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Musk: Introduce Carbon Tax & reduce other taxes

Discussion in 'Energy, Environment, and Policy' started by malcolm, Dec 3, 2015.

  1. malcolm

    malcolm Active Member

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    #1 malcolm, Dec 3, 2015
    Last edited: Dec 3, 2015
    Source
     
  2. felixkramer

    felixkramer Member

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    #2 felixkramer, Dec 4, 2015
    Last edited: Dec 4, 2015
    Elon Musk’s WOW: What if Everyone at the Climate Summit Watches or Reads His Talk?

    [Posted from Paris where I'm working with Citizens' Climate Lobby, Environmental Entrepreneurs & other groups. I commissioned a full transcript of Musk's speech; find that at http://citizensclimatelobby.org/at-cop21-elon-musk-pushes-for-revenue-neutral-carbon-tax/ .]

    Elon Musk made a surprise trip to Paris last night to an event accompanying COP21, the climate summit. His speech may become part of a climate solutions turning point.


    He chose not to speak at a large high-level institutional event. Rather, he addressed the engineers and designers of the future at the University of Paris-Sorbonne. Instead of a grand keynote, for 13 minutes, he described the challenges and presented a simple, elegant solution. He empowered his audience to get involved politically. Then he took 38 minutes of questions. Here’s a quick tour.

    As a physicist and businessman, his explanation of climate change and its risks ended with a question: why are doing “the dumbest experiment in history?” He didn’t worry about talking over his audience’s heads, explaining “unpriced externalities,” an essential economics concept often seen as too complex. (10:45)

    Then his key point — perhaps the reason he tore himself away from from his all-consuming responsibilities at Tesla, SolarCity, and SpaceX. He said we can end $5.3 trillion/year in subsidies to fossil fuel industries and make them pay for their poisonous emissions. (12:48) His solution is rapidly gaining support: revenue-neutral carbon taxes. He recommended just three actions: talk to politicians and ask them to enact a revenue-neutral carbon tax; talk to your friends about carbon taxes,; and fight carbon industry propaganda. (15:20)

    In questions, he repeatedly praised revenue-neutral carbon taxes. He called for governments at COP21 to put their feet down and get started. He showed how low but rising carbon taxes will change business practices in five years. (25:10) That matches the timetable for the just-announced international Carbon Pricing Leadership Coalition, which aims to get in place carbon pricing everywhere by 2020.

    He also answered respectful questions thoughtfully and imaginatively. See the video — or, in less time, read the full transcript. You’ll pick up nuggets on why we can’t wait for new technology “miracles,” what climate-concerned young people should do with their lives, batteries, electric cars, and space. The event's Youtube video is catching on, currently growing by thousands an hour.

    We’ll see if COP21 negotiators respond to the the groundswell. But even if they don’t, Elon Musk is inspiring people around the world to price carbon in their countries. They can share the spirit of this very practical guy, invoking elementary moral principles: governments don’t have to wait for others to Do The Right Thing. (43:30). And people have the power to make change. (45:30)


    For More Info:

    For more about carbon pricing during and after COP21, see Heads of State and CEOs Declare Support for Carbon Pricing to transform Global Economy.
    For more about revenue-neutral carbon fee and dividend, see Citizens’ Climate Lobby and its activities in Paris around COP21.


    Press coverage of Musk's speech:
    Elon Musk calls for carbon price to halve the transition time to clean energy, The Guardian, December 2
    Elon Musk just demanded a carbon tax in Paris, UK Business Insider, December 2
    Elon Musk croit en la taxe carbone, Le Point, December 3
    Elon Musk Is Probably Our Best Hope Yet For Moving Beyond Fossil Fuels, Gizmodo, December 3

    Elon Musk pleads for a "revenue-neutral carbon tax" during speech in Paris, Treehugger, December 3
     
  3. FlasherZ

    FlasherZ Sig Model S + Sig Model X + Model 3 Resv

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    The challenge is that it will not be revenue-neutral. It might be revenue-neutral to the government, but will have quite a disparate impact upon many different parties. The good news is that this might be supported, as 2 wolves and a sheep voting on who's for dinner isn't exactly a democracy - but it's not as simple as implied.
     
  4. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    As the longstanding solon from Louisiana (Sen. Russell Long) said in his most celebrated aphorism: Don't tax you, don't tax me, tax that fellow behind that tree.

    A tax on carbon emissions is from an economist's viewpoint the most elegant of all solutions - it is the purest way to internalize an obvious - once thought about - externality. And it also is one that relatively easily can be adjusted to account for cross-border dissimilarities. That is, if Country A & B disagree on how much a tax should be, an import tariff accounting for that difference most easily and more or less palatably can be constructed.

    However, there are two massive stumbling blocks even leaving aside the massive one of the use of the "T" word.

    First, as Flasher writes, the cold-weather diesel truck operator at an Alaskan coal mine is going to be massively more affected than is the software engineer in San Diego. Full stop. "Should" she be? Well, yes, according to how the full-cost economic chips fall. Regardless, a society's concerns also deal with how to accommodate all within that society, so we introduce another element here. Extremely difficult to deal with, and oxes will continue to be gored.

    Second, it is almost as difficult for any ultimate authority (national governments) to come up with an agreeable price tag on, for example, 1 mole of CO2, of CH4, and so on. Similarly, it is likewise easy - although specious and deserving of a C- or D by Professor Economica - for a nation to assert "But we are going not to cut down that 1 ha. of forest so we get extra credit..." etc.

    Regardless, the basic tenets of a carbon tax do make elegant sense and there never can be too much publicity for same. Mr Musk is a reasonable spokesman for it. Some revile him; some revere him; he's not a good public speaker but he's certainly less dry than an academician and in general, less controversial than any politician of any stripe.
     
  5. Raffy.Roma

    Raffy.Roma Active Member

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    I am not an expert of economics and/or taxes but to me it's obvious that fossil fuels should be seriously taxed while electric cars and renewables should be almost tax free.
    This way the market would help us to get rid of fossil fuels.
     
  6. abasile

    abasile Independent Software Eng.

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    Something needs to be done, as delaying the transition away from fossil fuels has real costs to humanity. In conversations with friends, I have suggested the idea of a revenue neutral carbon tax.

    The most common objection is that, by introducing a new tax, even if it starts out as revenue neutral, we would be giving politicians yet another way into our wallets. Once instituted, new taxes only seem to go up.

    On the other hand, I would argue, some net additional tax revenue could be a good thing. At least at the US federal level for the last 15 years, there's been a lack of collective political will to balance the budget, and deficit spending is ultimately unsustainable. Cutting spending is unpopular and so is increasing taxes. We most likely need to do both. I just wish US politics weren't so polarized.
     
  7. Zythryn

    Zythryn MS 70D, MX 90D

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    Carbon fee and dividend plan is the best proposal I have seen in a very long time.
    Carbon Fee and Dividend - Citizens Climate Lobby

    It gives households more money to be able to afford the higher price of fuel.
    For those households that are more efficient, they net even more money, giving people more of an incentive to buy efficient products.

    Jobs will shift from inefficient products to more efficient ones. Just as there are more jobs in solar than there are coal jobs in our nation. In U.S., there are twice as many solar workers as coal miners - Fortune
     
  8. Lesifass

    Lesifass Member

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    I like that idea.

    Just 2 issues:
    - The transition phase. Right now, everyone assumes that it's cheap to produce CO2 and there are business models based on that assumption. By introducing a carbon tax, we probably kill some of those businesses and hurt other ones. That is what we want to achieve, of course, but it's painful.
    - Once the carbon tax shows positive effects (i.e. less CO2 produced), the tax revenue goes down. When/if we reach the ultimate goal of a "carbon free society", the carbon tax is dead. So the government(s) need more money and have to increase other taxes again.

    Still, I think this is the right way to go. Let the market decide what to do in order to reduce our CO2 footprint. Or maybe use something like the EU Emissions Trading Scheme, but that one doesn't really work right now…
     
  9. Robert.Boston

    Robert.Boston Model S VIN P01536

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    In addition to Audie's excellent points, there is are challenges in selecting a carbon tax level.

    Some of FlasherZ's concerns could be eased by ramping in the tax on a known schedule. A $5/MT tax ramping up by $5/MT each year until it gets to, say, $50/MT would give people time to adjust.

    The bigger problem is getting a tax level that actually achieves the desired goal. Scientists have a much better handle on the quantity of greenhouse gases we can still put into the atmosphere, but economists don't have as clear a sense about what tax level will keep future emissions within that budget. We've dealt with this problem before: SO2 causing acid rain. The solution we used to solve that problem (at a far lower cost than anyone thought) was a cap-and-trade program. Although this approach is similar to a tax, it lets the market determine the price of solving the problem.Using cap-and-trade for carbon presents many problems, though, not least of which is that carbon is very long-lived in the atmosphere (creating a time dimension to the pricing not found with SO2).
     
  10. RichardC

    RichardC Cdn Sig & Solar Supporter

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    Robert, I agree with the revenue neutral fee and dividend approach, for all of the reasons articulated by Jim Hansen, Elon Musk and most of the economists who have seriously considered the issue. The experience in British Columbia with its revenue neutral carbon tax (currently at $30/MT) is a good case study and example. I do not view the "quantity" issue as a significant problem and would suggest that we start at $30/Metric Tonne (MT) and add $10/MT each year under a revenue neutral carbon fee and dividend model, rather than employing a cap and trade model, for the following reasons:

    • This problem has been clearly understood for at least 40 years, it has been recognized as a critical problem for more than 30 years and has been the focus of concerted (but completely ineffectual) international action for over 20 years.
    • The failure to act despite the near-absolute scientific certainty and growing evidence of real world impacts highlights the necessity for a simple model and the need for immediate action.
    • We are well past the point at which we can afford the time it would take to convert the abstract, theoretical advantages of a cap and trade model into a properly functioning real world model (which would auction and price all emissions, without any free or discount priced allowances, and has yet have been implemented in practice).
    • The decade-long experience with cap and trade in Europe highlights a number of the real world problems and issues (the price there spiked to over 30 euros in 2005 and 2006, but thereafter fell dramatically and has been in the single digits for the past three years).
    • In Europe direct regulation, massive carbon fees (taxes) (in the form of surcharges on transportation fuels), feed-in tariff programs and other direct economic and regulatory intervention has been substantially more effective at reducing emissions than the EC cap and trade regime.
    • We are now at a point where there is no longer any level of additional CO2 emissions which can be considered safe.
    • The goal has to be to eliminate all additional emissions as soon as possible.
    • A carbon fee (tax) which rises without limit, e.g., $30/MT this year, $130/MT a decade from now, $230/MT two decades from now, etc. will have that effect by providing a clear and visible roadmap to the cost of future emissions.
    • The starting fee of $30/MT is about $0.07 (7 cents per litre), much less than the decrease in gasoline prices from the collapse of oil prices, and is easily affordable.
    • The annual increase of $10/MT is about $0.02 (2 cents per litre) per year (or slightly over half a cent a quarter) will provide business and consumers with steadily increasing incentives to shift to lower emitting alternatives, but without any dramatic price shocks.
    • Cap and trade provides no such clarity or predictability as to cost.
    • A carbon fee (tax) can more easily be coordinated across industries and international borders than a cap and trade regime. Under cap and trade there will predictably be decades of wrangling as to the allocation of the caps, both domestically and internationally, and there are no objectively "correct" answers to any of those questions.
    • Should high emitting countries and industries be given a greater cap in recognition of the time it will take them to change, or be given zero allowances on the basis that they have already used more than their fair share? Should allowances be issued on a per capita basis? What weight should be given to account for past emissions (which will continue to cause harm for centuries)?
    • The allocation of allowances under a cap and trade regime is politics at it worst. It is not objectively based on science, or economics, or true public policy considerations, but rather on the effectiveness of the lobbying by competing business interests. In such battles, the public interest almost always comes in last place.
    • Unlike acid rain, which involved a small number of discrete emitters within a specified geographic and political domain, climate change is truly global, involves every human being as an emitter, and requires a clear price signal in order to properly affect the near infinite number of decisions which result in emissions which are made every day.
    • The clarity and predictability and enforceability of a carbon fee, as opposed the uncertainty, and unpredictability, and the enforceability challenges posed by a global cap and trade regime, make cap and trade the vastly inferior option.
    • A carbon fee (tax) provides a clear metric for enforcement across different jurisdictions and permits the imposition of border adjustments to protect the industries in a higher fee jurisdictions from imports from countries with a lower carbon fee (a result which is impossible to accomplish under a cap and trade system with free allowances).
    • A pre-planned carbon fee model provides the certainty required for efficient investment planning by both businesses and consumers, whereas the price level is the unknown variable under a cap and trade system (and precludes efficient and effective business planning).
    • As the price of carbon is uncertain under cap and trade, it is more likely to have unpredictable and harmful impacts on businesses as prices spike and fall (and as businesses fail) and on consumers who will be sideswiped by price spikes.
    • Cap and trade will also tend to harm the most vulnerable in society whereas a carbon fee (tax) and revenue neutral dividend model ensures that the least well-off are not only protected, but actually see a net increase in disposable income.
    • The complexities of cap and trade systems mean that it takes many years to implement them, further years for fine tuning, and results in systems that will lose many billions of dollars to deadweight losses (in the form of fees paid to lobbyists, traders, speculators, regulators, lawyers and accountants), whereas a carbon fee and dividend model can be relatively easily added to existing commodity tax regimes, transparently returns the fees to the public, and therefor can be much more quickly and efficiently implemented and enforced.
    • The fee and dividend model is much more economically efficient as the costs imposed by each additional MT of emissions are paid by the person responsible for such emissions.
    • The fact that a particular industry has hired better lobbyists (and as a result has obtained no-cost carbon allowances) in no way reduces the harm caused by their emissions.
    • The inherent unfairness associated with a lobbyist-driven cap and trade system will reduce public support for the system (and for carbon regulation overall) thereby further harming the effectiveness of the system.
    • The only stakeholders to benefit from a cap and trade model, as opposed to a carbon fee and dividend model, would appear to be the lobbyists (and the interests that they represent), traders, speculators, regulators, lawyers and accountants, the losers include the public, the economy and the environment.
     
  11. cpa

    cpa Member

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    From a common sense, practical and equitable point of view, all the above comments and suggestions are fantastic, and I agree in principle with them. There will be winners and losers with any plan; we just hope to keep the losses minimal and temporary.

    That said, I am cynical when it comes to politicians doing the right thing--at least here in these United States. Politicians view their jobs as a career, so their most compelling reasons for enacting or defeating legislation has more to do with keeping their jobs than it has to do with what is for the greater good for the country, society and the People. Frankly, I do not believe that the majority of our elected representatives are that intelligent when it comes to the myriad matters that they address each legislative cycle. They receive a lot of information (some may say propaganda) from diverse sources, and react viscerally or selfishly.

    Assessing and collecting a carbon tax and redistributing it among the people (or using it for infrastructure--hey! there's an idea!) is going to be an extremely complex and unpopular undertaking. Are our elected leaders capable of understanding all the complexities, nuances, economics and future benefits of such legislation? Look at the Affordable Care Act. In many situations it has worked, but it has failed enormously in others. That legislation is hundreds and hundreds of pages long, and I have read that many senators and representatives were shocked to find out what was really contained in the bill that they supported so strenuously. They even admitted not to have read the entirety of the legislation, and relied upon summaries. (If my memory recalls correctly.)

    In my opinion carbon-tax legislation is going to be vastly more complex than the Affordable Care Act. There will be years of dueling economists, scientists and business executives weighing in on various theories and proposals to persuade Congress what to do (or not to do.) The only thing that will come of this is that they will kick the can down the road and revisit this topic later. And, if by some stretch of luck, reasonable legislation is enacted into law, it is quite likely that nine people in black robes who know absolutely zero about science and economics will decide whether the legislation passes Constitutional muster.

    I feel that this sort of thing faces a remarkably difficult uphill battle in contemporary society. [Sigh.]
     
  12. RichardC

    RichardC Cdn Sig & Solar Supporter

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    While I do not disagree with many of your comments and observations, a fee and dividend law is inherently very simple. In fact the credible drafts which have been introduced in the House and the Senate were each less than 30 pages in length. See:

    http://www.whitehouse.senate.gov/news/release/sens-whitehouse-and-schatz-introduce-carbon-fee-legislation
    http://www.whitehouse.senate.gov/download/?id=5a0a5234-a651-4e50-a4b5-2b15a7e57d3a&download=1
    https://www.congress.gov/bill/113th-congress/senate-bill/332
    https://www.congress.gov/113/bills/s332/BILLS-113s332is.pdf

    A recently published paper has also provided cogent arguments as to why a carbon fee and dividend program could be popular with voters. See:

    http://www.researchgate.net/publication/281624262_We_All_Own_the_Air_Why_a_Carbon_Fee_and_Dividend_Makes_Sense_for_Canada
     
  13. FlasherZ

    FlasherZ Sig Model S + Sig Model X + Model 3 Resv

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    Anyone can offer a bill in Congress (as evidenced by your last link, Sanders and Boxer). That doesn't mean anything about the practicality. Bernie Sanders could offer a bill that taxed anyone making over $100,000 at 100% to give to the people who don't want to work, and it would be "inherently very simple". But that doesn't mean it has a chance in hell of passing, because the practicality of it is zero.
     
  14. RichardC

    RichardC Cdn Sig & Solar Supporter

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    Flasher, you make two points, one with which I agree.

    In the current, fossil industry sponsored House and Senate, the chances of passing any legislation which materially reduces the likelihood of climate change catastrophe is close to zero. (A vast majority of the GOP representatives deny the clearly established science (which has for many years been acknowledged by all national science academies, all national governments and even the leading oil companies.)

    There is nothing inherently impractical or overly complex about a carbon tax law (subject to the legislative dysfunction point previously noted). In fact the highly successful British Columbia carbon tax law is only about 100 pages in length. See: http://www.bclaws.ca/Recon/document/ID/freeside/00_08040_01 and http://www.fin.gov.bc.ca/tbs/tp/climate/carbon_tax.htm
     
  15. Ktowntslafan

    Ktowntslafan Member

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    #15 Ktowntslafan, Dec 6, 2015
    Last edited: Dec 6, 2015
    I agree with @cpa. I think we need a backup plan-check out my signature line. It's much more palatable politically to cancel subsidies to oil and gas and redirect to green. Norway is the best practice to follow IMO.

    CVT5s7IUwAEzmCo.png
     

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