I couldn't agree more.*
From FT Alphaville:
Carbon taxes should be raised. But all of that revenue must be paid back
if the levy is to gain support from businesses and households
John Llewellyn, an economist and founder of Llewellyn Consulting, explains why raising carbon taxes — and redistributing the proceeds — is the best means to lower carbon emissions.
The world’s present approach to reducing greenhouse gases is not working. And it is not, despite the enthusiasm surrounding COP26, ever likely to work.
A mish-mash of treaties, pledges, targets, exhortations, prohibitions, subsidies, and regulations all claim to reduce greenhouse gas emissions. Yet the myriad decision-takers in modern complex economies, individually and collectively, are failing to take the actions necessary to meet the objectives set out under the Paris agreement.So what incentive would be up to the task? What is required is unequivocal certainty that the price of carbon emissions is henceforth going to be sufficiently high that producers and investors have no doubt whatsoever about the future profitability of producing sustainable alternatives; and consumers have no doubt about the financial gain to be had from changing their patterns of expenditure. In short, what is needed is a tax on all greenhouse-gas emissions.
Yet this highlights the reason why it is so difficult for decision-takers to do what it will take to keep climate change in check. Transition, if it is to be successful, will substantially raise the cost of emitting carbon. That will in turn raise costs for businesses and households. A fact that is politically unpalatable.But there is a way around it: simply give the money raised by such a levy back to the electorate, every last cent of it.
At first blush, this proposal is bemusing. Raising the price of carbon in and of itself makes people worse off. They hate that. Typically they vote down politicians who propose it. So what is the point of raising a tax and then giving it all back?....
....MUCH MORE
The key is the per capita rebate. Bill Gates gets the same rebate as the little old lady who ventures out of her apartment once a week, despite Gates' Sasquatch-sized carbon footprint.
What you've done is raise the price of carbon relative to the rest of the economy but eased the burden on those who emit less. Without Orwellian personal carbon allotments.
*Some prior posts:
June 2009Climateer Investing on Carbon Trading and Traders
Our preference is "Cap-and-Tax (auction) with 100% Rebate" not Cap-and Trade.November 2012
The post immediately below, "Richard Sandor, Barack Obama and the Founding of the Chicago Climate Exchange (CLE.L)" got me to thinking about the carbon markets.
Proponents repeat the mantra that cap-and-trade is a "market based 'solution'". This is, of course, nonsense.
Just as an economist using the tools of science (mathematics) doesn't make economics a science, carbon traders using the tools of markets doesn't make carbon trading market based.
The carbon markets are an entirely artificial construct, beholden to political paymasters for their very existence. Which may be why so many political types are planning to profit from them.
Directly, think Al Gore's Generation Investment Management's investment in carbon project developer Camco or Lord Nicholas Stern's Vice-Chairmanship of IDEACarbon's parent IDEAGlobal or indirectly as a source of campaign contributions for pols still in office, or an unaccountable slush fund in the case of the U.N.
The word artificial led me to think of it's cousin, artifice. Here's the Oxford Pocket definition:The securities attorneys among our readers will recognize the word from the common state security law usage "...employ any device, scheme, or artifice to defraud".ar·ti·ficen. clever or cunning devices or expedients, esp. as used to trick or deceive others: artifice and outright fakery.
Coincidence?
Here's the view from Russia, quoted in The Bored Whore of Kyoto:"I don't know if climate change is caused by burning coal or sun flares or what," said the Moscow-based carbon cowboy. "And I don't really give a shit. Russia is the most energy inefficient country around, and carbon is the most volatile market ever. There's a lot of opportunity to make money."Here's a former Goldman Sachs trader:Here's Lord Stern at the Bali Climate Conference where the largest NGO contingent were the gang from the International Emissions Trading Association, 336 representatives including lawyers, financiers, emissions traders, consultants, certifiers and emissions trading experts... the IETA made up 7.5% of the 4483 Non-Governmental Organisation (NGO) delegates registered for the U.N. shindig:The whole reason for the existence of traders is to make as much money as possible, consistent with what's legal...I lived through this: if you didn't manipulate the market and manipulation was accessible to you, that's when you were yelled at.-Former Goldman Sachs trader
New York Times, May 8, 2002“Bali will set in motion a process that will define the structure
of the carbon markets for decades to come”
“By 2020 the global carbon market could be worth EUR 240-
450 billion”
-Sir Nicholas Stern"This (climate change) is much too important to leave to environment ministers"
-Sir Nicholas Stern
to Finance Ministers basking in Bali
Do You Hear the Carbon Tax Drumbeat?
It was quite a few years ago that I realized a carbon-tax-with-100%-rebate was the best approach to get what you want less of (carbon) with the least vigorish going to my Wall Street confreres.September 2020
Now that Exxon is backing the idea I'm wondering if there was a flaw in the thinking. I trust the oil majors about as much as I trust a commodity trader or...
"The Royal Navy’s Triumph over Slavery"
When carbon markets were all the rage—we preferred tax-and-100% rebate, less opportunity for rent-seeking and graft but a tough sell to the powers-that-be who would profit from said rent-seeking and graft— when they were all the rage one of our pithy little analogies was:
"When Britain decided to end slavery,
Wilberforce didn't set up a cap-and-trade system"—from our October 2007 post "Cap-and-Trade Market in Babies"It was a bit surprising how many intelligent, educated people would ask: "Who's Wilberforce?"
And many, many more
