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Forbes Editor Cals for Carbon Tax
Jun 15, 2006 (From the CalCars-News archive)
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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We're growing accustomed to provocative ideas coming from unexpected sources. US News & World Report recently joined the ranks of those acknowledging that global warming is a real danger. That publication's reaction was to move straight from ignoring the problem to focusing on adapting to a grim future -- skipping the entire stage of taking steps to sharply reduce global greenhouse gas emissions.

We've been saying for some time that if any one of several policies change, the case for PHEVs would improve further: higher CAFE fleet MPG requirements, carbon cap-and-trade, oil taxes and/or a floor on oil prices. Here's an example of one of these proposals -- important less for its specifics than for its source. It comes from Forbes, a publication with a low-tax orientation. William Baldwin has been editor of Forbes magazine since January 1999; he's had jobs as managing editor, executive editor and assistant managing editor since 1987. This is his weekly column, Sidelines. After his proposal we've provided a short explanation of its implications.

Tax My Carbon William Baldwin, 06.19.06 Forbes Magazine­columnists/­columnists/­forbes/­2006/­0619/­020.html

An inconvenient truth, not adequately addressed by Al Gore in his movie, is that environmentalism makes life complicated. If SUVs are bad and wind power is good, then we must levy a tax on gas-guzzlers and hand out tax credits for windmills. Those in the business of selling windmills are very happy with this arrangement (see story by Naazneen Karmali), but in no time our fears of global warming have caused our economy to become littered with subsidies, credits, deductions, tax surcharges, earmarks and research boondoggles. Here's a way to make life simpler: Chuck out all energy legislation, replacing it with a one-sentence statute that levies a tax on carbon emissions. Let's do it big--30 cents a pound. So that people can adjust, start it at 1 cent and increment the tax by a penny a year from now to 2036.

We're talking a lot of revenue--enough, if the full rate were in place today and no one responded with changes in air-conditioning and driving habits, to replace the personal income tax. It would add $1.65 to the price of a gallon of gasoline. It would triple your electric bill if your utility were entirely coal fired. The purpose, though, would be not just to raise revenue but to change behavior. In 30 years' time, coal utilities would get very imaginative about switching to nuclear or finding some way to stuff carbon dioxide down a well hole. You would have long since retired your Suburban.

Now think of the legislative pollution that could be removed. The guzzler tax (up to $7,700) could be repealed; it is, after all, none of the government's business whether I waste gas by driving a big car or by making unnecessary trips to the pharmacy. Repeal mileage regulations (27.5 miles per gallon for cars, 21.6 for pickups). Get rid of the hybrid tax credit (up to $3,400). Forget George Bush's plan to spend $1.2 billion on hydrogen and $150 million on grass clippings.

We could find other employment for the lobbyists who tell us that ethanol is a winner; now, for the very first time, the chemical would succeed or fail on its own carbon merits. We wouldn't need the $2,000 solar credit or the $150 for qualified water heaters or the $50 for advanced circulating fans. We wouldn't need the tax forms for any of these things.

What about all those bureaucrats at the Department of Energy working on renewable energy and energy conservation? They work so very hard, burning the midnight oil. Think of the oil you could save.

[As for the specifics of the proposal, designed to substitute for a whole range of policies, taxes and mandates, here's how it has been explained to us (we may have goten in wrong). Current annual global CO2 gas emissions are 6 billion tons = 1.7B tons of solid carbon. 30 cents/pound = $600/ton; 1 cent = 20/ton. $20/ton would raise $34B ... $600/ton at today's volume would raise $1 trillion. Price signals would start being effective around $50/ton.

A car produces roughly 20 pounds of CO2 per gallon of gasoline. The fleet average car driven 15,000 miles/year produces 13,000 pounds of CO2 annually or 3500 pounds of carbon, and at the maximum of $600/ton that would cost $1,000 in taxes. But price signals would be minimal in the early years.]

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