Carbon tax in the mainstream ? | Brussels Blog

Carbon tax in the mainstream ?

posted by on 16th May 2012
16th,May

At the Progress Annual Conference, Phil Collins of The Times, Peter Kellner of YouGov and Mary Riddell of The Daily Telegraph thought that a carbon tax to create jobs could become mainstream politics. The politician on the panel ducked the question.

They should read the article in the latest Fraser Economic  Commentary (1), “The impact of the introduction of a carbon tax for Scotland”.

I like this bit:

Our simulations demonstrate that a carbon tax [ to support employment ] could simultaneously stimulate employment while reducing emissions: the double dividend.

and

Furthermore, in current circumstances, it may be thought desirable to focus the good news by recycling revenues to subsidise employment among the younger age groups who have been most adversely impacted by the recession and its aftermath.

The advantages of a carbon tax to create jobs are:

  • It creates jobs
  • It reduces domestic demand for energy so it
  • closes the energy gap (2)
  • reduces imports
  • increases exports
  • It redistributes from rich to poor

It may even help in international climate negotiations.

The economics has always been simple – tax “bads” subsidise “goods”. Now I think the politics will be possible as events show the public just how bad climate change is becoming.

I was surprised Mary, Peter and Phil thought it could be mainstream too.

Pity they aren’t politicians.

(1) The latest Fraser Economic Commentary can be found here – this is a temporary location. It is not yet on the Fraser of Allender web site.

(2) Kim Swales, one of the authors, tells me they estimate the long run elasticity of demand for energy as 0.65, this means that price increases will dampen demand considerably. There should, of course, be measures to protect those in “fuel poverty”.

POSTSCRIPT:  Carbon taxation best for Europe.

Vivid Economics, Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits, report prepared for the European Climate Foundation and Green Budget Europe,
May 2012.


A CARBON TAX SOLUTION?

Is it politically possible?

At the recent Progress Annual Conference, Phil Collins of The Times, Peter Kellner of YouGov and Mary Riddell of The Daily Telegraph thought that a carbon tax to create jobs could become mainstream politics. The politician on the panel ducked the question.

Does it work?

From the latest Fraser Economic Commentary,”The impact of the introduction of a carbon tax for Scotland” :

“Our simulations demonstrate that a carbon tax [to support employment] could simultaneously stimulate employment while reducing emissions: the double dividend.” and

“Furthermore, in current circumstances, it may be thought desirable to focus the good news by recycling revenues to subsidise employment among the younger age groups who have been most adversely impacted by the recession and its aftermath.”

Will it work for Europe deficits?

Directly aimed at the current crisis is a recent report which claims that a carbon tax is the best solution – particularly for employment: Vivid Economics, Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits.

I think carbon taxes can create jobs, reduce Europe’s deficits and are now politically possible so I have started an e-petition “Tax carbon. Subsidise jobs”: http://www.avaaz.org/en/petition/Tax_carbon_Subsidise_jobs.

I’m hoping some of the economists that keep telling me “Tax bads, subsidise goods” will sign.

comment

Posted on the Economist site….

A CARBON TAX SOLUTION?

Is it politically possible?

At the recent Progress Annual Conference, Phil Collins of The Times, Peter Kellner of YouGov and Mary Riddell of The Daily Telegraph thought that a carbon tax to create jobs could become mainstream politics. The politician on the panel ducked the question.

Does it work?

From the latest Fraser Economic Commentary,”The impact of the introduction of a carbon tax for Scotland” :

“Our simulations demonstrate that a carbon tax [to support employment] could simultaneously stimulate employment while reducing emissions: the double dividend.” and

“Furthermore, in current circumstances, it may be thought desirable to focus the good news by recycling revenues to subsidise employment among the younger age groups who have been most adversely impacted by the recession and its aftermath.”

Will it work for Europe deficits?

Directly aimed at the current crisis is a recent report which claims that a carbon tax is the best solution – particularly for employment: Vivid Economics, Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits.

I think carbon taxes can create jobs, reduce Europe’s deficits and are now politically possible so I have started an e-petition “Tax carbon. Subsidise jobs”: http://www.avaaz.org/en/petition/Tax_carbon_Subsidise_jobs.

Geoff Beacon ( May 19, 2012 at 9:45 am )

Someone’s talking on a mobile too loudly just now. He’s just said some firm or other is good at shuffling numbers around to avoid tax.

It would be harder to do that with a carbon tax.

Geoff Beacon ( October 23, 2012 at 2:03 pm )

The problem with a carbon tax is that cheap oil has been subsidizing food productions. A sudden carbon tax raises the price of food, and then either food cost world wide must be subsidized or industrial wages, world wide must be subsidized.

Other climate issues (rain, drought) are likely to complicate the pricing of food. Hungry workers do not produce, so this is a major issue in any industrial civilization.

I am for a carbon tax, but have concerns about the mechanics and details of global implantation of a large carbon tax on a rapid schedule. It will not work, if it forces large numbers of workers to go hungry.

Aaron Lewis ( January 14, 2013 at 6:57 pm )

Aaron

I believe the problem you pose can be minimised if this scheme is carefully implemented. It does depends on how much is redistributed from rich to poor.

I expect some foods with high carbon, land an water footprints to become prohibitively expensive. This would free up resources to produce much more staple food.

See “It’s the poor that starve” http://www.brusselsblog.co.uk/its-the-poor-that-starve/

admin ( January 14, 2013 at 8:41 pm )

It is September, 1940, and we all live in London. As the Blitz begins to rain bombs down on our heads, we discover that companies and people right here in London are busily making bombs of the very type incinerating our children, and sending this ordinance off to the Jerries.

And our response is to decide to put a bit of a tax on this bomb making and exporting enterprise in hopes that market signals may eventually reduce the rate of increase in bomb production, and perhaps even eventually bring about some reduction in this unwanted activity…

Am I nuts, or is it everyone else?

john harkness ( January 18, 2013 at 12:23 am )
Geoff Beacon ( May 16, 2013 at 2:12 am )

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