I’m going to have to disagree with the superiority of the carbon tax vs. cap-and-trade, and for the same reasons Alonzo Fyfe highlighted in these articles.

First, I’d like to point out that both cap&trade and a “straight-up” emissions tax are, in fact, taxation on carbon emissions. I disagree with the claim that all costs in the former are ultimately shifted to the taxpayer and not the polluters, because a more pollutant industry would be required to purchase more credits, which would of course become more scarce (and costly) the closer you get to the cap, thereby diverting the costs directly to the big polluters (and their consumers – in this regard I agree with Fyfe that this is only proper and fitting). With the credits coming from the government, this is essentially a carbon tax too.

So, both are a form of tax on carbon emissions. In either form, the big pollutants have an incentive to reduce their carbon emissions, whereas the smaller polluters are less affected.

The difference: In cap&trade, you set a (flawed) cap, wherein using the carbon tax you set a price on carbon – but why would this set price be any less flawed than the cap? A tax of 0 would have no impact, and so it is clear that a tax set too low would not provide enough incentive for emissions cutting. The result could well be a higher total carbon output than desired, and just like cap&trade, the political weather may well foil attempts to adjust the tax.

So, which is better? To me, it seems more prudent to set a (flawed) cap that directly aims at the emissions level and letting the credit price be regulated by the market, than setting a (flawed) tax rate which aims to indirectly reduce emission levels – same idea, but the straight tax is a blunter instrument here.

I’d appreciate your analysis on the matter, especially if you see a flaw in my reasoning.

Because it has the word “tax”.

So… can you post under just one name, now, please?

Charles: Too bad it’s not politically viable.

How is a carbon tax any less politically viable than a cap and trade? Aren’t both options more politically viable than the government having to pay the costs of global warming after the fact?

Alonzo, I really don’t get this. First you make a big deal about how if you don’t set the cap-and-trade limit properly, the whole thing creates a big mess. Then you say that even an imperfect tax that has error (and could also presumably be set at the wrong level) is still better than nothing. Let me quote what you said about the negative aspects of cap-and-trade:

Even if a cap is set, it will be set at the wrong level, and it will remain the long level while political factions continue to spend billions of dollars in a political battle, while greenhouse gas emitters will continue to muddy the water to prevent any type of political conclusion that will prevent them from passing the bill to innocent third parties.

Soo….what part of that wouldn’t be the same with a carbon tax? Presumably, government wouldn’t know the right level to set the tax at, and political factions would fight over the right level and corporations will lobby to fight the tax. So what’s your justification for one over the other?

Anarcho-communist approach, Alonzo? Really?