Plan on Carbon Tax
June 1, 2009
This journal has addressed topics of global warming several times over the past year, but this piece reminds us that consequences of misinformed policies can be devastating to citizens, industry and the national future.
Science examining climate change draws conclusions from facts. Your views or mine are not valid because of consensus. Ample reasons exist to question man’s role, via carbon dioxide or greenhouse-gas emissions, in contributing to climate shifts and whether solar cycles are a cause of climate fluctuations. Evidence is not conclusive that human activities on Earth changes climate. Enter the political class (the least competent to be involved) into this debate, and problems are immediate.
It is evident that President Obama’s tax proposals for cap and trade (C&T), a rearranged version of the Warner-Lieberman bill from the last Congress that mercifully failed, have also collapsed. “Carbon protectionism” failed by a 67-31 vote against an amendment to the 2009 appropriation bill, and it is projected that a C&T replacement will not pass anytime soon.
An MIT study projected an added $3,128 annual family cost via this approach, which was political stupidity. So your 2009 political class has created a new ruse – not C&T but a “carbon tax” on industry and individuals. There are good reasons to be wary, including facts:
- C&T has an established bureaucracy worldwide to feed at the public trough.
- C&T advocates do not understand markets or business.
- C&T complexities disguise weakness, so it is hard to connect ethics and self-interest.
- If learned folks from the United Nations say C&T is good, it must be.
The carbon tax is an environmental tax on emission of carbon dioxide or other greenhouse gases – a pollution tax. Pollution is a “negative externality” because the presumed negative effect is on a party not directly involved in a transaction. As it was originally explained by English economist Arthur Pigou, taxing goods (fossil fuels) that are the source of negative externalities (carbon dioxide) becomes an indirect tax. The “social cost of carbon” is estimated to range between $10 and $350 per ton. It is necessary that we distinguish between the weights of carbon and its content in carbon dioxide, only one of innumerable greenhouse gases, or the originating fuel. Only 27.29% by weight of CO2 is carbon.
The Department of Energy has detailed public estimates that show carbon content in combustion products for various fuels. At a flat $100 per ton of CO2 produced by burning fossil fuel, a carbon tax would essentially add 77-129% to electric bills, 60-144% for gasoline and about 100% to costs for natural gas and other refined crude-oil products.
Is an environmental need to restrict fossil-fuel burning a real issue? Is a tax on production and consumption of energy the way to reduce CO2? What is the probable price that industry should expect to pay via an indirect tax? My prediction is about $100 per ton at the outset. All this does is encourage industry to move offshore to more reasonable political environments, which exacerbates the socialist course of this country.
Issues as important as these cannot be left to politicians. A premier example is a 648-page bill from Congressmen Markey (D-MA) and Waxman (D-CA) that may have found its way from committee to House debate by the time you read this. The “American Renewable Energy Act” (H.R. 890) requires retail electric suppliers to meet 6% of their retail load with “qualifying renewable resources” by 2012, increasing to 25% by 2025. Two months ago, this column reported that only 7% of all use is from “renewable” sources. The nitwits who mandate these things are paid $175,000 annually plus great perquisite by taxpayers. The public that allowed this should be ashamed. IH