Thursday, 14 June 2007

Carbon taxes: What if ...

Carbon taxes, carbon taxes, carbon taxes. Everyone wants a carbon tax. We "need" a carbon tax, apparently, to stop runaway global warming.

Really? Well, Ross McKitrick -- the co-debunker of the bogus Mann 'Hockey Stick' -- has an idea. Why not link the rates for any carbon tax to actual global temperatures -- indeed, how about linking them to the temperature of the tropical troposphere, where the IPCC's science says the primary CO2 "fingerprint" is to be found [see here for example]?

If you really believe that temperatures are going to rise precipitately, then why would you object -- surely, from your point of view, that's a one-way bet, right?

Owen McShane describes the proposal as it appeared in a recent Canadian National Post:
McKitrick calls this proposal "Calling their Tax (bluff)." The idea is that the carbon tax is pegged to actual measured global temperature just as pensions are pegged to inflation. If the globe warms we pay more; if the globe cools we get a refund. People would really focus on the actual measurements. They might even notice that there has been no warming since 1998. And everyone would take a great interest in long range forecasts and figure out who was getting them right. Those whose "predetermination and bias" always encourages them to predict "warmer" would soon lose their clients and their track record would be there for all to see, no doubt listed in the same pages as the share market and similar "real" information.Augie would be thrilled.
That could bring a little honesty to warmist politics, couldn't it? And too to some of the science.

And with the focus on the troposphere instead of the flawed surface record, we could put paid linking our prosperity to the entirely substandard network of surface weather stations on which the surface record relies, a topic that has been spinning the wheels of McKitrick's co-debunker Steve Mcintyre in many recent posts at his Climate Audit blog. (And check out the beginnings of Anthony Watts' photographic record of the substandard stations at SurfaceStations.Org. Anybody like to send him some photos of local stations to see how they match the likes of the "high quality" station shown below in Marysville, California?)

UPDATE 1: Steve McIntyre's a fan of the McKitrick Plan.
If models are wrong and solar or something else is causing climate change, then it would have negligible impact. If models are right, then the tax would go up a lot. It’s an elegant idea. Calling everyone’s bluff.Of course, it wouldn’t generate any commissions for lobbyists and brokers or expense accounts in night clubs in Moscow and Montreal; so it’s chances of passage are negligible. But isn’t it a better idea than anything on the field so far?
Well, isn't it?

UPDATE 2: A fine comment at the Climate Audit blog:
It is a better alternative to any mitigation plans I have heard and would be something to propose when one wants to determine how much the AGW advocates really want to attack the real problem and how much they merely want to impose regulations.
Many good comments on that thread, including follow up from McKitrick himself. Why not head over and ask him some questions.

UPDATE 3: Geoffrey Plauche comments at the Mises Blog:
If models are right, then the tax would go up a lot." On the other hand, if the tropical troposphere temperatures continue to decline as they have since 2002, then the tax would go negative and turn into a subsidy on carbon emissions. Of course, the alarmists are convinced this won't happen so it shouldn't be an obstacle to them endorsing the tax...

McKitrick has effectively laid down the gauntlet for both skeptics and alarmists by offering them a public policy proposal they both should be able to endorse, since both are convinced it will go their way. Only those of us who have independent moral and practical reasons for opposing any form of tax or subsidy whatsoever should have a good reason for not accepting the challenge.
Many good comments on this post too.

UPDATE 4: Arnold Kling suggests a wrinkle whereby "there is a futures market in the temperature indicator, and the tax is tied to the futures price." Good thought.


  1. Meanwhile such a tax would be revenue neutral for any government. For every dollar gained from carbon tax, other taxes would come down - so that it isn't use to change the size of the state.

  2. Good idea....what say you warmists?

  3. It would be a great idea if, as is so often posited by hard-core skeptics, the goal of carbon tax was to increase government revenue.

    But the idea is that it is a punitive measure to leaven the effect of carbon emissions such that we MITIGATE any temperature rise. The whole thing hinges on the presumption that by moderating our carbon output we can head off predicted temperature rise - not totally, obviously, but in part.

    So says this warmist.


  4. No, in fact it's posited on the presumption that the hotter it gets, the more carbon "costs." And the cooler it gets, then the the more carbon is needed.

    Of course both premises come straight from the warmists, who maintain that there is in fact a causal connection between the meagre amount of CO2 man produces and rises and falls in temperatures.

  5. This type of proposal is always worth looking at. It is not dissimilar to environmental contingency bonds which i much prefer.

    These bonds are environmental levies which are then placed into a bond structure (ie invested) until the money is needed. So the money is ringfenced to deal with the specific cost (dairy farming is the most obvious candidate for this) but more importantly if the cost is less than forecast then the money can be returned plus interest.

    It keeps govt paws off the money and keeps it directly connected to the cost.

    The problem with carbon taxes is they wont really work anyway as demand is not elastic in the oil market (people need it and will pay the price).

    So i like the way of thinking here but carbon taxes are not the answer in the first place.

  6. I like the McKitrick proposal. I was shocked while in Canada a couple of weeks back to hear Elizabeth May, the Green Party leader, argue for a small carbon tax (on the order of 17 cents per litre of gas; gas prices there are about 10 cents cheaper than here after correcting for the exchange rate) that would be entirely offset by reductions in income and other taxes such that the proposal remained revenue neutral. McKitrick's proposal is one better, but I have a hard time imagining the Greens here arguing for a revenue-neutral carbon tax.


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