Sunday, June 17, 2007

Finally! A Rational Carbon Tax

Carbon trading schemes are hopelessly mired in corruption and fraud. A fair carbon tax may work better, if a rational scheme for such a tax could be devised.
The IPCC predicts a warming rate in the tropical troposphere of about double that at the surface, implying about 0.2C to 1.2C per decade in the tropical troposphere under greenhouse-forcing scenarios. That implies the tax will climb by $4 to $24 per tonne per decade, a much more aggressive schedule of emission fee increases than most current proposals. At the upper end of warming forecasts, the tax could reach $200 per tonne of CO2 by 2100, forcing major carbon-emission reductions and a global shift to non-carbon energy sources.

Global-warming activists would like this. But so would skeptics, because they believe the models are exaggerating the warming forecasts. After all, the averaged UAH/ RSS tropical troposphere series went up only about 0.08C over the past decade, and has been going down since 2002. Some solar scientists even expect pronounced cooling to begin in a decade. If they are right, the T3 tax will fall below zero within two decades, turning into a subsidy for carbon emissions.

....Under the T3 tax, the regulator gets to call everyone's bluff at once, without gambling in advance on who is right. If the tax goes up, it ought to have. If it doesn't go up, it shouldn't have. Either way we get a sensible outcome.

But the benefits don't stop there. The T3 tax will induce forward-looking behaviour. Alarmists worry that conventional policy operates with too long a lag to prevent damaging climate change. Under the T3 tax, investors planning major industrial projects will need to forecast the tax rate many years ahead, thereby taking into account the most likely path of global warming a decade or more in advance.

And best of all, the T3 tax will encourage private-sector climate forecasting. Firms will need good estimates of future tax rates, which will force them to look deeply, and objectively, into the question of whether existing climate forecasts have an alarmist bias. The financial incentives will lead to independent reassessments of global climate modelling, without regard to what politicians, the IPCC or climatology professors want to hear.

Policymaking in the real world is messy, and ideas that sound good in theory can come out hopelessly gummed up with extraneous provisions that dilute or contradict the original purpose. But as a thought experiment, I find the T3 tax clarifies a lot of issues.

Read the whole thing. It is clear that apocalyptic prophecies that aspire to public policy need to be called to account. Alarmist bureaucrats and "scientists" must be forced to "put their money where their mouths are."

Alarmist predictions that can not possibly come true before everyone now alive is long since dead, are not worth taking seriously. Benchmarks must be set and adhered to. Otherwise it is all a cynical game on the part of the IPCC and its pet computer modelers.



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