The Case against "Smart Taxes" on Carbon

[mRx 16]

Cap and Trade can and does work right here in the U.S.

Cap and trade was designed, tested and proven here in the United States, as a program within the 1990 Clean Air Act Amendments. The success of this program led The Economist magazine to crown it "probably the greatest green success story of the past decade." (July 6, 2002).

The Economist touts Cap and Trade as a market-based approach? Cleary, that's untrue. Magically legislating CO2 as a scarce commodity will increase explicit costs to a company, who will, in-turn, bundle this additional cost into the price that the consumers pay. This is just a secret tax; nothing more.

Taxing America is exactly what we don't need now, especially in our economic condition. Especially when, as suggested by the scientific majority, there would be no tangible benifit to this burdonsome cost.

If there is a market wide cap on CO2 emissions, whatever costs associated with a company investing in reducing their emissions won't necessarily go directly to the consumers as they must also remain competitive. Those costs will gradually go down. Secondly, we will see a boom to the economy from a growing demand alternative energy and technology, which will in turn bring those costs down. Any mandated reduction on market wide emissions will have a cost associated with it. The argument is that for one, the individual cost will be minimal and most importantly, we will reduce our CO2 emissions to more manageable level.

We must assume that these companies are already efficient, and competitive; therefore, a tax on them will create a deadweight economic loss. This loss could be seen in: an unnatural price increase, which would undoubtedly make it unaffordable for some consumers; industry layoffs, or as you suggested absorbed by the company. To be fair though, the loss would probably be spread over the lot.

According to the Energy Information Administration, 85% of US energy comes from fossil fuels. The success that you posted about SO2 lowering is an apples and oranges comparison of C&T policies. There was technology already implemented for over 100 years to lower sulfer dioxide. I know of no such implemented technology to lower CO2, therefore the costs could be much higher.

The point is, in our economic state, forced equity loss in our globally-competitive industries, is not a good course-of-action.

[one...two...tree 2,762]

Cap and Trade can and does work right here in the U.S.

Cap and trade was designed, tested and proven here in the United States, as a program within the 1990 Clean Air Act Amendments. The success of this program led The Economist magazine to crown it "probably the greatest green success story of the past decade." (July 6, 2002).

The Economist touts Cap and Trade as a market-based approach? Cleary, that's untrue. Magically legislating CO2 as a scarce commodity will increase explicit costs to a company, who will, in-turn, bundle this additional cost into the price that the consumers pay. This is just a secret tax; nothing more.

Taxing America is exactly what we don't need now, especially in our economic condition. Especially when, as suggested by the scientific majority, there would be no tangible benifit to this burdonsome cost.

If there is a market wide cap on CO2 emissions, whatever costs associated with a company investing in reducing their emissions won't necessarily go directly to the consumers as they must also remain competitive. Those costs will gradually go down. Secondly, we will see a boom to the economy from a growing demand alternative energy and technology, which will in turn bring those costs down. Any mandated reduction on market wide emissions will have a cost associated with it. The argument is that for one, the individual cost will be minimal and most importantly, we will reduce our CO2 emissions to more manageable level.

We must assume that these companies are already efficient, and competitive; therefore, a tax on them will create a deadweight economic loss. This loss could be seen in: an unnatural price increase, which would undoubtedly make it unaffordable for some consumers; industry layoffs, or as you suggested absorbed by the company. To be fair though, the loss would probably be spread over the lot.

According to the Energy Information Administration, 85% of US energy comes from fossil fuels. The success that you posted about SO2 lowering is an apples and oranges comparison of C&T policies. There was technology already implemented for over 100 years to lower sulfer dioxide. I know of no such implemented technology to lower CO2, therefore the costs could be much higher.

The point is, in our economic state, forced equity loss in our globally-competitive industries, is not a good course-of-action.

First - I seriously doubt that chart is accurately accounting for new revenue growth from the demand and investment into energy efficient technologies as well as alternative energy. We have chance here to build an economy around those two avenues, or we stay the course and watch what happens to the market when fossil fuel prices soar.

Secondly - it's a wrong assumption to believe that one, efficiency is static, and two, that a company cannot adapt to outside force like a cap on emissions without it being detrimental. For example, let's say you had your own company, in 20 story building. You have a choice to reduce your building's energy use down or buy credits to keep your thermostat at a cool 68 degrees in everyone's office. There are plenty of ways to make your building incredibly more energy efficient and in the long run, you'll be getting a return on your investment with a reduction of energy needs.

[mRx 16]

Cap and Trade can and does work right here in the U.S.

Cap and trade was designed, tested and proven here in the United States, as a program within the 1990 Clean Air Act Amendments. The success of this program led The Economist magazine to crown it "probably the greatest green success story of the past decade." (July 6, 2002).

The Economist touts Cap and Trade as a market-based approach? Cleary, that's untrue. Magically legislating CO2 as a scarce commodity will increase explicit costs to a company, who will, in-turn, bundle this additional cost into the price that the consumers pay. This is just a secret tax; nothing more.

Taxing America is exactly what we don't need now, especially in our economic condition. Especially when, as suggested by the scientific majority, there would be no tangible benifit to this burdonsome cost.

If there is a market wide cap on CO2 emissions, whatever costs associated with a company investing in reducing their emissions won't necessarily go directly to the consumers as they must also remain competitive. Those costs will gradually go down. Secondly, we will see a boom to the economy from a growing demand alternative energy and technology, which will in turn bring those costs down. Any mandated reduction on market wide emissions will have a cost associated with it. The argument is that for one, the individual cost will be minimal and most importantly, we will reduce our CO2 emissions to more manageable level.

We must assume that these companies are already efficient, and competitive; therefore, a tax on them will create a deadweight economic loss. This loss could be seen in: an unnatural price increase, which would undoubtedly make it unaffordable for some consumers; industry layoffs, or as you suggested absorbed by the company. To be fair though, the loss would probably be spread over the lot.

According to the Energy Information Administration, 85% of US energy comes from fossil fuels. The success that you posted about SO2 lowering is an apples and oranges comparison of C&T policies. There was technology already implemented for over 100 years to lower sulfer dioxide. I know of no such implemented technology to lower CO2, therefore the costs could be much higher.

The point is, in our economic state, forced equity loss in our globally-competitive industries, is not a good course-of-action.

First - I seriously doubt that chart is accurately accounting for new revenue growth from the demand and investment into energy efficient technologies as well as alternative energy. We have chance here to build an economy around those two avenues, or we stay the course and watch what happens to the market when fossil fuel prices soar.

Secondly - it's a wrong assumption to believe that one, efficiency is static, and two, that a company cannot adapt to outside force like a cap on emissions without it being detrimental. For example, let's say you had your own company, in 20 story building. You have a choice to reduce your building's energy use down or buy credits to keep your thermostat at a cool 68 degrees in everyone's office. There are plenty of ways to make your building incredibly more energy efficient and in the long run, you'll be getting a return on your investment with a reduction of energy needs.

If you believe in market efficiency (which everyone should, I read a book by Fed Chairman Bernake [the inflationist], and he even believes in it) then you know that, all other things remaining constant, we are recieving the maximum economic surplus with the energy market in equilibrium. If new technology (alternative energy source) were introduced by a competing energy company, and his costs were cut, he would earn an economic profit over his competitors. His competitors would follow suit with the cost saving innovation, and the market would stabilize with the innovation being practiced by the entire industry. The fact that has not happened tells us that the alternative energy would not reduce explicit costs. This could simply mean that the new technology is not fully developed and efficient yet. (which is my assumption)

Market forces drive companies to innovate, because it gives them a cost-saving advantage over their competitors, albeit temporarily. This axiom is the same reason why we have motorized freight vessels as opposed to still using primitive means such as manual oarsmen.

I think that eventually, as non-renewable energy sources diminish (like fossil fuels), their prices will raise, giving incentive to companies to cut their costs and search for alternative energy sources.

Trying to force such a natural market force is absolutely wasteful and will raise costs unnecessarily, and it's not guaranteed to even compel companies to switch to alternative technology.

[one...two...tree 2,762]

If you believe in market efficiency (which everyone should, I read a book by Fed Chairman Bernake [the inflationist], and he even believes in it) then you know that, all other things remaining constant, we are recieving the maximum economic surplus with the energy market in equilibrium. If new technology (alternative energy source) were introduced by a competing energy company, and his costs were cut, he would earn an economic profit over his competitors. His competitors would follow suit with the cost saving innovation, and the market would stabilize with the innovation being practiced by the entire industry. The fact that has not happened tells us that the alternative energy would not reduce explicit costs. This could simply mean that the new technology is not fully developed and efficient yet. (which is my assumption)

Market forces drive companies to innovate, because it gives them a cost-saving advantage over their competitors, albeit temporarily. This axiom is the same reason why we have motorized freight vessels as opposed to still using primitive means such as manual oarsmen.

I think that eventually, as non-renewable energy sources diminish (like fossil fuels), their prices will raise, giving incentive to companies to cut their costs and search for alternative energy sources.

Trying to force such a natural market force is absolutely wasteful and will raise costs unnecessarily, and it's not guaranteed to even compel companies to switch to alternative technology.

Matt, industry knows that conversion to newer technologies will have initial cost to it, but changes are made for the long term investment...that such changes over time will lead to greater efficiency. So that argument is - if your industry relies primarily on fossil fuels, you will be better off in the long run to shift as much away from fossil fuels as you possibly can. As for energy efficiency technology and alternative energies - they cannot entire into the market competitively without some kind of subsidy - whether through tax breaks or investment. Nuclear power didn't stand on its own and even with fossil fuels, they have long benefited from government subsidies.