once did. Canada and Japan aren't even close to compliance; China and India, whose emissions rates are growing most rapidly, are exempt altogether as "developing" countries -- which, given their economic strength, is absurd.

None of which is to say that reduction of carbon emissions is impossible. But the limiting of fossil fuels cannot be carried out with an unenforceable international regime, using complicated regulations that the United Nations does not have the staff or the mandate to supervise, with the help of a treaty that effectively penalizes those who bother to abide by it. I no longer believe that a complicated carbon trading regime -- in which industries trade emissions "credits" -- would work within the United States either: So much is at stake for so many industries that the legislative process to create it would be easily distorted by their various lobbies.

Any lasting solutions will have to be extremely simple, and -- because of the cost implicit in reducing the use and emissions of fossil fuels -- will also have to benefit those countries that impose them in other ways. Fortunately, there is such a solution, one that is grippingly unoriginal, requires no special knowledge of economics and is easy for any country to implement. It's called a carbon tax, and it should be applied across the board to every industry that uses fossil fuels, every home or building with a heating system, every motorist, and every public transportation system. Immediately, it would produce a wealth of innovations to save fuel, as well as new incentives to conserve. More to the point, it would produce a big chunk of money that could be used for other things. Anyone for balancing the budget? Fixing Social Security for future generations? As a foreign policy side benefit, users of the tax would suddenly find themselves less dependent on Persian Gulf oil or Russian natural gas, too.

I'm an agnostic on global warming. The temperatures of Earth have waxed and waned over the millenia, and even in the last few centuries we have seen significant shifts that have made a large impact on human habitation, prior to any massive releases of carbon into the atmosphere. At one point, Vikings farmed Greenland until a mini-Ice Age struck the northern hemisphere and the land got swallowed up by ice. It's part of a natural cycle that we don't fully understand. I also have great suspicion of environmentalists acting like Chicken Little, and worse, demanding that dissent from their orthodoxy be squelched. That indicates a hysterical approach to science that masks a great deal of insecurity over the actual data.

However, massively releasing carbon into the atmosphere certainly cannot be viewed as a positive thing to do. It pollutes the air, and the means necessary to retrieve the carbon in the forms of oil, coal, and natural gas tend to pollute the earth as well. Given the location of much of the Earth's oil reserves, dependence on that for our energy creates national security problems and long-term instability in our economic viability. Even if one doesn't buy into the global-warming hysteria, these concerns should press us to leverage our technological leadership to create alternatives.

Unfortunately, that will not come through a "carbon tax", which would shift resources away from the innovators and leave the money in the hands of bureaucrats. Applebaum means well, but the solution she has in mind would cripple the private sector and create a bureaucracy that would rival anything considered under HillaryCare. It would require every household with a heater to file a carbon-impact equivalent of a 1040 every year. Think of the notion of having an IRS for carbon use, and one gets a very ugly picture indeed.

Besides, we already tax gasoline by significant percentages, and that has hardly had the impact that Applebaum predicts. It hasn't slowed the demand for gasoline; that has risen in relation to the growth of the population and the economy. Only a small percentage of energy taxes go to innovation. Most of them go to general funds, feeding bureaucratic growth.

The idea that this can be done on an ad-hoc basis undermines the entire argument for action, anyway. Global warming does not just occur over those countries that fail to become enlightened, as defined by environmentalists. Britain will not impose such a tax on its economy if the rest of the world refuses to follow suit, because they know it will cripple their ability to compete on the global market. That was why Kyoto came into existence -- to get broad agreement to jump into tough regulations immediately. They made the mistake of excluding China and India, among others, two nations rapidly becoming the leaders of carbon releases and challenging for economic leadership as well.

If Applebam wants innovation, then set up incentives that don't require massive bureaucracies to get it. NASA put men on the moon not by taxing everyone to death for living on Earth, but by offering government contracts for innovation as part of a shared mission. Create breathing room by allowing the oil companies to get their product from American reserves over the next fifteen years in exchange for benchmarked progress on making oil an obsolete commodity for energy. It will relieve us of a national-security nightmare in the Middle East, starve our enemies, and use our economic strength to solve the problems created by carbon-release energy. Instead of growing the government, we will create a stronger -- and cleaner -- private sector in energy.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at February 6, 2007 5:27 AM

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