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Economists Support Fossil Fuel Tax
Phil Izzo, Dow Jones
The government should encourage development of alternatives to fossil fuels, economists said in a WSJ.com survey. But most say the best way to do that isn’t in President Bush’s energy proposals: a new tax on fossil fuels.
Forty of 47 economists who answered the question said the government should help champion alternative fuels. “Economists generally are in favor of free-market solutions, but there are times when you need to intervene,” said David Wyss at Standard & Poor’s Corp. “We’re already in the danger zone” because of the outlook for oil supplies and concerns about climate change, he said.
A majority of the economists said a tax on fossil fuels would be the most economically sound way to encourage alternatives. A tax would raise the price of fossil fuels and make alternatives, which today often are more costly to produce, more competitive in the consumer market. “A tax puts pressure on the market, rather than forcing an artificial solution on it,” said Mr. Wyss. ..
In the survey, which was conducted Feb. 2-7, just two economists recommended regulations that require energy companies use more alternatives, one of the keys of the Bush plan, while six advised subsidies for producers of alternative fuels. “With subsidies, the government chooses the market solution,” said Diane Swonk at Mesirow Financial. “I’d favor taxes in this area.”
Other economists in the survey, though, said the smartest course for the government is to let market forces determine the future of alternative energies. “The more we mess with things the more problems we create,” said Brian S. Wesbury of First Trust Advisors. “Government interference in the marketplace can do damage to long-term development of alternate energies.” ..
(8 Feb 2007)
Government interference is a great way to create winners, and it is not coincidence that in many countries those winners are big Party donors (eg. Agribusiness) and/or important electorates (eg. Queensland cane farmers). Markets can function well when properly regulated, which is obviously not the case currently, where the provider who externalises (avoids) the most costs wins. –LJ
Global Warming and Hot Air
Robert J. Samuelson, Washington Post
You could be excused for thinking that we’ll soon do something serious about global warming. Last Friday, the Intergovernmental Panel on Climate Change (IPCC) — an international group of scientists — concluded that, to a 90 percent probability, human activity is warming the Earth. Earlier, Democratic congressional leaders made global warming legislation a top priority; and 10 big U.S. companies (including General Electric and DuPont) endorsed federal regulation. Strong action seems at hand.
Don’t be fooled. The dirty secret about global warming is this: We have no solution. About 80 percent of the world’s energy comes from fossil fuels (coal, oil, natural gas), the main sources of man-made greenhouse gases. Energy use sustains economic growth, which — in all modern societies — buttresses political and social stability. Until we can replace fossil fuels or find practical ways to capture their emissions, governments will not sanction the deep energy cuts that would truly affect global warming.
…But in practice, no plausible “cap and trade” program would significantly curb global warming. To do that, quotas would have to be set so low as to shut down the economy. Or the cost of scarce quotas would skyrocket and be passed along to consumers through much higher energy prices. Neither outcome seems likely. Quotas would be lax. The program would be a regulatory burden with little benefit. It would also be a bonanza for lobbyists, lawyers and consultants, as industries and localities besieged Washington for exceptions and special treatment. Hello, influence-peddling and sleaze.
What we really need is a more urgent program of research and development,…
Meanwhile, we could temper our energy appetite. I’ve argued before for a high oil tax to prod Americans to buy more fuel-efficient vehicles.
(7 Feb 2007)
Carville, Matalin spar over carbon tax
Tom Steever, Brownfield Network
Opinions vary about political solutions to the global energy issue. There is about as much agreement as one might expect from one of America’s highest profile political couples.
Mary Matalin and James Carville agree on many things, but disagree over global energy policy. The Washington, D.C. power couple dated and married despite positions on opposite extremes of the political spectrum. Although Republican strategist Matalin is skeptical, Carville, who engineered Bill Clinton’s trek to the White House, proposes to make heavy energy-use countries pay.
“I know this,” said Carville in San Antonio Wednesday, where he and his wife closed the National Biodiesel Conference, “the public is ready for this, and the way that you deal with peak oil (prices) or anything else is you do it through a worldwide carbon tax.”
(8 Feb 2007)
James Carville is a prominent Democratic strategist and commentators — apparently he is informed about “peak oil.”
Australian carbon task force suggests trading scheme
Stephanie Peatling, Sydney Morning Herald
A task force set up by the Prime Minister, John Howard, to investigate carbon emissions trading will not set a limit for reducing greenhouse gas emissions and has suggested that Australia would only join an international trading scheme.
It is unlikely this would happen for another five years.
The paper, which will suggest emissions trading models to Mr Howard, stressed that any action Australia took to reduce its greenhouse gas emissions should not compromise its “major competitive advantages through the possession of large reserves of fossil fuels and uranium”.
It says emissions trading is preferable because it is more “flexible” than imposing a flat price on carbon in the form of a levy or tax.
It suggests creating permits for emitters that would allow them to emit a certain amount of greenhouse gas but does not impose a direct financial penalty.
The paper will not please environment groups, which wanted the group to recommend pollution cuts of up to 90 per cent by mid-century.
The task force is expected to release a discussion paper tomorrow, and the Australian Conservation Foundation says it must come out in favour of severe and early cuts to emissions in Australia.
“Indeed, if the scheme fails to reduce emissions it could simply be a cost imposed on industry and consumers for little benefit, locking in unsustainable levels of greenhouse pollution and exposing governments to massive future carbon liabilities,” foundation climate campaigner Tony Mohr said.
(7 Feb 2007)Contributor SP writes: “Perhaps it should be called a levy?”
