It would be better if we could convert our safety margin into a number of years remaining until climate change reaches a level deemed “unacceptable”. If warming has averaged 0.10 deg/decade for the past 30 years (satellite data), so we would have a 200 year safety margin and a $1X carbon tax. 150 year margin, $2X tax; 100 year margin; $4X tax etc. Unfortunately, I’m not sure if the satellite temperature record has enough reliability and stability to calculate a safety margin in years.

Sea level rise is a measure of climate change that we can measure extremely accurately with satellites. Sea level responds to both warming (thermal expansion) and lose of ice caps. We’ve had a long term rise in sea level of about 0.20 m/century for several centuries, so we might decide this rate of increase won’t be taxed, only incremental increases above it. We could “define” a rise of 1.2 m/century as unacceptable, and adjust our carbon tax are we approached this “unacceptable”rate.

Obviously, the definition of unacceptable GW is a difficult political decision, but once it is made, the appropriate economic incentives for reaching our goal might be relatively clear.

Established cultures have established mechanisms for providing societal services. For many “industrialized” societies (i.e., societies that produce large quantities of greenhouse gases per capita) that mechanism is taxation. Governments in “industrialized,” market-driven economies are good at establishing and collecting taxes. Krem, you surely agree with that premise. The purpose of the “tax on carbon” (actually on fuels and processes that release greenhouse gases in proportion to their greenhouse effect) is to price “carbon” high enough to reduce its use. This forced reduction will be accomplished most cost effectively, through market mechanisms, across all applications of technology that will reduce the targeted emissions. Coal will become very expensive, petroleum products will be somewhat more expensive, even natural gas will cost a bit more. Every player in the economy will be less inclined to use these commodities. The utility will be less inclined to build another coal-fired power plant, the consumer will be inclined to avoid buying yet another gasoline guzzler and the homeowner will be inclined to install double-layered windows.

The unfortunate reality is that the United States, Australia, South Africa and Japan, to name a few of the worst offenders, produce shockingly high levels of GHGs per capita, per year. While China produces GHGs at a fraction of the same rate, it is accelerating dramatically. The industrializing countries that still produce below average GHGs per capita per year include Brazil and India. Even with its post-Kyoto efforts, Europe is not far below Japan in GHG out put per capita. For that reason, tax incentives will likely be needed if the most profligate GHG-emitter countries are to reign in their current use of carbon-based fuels.

In the U.S., tax policy has already been used as a carrot to promote investment in certain technologies – wind, solar, geothermal and “green building.” The investment tax credit has been used successfully in this country to stimulate economic growth in general and to stimulate energy investments in particular in past decades. It is an important factor once again either in traditional form or in its grant form.

However, to the extent that individual states, regional groups of states or the federal government target a few select approaches, particularly if applied to a limited region, alternative energy investments will be sub-optimal, more costly than necessary and relatively inefficient. Thus an investment tax credit to support investment in alternative, renewable, energy systems will encourage their development where they can be most efficiently brought into the energy system. This will lead to wind farms built where the wind is strong and most steady and solar facilities built where insolation is greatest.

If government is to interfere with the market, as I feel it must in this case, let it use the tools it wields best. If it is to offer grants and investment tax credits to promote “good” energy investment, let it tax “bad” energy consumption. To reduce the “waste” of energy, our energy costs, apparently, need to go up. In such case, the net increase in revenues can be used, for example, to reduce the sales tax on other staple products or to improve public education.

A “carbon” tax, with the expectation that any new tax revenue will be put to some useful purpose, is far preferable to a volatile carbon-caps-and-credits market which benefits the “geniuses” of Wall Street and their kin. The latter prospect makes me ill.

My primary objection is that by proposing any form of financial penalty (or incentive) tied to emissions of any sort, is in effect an admission that these man-made emissions “cause” climate change – which of course is absurd.

As there is no evidence that increased CO2 emissions have any significant impact on temperatures, let alone climate, there is therefore no tax, emission scheme or “market fix” that works – because there is no work to be done.

Of course, really what a “revenue neutral” scheme means is redistribution of wealth.

I shudder to think of any mechanism which relies on the “global temperature record” as a trigger for action. The “malleability” of even the historical temperature record, as demonstrated with “blink comparators” at WUWT on several occasions, suggests a measure which has been and can be “gamed” (GISSed? UEAed?).

Don’t begin vast programs with half-vast ideas.

“What am I really saying? I reject pricing carbon qualitatively. Period. Don’t start low (remember the federal income tax at 1%?) but don’t start. Don’t qualitatively introduce a new revenue source for government.”

With all due respect, this reasoning is confused. The issue of

a) whether the price of fossil fuels accurately reflects the (unjust) costs it throws onto others

is *completely separate* from the issue of

b) whether a new source of government revenue should be introduced.

For example, you could price in the social cost of carbon with a tax, but rebate it directly to all people, something that ultra leftist pro-tax revenue James Hansen prefers. That would price carbon but not give government more revenue.

If you consistently have trouble distinguishing these issues, maybe you could ease off on the entire energy issue until you can master it. Just a friendly suggestion.

My position is a penny per ton is too high, and a hundred dollars per ton is too low (not enough to do anything substantial in the global scheme of things).

What am I really saying? I reject pricing carbon qualitatively. Period. Don’t start low (remember the federal income tax at 1%?) but don’t start. Don’t qualitatively introduce a new revenue source for government.

Obviously it’s hard to be precise in a blog post, but I think you are misunderstanding my problems. When you ask me for a rival policy that responds to new information and is superior to yours, I can glibly reply: Sure, let’s have a carbon tax calibrated to the best-estimate of the social cost of carbon. And then as we get new information (including new temperature readings), we update the SCC using Bayes Law and adjust the tax accordingly. That is literally the theoretically best policy, given our uncertainty.

Now why don’t we do that? It’s because we all can’t *agree* on what the SCC actually is. There are people who think it’s really high, like Joe Romm, and that we should be taxing the heck out of emissions right now. Then there are people like Richard Lindzen, who thinks the IPCC estimate of climate sensitivity is too high, and (I presume) the “optimal carbon tax” should be a lot lower than what most other experts would say.

So what I was doing in my post wasn’t so much saying, “Whoa, McKitrick’s plan backfires because the IPCC might be right!” Rather, what I was saying is that I don’t believe there is actually a wide overlap where both sides in the debate could agree to a McKitrick tax.

For example, to get Rob Bradley to sign off on the tax, the initial rate has to be low. So in principle, if tropospheric temperatures stayed flat for the next two years (or even fell), then we would have a very low carbon tax for 2 years in a row.

Knowing that possibility, someone like Joe Romm would insist that this low initial tax rate would have to go up by a factor of 20 or something at the first blip in global temperature. If we didn’t concede that to him, then Romm would never sign on to the policy, because there would be (in his mind) an unacceptably high probability of catastrophe.

Do you see where I’m going with this? Because of the natural variability in temperatures, I don’t see how you actually could get honest people who have wildly different estimates of the SCC to agree to a McKitrick-style tax. Thus, I don’t think you are necessarily “smoking the other side out” if they balk at your proposal, since you’re asking *them* to sacrifice their view on the front end.

Maybe that’s a good way to frame my point: We could just as well propose a Murphy temperature tax, in which we start out with a $100 / ton tax on carbon. But then for every 1% the tropospheric temperature falls behind the IPCC suite of models’ forecasts (given the observed emissions and updating the forecasts all along), we knock down the Murphy tax accordingly. So we can “smoke out” the skeptics and see if they actually think the IPCC models are overpredicting temperature rises, or if (on the contrary) the people criticizing Waxman-Markey etc. are really just philosophically opposed to government intervention.

Does that help clarify my point?