Student of Environmental Policy and Economics
I would like to respond to Dieter Helm’s op-ed that appeared in Yale Environment 360 on November 8th 2012. As a climate change conscious college student majoring in Environmental Policy and Economics, I would like to share both my agreements and disagreements on Helm’s arguments about relying on a carbon tax to mediate carbon pollution.
A carbon tax, while highly disliked, can be very effective in curbing emissions of a highly intensive carbon emitter industry. Boulder Colorado is a prime example, it has implemented a city wide carbon tax that has been successful in reducing the amount of emissions and the tax has grown in favor among the citizens of Boulder. The effectiveness of this tax occurred because it focuses on a more quantifiable amount than emissions from carbon producers, it focuses on what Helm validly views as the focus of an effective carbon tax, consumption of carbon.
While this may be a valid insight in the world of economics, at least in the long-run, production and consumption are essentially the same thing. Most often it takes consumption of a product to lead to the output or production of another product and when trying to place a monetary value on the use of a product or the social costs it incurs, take coal for example (a main cause of carbon emissions), the lines begin to blur. With this in mind, I find fault in the idea that the carbon tax would become the consumers’ burden, when many consumers do not have a true idea of their role in emission output.
I personally believe that that true key to creating a tax on carbon is to make the tax revenue neutral. Regardless of whom or what the tax is placed on, this method essentially decreases a regressive tax, like the income tax, and inputs the carbon tax in replace of the amount that was reduced from the income tax. This means that for those paying the tax that their overall tax burden has not increased. Furthermore, they are now paying a tax that has an evident purpose. This is one of the reasons that the tax in Boulder has become so favorable. As a revenue-neutral tax, it successfully lowered and replaced a portion of the income tax as well as minimized Boulder’s carbon output. This program generated about a million dollars annually for the city and those revenues were used to fund Boulder’s climate action plan to further reduce energy usage.
Another key to implementing a successful carbon tax; incentives. Economists focus many of their decisions on the fact that “people respond to incentives”. The fact that Boulder’s favorable revenue-neutral carbon tax gave an offsetting discount to households that used renewable energy provided an incentive for others to invest in renewable energy for their homes. Helm also hinted the carbon tax will immediately provide another incentive as the relative economic costs of coal are bound to become more expensive with a tax; it will give agents a reason to look for other energy sources, perhaps some green technology.
However, Mr. Helm, it boggles my mind that you recommend natural gas as a solution to lower carbon emissions. Please, do not think gas is the solution. Why should gas be proposed as a solution or substitution to coal? It may be a “cleaner” fuel but it does still pollute the environment. Living in Pennsylvania, I have heard many tales of woe from people who live near fracking sites and have despised what it has done to their land. The extraction process in particular has caused devastating effects on the individuals and environment directly around the extraction sites, even if the fracking companies will not admit it.
Additionally, both coal and gas are available in limited amounts. Rather than investing our time and money on shale gas sites, that just like coal, are not infinite and will need to be replaced eventually, shouldn’t the government be putting more capital into developing substantial renewables. Maybe with some investment in innovation, complementary technology will allow current renewables to “bridge the gap”, as Mr. Helm puts it.
A nationwide carbon tax may be the beginnings of a solution for those of us that recognize climate change as an immediate issue. Replacing a limited energy resource with another limited resource is not. It may just contribute more to climate change in the long run. I firmly believe that if we don’t make a change now our environment will end up beyond repair.
I already think I have the right to be ashamed of the environmental consideration my parents generation have provided the world. If our generation does nothing to try to change the outcome, I think we are even more to blame for what will result because of our lack of finite resource conservation.