Global Warming

Carbon Rebates: Better than Carbon Regulations?

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Carbon Share
CarbonShare

The New York Times is running today an op/ed, "The Carbon Dividend," by University of Massachusetts economist James Boyce touting a new bill by Rep. Chris Van Hollen (D-Md.) that would set up a cap-and-dividend program that aims to limit U.S. emissions of globe-warming carbon dioxide. Boyce explains that the plan…

…would require coal, oil and natural gas companies to buy a permit for each ton of carbon in the fuels they sell. Permits would be auctioned, and 100 percent of the proceeds would be returned straight to the American people as equal dividends for every woman, man and child…

The number of permits initially would be capped at the level of our 2005 carbon dioxide emissions. This cap would gradually ratchet down to 80 percent below that level by 2050. Prices of fossil fuels would rise as the cap tightened, spurring private investment in energy efficiency and clean energy. Energy companies would pass the cost of permits to consumers in the form of higher fuel prices. But for most families, the gain in carbon dividends would be greater than the pain. In fact, my calculations show that more than 80 percent of American households would come out ahead financially—and that doesn't even count the benefits of cleaner air and a cooler planet.

As the cap tightened, prices of fossil fuels would rise faster than quantity would fall, so total revenues would rise. The tighter the cap, the bigger the dividend. Voters not only would want to keep the policy in place for the duration of the clean energy transition, they would want to strengthen it.

The net effect on any household would depend on its carbon footprint—how much it spent, directly and indirectly, on fossil fuels. The less carbon it consumed, the bigger its net benefit. But why would a vast majority emerge as winners?

There are two reasons. First, among final consumers, households account for about two-thirds of fossil fuel use in the United States. Most of the remainder is consumed by government. In Mr. Van Hollen's bill, households would receive these other carbon dollars, too.

Republicans should welcome this feature, since over the years it would return billions of dollars from the government to the people. Unlike a carbon tax, which brings in more revenue for the government, Mr. Van Hollen's bill is, in effect, a tax cut.

Boyce likens the proposal to the popular Alaska permanent fund that divvies up oil and gas royalties to each Alaskan citizen. (To get a better idea how the Alaska fund works, see my colleague Jesse Walker's "One State Already Has A Basic Income Plan.")

Given that the bastards in Washington and various statehouses are going to "do something" about climate, this proposal could be thought of as a least bad policy alternative policy. After all, our policymakers have already screwed up the economy with ethanol mandates, EPA coal regulations, CAFE standards, feed-in tariffs, renewable portfolio standards, tax credits for solar, wind, and electric cars, and on and on and on. So what about a deal? Get rid of all of those regulations, mandates and requirements in exchange for this straigtforward carbon dividend plan.

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  1. Given that the earth is just about due for another ice age, which would be far more destructive than some minor warming, shouldn’t we be happy to let greenhouse gases prevent the onset of that ice age?

    1. Are you serious? One of Nancy Pelosi’s beach houses could be flooded by global warming! Don’t you care about that, you monster?

      1. Yes, I care deeply about that.

        Can we speed this shit up?

      2. Hey, I live about 9 miles west of NYC; I’m looking forward to beach front property.

  2. End the income tax permanently. Substitute a revenue-equal carbon tax. I’d take that deal with the Devil.

    1. Honestly, any new tax proposal from a flat tax to your idea needs to be analyzed and thought about by anti-tax and anti-government people who just spend about a month trying to figure out the most insidious and evil ways the politicians would find to exploit, distort, and crony-ify any new tax system. Just to make sure the new system wasn’t going to be even worse than the old.

    2. The Fair tax would be even better.

      Any consumption based tax would provide the same energy conservation motivations as a direct carbon tax however with the fair tax you only pay taxes on new products and services.

      So if you buy a new car you pay the sales tax, if you buy a used car however there is no sales tax involved (from the fair tax at least, state sales taxes are a different matter).

      This creates a massive incentive for people to conserve resources and recycle them rather than just throwing things away when they become inconvenient and buying a brand new replacement.

      A general sales tax also has the benefit of taxing all energy consumed whether the product was manufactured in the US or overseas, one major problem with a carbon tax is the massive incentive to relocate operations overseas and if necessary to outsource them to vendors not subject to US laws.

  3. “The number of permits initially would be capped at the level of our 2005 carbon dioxide emissions.”

    Maybe I’m not recalling correctly, but I understand the US is already back to early 1990 levels because of the shale boom and bad economy. This EPA chart seems to support my recollection: http://www.epa.gov/climatechan…..as/gas/all and also says we’re 10% lower than 2005 already.

    1. This would seem to allow room for expansion AND efficiency gains. Huh. That almsot makes sense.

    2. Shale gas isn’t going to cut it if the goal is an 80% reduction. CH4 still has C. The only way to make that happen is a half dozen downturns a la 2008. Space them out between now and 2050, and it’s a crappy US economy from now on.

  4. So were just going to fork over money to favored companies and industries. Still cronyism.

    1. TLAH: I think the idea is that the money gets “forked over” directly to citizens. Expecting politicians to actually vote for such a system, well….

      1. Really Ron? You buy that logic?

        What could -possibly- make you think that power companies wouldn’t just charge (to customers) whatever they’re paying (to the government) for their services? In what world can this *not* be seen as pointless if not downright destructive?

        1. a: Slightly modified version of my post below:
          In this proposal nobody gets rich selling permits, the revenues passed directly to citizens (minus I’m sure a small administrative fee along the lines of social security). And yes, the goal is to increase the price of carbon emitting energy, so that people will use less. The revenues from auctions will, according the proposal, offset the increased energy costs for 80 percent of citizens. With cash in hand, citizens won’t simply fork it over as a “rebound effect” to gas, electric, and oil companies to pay the higher rates for fuel and lighting, but spend it on other products and services.

          1. In this proposal nobody gets rich selling permits, the revenues passed directly to citizens (minus I’m sure a small administrative fee along the lines of social security).

            Right. So here’s the breakdown, Ron, because I think you really don’t see how conniving this scheme is:

            Step 1: (G)overnment charges (E)nergy companies for permits.
            Step 2: (E) charges (C)onsumer higher price for energy directly proportional to whatever they’re being charged for the new permits. This is what’s known as “passing the cost to consumer.”
            Step 3: G sends C a check for some random, arbitrary number that is less than (or hell, even more than, the actual amount of the check is irrelevant). C smiles at G and says “whoa thx for teh cash yo.”
            Step 4: G either:
            Runs a deficit to pay whoever cooked up this half baked scheme (Hide true cost through either taxation or inflation at a later date, deferred taxation) OR
            Sends out checks with outlays significantly reduced to cover the costs of however many thousands of employees it takes to fix shit that isn’t broken.

            In short, there is -no way- this benefits the consumer. The only people that benefit are Government. So yeah, if you like getting your money stolen, go ahead and cheer on.

            1. Step 2: (E) charges (C)onsumer higher price for energy directly proportional to whatever they’re being charged for the new permits. This is what’s known as “passing the cost to consumer.”

              actually they will charge more. and after the government takes their vig, you’re probably down 25%. is this rebate money taxable income? that’s probably the kicker.

              1. My god, that’s fucking hilarious. “Hey, here’s some money we stole. Oh yeah, by the way, you’re going to have to pay taxes on that too… Plus the increased taxes for the increased energy prices… so yeah, thanks!”

            2. Don’t forget about the 80% reduction!

              (E) generates much less electricity.

              Even with the “free cash”, (C) cannot afford air conditioning, and personal transportation is a distant memory.

              1. Isn’t that the point?

          2. Ah, so again the top 20% get fucked.

          3. Ron, just what did Mike Mann mean by HIDE THE DECLINE?

  5. Wooooow, I love the roundabout way they go about sucking the fucking money out of my pocket. The general public would get behind this thinking “Oh yay, I’ma get monies!” Then, 6 months later when their power bill triples, “GODDAMN THOSE POWER COMPANIES! NEEDS MOAR TAXES!”

  6. There is no solution for which global warming can’t provide a problem.

    1. As long as the solution is more power and money for politicians, less freedom and more money extracted from us plebs.

  7. Reducing carbon is not the goal – Giving bureaucrats vast(er) and deep(er) controls over all aspects of the economy is the goal.

    This ‘carbon’ stuff is just an excuse.

    1. In addition, the entire purpose of these few ‘reasonable sounding’ proposals is to simply make the broader idea of

      ‘Geoengineering-by-bureaucrat’

      ..more palatable, and create the impression of inevitably through endless repetition of variations on the theme.

      The fact is that NONE of the various regimes discussed by western governments – cap and trade, carbon taxes, credits, etc whatever – have any real impact on the “environment”, ultimately.

      These programs exist more for their own sake than for any ostensible objective ‘environmental’ cause. They exist because *they can*. They ‘help’ no one other than the people who’s job it is to ‘manage systems’.

      This is like asking rats to vote whether they want their maze painted blue or red – but never questioning whether this maze-running is doing anyone any good in the end.

      1. After watching them wreck the economy, who on Earth would think that these guys should control the dials on things like the amount of atmospheric CO2 available for the air scrubbers on Spaceship Earth known as “plants”? Are you fucking kidding me? I’ll take my chances with non-centrally controlled runaway global warming.

    2. I saw “reasonable sounding” and cracked up. “Reasonable sounding,” to me, means “Look, this makes no fucking sense if you think about it, but I’ve got the language to sell you on this shit down.

  8. Out of curiosity, how do they get 80% of 2005 emissions as the Gaia friendly level?

    Supposedly the emissions of 1990 levels were responsible for an ever heating planet that was going to see Manhattan flooded by 2010…

    Why is their set point now suddenly benign instead of dangerous?

    1. The frog won’t notice the water at this temperature…. yet?

    2. Technically, the 1999 levels were responsible for rapid cooling, I think we should target them.

      1. Judging by today, so are the 2014 levels. We need more CO2 in the air!

  9. Permits would be auctioned, and 100 percent of the proceeds would be returned straight to the American people as equal dividends for every woman, man and child…

    Wealth redistribution: What’s not to like?

    1. That’s the initial plan. Wait until it is means tested so that only Iowans, ADM, and inner city folk get to dip their beak.

  10. “…would require coal, oil and natural gas companies to buy a permit for each ton of carbon in the fuels they sell. Permits would be auctioned, and 100 percent of the proceeds would be returned straight to the American people as equal dividends for every woman, man and child…”

    This is fucking retarded. Let me make sure I’ve got this straight: You’ll charge the energy companies more to generate power. They’ll pass the cost on to the consumer. The consumer will get their money back after the government/permit auctioneer take their cut. Energy will cost more. Somebody selling “carbon permits” will get rich. Is that about right? Say, is this Al Gore channeling through a fellow dem?

    1. You weren’t supposed to read it, you were supposed to feel it. Pay no attention to the man behind the curtain.

    2. Its like Obamacare! Somehow in all those layers of bureaucracy, money is *saved* somehow.

      1. Gilmore, it is saved! Right into those bureaucrats’ bank accounts.

    3. The only people who benefit are those taking the small cut off the top.

      1. 80 to 95% off the top is not ‘small’.

    4. Don’t forget about the 80% reduction in permits by 2050.

      Not only will consumers pay more, they will also get much less.

  11. MG: That’s the part that’s supposed to attract the Dems. The “tax cut” part is supposed to attract the Reps.

    1. Well as long as all the politicians are happy, i see no reason to object….

      1. The sarcasm in that statement was so sharp I think I cut my eyes just reading it…

  12. AEM: In this proposal nobody gets rich selling permits, the revenues passed directly to citizens (minus I’m sure a small administrative fee along the lines of social security). And yes, the goal is to increase the price of carbon emitting energy, so that people will use less. The revenues from auctions will, according the proposal, offset the increased energy costs for 80 percent of citizens. With cash in hand, citizens won’t simply fork it over to pay the higher rates for gas and lighting, but spend it on other products and services.

    1. AEM: In this proposal nobody gets rich selling permits

      BULLSHIT. The government gets rich “managing” this scheme. Someone’s gotta be paid to do it, and guess who fucking pays.

      There is absolutely zero argument that it’s nothing but a scheme to make some random shitsipper in DC rich at the expense of the taxpayer. They’re just disguising the cost by handing you a check instead of blatantly stealing it from your pocket.

    2. I can finally afford a TV larger than a monitor! I just won’t be able to afford to turn it on.

    3. Ron,

      Since we’re already 12+% below 2005 levels, and dropping every year, what environmental purpose could this possibly serve?

      1. So that the government can claim responsibility for the falling carbon levels.

    4. You know who gets rich? The people collecting the small administrative fee.

      1. “minus I’m sure a small administrative fee along the lines of the entire social security budget

        FTFY, Ron

    5. “The revenues from auctions will, according the proposal, offset the increased energy costs for 80 percent of citizens.”

      I’m guessing the other 20% are going to be paying more than they get back, right? In other words, what they pay in increased energy cost, is going to subsidize someone else’s energy costs. It’s another fucking “wealth redistribution scheme”, with a cut taken off the top by those who administer it.

  13. How are we “reducing” carbon, anyway? Collecting it and launching it into space? As a entity composed primarily of organic chemicals, I heartily object to the elimination of my carbon.

    1. That’s what they’d conveniently like you to not ask, ProL.

      The truth in short: They’re reducing carbon emissions by stealing your money, thereby leaving less of it for you to buy shit with.

      1. You know, the way things work out, we’ll reduce C02 so much that the Earth will go into a cooling spiral. Which is far worse than some warming.

        1. Or the plants die off to a level to support the necessary amount of CO2.

          1. I see. So we should kill the trees? I envision moving the trees first to concentration camps, then systematically killing them.

    2. The processes contributing to the carbon cycle have remained roughly in equilibrium until the industrial revolution, when we started extracting carbon stored in the lithosphere and releasing it into the atmosphere. I thought you people liked your budgets balanced.

  14. I didnt read all the way thru, but here goes anyway:

    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE
    COASE COASE COASE COASE COASE COASE COASE COASE COASE

  15. Ron,

    I figure you dont read comments to articles that arent yours, but the other day on the Australia ending carbon tax thread, I asked if you were in mourning?

    1. robc: Nope. Australian proposal nowhere close to rebating revenues to citizens.

      1. You seem to like any pigovian solution, so I thought you might be upset.

  16. Li Keqiang: Hey, did you hear what the Meiguo are proposing this time?

    Xi Jinping: No, what?

    Li Keqiang: They’re going to handicap their economy even more because they believe in fairy tales.

    Xi Jinping: Ha ha! That’s awesome! Gotta hand it to the laowai, anything we could ever dream of to sabotage them could never equal the harm they inflict upon themselves.

  17. How can anyone believe, for one second, that the process of allocating and auctioning off these permits won’t become a festival of cronyism and corruption?

    Sure, the proposal sounds nice and clean, but come on – did the last 4,000 years of government never happen? Have we not seen this movie before?

    The naivete of believing that, once the State gets its mitts on these billions, its just going to send it straight out the door in a way that advances no ideological agenda, well-connected crony, or even doesn’t just flat-out get diverted (in our current environment of permanent deficits) to general spending is really just mind-boggling.

    1. Social Security has been pretty successful.

      1. So was Bernie Maddoff.

        1. If someone manages to make a pyramid scheme work for 80 years (and counting), I think we should probably just call it a good investment.

          1. What if they end up $17 Trillion in debt with $120 Trillion in unfunded liabilities? Is that good?

            http://www.usdebtclock.org/

            1. What does that have to do with Social Security?

          2. Sure, as long as you are not the sucker at the end of the pyramid falling….or getting sucked dry to pay for the Boomers retirement.

            http://www.ssa.gov/oact/trsum/

            Note: “Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010 and the Trustees estimate that Social Security cost will exceed non-interest income throughout the 75-year projection period.”

          3. For who?

          4. One of the things that i love about social security is that people pay in the same portion of their salary that financial advisors tell their clients to direct towards life insurance/disability insurance/LTC insurance/savings/retirement. According to financial advisors, 10% of your income correctly apportioned to those areas will result in a comfortable retirement, adequate disability/LTC insurance *and* enough savings to deal with emergencies.

            In exchange for 12% of their income, what people get is: a shitty old age annuity that is inadequate to live off of, a shitty disability insurance that is inadequate to live off of, a pittance for funeral expenses, and shitty old age medical insurance.

            And superstitious, poorly educated yokels like Tony think it’s a good deal. Tsk.

            1. It’s a better deal than nothing, and I’m all for beefing up the benefits.

              Sure, some people might be able to get a better return on that money, but many, probably most, will simply be poor and die. That’s what happens to old people in the wild.

              1. Tony, the only way you can beef up the benefits, and pay for them, is if the ‘contributions’ are invested in the stock market, with the state rapidly becoming the largest stock holder in the US.

                There’s a term for an economic system where the means of production are directed by the state while nominally remaining privately owned: fascism.

                1. That’s Tony’s preferred economic system anyways.

      2. Social Security has been pretty successful.

        You’re going to have to be more specific.

        Its not self-funding any more, so it hard to say its a financial success.

        It acted as a hidden general fund tax, so it underwrote our descent into permanent deficits.

        It convinced people they didn’t need to save for retirement, so it impaired capital formation and created a huge class of government dependents.

        Where’s the success, again?

        1. It succeeded in resulting in more people dependent on government taking from some to give to others, so Tony considers it a wild success.

        2. It succeeded in getting Donkeys elected.

      3. “Tony|7.30.14 @ 1:06PM|#

        Social Security has been pretty successful.””

        Do you know what ‘opportunity cost’ is, tony?

      4. “Social Security has been pretty successful.”

        Not as successful as the stock market, which is where I would have put MY FUCKING MONEY had I not been forced to put it into the Ponzi scheme known as Social Security.

      5. Hahahahahahahahahahahahahahahaha.

    2. From Roman tax farmer contract letting to TEH STIMULZ it has been so, and will remain.

  18. “This cap would gradually ratchet down to 80 percent below that level by 2050.”

    It sounds so simple, but they’re going to pass out money that won’t buy much, at least not much in the way of physical goods, transportation, or electricity.

    This is unicorn economics. We must first assume that we can have a modern economy without carbon-based energy. Otherwise, the dollars distributed from the GHG auction will only pay for bread and circuses. If that: modern agriculture accounts for about 15% of world GHG emissions when fuels and fertilizers are taken into account. Without modern agricultural methods, crop yields probably won’t even be sufficient for the bread part of bread and circuses. You can bet that any scheme devised by the ruling elites will assure that they maintain their lifestyles of the rich and famous.

  19. “…would require coal, oil and natural gas companies to buy a permit for each ton of carbon in the fuels they sell.”

    Could someone please show me the specific bit of the Constitution that grants such power to any branch of government?

    Thanks.

    1. It’s a tax. What do I win, Alex?

      1. Income tax is allowed by amendment.

        I dont see anything about a carbon tax.

        1. Carbon dioxide comes in to the atmosphere from polluters like you. So it is, in fact, an in-come tax.

          1. The constitution was printed on carbon based parchment, so the constitutionality can be safely inferred.

            /Supreme court by a 5-4 decision

      2. It’s not a tax… it’s an auction for a permit.

        1. Right. Bureaucrats auction off permission slips to produce power. This is somehow good for our power-based economy. Brilliant.

      3. Also, the CO2 in the atmosphere crosses over state lines, so Commerce Clause, bitchez!

    2. *mumble, mumble* power to regulate interstate commerce…yeah! That’s the ticket! *mumble, mumble*

      1. Is there something either not interstate or not commercial about this?

        1. Sure, show us what this has to do with “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

          And if you try to paint “among the several States as anything other than stopping the Massholes from levying a tariff on the New Yahkers goods and Congress saying “NO CHANCE”, you are as bad as the Wickard court.

          1. Since I’ve got the entire history of the country’s commerce clause case law on my side, why don’t you tell me why it’s a good thing to let energy companies pollute the environment for free?

            1. No, Tony, you have the entire history of commerce clause jurisdprudence since the late 1930s on your side. Before then, the Court actually applied the words on the page.

              1. Who are we, to argue with the legal geniousness of Tony!

        2. Is the permit only required for fossil fuels being sold to a buyer in another state?

        3. Of course it’s interstate and commercial; that’s why I mentioned it.

          The question is, which definition of “regulate” is the correct one in that sentence? Is it “1. to govern or direct according to rule” or “2. to bring order, method, or uniformity to”?

          What do you think, Mark Ames Tony? And, please, show your work.

          1. Both? You’re a little late to the Commerce Clause interpretation party. Perhaps there’s still some carrying on in the bong lounge?

            1. Both?

              My question was an earnest attempt at a discussion. Principled arguments could be made for all three positions. Still, I believe you need to make more of an effort to defend your position than just a cavalier dismissal of the debate itself. Yet, I agree with you that the ship has sailed. The noble intentions of the Constitution were abrogated by the Federal government in about a year through the government’s response to the Whiskey Rebellion.

              1. An expansive view of the commerce clause has proved rather useful. Defense completed.

                1. Translation: The ends justify the means.

                  You really are an ignorant, evil, fuck.

    3. It is right there in the FYTW clause, of course.

  20. The deal we’ll ask for:

    So what about a deal? Get rid of all of those regulations, mandates and requirements in exchange for this straigtforward carbon dividend plan.

    The deal we’ll get (and deserve).

    Combine all of those regulations, mandates and requirements along with this straigtforward ass-fucking plan.

    1. “look, we think all this tying you up, torturing you, having starving animals knaw on your limbs, **then** raping you is really an excessively complex endeavor, no? so! = we think the best deal for both of us is just to *jump straight to the raping*! Yes, this one is a ‘gang-rape’, but by getting everyone in on the action at once, it reduces all the scheduling conflicts and travel time, etc (we carpool!) Think of all the clutter and waste we’ve reduced!? I think its a Win-Win, don’t you?”

      1. +2 holes, no waiting.

  21. Hmmm, I wonder how this’ll work out when everybody starts heating their homes with wood, because they can’t afford to pay for oil?

  22. What the cost of lowering the Earth’s temperature by 1 degree by the end of the century, according to IPCC calculations

    https://www.youtube.com/watch?v=Zw5Lda06iK0

  23. More economic nonsense. No matter how you slice and dice it, if you convert from a less expensive form of energy to a more expensive form (which this proposal entails), everyone will end up paying more for energy.

  24. The consensus is in. “The highly productive fisheries of Alaska are located in seas projected to experience strong global change, including rapid transitions in temperature and ocean acidification -driven changes in pH and other chemical parameters. Many of the marine organisms that are most intensely affected by ocean acidification (OA) contribute substantially to the state’s commercial fisheries and traditional subsistence way of life. Prior studies of OA’s potential impacts on human communities have focused only on possible direct economic losses from specific scenarios of human dependence on commercial harvests and damages to marine species. However, other economic and social impacts, such as changes in food security or livelihoods, are also likely to result from climate change. This study evaluates patterns of dependence on marine resources within Alaska that could be negatively impacted by OA and current community characteristics to assess the potential risk to the fishery sector from OA. Here, we used a risk assessment framework based on one developed by the Intergovernmental Panel on Climate Change to analyze earth-system global ocean model hindcasts and projections of ocean chemistry, fisheries harvest data, and demographic information. The fisheries examined were: shellfish, salmon and other finfish.” Source-Ocean Acidification Risk Assessment For Alaska’s Fishery Sector.

    1. “could be” “potential” Could be a potential windfall for the right marine biologist.

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