“What is RFF hiding–and why? Yes, a carbon tax produces revenue and would reduce CO2 emissions. But what about the tax effect on consumer energy prices–on gasoline, diesel, home heating oil, natural gas, and electricity for starters? And what are the climate effects from the levy (the ostensible reason for the tax)?”
Resources for the Future (RFF), full of PhD economists–and claiming to be scholarly and nonpartisan–has lost its intellectual way on the all important global warming issue.
Previous posts at MasterResource have documented how the once scholarly organization got corrupted by Malthusian thought in the 1970s–and then climate alarmism in the 1990s forward. Former head Paul Portney (a great guy, to be sure) went for the big funding bucks (from private foundations and government) and decided to assume the climate problem, not debate it, and not seriously assess public policies toward climate from a critical perspective. Portney’s beginning (he joined RFF in 1972 and was president from 1995 to 2005) has been continued by Phil Sharp (2005–2016) and now by Richard Newell. (2016–).
A Selective Calculator
The latest example of RFF’s myopic views toward climate issues is its E3 Carbon Tax Calculator. RFF Fellow Marc Hafstead explains its origins:
Here at RFF, we are regularly asked by policymakers and reporters to estimate the impact of a specific carbon tax price path on future carbon dioxide (CO2) emissions. To project future emissions under a carbon tax, we utilize a large-scale, computable general equilibrium (CGE) model of the US economy—the Goulder-Hafstead Energy-Environment-Economy (E3) CGE Model. To provide more information about carbon taxes and future emissions, we are pleased to introduce the E3 Carbon Tax Calculator.
Suggestively, RFF’s explanation uses the term gross revenues and not tax collected. The Model does not account for declines in economic growth from the new tax–reducing tax collections elsewhere. And finally:
The E3 model does not include non-energy-related CO2 emissions nor non-CO2 greenhouse gas emissions. Therefore, we cannot project whether or not a given carbon tax can meet the US targets under the Paris Agreement (i.e., greenhouse gas emissions 26–28 percent below 2005 levels) without making assumptions about future non-energy-related CO2 emissions and non-CO2 greenhouse gas emissions.
Still, the reductions in CO2 emissions can easily be run in a climate model to calculate the year 2050 and 2100 temperature and sea-level-rise amounts. And let it be said the amount will be inconsequential. And it will be even more so if industrial activity shifts to more CO2-friendly jurisdictions (the leakage effect).
Debate, Don’t Assume
Why a tax on carbon dioxide in the first place? Why does RFF refuse to debate physical science assumptions behind climate/energy policy? (Lobbyists, lawyers, and technicians, not economists, can do the assuming.) Why not have a discussion about the reasons to not impose such a tax? After all,
A carbon tax requires mass correction to avoid hurting poorer people the most.
A carbon tax requires international trade rules and restrictions.
A carbon tax is a whole new source of government revenue. It is a qualitative change in favor of larger government.
Then there is the whole Public Choice side of the debate that RFF scholars and guests do not discuss. It should be part of the conversation. As economist Robert Murphy has stated: “If the political process has produced a crazy tax code with stultifying barriers to savings and investment, why would we trust that same political process to do the ‘optimal’ thing with a giant new carbon tax?”
Conclusion
What is RFF hiding–and why?
Yes, a carbon tax produces revenue and would reduce CO2 emissions. But what about the tax effect on consumer energy prices–on gasoline, diesel, home heating oil, natural gas, and electricity for starters? And what are the climate effects from the levy (the ostensible reason for the tax)?
Here is your answer. An E3 Carbon Calculator with four outputs instead of two [1] would be a public relations disaster for the imposition of a carbon tax–something the funders of RFF do not want.
Is RFF really an impartial, scholarly, objective organization as self-advertised?
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[1] The four outputs would be gross tax receipts, CO2 emissions reduction, climate effects (temperature and sea level rise); and retail energy price effects (gasoline, diesel, home heating oil, natural gas, electricity).
RFF also, as do many, conveniently ignores the real world performance of freer markets compared to more restrictive markets (including those with carbon tax)…and freer markets are reducing carbon emissions better/faster than those that are more restrictive. Truly concerned about carbon? Embrace the market not government.
Note that RFF does not allude to “revenue neutrality”, or assert that the tax would be “fully refundable”.
Most carbon tax proposals have included a strong element of redistribution from the “haves” to the “havenots”. The US proposals have proposed redistribution from the “haves” here to the “havenots” here. The UN proposals have proposed redistribution from the “haves” here to the “havenots” elsewhere.
At least they did not refer to the carbon tax as a “market-based mechanism”.
Well; at least it’s not this E3:
E3’s PATHWAYS Analysis Underpins a New Report from the NRDC on the United States’ Clean Energy Future
https://www.ethree.com/e3s-pathways-analysis-underpins-new-report-natural-resources-defense-council-united-states-clean-energy-future/
It looks like RFF has now provided a new calculator on energy prices: http://www.rff.org/blog/2017/calculating-various-fuel-prices-under-carbon-tax
Now a calculator on temperature and sea level effects is needed.