Monday, May 02, 2016

The Political Hurdles Facing a Carbon Tax — and How to Overcome Them - by David Roberts

Breaking Political Hurdles (Credit: Shutterstock) Click to Enlarge.
A consensus has formed among economists, climate wonks, and progressives that a carbon tax is the best way to address climate change.  In some quarters, rhetorical support for a carbon tax is seen as a litmus test for whether policymakers are serious about climate change.

In my last post, I questioned the premise that a carbon tax is always and everywhere the "first best" climate policy.

In this post, I'm going to do something different:  I'm going to accept the premise.  Let's assume that a carbon tax, equal to the social cost of carbon, is the ideal climate policy — the most efficient and cost-effective way to reduce carbon emissions.  Let's stipulate that it is our ultimate goal.

Now, how do we get there?

To answer that question, we have to go beyond economics to political economy:  institutional structures, power, and influence.  We have to grapple with the political constraints on carbon pricing and think about how they can be overcome.
Proof of political constraints is in the pudding

Carbon prices, where they exist, are too low. That is to say, they fall short of the social cost of carbon (SCC), as estimated by economists.
Political constraints have implications for policy design
So, given everything discussed above, it seems to me that carbon pricing strategy discussions should begin by accepting two premises.  First, a new carbon pricing system, where it is possible at all, will begin with a relatively low price.  And second, sweeping wonk systems for revenue neutrality will not do much to overcome political resistance, especially in the early stages.

Support for Carbon Tax with Revenue Used for Research and Development for Renewable Energy Programs (Credit: NSEE) Click to Enlarge.
What will?

All the polling I've seen indicates that clean energy is extremely popular.  Using carbon tax revenue for clean energy R&D is the only thing that found majority support across the spectrum in the NSEE:

Read more at The Political Hurdles Facing a Carbon Tax — and How to Overcome Them

No comments:

Post a Comment