Carbon Tax vs. Cap-and-Trade System
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  Carbon Tax vs. Cap-and-Trade System
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Poll
Question: Which approach would you prefer to achieve a meaningful, further reduction in CO2 emissions?
#1
Carbon Tax
 
#2
Cap-and-Trade
 
#3
Neither -I am a Skeptic
 
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Total Voters: 44

Author Topic: Carbon Tax vs. Cap-and-Trade System  (Read 5428 times)
Frodo
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« on: March 14, 2015, 01:58:44 PM »

And to better acquaint yourselves, here are a couple of sites describing them:

http://www.carbontax.org/

http://www.edf.org/climate/how-cap-and-trade-works

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bedstuy
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« Reply #1 on: March 14, 2015, 02:22:22 PM »

You don't need to choose between the two necessarily.

I think cap-and-trade is more efficient, but it can only really apply to stationary sources like refineries, power plants, factories, etc.  Cap and trade works better for them because it creates an incentive to reduce your emissions as much as possible, whereas a tax provides the same incentive to everyone.  The factory that can cut emissions 80% has the same incentives as the factory that can cut emissions 40%, it's just inefficient.

For individuals, taxes are the only option to affect behavior directly.  But, I wouldn't have a strict carbon tax.  I would have something like an environmental externality tax on things like gasoline, electricity from coal plants, cars, etc which factor in all greenhouse gases and some measure of the pollution they cause. 
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AggregateDemand
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« Reply #2 on: March 14, 2015, 03:43:09 PM »

Both are terrible, but cap-and-trade is downright diabolical. Creating a fiat market in which government controls supply is an arrangement so dangerous that the man who first contemplated trading negative externalities also said they should never be used. Besides the high likelihood of government abuse and inaccurate pricing due to artificial supply, cap-and-trade also allows people to profit by polluting, albeit polluting less or in less controversial ways than other businesses. Carbon-tax has no such perverse incentives. Everyone pays for polluting.

Pollution is the consequence of people doing something worthwhile and beneficial. You have to incentivize people to perform the same behaviors while emitting less carbon-dioxide. Punitive legislation, which is really just a money-grab, is not appropriate. We could put $5,000 in ecological credits on the hood of every car in America, and still spend less than $100B. Taxation and other punitive measures are just deadweight loss. We pay the government to establish and enforcement bureau to punish the people, when we should simply make better use of the money we have to address populist problems.
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TimTurner
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« Reply #3 on: March 14, 2015, 04:15:33 PM »
« Edited: March 14, 2015, 04:18:23 PM by TimTurner »

I support a carbon tax that taxes big polluters while giving most (all but 35%) of the proceeds to people who pollute less.  The 35% goes to a fund that helps pay for efforts to reduce pollution - increased tax credits for renewable energy, a new tax credit that rewards the building of energy-efficient housing, perhaps even a new coast-to-coast high-speed rail that would link with Amtrak (if feasible).
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Antonio the Sixth
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« Reply #4 on: March 14, 2015, 05:28:09 PM »

Why not both?
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snowguy716
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« Reply #5 on: March 16, 2015, 02:20:37 AM »

Cap and trade was basically 'here little companies and poor but well intentioned environmentally conscious individuals...hand all your money to people like Rajendra Pachauri and Al Gore who already have a lot!'

They should be in jail...both of them.

Neither...but if you must...just slap a fracking tax on it.  No more of this free market bullsh**t.  Every time its just a transfer of wealth upwards with the blessings of the 'left'.  Its absolutely disgusting.
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RI
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« Reply #6 on: March 16, 2015, 02:47:09 AM »
« Edited: March 16, 2015, 01:04:54 PM by realisticidealist »

There is a ton of literature in environmental economics about this exact issue. The short answer to which is more effective and efficient is that it depends; there are scenarios when either would be more preferable than the other. The biggest issue is how they behave under uncertainty and imperfect information regarding either environmental damages or abatement costs, along with elasticity of those functions and the correlation between the two.
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bedstuy
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« Reply #7 on: March 16, 2015, 07:11:44 AM »

Cap and trade was basically 'here little companies and poor but well intentioned environmentally conscious individuals...hand all your money to people like Rajendra Pachauri and Al Gore who already have a lot!'

They should be in jail...both of them.

Neither...but if you must...just slap a fracking tax on it.  No more of this free market bullsh**t.  Every time its just a transfer of wealth upwards with the blessings of the 'left'.  Its absolutely disgusting.

Do you know what cap-and-trade is though? 

What about the NOx cap-and-trade program?  Do you think we should tax NOx and SO2 instead?  What about mercury?  Should companies be able to dump mercury into the atmosphere as long as they pay a tax? 
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snowguy716
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« Reply #8 on: March 16, 2015, 07:57:01 AM »

Cap and trade was basically 'here little companies and poor but well intentioned environmentally conscious individuals...hand all your money to people like Rajendra Pachauri and Al Gore who already have a lot!'

They should be in jail...both of them.

Neither...but if you must...just slap a fracking tax on it.  No more of this free market bullsh**t.  Every time its just a transfer of wealth upwards with the blessings of the 'left'.  Its absolutely disgusting.

Do you know what cap-and-trade is though? 

What about the NOx cap-and-trade program?  Do you think we should tax NOx and SO2 instead?  What about mercury?  Should companies be able to dump mercury into the atmosphere as long as they pay a tax? 
I think trying the idea with co2 would need a lot better planning and oversight than the attempts so far, which have been failures that enriched a few people.
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bedstuy
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« Reply #9 on: March 16, 2015, 08:35:17 AM »

Cap and trade was basically 'here little companies and poor but well intentioned environmentally conscious individuals...hand all your money to people like Rajendra Pachauri and Al Gore who already have a lot!'

They should be in jail...both of them.

Neither...but if you must...just slap a fracking tax on it.  No more of this free market bullsh**t.  Every time its just a transfer of wealth upwards with the blessings of the 'left'.  Its absolutely disgusting.

Do you know what cap-and-trade is though? 

What about the NOx cap-and-trade program?  Do you think we should tax NOx and SO2 instead?  What about mercury?  Should companies be able to dump mercury into the atmosphere as long as they pay a tax? 
I think trying the idea with co2 would need a lot better planning and oversight than the attempts so far, which have been failures that enriched a few people.

You think SO2 and NOx trading has been a failure that enriched a specific person?  I don't understand.  That's acknowledged as a huge success and it's administered by the government.
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TNF
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« Reply #10 on: March 16, 2015, 09:32:37 AM »

Neither will do anything to significantly reduce the amount of carbon we're pumping into the atmosphere.

1) Carbon taxation will either be dodged (employers will relocate overseas or to areas with lax regulatory environments, i.e. the American South), the cost passed onto the consumer, or will be ineffective entirely because other nations won't adopt the same tax because they'd see doing so as pointing them at a competitive disadvantage with the United States.

2) Cap and trade will create another economic bubble and will probably cause an economic collapse as speculators buy up pollution credits and sell them off in a haphazard fashion. This tends to happen when you create markets out of thin air (no pun intended), and this would have pretty terrible effects indeed. Also, there's no guarantee of American Capital complying with it, because we have to remember that they're willing to relocate and then ship goods back into the U.S. because those sort of activities are financially advantageous to them.

The only thing that will make possible a shift to carbon neutral or low emission forms of energy is a shift in the mode of production. Capitalism is incapable of "going green" because it relies on the profit motive. A socialist society, one in which the means of production are owned by the whole of the people and the economy democratically planned, could solve the climate change crisis in a decade, if not sooner. Under a socialized system, we could immediately call for a halting to the extraction of coal, fracking, and drilling for oil. Without capitalists to protest, these activities could be curtailed and the workers who work those projects given a just transition to new jobs building the kind of renewable power stations that we need in order to cut out the bulk of carbon emissions.

We could stop the production of the internal-combustion engine based car, perhaps after a period of time, and start the production on a mass scale of automated electric vehicles. We could have squads of workers moving around the country, helping to reftrofit buildings to make them energy efficient, helping socialize agriculture and take it out of the hands of the sprawl inducing agribusiness capitalists, etc. The myriad of technological innovations kept from the market by the capitalist profit motive (the electric car, chiefly), and new innovations (vertical farms, lab-grown meat, etc) could be introduced on a nationwide basis. And, of course, as socialism has to be international if it's to be anything, these new technologies and techniques could be exported abroad to our sister socialist societies that would inevitably arise in the wake of the collapse of American imperialism.

Eventually, I think the whole of the planet will be under a socialized economic and political system. We'll be able to plan on a planet-wide system and bring the weather under our control, build grand cities even greater than those of today, and explore the universe. Perhaps the crisis of climate change will hasten the need to do so.
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politicus
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« Reply #11 on: March 16, 2015, 10:00:51 AM »

Ideally both. Carbon tax if I have to choose.
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bedstuy
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« Reply #12 on: March 16, 2015, 10:04:35 AM »

Neither will do anything to significantly reduce the amount of carbon we're pumping into the atmosphere.

1) Carbon taxation will either be dodged (employers will relocate overseas or to areas with lax regulatory environments, i.e. the American South), the cost passed onto the consumer, or will be ineffective entirely because other nations won't adopt the same tax because they'd see doing so as pointing them at a competitive disadvantage with the United States.

I think the point of a carbon tax is for it to be passed on to consumers.  You want consumer to factor in the environmental cost of their behavior when they make decisions.  You could also make a carbon tax revenue neutral by lowering other taxes, so I don't see how that's a major problem.

2) Cap and trade will create another economic bubble and will probably cause an economic collapse as speculators buy up pollution credits and sell them off in a haphazard fashion. This tends to happen when you create markets out of thin air (no pun intended), and this would have pretty terrible effects indeed. Also, there's no guarantee of American Capital complying with it, because we have to remember that they're willing to relocate and then ship goods back into the U.S. because those sort of activities are financially advantageous to them.

You can't relocate a power plant out of the United States.  That's mostly what we're talking about.   Most CO2 emissions are energy production and transportation, not industrial.  The things that are industrial mostly can't be off-shored, or they already would have been.  There are things it still makes sense to produce in America, gasoline, cement, steel.

As for your theory, that's just a bold claim that you created out of thin air, no pun intended.  We have plenty of other trading markets that work pretty well.  Why is this one definitely going to lead to economic collapse?
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TNF
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« Reply #13 on: March 16, 2015, 10:09:32 AM »

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Why should people who didn't create the crisis pay for it? The only people who should be asked to pay more are those who profit from the destruction of the planet. Not the people who are already having a hard enough time trying to get by.

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Because capitalism is inherently unstable and creating yet another market for speculators to speculate in (one not tied to any actual, tangible product, mind you), is a recipe for disaster in and of itself? Have you been asleep for the past decade or so?
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bedstuy
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« Reply #14 on: March 16, 2015, 10:29:54 AM »

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Why should people who didn't create the crisis pay for it? The only people who should be asked to pay more are those who profit from the destruction of the planet. Not the people who are already having a hard enough time trying to get by.

You want to create incentives based on prices.  Think about it this way, imagine your apartment includes free electricity.  Will you use your air conditioning more in the summer than if you paid for your electric bill?  Of course.  Similarly, the environmental cost should be priced into different goods so people conserve.

It's not a matter of whose fault it is.  And, as for the distributional consequences, why not just replace other taxes with a carbon tax so the majority doesn't pay any more? 

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Because capitalism is inherently unstable and creating yet another market for speculators to speculate in (one not tied to any actual, tangible product, mind you), is a recipe for disaster in and of itself? Have you been asleep for the past decade or so?

Well, that's just silly.  Markets are often the efficient means of allocating goods and capital.  It's a matter of what is the least bad solution.  Markets aren't always perfect, but they're going to be more efficient than government command and control.
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True Federalist (진정한 연방 주의자)
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« Reply #15 on: March 16, 2015, 12:15:00 PM »

I already reposted one of bedstuy's missives here to the good post thread.  I'm tempted to send more.  He keeps saying what I would say on this topic, and at least as well and quite probably better than I would.
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morgieb
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« Reply #16 on: March 16, 2015, 03:20:21 PM »

Write-in: Direct action.
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Sumner 1868
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« Reply #17 on: March 16, 2015, 05:10:41 PM »

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AggregateDemand
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« Reply #18 on: March 16, 2015, 08:38:07 PM »

I think the point of a carbon tax is for it to be passed on to consumers.  You want consumer to factor in the environmental cost of their behavior when they make decisions.  You could also make a carbon tax revenue neutral by lowering other taxes, so I don't see how that's a major problem.

If you want to see the major problem (hiding in plain sight), remove the moralistic component of anti-pollution policy by choosing a comparative hypothetical which yields no irrational self-preference on your part.

Suppose you want Americans to have formal mahogany dining room suites. You tax them for not having dining room suites. Does the tax magically increase their purchasing power? No. Tax does the opposite, in fact, which moves Americans farther away from your intended goal, while impoverishing more people. Even Obamacare isn't that stupid. Furthermore, the people who are most hurt by carbon tax don't pay other taxes, except payroll taxes and gasoline excise tax, the two forms of taxation Democrats refuse to cut, regardless of the rapturous socioeconomic consequences.

People are not making pollution for pollution's sake so directly taxing the unintended consequences of economic growth is pointless politicking, not efficient policy. The public need capital to purchase new equipment and resources so they can behave according to their current productive patterns, without generating as much pollution.

Sumptuary taxes are an incredibly lazy way for people to avoid developing real policy.
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traininthedistance
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« Reply #19 on: March 16, 2015, 11:11:12 PM »

Kind of a false dichotomy, but if I'm forced to choose I'd go with a carbon tax.  Less opportunity for market manipulation, and does a better job of a) capturing as wide a swath of pollution as possible, and b) providing real incentives to re-organize our choices in a more robust and sane manner. (And, yes, any proposal which is serious about the gravity and the cause of this issue needs to address the demand for pollution, not just its supply.)


Care to elaborate on what exactly this means?  
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morgieb
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« Reply #20 on: March 16, 2015, 11:29:10 PM »


Basically it was Tony Abbott's 'alternative' to The Carbon Tax/ETS. The idea behind it seems to be to provide financial incentives to polluters to reduce emissions. But in reality it's a clusterf**k created by a man who felt the need to have any alternative at all to tackling climate change that wasn't Labor's policy.
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traininthedistance
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« Reply #21 on: March 17, 2015, 01:47:22 PM »

The only thing that will make possible a shift to carbon neutral or low emission forms of energy is a shift in the mode of production. Capitalism is incapable of "going green" because it relies on the profit motive.

You do realize that the world economy grew 3 percent last year, but emissions stayed constant? Seems like disproof of your pat assertion right there.

Decarbonization and a market economy are of course compatible, so long as the proper incentives are in place.  Those proper incentives being, of course: Pigouvian taxation of externalities; restriction/protection of natural non-renewable resources; and investment in public goods such as mass transportation and basic scientific research. Naive "unfettered" capitalism, of course, inevitably leads to disaster– but not so for a mixed economy, where there is a role for both evidence-based planning *and* price signals.
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« Reply #22 on: March 20, 2015, 01:12:59 PM »

Carbon tax, and use half the proceeds to lower corperate tax and the other half should be redistributed.
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Boston Bread
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« Reply #23 on: March 20, 2015, 03:34:16 PM »

Carbon tax, use half the proceeds to lower sales tax and the other half should be invested in green energy.
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« Reply #24 on: March 20, 2015, 05:01:05 PM »

Carbon tax.   Responsiveness to demand is crucial for the normal functioning of any market. With a cap-and-trade system the level of energy demanded by users is replaced by a centrally set cap. (I realize the cap is on pollution but to a great extent the two will continue to be tied together even while the amount of pollution per energy decreases - and no one knows by how much)  I trust a more decentered economic decision making process, and a carbon tax will allow this while still incorporating some measure of the cost of pollution.  Granted a level for the tax must be made and this is a central decision, but it is not a decision so formally restricting as a cap, and the cost mechanism allows greater flexibility to meet the wax and wane of energy needs. 
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