Dear Dr Hansen
It is very exciting that you are coming to the London School of Economics to speak at the invitation of Professor Samuel Frankhauser of the Grantham institute for Climate Change. I am writing to you to mention an email exchange we had previously and raise a few other issues.
Briefly I agree with you that a high carbon price is essential. It is probably the most important policy option for combating climate change.
Your carbon fee and green cheque
You have taken the stance that the only politically viable way to distribute the very large revenues from a carbon tax is to send monthly cheques to every citizen. Governments spend none of the tax. This enables you to rename this carbon tax a carbon fee and green cheque.
Your scheme is an earmarked tax which many economists deprecate. I do not. Earmarked taxes are useful policy scenarios.
It would be wonderful if any nation implemented your scheme and I understand why you think your scheme has a better chance of success in the US than one that would involve more government expenditure. This may not be the same in Europe.
Labour Party Policy
Recently I attended a conference Building The Alternative: Labour’s Policy Review organised by the Fabian Midlands and Northern Region. The session Labour’s Welfare Dilemma: contribution, benefits, and new forms of work was led by Baroness Lister of Burtersett. She sits in the House of Lords as a member of the Labour Party and is clearly close to the thinking of the party. I asked her about your carbon fee and green cheque scheme. Her answer that it is not part of Labour Party thinking to give people something for nothing. As I remember she also used the phrase “dream on”.(1)
For a month or so I had a piece, Carbon Tax, on the Labour Policy Portal, which is now discontinued. I have tried unsuccessfully to get this article onto the Labour Party’s Your Britain website but I have put this article here on my Brussels Blog website. The article discusses your proposals and emphasises that most people receive more in their monthly dividend than they pay in increased prices. Also because the rich in general have more carbon intensive lifestyles than the poor, most households will gain at the expense of the wealthy.
At first glance you might expect policies that redistribute from rich to poor would be attractive to the Labour Party but I think they believe that a carbon tax would be an electoral burden. I was hoping that the poll by the Friends of the Earth might be of some influence. They found
Use of carbon tax revenue: 70 percent of respondents said that they would strongly favor or favor a carbon tax that directed revenues towards helping to “solve our budget problems,” while 72 percent said that they would strongly favor or favor a carbon tax that directed revenues towards the dual purposes of helping “solve our budget problems and fund programs that help deal with the effects of climate change and create clean energy jobs.”
A libertarian view
Dr Hansen, I remember (or possibly imagined) that you one described yourself as a small town republican that disliked big government. That suggests you have some of the same political sensibilities as Tim Worststall of the Adam Smith Institute. In an article in Forbes Magazine, Wrong Question About A Carbon Tax, he says
As so many do in fact ask the wrong question about a carbon tax. For while it is true that a carbon tax is the complete solution to climate change it isn’t because it would stop climate change … the very point of a carbon tax: it is not, not at all, in order to stop climate change. It is to enable us to have the right amount of climate change.
From the full article you will see that it is Tim’s belief that climate change isn’t nearly as bad as you say. If he is in London, I hope he can attend your lecture.
Other considerations for a carbon tax
I think you should recognise that the main policy objective should be a high carbon price and allow for other policy options that may engender political support in different contexts. Two examples relevant to the UK:
1. Fuel Poverty
There is considerable concern about fuel poverty in the UK. The implication is that if carbon taxes are high, the poor will be cold and damp and become sick. For fuel poverty an attractive policy is one which had progressive costs on fuel so that the unit cost of fuel to a household increased as more fuel was used.
Your green cheque scheme may have the effect of reducing fuel poverty through the monthly payments but it is a harder political sell in the UK.
2. Economic Growth and Employment
There is considerable worry in Europe about unemployment, particularly for the young. There is also an assumption that jobs can only be created by economic growth. This means that any policy that threatens almost any economic activity is thought to “cost jobs”. This is clearly incorrect because most unemployment is amongst the low paid and a policy which used increased taxes to reduce the cost of employing labour at the bottom of the labour market could create net employment. See More jobs – the easy way.
Again a green cheque could allow people to lower their wages and price themselves into employment but this also is a difficult point to explain.
The UK Committee on Climate Change
Dr Hansen, for several years your host, Professor Samuel Frankhauser has been a member of the UK Committee on Climate Change (the CCC), which is slated as being independent of the UK Government. In 2008 I raised several questions with the committee after speaking to Lord Turner the then chairman of the committee. Here are some of the problems I find with the CCC:
1. Emissions of greenhouse gases due to overseas manufacture.
Until recently, it has followed (or not challenged?) the claim made by the government that the UK’s emissions of greenhouse gasses has been falling. In my view, this claim has been disingenuous because it counts only greenhouse gas emission in the UK at a time when when much of manufacturing has been moved overseas so that we import goods that were previously made here. This has led to a fall in emissions due to manufacturing based in the UK while the carbon footprint of goods consumed in the UK has risen sharply. I raised this issue with the in 2008 after speaking to Lord Turner the previous chairman of the committee.
I am pleased that the committee is (at last) speaking out on this issue, following in the footsteps of Sir Robert Watson, Chief Scientific Advisor to Defra. I hope that this may be due to the influence of the new chairman Baron Deben.
2. Does the CCC downplay the pace of climate change
I believe the Committee on Climate Change avoids taking into account science that is too worrying for government policy. I have previously raised the question of the choices of scientists made by the CCC and the Department of Energy and Climate Change (DECC). I have discussed these in The Department of Energy Security and Committee on Climate Change discounts important science on my BrusselsBlog.
Dr Hansen, I would have thought that your scientific advice is too strong and urgent for the CCC and DECC to countenance but I will contact them and suggest that they ask you to become one of the CCCs scientific advisors.
It does give me some hope that a member of the CCC has asked you to give this lecture.
3. Policy levers to reduce the UK’s carbon footprint .
I have just looked at the minutes of the CCC for 15 February 2013, in particular Carbon footprint report: policy levers to reduce the UK’s carbon footprint. The minutes say
In this session the Committee considered levers for reducing the UK’s carbon footprint.
These include carbon footprinting and labelling of products, which the Committee felt would be of limited impact, except in a few cases where there is significant scope to reduce emissions through consumer choice. The Secretariat will aim to identify if there are any obvious products where this is the case.
I take the phrase “except in a few cases where there is significant scope to reduce emissions through consumer choice” to mean that the CCC is reluctant to actually speak out about the large part of the UK’s carbon footprint.
The CCC could easily pronounce on the worst elements of the UK’s carbon footprint which is caused by consumers.
I look forward to the time when someone connected with government or parliament actually publicises the carbon foot-prints of everyday living. An cheap and effective way would be to issue press release giving carbon footprints of activities and consumables that contribute the carbon footprints. It’s not that hard as can be seen from my website the Green Ration Book.
For example a 200 gramme (8oz) beef steak has a footprint of approximately 5kg CO2e and a return flight from the UK to Las Vegas has a carbon footprint of 3400 kgs CO2e.
The Green Ration Book measures carbon footprints against a target of 6kgs a day, the 2050 target for UK citizens. set by the UK Government.
According to the Green Ration Book the beefsteak’s 5kg represents over three days of a person’s ration for consumables (i.e. no more food for 3 days) and the return flight to Las Vegas is over 6 years worth of a personal carbon ration for travel.
(1) Baroness Lister has since commented . “Thanks. Unfortunately an open letter of that kind can’t convey my tone of voice and the implication is that I agree with Labour’s position whereas I dislike the ‘something for nothing’ mantra. And if I said ‘dream on’, which I don’t recall saying, it wasn’t meant to be as dismissive as this suggests.”
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