Saturday, September 6, 2014

Carbon Taxes: Is the time right?

I belong to the NRDC. I support many local and national initiatives designed to reduce carbon emissions and protect disappearing flora and fauna. Humans must live more harmoniously with the planet, as this appears to be the only place in our solar system where we can live. I believe that the relevant scientific data shows unambiguously that global climate change is real and that humans are a huge causal factor. I despise the idea of killing animals for fun or for backwards religious/medical/cultural beliefs (See post on "The Devouring Dragon"). If humanity doesn't change worldwide practices around energy use and resource consumption we could see an even more devastated planet. There will be higher temperatures and more floods. There will be less wildlife and fewer trees. And those unpleasant changes could arrive sooner than we think. And yet I find myself unable to fully support a carbon tax though I will admit that it’s probably the right thing to do. Hypocrisy?  Probably. Quite possibly actually. Heck, absolutely. But let’s examine why.

The basic idea of a carbon tax is that pollution is an externality to economic activity. Neither the seller nor the buyer is concerned with pollution because they aren't paying for it. Just as an amoral factory owner will, absent aggressive regulation, criminal penalties and civil liability, dump pollutants in the water, someone else, i.e yours truly or even the people reading this blog post, will engage in activities that increase carbon emissions because we are not paying the full price.
If the government taxes carbon producing activities, you will engage in them less. You will try to produce less carbon, saving yourself money and also saving the environment. Suddenly the monetary incentives and the environmental incentives are lined up together. You spend less money. Climate change slows. That’s the idea, anyway. The reality might be a little different. Although the whole “coastal elites” trope is beyond hoary it's useful to compare and contrast the different experiences of people who live in very densely populated urban areas and use mass transit to reach work and of people who live in more open areas and/or don’t use mass transit. I spend roughly about $300/month on gasoline. That's the cost of my commute. I live in SE Michigan which lacks consistent public transportation but does have massive suburban sprawl. If I lived in The Bronx or Harlem and worked in downtown Manhattan my transportation costs (assuming I didn’t drive) would probably be a little over $100/month. For now, I am locked into working where I do. Working closer to home would entail a significant pay cut. I'm not a fan of that. 

So if there were a carbon tax the million dollar question is how much would it cost. A CBO analysis claimed that a $21/ton carbon tax would raise gasoline prices by about $0.20 gallon. That would cost me roughly $5/week or about $20/mth, not counting other changes a tax would require. I wouldn't LIKE it but I could live with it. 
Some people think that such a small carbon tax doesn't really change behavior enough. They would prefer a carbon tax anywhere from double to twelve times the amount mentioned in the CBO analysis. They would like to see gas prices raised by $1/gallon or more.
I would be against that for many reasons but the biggest one is obviously that I just don't currently earn enough to be blase about $5,$6,$7 or more for a gallon of gasoline. Something would have to give. Maybe it's food, although a carbon tax would also increase food prices because so much of our food supply is delivered to market via fossil fuels. Maybe I eat out less or don't see first run movies or just buy less food or (horror) fewer books but I can't stop driving to work. A US carbon tax also gives US companies more incentives to move production to China, already the world's largest carbon emissions producer. China is taking steps which could mean game over as far as global climate change is concerned. The Chinese are increasing their use of refrigeration. This is wonderful if you are concerned about food spoilage, food safety and storage, fighting disease, and immediate access to varied foods. But if you're primarily concerned about climate change then the idea of 1.3 billion people deciding to live just like Americans makes you nervous.
An artificial winter has begun to stretch across the country, through its fields and its ports, its logistics hubs and freeways. China had 250 million cubic feet of refrigerated storage capacity in 2007; by 2017, the country is on track to have 20 times that. At five billion cubic feet, China will surpass even the United States, which has led the world in cold storage ever since artificial refrigeration was invented. And even that translates to only 3.7 cubic feet of cold storage per capita, or roughly a third of what Americans currently have — meaning that the Chinese refrigeration boom is only just beginning. This is not simply transforming how Chinese people grow, distribute and consume food.
It also stands to become a formidable new factor in climate change; cooling is already responsible for 15 percent of all electricity consumption worldwide, and leaks of chemical refrigerants are a major source of greenhouse-gas pollution. Of all the shifts in lifestyle that threaten the planet right now, perhaps not one is as important as the changing way that Chinese people eat.
Calculating the climate-change impact of an expanded Chinese cold chain is extremely complicated.  Artificial refrigeration contributes to global greenhouse-gas emissions in two main ways. First, generating the power (whether it be electricity for warehouses or diesel fuel for trucks) that fuels the heat-exchange process, which is at the heart of any cooling system, accounts for about 80 percent of refrigeration’s global-warming impact (measured in tons of CO2) and currently consumes nearly a sixth of global electricity usage.
You see the issue, yes? No American should tell any one in China that they shouldn't be using refrigeration. But it may be that what's good for the Chinese and their health is bad for the planet. Probably the Chinese wouldn't be too interested in altering their approach unless everyone else does likewise. Are you willing to give up refrigeration and other modern comforts that contribute to emissions? No? Then don't expect (insert foreign group here) to do so. Our ability to change our environment has outstripped our political control. I could support a carbon tax if every country has one as well. We can only fix carbon emissions via a planet wide solution. But that won't happen because each country has different goals and needs. It's easy to wax rhapsodic about saving the Brazilian rainforest but if your family's livelihood depends on lumber, then that rainforest will have to go. We're experiencing the classic prisoner's dilemma. From outside the system cooperation makes sense but rational actors within the system will not cooperate. Everyone is worse off. The usual solution is imposition of an outside regulator. 

For criminals this might be the Mafia. If criminals have certainty that talking brings swift and certain death, then each criminal keeps his mouth shut. No one is convicted and both criminals walk free. They are better off. But states are the regulators. Who can tell sovereign states what to do? How would we create a planet wide single regulator for carbon emissions. I don't see how it could be done. So that means that the climate change we're seeing now could be irreversible. It's not completely hopeless of course. China is moving towards greater usage of natural gas, not because of foreign concerns, but because of internal Chinese worries about air quality and dependency on foreign imports. But Australia just repealed its carbon tax because of some of the fears I listed above. People generally act in their own interest. The challenge is bringing the narrow national or individual private interest and the greater public or international interest into congruence. How do we do that?

What are your thoughts? Would you drive less if a carbon tax were imposed?

Are you concerned with climate change?

Would you give up refrigeration to save the environment?
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