Carbon tax works out to $43/ton.

The social cost of carbon emissions, averaging the conclusions of peer-reviewed economic studies, is $43/ton. Which is what makes that a good starting point for a carbon tax. For example, driving from Norfolk to San Francisco in a car that gets 25mpg would emit 0.3 tons of CO2, and would be taxed at $13.26 to offset the carbon component of those emissions. Or you could pay somebody to stay in bed all day and call it a “carbon credit.” I’m starting to think that carbon credits are bullshit. (Via Freakonomics)

19 thoughts on “Carbon tax works out to $43/ton.”

  1. Speaking of Carbon, have you seen what Percival Zhang, assistant professor of biological systems engineering at Virginia Tech is up to? He has found a way to convert starch to hydrogen gas using enzymes. The hydrogen can be generated aboard a vehicle, then power a fuel cell. The energy yield is 300% more efficient than taking biomass to ethanol, and is carbon neutral. While the fuel is no more hazardous than a bag of corn starch.

  2. Ooooh, that’s cool. Brewing energy — through enzymes or otherwise — makes so much more sense than using a process that requires energy, like corn-based ethanol.

  3. Claims of three times the efficiency of biomass ethanol (are we talking about corn or sugarcane or switchgrass or what?) are nothing to sneeze at, but I can still see using corn starch, and turning that into one giant subsidy for corn growers, regardless of usefulness.

    Regarding the original article, I’m all in favor of a pigovian tax on carbon emissions, including tax credits for operations which have negative carbon emissions. Basically, adjust the market for the external costs being incurred, and let the market sort things out.

  4. While reading Rolling Stone last night, I came across a great interview with Al Gore that addressed this very topic. He suggests simply eliminating the payroll tax and replacing it with a carbon tax. The government income remains the same, and then we’re taxing behavior that we want to discourage (carbon emissions — the Pigovian tax that you mention) rather than behavior that we want to encourage (earning money). There’s a lot to like about that proposal.

  5. The enzyme process eliminates much of the existing hydrogen source (ethanol, methanol, ammonia, NG) inefficiency by by eliminating the thermodynamic requirement of distilling / refracting. And polysaccharides (sugary carbohydrates) just contain more hydrogen. The source starch could be any number of things – corn, beet, rye, or hemp seed to name a few. And rather than building new hydrogen fueling storage/dispensing infrastructure, you would buy your fuel at the feed store, or it could be grown and processed low-tech.

  6. I often wonder why we haven’t looked to Europe for an answer to the emissions from fossil fuels. (http://www.csmonitor.com/2005/0826/ p01s03-woeu.html)
    I like the new alternative fuel research that is being done, but if I lived in Germany, I could buy a Volkswagen with a 1.2L diesel that gets around 80 mpg- a great improvement over my current VW TDI that gets around 50 on the highway. Yes, the 1.2L engine does produce carbon emissions, but at a much lower rate than any currently available multi-passenger vehicle- even lower then the moped I rode around on for a couple of months in high school. We should put more energy into encouraging options that are practical TODAY, all the while pursuing these new energy sources. Heavily taxing road fuel is one way that European nations curb the byproducts of fossil fuels (traffic, pollution, etc.); instituted here, a creative tax on fuels might help Americans realize that moderation, as a way of life, is good! This might also give a boost to the use of rail transport, which is by far, a more efficient way to move mass quantities of anything.

    I do think that it would be fruitless to use taxes (other than those at the pump) as a way to curb use of fossil fuels. Wouldn’t the government in someway actually want to encourage the use of such fuels to fund the numerous pork projects around the country?

  7. Probably the most important reason “why we haven’t looked to Europe for an answer to the emissions from fossil fuels” is that in 2006 we managed to cut our fossil fuel emissions while Europe’s rose. This suggests to me that new taxes and Kyoto-style regulation, so beloved by Europeans, might not be the best answer for America.

  8. While I think that there are many important differences between the US and various European countries when considering environmental policy, both in our economy and in our society, I think it’s a little disingenuous to suggest that because European CO2 emissions were up and US emissions were down, our system is obviously better than theirs. This goes doubly so when you consider the disparity in per capita CO2 emissions between the US and members of the EU.

  9. Where did that come from, Smails? I’d heard that before, in the context of it being more a poor presentation of stats than reality. But I’ve not seen the source for either, so I don’t know. Knowing the European emphasis (from boardroom to living room) on green behavior, I’m inclined to believe that it’s the former. But I’d like to sort it for myself.

  10. Here’s a cite for the US decline of 1.3%:
    http://www.greencarcongress.com/2007/05/eia_us_co2_emis.html

    Here’s another for Europe’s rise:
    http://business.guardian.co.uk/story/0,,2048733,00.html

    I confess that what bothers me is not so much Europe’s utter failure to meet its Kyoto goals even as it continues to lambaste the US for not having signed on to that boondoggle as it is my contempt for the suggestion we in America ought to be doing things the “European Way.” Although one never knows. Perhaps the “European Way” is what’s responsible for their marked superiority over the US in wealth creation, jobs, technology, military prowess and other areas I consider important.

  11. J.S., I just read those articles, and a few things stand out. Above all are the reasons cited for the U.S.’ drop in carbon emissions:

    Factors that drove emissions lower include weather conditions that reduced the demand for heating and cooling services; higher energy prices for natural gas, motor gasoline, and electricity, that reduced energy demand; and the use of a less carbon-intensive fuel mix (more natural gas and non-carbon fuels) in the generation of electricity.

    Two of those three causes are externalities that the U.S. had nothing to do with. There’s no reason to think that they’re the beginning of a trend, and no public policy lesson comes of them. Usage could just as easily go up next year if fuel prices drop and we have a winter of average coldness. As a nation, we deserve virtually no credit for this decrease.

    The Guardian article, on the other hand, paints quite a different picture of the E.U. Here we have a system that was established to reduce emissions that clearly isn’t working out. The E.U. knows it, and they’re overhauling it based on the weaknesses that they’ve discovered. They set a goal, they failed to meet it, and they’ve established a plan to correct it. That sort of accountability just doesn’t exist in the U.S. I give the E.U. a great deal of credit for implementing a fairly radical, but still free market solution to the problem and recognizing that it’s failed to work.

    The U.S. has done nothing to reduce emissions. We have a vice president who says that he regards frugality of energy usage as a nothing more than a personal virtue. So while it’s great that our emissions went down this year, we cannot pretend that we deserve any credit for it, or that it’s a sign of things to come.

  12. Maybe some of that’s true, Waldo. But what about the weather in Europe? Imagine if Europe’s inability to meet its Kyoto goals for reducing global warming was due to an abnorally cold winter which caused power plant emissions to rise! Oh, the irony.

  13. Judge Smails: It would be ironic if GLobal Warming = Uniform Local Warming. Have you read about the thermohaline convection engine that powers the Great Ocean Conveyer? Global warming would indeed lead to a local ice age in Europe. (Whether we would be seeing that yet is a completely different question.)

  14. Since Waldo’s entry used a mode of transportation as an example, I was suggesting Europe as good example of emissions reduction for vehicles. According to JS’s article, the US emissions from the transportation sector has increased. Based on what is driving on our roads today and the continuing push for people to live further away from urban areas, Americans could learn a good bit from their counterparts across the Atlantic.
    I’m not suggesting that everything that is done in the EU is better than what we have here, but they have it right when it comes to vehicular emissions.
    Interestingly, Woseley, the British company that owns Ferguson Enterprises is developing a green building division in Europe that focuses on sustainable products and energy efficiency. I’ve been told that this division will not cross the Atlantic for at least 7-8 years.

  15. @ Tim:

    Is the thermohaline convection engine that powers the Great Ocean Conveyer the same thing as the Gulfstream? Or is the Gulfstream merely one example of the thermohaline convection engine that powers the Great Ocean Conveyer?

    @ tom:

    Good point on the transportation sector. Still, if it’s not an anomaly, and I guess we’ll find out in a year or so, the Europeans’ overall increase in emissions ought to chasten them a bit. Glass houses and all.

    Finally, one point on the figure of $43/ton in externalities. Taking the average of something we have only a rudimentary understanding of to begin with seems like a great way to bollocks things up. And why take the average instead of trying to identify the best number to begin with? This seems like a page taken from the David Gergen School of Compromise. If Waldo says 2+2=4 and I say 2+2=10, the Gergen School would argue that the best possible outcome is for the two of us to compromise and agree that 7 is the right answer. Cleary, sometimes one set of data is just more right than the other.

  16. @Judge Smails: (D’oh! I completely forgot to provide links in that comment.) The Gulf Stream is one section of a set of connected ocean currents called the Great (or Global) Ocean Conveyer. The Conveyer is driven by thermohaline (temperature and salinity) convection, whereby cold, salty water flows along the bottom towards the equator and warm, fresh water flows along the top towards the poles [diagram]. When the warm water reaches colder latitudes (such as those around Europe), it releases steam — this cools and salinates the water, forcing it into the deep return path.

    The danger is that cold, fresh meltwater from the Arctic and/or Greenland will block the return path. This is widely considered to be the cause of the Younger Dryas, a period of severe cooling in Europe some thousands of years ago. It took about 1300 years to reverse, because the fresh water formed a “lid” over the North Atlantic.

  17. Tim, Judge
    I dont think that there are many scientist who think the stalling of gulf stream is a high probability, and . . .

    Actually Europe has been beset by abnormally warm winters, had a hard time making snow this year; and monster heat waves . . . remember all those people who were killed in France couple years back. . . oh and not to mention all the extreme rain events they had in Europe.

    Also, another thing to consider when thinking about Europe’s energy consumption and CO2 admissions is that the EU is in the process of absorbing all those Eastern Block countries and their horribly inefficient energy production technology, not to mention all their other inefficiencies.

    Which brings me to another point: The US’s CO2 admissions are naturally going to grow at a slower rate in relation to our Economic growth, because we are so rich. I think rich countries generally see a gain of 1-2% a year in their energy intensity, that is how little energy is required to produce a dollar of GDP.

    The biggest problem facing us now is that rich countries can afford to clean up their environment, purchase more efficient tech, so on and so on.

    All China can afford at this point is dirty, dirty power plants, thats why they are now the #1 producer of C02 in the world. Though they come in at 10,500 tons a person, while the average American comes in at 45,500 tons.

    Makes Waldo’s social carbon tax kinda of expensive, doesn’t it?.

    Though, I am in favor of a carbon tax, either getting rid of the payroll taxes or some kind of phased industry carbon tax blended with cap and trade.

  18. Also, offsetting is absolutely not bullshit, IF it is done correctly.

    There are a lot of crazy schemes our there right now. But done right it is providing much needed capital for expensive alternative energy projects in the third world or even right here in our backyard.

    We need market volume to drive down the cost of these projects but first we need capital to get the ball rolling. Offsetting can be one way to generate this capital. Or government funding, regulation, mandates.

    Conservatives should be all about offsetting instead of making fun of it because its what Al Gore does.

    As far as carbon credits go, if there were a world wide cap and trade system, what on earth would be wrong with trading in these?

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