Monday, December 14, 2009

Carbon Tax: "Back to the Future"

A follow-up to our earlier "Cap-and-Trade: No Wall Street Intermediaries (BAC: GS; JPM; MS)".

We haven't mentioned Eleanor since 2007*, definitely an oversight, she has pretty good access on the gauche side of the aisle.

You know our thinking, don't let Wall Street anywhere near this. Either a tax with 100% rebate or Cap, 100% auction, 100% rebate; no offsets, no financial intermediaries.
If you set up a Cap-and-trade system with minimum and maximum annual prices and an electronic trading platform you make the so-called 'market-based system' a virtual tax.

If you ever hear a carbon trader say the lack of offsets will raise the price you know you've got a duplicitous (two-faced: dup=two) argument. The whole point of the exercise is to raise the price.
If someone's pitching low-cost cap'n trade they are making a political rather than an economic argument.
Then you cut the payroll tax dollar for dollar to encourage what you want (labor, i.e. work) and discourage what you don't want: the marginal BTU.
From NewsWeek, by Eleanor Clift:
The idea of a carbon tax, proposed by Al Gore 17 years ago, is winning new converts.
As world leaders gather in Copenhagen to pursue a reasonable set of targets to cap greenhouse gases, there is a growing realization in Washington that the Senate bill designed to address climate change is doomed. Republican Sen. James Inhofe, a global-warming denier, says the bill passed by chairman Barbara Boxer's Senate Environment and Public Works Committee could get only 29 votes, an assessment shared across the political spectrum. "The Boxer bill is ancient history," says the Sierra Club's chief climate counsel, David Bookbinder.

At the same time, there is a new sense of urgency that action must be taken to address what the weight of scientific evidence suggests is a deadly warming caused by human greenhouse-gas emissions, primarily carbon. The legislation currently before the Senate would cap overall carbon output and allow various business interests to trade permits to pollute like so many shares of stock. Wall Street loves cap-and-trade because permits could be securitized just like credit-default-swap schemes, but few others are wild about it, or even understand how it works, and it seems too heavy a lift for Senate Democrats facing reelection.

Against this backdrop, another idea is gaining momentum, one that seems even more improbable: a carbon tax. Its proponents call it "Plan B," and it is predicated on the anticipated failure of cap-and-trade...MORE.
*In 2007 I was kicking around the idea of measuring CO2 in units called "Gores", equal to 150 kilograms (Al was top ticking his weight at the time). I mentioned the idea in "Global Warming, Al Gore and Eleanor Clift" and showed off a bit of ADHD:
...Today she got off a couple good lines. Regarding a possible Bloomberg entry into the presidential race she said:
"...A billion dollars would make a difference"

Commenting on the Democrats she mentioned "Al Gore hovering over the field"

This is a vision I've had (and where I tie the post thus far to Climate Change) for a month or more.

It first came to me when I realized the EIA would be reporting later this month that the United States emitted almost exactly 6000 million metric tonnes of CO2 in 2006, which is handily divisible by the 300 million population.

That economy-wide 20 tonnes per person figure is, of course, not anyone's individual CO2 footprint (Quick. Compute the carbon mass. How many grams of carbon in one mole of CO2? You, smartass, you in the back: forget about the isotopes. If you're too precise, you're precisely wrong. The answer is_____.).
Because 20 tonnes of CO2 is as foreign to most people as an octonion (not eight onions), I tried to put it in terms normal people could visualize.

Then I saw this picture of Grammy nominated presenter, Webby and Oscar winner, Senator, Vice-President, former future president, Al Gore.

It occurred me, if people could visualize CO2 as X number of ex-V.P.'s floating over them, they might have a better grasp of just how much carbon dioxide we pump out.
(after the terror subsided, of course)

I'd guess that Al's weight top-ticked at over 300 pounds but giving him credit for his stated commitment to shed some, I set 300 pounds as equal to one gore (note small g).

Thus it's simple arithmetic to see that each American's share of our national CO2 output could be represented by 147 gores floating over every one of us.

Taking this a step further, a kilogore (one thousand gores) is equal to the CO2 apportionment of 6.8 Americans. This is also a Kilogore, but it's Theola (and a misspelling) . Singing "The Love of My Man". So every time you see seven Americans, picture 1029 former vice-presidents floating above them. Singing. The love of my man.

If you're bored, weigh the universe in gore units. I'd guess it's under a yotta (1,000,000,000, 000,000,000,000,000), which makes me sad. Although I like the "yottagore" I wanted to introduce the prefix "lotta" as in lottagore. We'll leave peta-gore to Tipper. (The Love of My Man)....