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Dallas, Texas, United States

Sunday, September 26, 2021

Carbon Tax

Some years ago a member of a group that I was in asked us for ideas on behalf of a local utility company that she was associated with.  She was asking for innovative ways in which consumers could conserve the product provided by the company.  I forget exactly whether it was water or electricity that was provided but you get the point.

Straight away I responded that the utility company should increase the price in order to decrease demand and then use the extra profit to increase capacity.  When she asked how this might impact the poor, I responded that the price could be progressive.  When the gentleman next to me told her that he agreed with me on this simple solution, I think she was a little disappointed that we were not suggesting ideas that might involve a voluntary reduction of consumption of the utility as a form of individual sacrifice.

I thought of this as I was watching the new educational video Can You Fix Climate Change? by the YouTube channel "Kurzgesagt -- In a Nutshell".  The video makes the point that individual sacrifice is not going to be effective in eliminating the emissions that cause global climate change.  They go so far as to suggest that recommending individual sacrifice is a cynical ploy by the worst emitters to distract us from more substantive policies.

Where I thought this video floundered is toward the end where it insisted that there was no one solution to the complex problem of reducing emissions.  The video suggested that we should demand change from our elected officials despite the fact that we are not quite sure what to do.  Finally, the video opined, we should continue to engage in personal sacrifice just to do our small part even though it really will not help with the overall problem.

I reacted by wondering why the video did not talk about the simplest solution, a tax on emissions such as a carbon tax.  When I search the Web, I see that people are still talking about the carbon tax and they still think it is a good idea.  I even see a recent news article that reports that legislators are talking about putting a carbon tax into the upcoming budget bill.

I watched the video again to see if there if there was any reference to a carbon tax.  I saw a very brief mention that suggested that imposing the costs of carbon capture on the energy industry would bankrupt it.  To this I respond that even with a carbon tax the traditional energy industry will never go bankrupt until people are able to get all of their energy needs fulfilled from carbon neutral providers.

Later the video suggests that politicians are reluctant to reduce subsidies to the carbon emitting energy industry because doing so would have the downstream effect of increasing the prices of consumer goods.  I respond by recommending that we use the income from the carbon tax to mitigate these impacts.  The carbon tax income could be used to subsidize the necessities for living while simultaneously expanding our energy capacity by funding research into carbon neutral sources.

This video was funded by the billionaire Bill Gates so I started to wonder what he has against the carbon tax.  I found a YouTube video by Gates entitled This tool will help us get to zero emissions.  Given this title, I initially assumed that this video would propose the carbon tax as the solution since it could be that one tool.

Instead Gates suggested what he calls the Green Premium.  This seems to be a plan to quantify the emissions that are coming from the production and consumption of each product and then funding research into reducing those specific emissions.  In an interview in which he is directly asked about the carbon tax, he states that it could work but then implies that it is not politically adoptable because of the increase in prices to consumers.

Gates is pushing the Green Premium as the next best alternative but I am not willing to give up on the carbon tax.  The carbon tax is straight-forward and it lets the invisible hand of the free market determine where best to invest research dollars into carbon neutral technologies.  I believe it can be politically viable so long as we offset the indirect impact of the carbon tax on consumers with benefits from the income to make the overall effect progressive.