Economists: Put a price on carbon. Now.

Energy experts, such as the International Energy Agency, conservative thinkers, such as David Frum, conservative economists (such as Greg Mankiw, formerly of the Bush administration) and now Lawrence Summers, formerly Barack Obama's Secretary of the Treasurer, all agree — put a price on carbon. 

That is, raise the tax at the pump from 18 cents a gallon, where it's been for over twenty years.  

Van der Hoeven of the IEA, in response to questions, stated the logic most directly::

Q: Falling oil prices have been like a tax break for consumers, but you want to raise gasoline taxes now. Why?

A: We are not a climate agency . . . but what I really do hope is that these low oil prices will be used by policymakers as an opportunity to cut down fuel subsidies in those countries (such as Indonesia, Malaysia and Thailand) that do have them. Whether it is a carbon tax or you do it in a different way . . . put a price on carbon. Because now with the low prices, the economy won't be hurt, or will be less hurt, than in any other time so use that opportunity.

David Frum, a conservative, formerly a speechwriter for Geroge W. Bush, now a senior editor at Atlantic, backed the Pigovian concept of taking an activity that to balance out its costs to society. Long before climate became an issue, for instance, there was a tax on gas to maintain the roads. 

Lawrence Summers, formerly Secretary of the Treasury for President Obama, endorsed this idea yesterday. In the Financial Times he wrote:

When we drive our cars, heat our homes or use fossil fuels in more indirect ways, all of us create these costs without paying for them. It follows that we overuse these fuels. This is not some kind of government planning argument — it is the logic of the market: that which is not paid for is overused. Even if the government had no need or use for revenue, it could make the economy function better by levying carbon taxes and rebating the revenues to society.

The logic is simple: the political will, however, well —


Published by Kit Stolz

I'm a freelance reporter and writer based in Ventura County.

2 thoughts on “Economists: Put a price on carbon. Now.

  1. Thanks for sending that link. That’s an exciting idea, and deserves more attention (which it sounds like it’s getting from the city of San Francisco, the state of CA, and even the White House). As the geochemist quoted in the story, Whendee Silver says, we still need to reduce emissions of greenhouse gases — but to be able to simple and practical means of biological uptake is also a great step forward.

    From the SF Chronicle story you mentioned:

    “The research showed that if compost from green waste — everything from household food scraps to dairy manure — were applied over just 5 percent of the state’s grazing lands, the soil could capture a year’s worth of greenhouse gas emissions from California’s farm and forestry industries.

    The effect is cumulative, meaning the soil keeps absorbing carbon dioxide even after just one application of compost, the researchers found. In theory, Silver calculates, if compost made from the state’s green waste were applied to a quarter of the state’s rangeland, the soil could absorb three-quarters of California’s greenhouse gas emissions for one year, due in large part to the one-time offset from waste diversion.”


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