A Free-Market Energy Blog


Posts from December 0

The Five Circles of Carbon Tax Hell

By James DeLong -- May 3, 2013

“The tax will not be implemented in the politically aseptic world of academic modelers, but in the real world of intense  political pressures. Its assumed purity will not survive the onslaught [as demonstrated by] … Sanders-Boxer [where] the carbon tax is treated as a huge honeypot for allocating money to powerful groups, including overseas interests.”

The carbon tax, a serious proposal supported by some thoughtful people, deserves careful consideration. This tax is the subject of an extensive and often technical literature with top scholars making proposals for Resources for the Future and for the Brookings Institution. [1] The term “carbon tax,” however, has a chameleon-like quality, meaning something different in each of three different contexts.

Three Rationals

In the context of economic theory, the carbon tax is a way to deal with an imperfection in the energy market.…