Insomnia Log

This is what keeps me awake at night???

Who needs sleep? (well you’re never gonna get it)
Who needs sleep? (tell me what’s that for)
Who needs sleep? (be happy with what you’re getting,
There’s a guy who’s been awake since the second world war)

-- words and music by Steven Page & Ed Robertson

Location: Boulder, Colorado, United States

Everything you need to know about me can be found in my posts

Sunday, December 28, 2008

The Only Way to Stop Global Warming?

I write quite a few essays about global warming. These include several ideas on how individuals can help address the problem. But I'm not naive enough to think that even a significant minority of well-intentioned consumers doing what they think is right will have a measurable impact.

Some of my Libertarian-leaning friends say that the solution should be left to the free market. (At least they are mostly agreeing that the problem is real.) But here's the problem with that. Given enough time (say, 100,000 years), the free market will arrive at a solution. But in the meantime, lots of people and species will suffer, and most of them are not directly related to the companies and individuals causing the biggest impacts. You see, the flaw in this thinking is that spewing greenhouse gases into the atmosphere is definitely impinging on others' rights, and the free market should not allow individuals or companies to infringe on the rights of others in the name of profit, even if those others are not yet even born.

One politically popular approach is cap and trade (carbon trading). Here, companies are issued the right to emit a certain amount of greenhouse gases. If they emit more, they have to purchase the right to do so from someone else. If they emit less (or if they remove carbon from the atmosphere), then they can sell the credits.

The problem with cap and trade is that it assumes people and companies have the inherent right to put greenhouse gases into the atmosphere, impacting future generations around the globe. That would be like saying that, since there are 16,000 murders per year in this country, we are going to cap and trade permits to kill people. The permits will be issued proportionally to the number of murders you committed last year. If you kill more people next year, you will have to buy more permits from someone who came in under their cap. (Have no fear, each year we will cut the number of permits issued. By the year 2050 we will only be allowing 10,000 murders per year -- uh, subject to change based on input from organized crime's lobbyists.)

I've always thought that a carbon tax (actually a tax on any greenhouse gas emissions) is the ideologically best way to approach the problem. You charge a tax for any fossil fuel burned. It can be charged when the fossil fuels are mined, when they are burned, or any point along the supply line, but we would need to be consistent so they are charged exactly once.

You may ask, what about other countries? This will have no impact on China, India, or any other part of the world that may be contributing significantly to the problem.

I have two answers to that. First, we slap a tariff on all imported goods and services, proportional to the amount of greenhouse gases used to produce and ship to the U.S. If the producer can provide proof that they have an equivalent tax in their home country, this tariff will be waived. And second, if this program is successful, it can provide a model for other countries, and a useful tool in negotiating international agreements.

There's one more big problem with a carbon tax, and this is where I got stuck. Such a tax is highly regressive. The people who will suffer the most are those that already can't afford the gas to drive to work and the energy to heat their homes.

I pondered this last issue long and hard until I ran across this idea from Jim Hansen. Dr. James Hansen is none other than the scientist who first brought climate change to the attention of the U.S. Congress in the 1980s, and he continues to be active in the field.

Dr. Hansen suggests (actually demands) a carbon tax, but he adds a twist: 100% of the revenue of the tax is refunded immediately to the citizens. People would receive monthly direct deposits into their bank accounts. None of the received new tax money would be spent by the government. Instead the money would be divided equally among every man, woman and child.

How does that work? Say this new tax causes massive inflation (after all, the companies paying the tax will just pass it on to consumers). People might be paying $1,000 more per month for home heating, electricity, gasoline, and goods and services produced using these resources. But, the same people would be seeing the same $1,000 appear like magic, like clockwork every month.

If I'm a smart consumer, I'm going to figure out how to cut back on my energy usage and set aside some of that new money to make my home more energy efficient, or buy a plug-in hybrid, or any number of investments designed to allow me to live more efficiently and hence spend less money.

And, if I'm a smart business, I'm going to figure out how to get some of that new money. I'm going to start selling some of those energy-efficient products. And it won't be something goofy like carbon credits. Instead it will be something that will actually cause less greenhouse gas emission.

How much money are we talking about? Well, one estimate was that it would take an investment of about $100 per ton of carbon dioxide to stabilize greenhouse gas emissions by 2030. Each person in the U.S. emits about 22 tons of CO2 per year. So, we're talking about new taxes (and new dividend checks) of about $200 per month per person, or $800 for a family of four. Most of the cost for the typical family, I assume, would be in the form of higher prices for energy, and for good and services produced using fossil fuels. That cost would be offset by direct deposit of an approximately equal amount each month.

Of course, we'd need a scientific panel to determine the correct amount of the new tax for each product or service, as this should not be a political decision. And we would likely want to phase this tax in over a small number of years.

Is this the best solution? I don't know. But it seems to me that we need to be thinking about radical ideas such as this, instead of relying on do-gooders, relying on the free market, or relying on the ability of politicians to solve this in a timely manner. Because a timely manner is the thing that is most important.

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Blogger robin andrea said...

Very interesting analysis. I think the whole idea of the free market has tanked with the bailout of the stock market, but that would never stop free marketers from declaring it the only way to go. I'm much more pessimistic about our ability to actually have a positive impact through any of our attempts. There are simply too many people on the planet, and I think we'll run out of water before anything else.

Oh, and happy new year to you and Mrs. Insomniac. Please her a hello from robin. I'd love to hear from her.

Thu Jan 01, 01:28:00 PM  

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