Paul Krugman on a carbon tax

If reducing emissions really has to involve moving on many fronts, anything that looks like an administrative solution — telling, say, power companies what to do or not to do — is going to be much more costly than carbon pricing that exploits all the possibilities. But if a large part of the solution is going to involve a fairly limited set of measures — such as putting a quick end to the practice of burning coal to generate electricity — getting to broad-based carbon pricing is much less central.

And what I gather from reading various analyses of our prospects is that we’re closer to case #2 than to case #1: the problem of limiting climate change isn’t all that complex. End coal-burning and you’ve gone a significant way; a few other big things get you another substantial part of the way. Yes, comprehensive carbon pricing would be best, but it’s not the sine qua non of effective action.

Most of his points concern the status of Econ 101.

Addendum: Ashok Rao comments.


How do you price something, when you can't quantify its impact?

How does one price, for example, the negative externality of Krugman's hot air, in order to place a cow s**t tax on his writing?

I.e., this whole argument is not only pointless, it is juvenile coming from an "economist". If something is creating a negative externality, than surely, one ought to be able to point out to an actual cost it imposes. If you can't, then there's no externality, and there's no point in trying to internalize those costs.

Given all the gazillions of "global warming" papers have yet to show any actual causation, let alone quantify the magnitude of this effect, how can we be sure we're not imposing a tax on nothing?

A rhetorical question of course: anthropogenic global warming is faith-based. It is the same as imposing a tax on sin, and for the same purposes.

PS: BTW, I don't know why these "economists" keep repeating this carbon tax idea as if its some new brilliant idea no one has ever heard of before. Do they realize the argument isn't whether to tax or not, but rather, the fact that they can't even explain the actual cost of this externality? How does it not bother them one bit?

Speaking of Econ 101...the basic exercise taught to undergrad freshmen is: quantify the externality and figure out how much party A should compensate party B, or if such a compensation should take place instead of some other alternative.

Now, Krugman may not have taught Econ 101 in quite some time, but surely, he should have no problem doing this same simple excercise in this real-world scenario: first step is, what are the numbers to populate this excercise?

Isn't that kinda...important?

I'm pretty sure that the freshman learning can be summed up as "in principle there are externalities. Now here's the simplest possible numerical example we can come up with that has some conceptual link to something that you can intuitively understand. Now solve this fabricated and overly simplistic problem."

Even at the graduate level, teaching on externalities revolves around solving fabricated problems with increasing levels of mathematical complexity. You might read a lot of literature which actually attempts to calculate an externality, but unless you're a dedicated researcher working on a specific externality, you're basically never asked to "quantify the externality". Perhaps somewhere in the range of 1% of trained economists have actually performed any remotely realistic calculations on externalities using real data.

The real experts at calculating external costs are those working on legal teams in cases in which someone is actually suffering an external cost - such as pollution, and can reasonably quantify that cost and make a legitimate compensatory claim against the polluter.

Here is a useful faq on (some) of the questions you raise:

Nowhere do I see any answers on there.

How does one quantify the externality of CO2? That's the question...without an answer. Which is the most important answer.

Absent that, then you're just taxing sin in the same way the Catholic Church taxed pixie dust.

Section 15 discussed this, though without much in the way of references. For a more exhaustive discussion, see
but the short answer is it takes a lot of modeling.

We don't need exact numbers. Raise a few $10Bs via carbon taxes, reduce a few $10Bs on labor income, capital income, sales taxes, or whatever we want.

Net result: tax neutrality, with reduced deadweight loss for sure on labor, capital, or whatnot.

And at worst, increased deadweight loss on carbon, but likely a reduction of deadweight loss due to externalities from burning carbon.

Sounds good. But it's never offered that way.

I think you mean Harun that it is never remembered that way.

"Sounds good. But it’s never offered that way."

British Columbia already enacted a revenue-neutral carbon tax, in 2008. And it's on the ballot in Washington State.

That's the beauty of this. We don't know what the optimum tax level is, but we know what direction we should move -- so let's move somewhat in the correct direction. And no global Leviathan is required; a single country, state, or even municipality can enact this sort of tax reform (although at the municipal and even state or provincial level there can be tax-dodging effects near the border).

How does one quantify the externality of CO2?

How do we quantify the externality of anything? For example, is the US is attacked with nuclear weapons, that would be pretty bad for me and a lot of other people. As a result we spend a lot trying to reduce that risk. Are we spending too little or too much? Hard to say. The risk is probably very low but the potential cost if it happens is very high so even though the risk might be very low, unless it is 0 there probably is justification for some level of substantial spending to avoid or mitigate the danger.

Right now we are doing nothing for real on carbon. The risk is probably higher than nuclear war but the potential damage might be lower. Again hard to calculate an exact number but it is likely to be greater than 0, hence some level of carbon tax is justified.

So you imply a different question, what is the risk that a carbon tax will end up being too high? Well here those directly impacted by a carbon tax have a high incentive to fight one. Those harmed by carbon, though, do not have such an incentive (if they did, then Coarse's Theorem implies they could have just bargained directly with carbon producers to lower emissions). Long story short, it doesn't matter. Any carbon tax that actually clears the political system is likely to be on the too small side than too large side.

Who is not directly impacted by a carbon tax- those that avoid all carbon usage? It seems like those who would be positively impacted by a carbon tax, say providers of solar power, have already secured tax benefits for themselves. Rather than a carbon tax system, we are on our way to negative taxes for selected power alternatives, which more directly address the problem, rather than the sin tax preferred by those who consider it a moral issue. Those that prefer the simplicity of taxing the negative externality constitute a rather smaller group. However, both a carbon tax and a negative tax for alternatives seem vastly more free than the Krugman hammer solution of making burning coal illegal. Roughly pricing the externality of CO2, CH4, etc would also suggest a fair compensation model for carbon sequestration technology.

Lots of people would only be indirectly impacted by a carbon tax. You have to remember the money raised by a carbon tax goes somewhere. If it goes to lowering general taxes, for example, then you may end up with lots of people who might pay a few pennies more for gas and electric but at the same time get a few pennies less withheld from their paychecks making the impact roughly trivial or even beneficial to some small degree.

It isn't clear that solar power gets a net subsidy compared to other types of power generators. For example, I suspect coal enjoys a lot of 'rights' like the ability to dump waste into the water and air that would end up costing a lot more if we had some libertarian type system where they would be expected to either totally sequester their waste or purchase the rights to the air from a private market.

I don't think Krugman is disagreeing with you that a carbon tax or cap-n-trade system is more economically efficient. But you have to consider that in the real world those harmed directly by a carbon tax have the incentive to fight it up to some amount that is equal to the harm imposed by it. A single target that gets most of the job done (i.e. coal phaseout) may end up being less costly to implement in the real world.

Another factor not often considered, the costs are actually less than they seem. Suppose after 50 years it is proven that carbon is not a problem. Well guess what, all the coal we didn't burn over the next half century will still be available to us to burn at discount prices! Maybe we won't care because by then super-fusion reactors will be available for $100 each but then maybe not and energy will be very scarce and which case 'saving' our coal today would have been a wise investment.

" You have to remember the money raised by a carbon tax goes somewhere."

But a carbon tax that works produces zero revenue.

The "cost" of a carbon tax is paying workers to build energy harvesting and storage capital that replaces burning natural capital assets.

I suspect that paying workers to build capital assets is not conservative because conservatives know "you can't take it with you" so they endeavor to burn all their assets before they die.

The 'cost' is the opportunity cost. Presumably if we didn't have to worry at all about carbon, we would do a certain mix of things that would generate a lot of carbon. Under a carbon tax we do a different mix of things. That is a presumably a welfare loss because if we liked those things more, we could just do them now without the tax. That cost would remain even if the carbon tax was revenue neutral by being offset with payroll or income tax cuts.

But that is a rather philosophical concept....this 'cost' is the difference between this world and the most perfect world this could possibly be. Something to keep in mind but that is not the type of cost we think about in our everyday lives. In that world we think of cost in terms of things like lost jobs....but that should not be the case here. Less carbon intense activities would simply hire more people in a carbon tax regime.


What is the effect, if any, on temperature?

Isn't the current moderate warming beneficial (a recent US study says yes) and should be allowed to continue?

Whenn nature enters another inevitable cooling period should we be accelerating that process?

Governments are already spending colossal amounts of money - and condemning poor countries to more suffering - without having a clue to answering these questions.

The mayor of Vancouver wants to shutter Canadian oil pipelines, jeopardising the livelihoods of millions, while continuing to jet-set to London, China, NY, DC, Copenhagen etc for no quantifiable justification .

It's a type of madness.

"Isn’t the current moderate warming beneficial (a recent US study says yes)"

Funny how a single study is sufficient to counter a hundred others when it agrees with your priors. I would be interested to see the study that you refer to.

On the matter of the mayor of Vancouver. Well, a) he has no jurisdiction over things that happen outside of Vancouver, and b) He is perfectly free to express his view on anything he wants. Also, suggesting that it "jeopordizes the livelihoods of millions" is quite the exaggeration.

I'm also curious about these trips with "no quantifiable justification" that you mention. Indeed, this would be scandalous. Perhaps you could be more specific? I find it hard to imagine that a mayor of a major city could go to London, China, NY, DC, etc. and manage to have no justification for doing so.

Are there any studies that show current levels of warming are a net negative? Most of the costs are due to rising sea levels in the future. In the meantime we have longer and better growing seasons, etc.

Losing coastal cities would be less costly than being able to supply a few more hamburger buns to McDonalds? Agriculture is not a huge portion of our spending so slightly better output there is probably not going to be a big help to developed economies, even ones that depend on food imports.

It's also not clear that we do get 'longer and better' growing seasons. We have a lot of highly productive, industrialized agriculture in the US. If you suddenly shift the optimal growing areas away from that you aren't going to get better.

Miami and indeed much of south Florida is already being seriously impacted.

Boonton, I'm talking about current temperatures.

Read up on "net present value". Consider, for example, how Facebook's expected future profits affect its current value. The opposite situation applies when expected future value flows are lower.

In a context where risk-free returns (also read up this concept if you want to get this point) are in the range of 1-2%, damages that may occur long into the future may have strong impacts on net present value, even imagining that we are 100% indifferent to the situation we leave for future generations.

I gather you think the growing season is defined by temperature, not hours of daylight?

Most studies, as far as I am aware, focus on the link between emissions and warming--i.e., "is there an effect?"

I am familiar with scant few that seek to answer the follow on question, "how should we value the effect?"

«Given all the gazillions of “global warming” papers have yet to show any actual causation, let alone quantify the magnitude of this effect, how can we be sure we’re not imposing a tax on nothing?»

Uhh?? I think most papers and studies about "global warming" show a causal relation between more CO2 → more average temperature; yes, there are other studies arguing that these is no connections, but it is a bit an hyperbole pass from "most studies show a causation, but not all" to "gazillions of papers have yet to show any actual causation"

You forgot to summarily disregard all evidence that suggests that policies you don't like might be a good idea.

In regards to your comment about causality I think this page can help.

The data which we have is very hard to argue with. The green house effect has predictable consequences for our atmosphere and over time these consequences have been confirmed.

''The green house effect has predictable consequences"

LOL, WUT? We don't even know the climate sensitivity of CO2, much less regional impacts. We can not predict anything yet.

By "we" I assume you mean "I."

You're absolutely right, we don't know the exact climate sensitivity of CO2, not sure if you took me out of context by accident but I was talking about consequences on our atmosphere specifically.

That aside, not knowing the climate sensitivity of CO2 is kind of irrelevant. We know it will be bad. Agricultural output is a bit of an open question sure. But between sea level rise and ocean acidification we are likely to incur billions (possibly trillions) of dollars worth of damage to our economies.

WUT? The climate sensitivity is central to the question 'if it will be bad'.

I apologize. After rereading my comment my point was a bit muddled.

What I mean to say is that we have established a range of possibilities for climate sensitivity which can be relied on. And no matter where in that range the actual sensitivity is we are likely to suffer damage.

Waiting around to find out exactly what CO2 climate sensitivity is will likely have us passing a point of no return where feedbacks (such as permafrost burning in the arctic) begin locking us into significant warming.

You are pretty smug, not the best way to start a discussion, anyway.....

Among the gazillion global warming papers they show the accumulation of CO2 due to anthropogenic emissions are accelerating the natural process of melting of polar ice caps. The natural process is caused by long term (100K years) cycles of Earth's rotation angle. What humans are doing is making happen in a few centuries what naturally would happen in 10, 20 or 30K years. If you haven't found this facts on "global warming" papers, don't brag your ignorance.

Fine, ice melting is happening faster than natural. How to quantify in $$$ the effect of this process? Scientists think that saying sea level will rise and rainfall patterns will change faster than we can adapt is enough. I agree with you that this type of information is not enough, it's almost a factoid. Someone must put a price on "sea level will rise faster than we can adapt".

What about changes in rainfall patterns? Today no one has put a price on the rainfall that occurs in a productive agricultural region, rainfall is taken as a given like daily sunshine. If rain occurs in a spatial and temporal pattern different to today? What's the value of the land and infrastructure in the new desert or swamp?

However, it's impossible to predict the future. Based on the potential problems estimated by scientists there are two political alternatives: stick (taxes) and carrots (incentives). For now, I'd go for carrots or incentives to the development of less risky energy sources. There are benefits in clean energies beyond "global warming", benefits like clean air to breathe in cities or reduce the bargaining power of oil producers. Why not subsidize clean energy science? It's a 0.001% of national budgets. It may pay in medium-long term.

I think the situation you are describing exists for just about every externality. What was the cost of the ozone hole? What's the cost of sulfur dioxide emissions?

People can make estimates about those costs, but they're pretty fuzzy numbers based on a lot of assumptions and other fuzzy numbers.

Give more money to climate scientists because innovations in energy will increase the standard of loving for those living in coastal cities. And the left wonders why they aren't trusted on climate problems and solutions. If the left really cared about climate change, they would pay the rural folks and oil producers to go along, out of their own pockets, lowering their own standards of living.

Why the concern about whether warming is anthropogenic? If there is undesirable warming, regardless of its cause, shouldn't we try to mitigate it?

Conceding the premise for argument's sake, would taxing carbon do anything to mitigate non-anthropogenic climate change?

There are lots of answers to your question. Just because they don't all arrive at the same answer does not imply that the answer is "zero" or "non-existing".

Consider that most anti-AGW people are not at all concerned about the lack of precision about costing the risks of terrorism, but are highly prepared to give up significant civil liberties, in addition to forking over HUGE sums of money, to combat such risks.

As opposed to anti-terrorism policies, climate change mitigation policies are rather unlikely to backfire.

And anyways, I would much rather pay a tax on a non-renewable resource than, say, textbooks, condoms, etc.

Consider that most pro-AGW people are not at all concerned about the lack of precision about costing the risks of increasing the levels of the trace gas CO2 in the atmosphere, but are highly prepared to give up other people's civil liberties, such as freedom of speech, in addition to forking over HUGE sums of other people's money to government.

There's a big difference between discussing scientific validity and explicit corporate initiatives to mislead the public. If the second situation is found to have occurred, indeed, this is not protected under free speech.

Most people who want to reduce the rate of warming are more interested in having an incentive to deter carbon, not a general increase in the amount of taxes or the size of government. Read up on "revenue neutral carbon tax" if you want to familiarize yourself with what reasonable people are saying on such subjects.

If the left cared about climate, every proposal wouldn't fit their previous leftist aesthetic. All we hear is taxes, global wealth redistribution, and flashy symbolic environmentalism like solar and wind.

If we could solve climate change by recapturing atmospheric carbon, would the Democrats vote to lift carbon emissions requirements from factories? There's the truth right there. Climate change is a sideshow to achieve previous goals.

"taxes" --> "revenue neutral carbon tax", aka, overall taxes remain similar in size

"global wealth redistribution" --> aka, taking responsibility for damages imposed on others. Taking responsibility for your actions is rather much a feature of the right wing, no? Oh, unless it means taking responsibility for negative things that happen to other people as a result of things I profit from. It turns out that the arguments are rather full of hypocrisy. In this instance, the left is more right wing than the right.

"flashy symbols" --> aka new technologies that will power our industry and lifestyles in the future, and we are thinking ahead by making sure those technologies are in place by the time we need them. Also, to help reduce the negative impacts of energy consumption.

You hear what you want to hear because it allows you to think they are dumb, and do not hear what they are actually saying.

"Given all the gazillions of “global warming” papers have yet to show any actual causation..."

Do you understand what the word "greenhouse gas" means? While complex feedback systems are not perfectly understood, it is undeniable (by the scientifically literate) that CO2 is a greenhouse gas.

"a tax on nothing"

Venus is hotter than Mercury, even though it's much further from the sun. In fact, Venus' surface is mainly lava. I'd say the onus is on you to prove that adding CO2 to the atmosphere won't have an effect.

I don't think this comparison means what you think it means. You're comparing a planet with no atmosphere (Mercury) with one with an atmosphere consisting of over 96% CO2 (Venus). This demonstrates nothing about the effects of raising CO2 from .039% to .041% of the atmosphere on another planet (Earth). It is literally a comparison with nothing.

Thanks for making my point. The thicker the atmosphere, the more heat trapped. We are thickening Earth's atmosphere.

On a blog named "marginal revolution", arguing that small changes are "a comparison with nothing".

No one is suggesting that earth will turn into a Venus. But it will be warmer than otherwise.

See the work of William Nordhaus. You really don't know what you are talking about.

Pretty sure he doesn't answer any of these questions.

Horrible comment. "We know there will be devastating consequences and millions of lives lost, but we can't predict he exact cost of that devastation so lets just give up on any attempt to stop it"

If you can't quantify it, if you have no idea how to even go about quantifying the extent of the "damage," how on earth do you know the damage is inevitable?

Your statement also presumes a "carbon tax" will do anything to solve such a problem. It most likely will not. The onus is on its advocates to prove it does.

Econ 101. A tax reduces quantity, all else equal.

It has not been proven that reducing the output of CO2 will arrest - much less reverse - any climate change that might be happening, precisely because it has not been proven that a rise in the level of CO2 is the causal factor in whatever climate change might be currently taking place. Mindlessly stating that CO2 is a greenhouse gas is not a sufficient demonstration of causality.

If I add insulation to my house, it will be warmer than otherwise. Unless other things change.

I am not arguing that nothing else will change. I'm arguing that insulation is insulation. If you think that is mindless, then you are not thinking clearly.

The comments to my initial comment are quite weak. Lets examine why:

1) First off, nowhere again do we see an actual....COST...of the externality. If you can't estimate with any certainty, or at all, what the externality is, then how do you know its there? How do you price it?

2) NO...section 15 of that link doesn't provide an answer to the externality question. It's about setting the tax level to get a "desired" result. My question is...why is that outcome desirable? To make the argument that it is desirable, you need to provide an actual estimate of the COSTS of the externality.

3) NO...the EPA link doesn't help either. Besides having no methodology of how they are estimated, their...OWN ESTIMATES...range from $76 billion to $1.2 trillion. That's the point: a $76 billion externatlity is...peanuts. It's a non-issue. That would imply a "tax on carbon" to actually internalize the externality at....a few cents per ton. Meaning it is a non-event.

4) don't understand the argument I'm making. CO2 is a "greenhouse gas". That much is known. But it is also irrelevant to the conversation. The question is...WHAT IS THE EFFECT SIZE!!!!

Again....what is the effect size? To figure out the effect size simply saying that CO2 is a "greenhouse gas", and therefore it...impacts global not relevant. Everything impacts climate to some degree. The question we want to know is the effect size. To get to the effect size we need to....ISOLATE...the effects of the real world.

Doing that is actually quite...IMPOSSIBLE...precisely because there are long-term climate trends which we humans have never experienced and can't actually quantify with any degree of certainty. How the hell do we know what a 20-30-40k year trend is? How do we know what even a 100 year tend is?

Saying that there is a quite different from actually ISOLATING THE MAGNITUDE.

This is how one gets an EPA "estimate" ranging from $76 billion to $1.2 trillion :) LOL So it's either nothing...or its a huge. Ok which is it? :)

That's the question: magnitude of the effect.

The closest "science" gets to this question is by...estimating...the effects of doubling of CO2 levels on global temperatures. Those estimates, BTW, range from 5-6 deg C to 1 deg C. :) Meaning, science actually does not know the MAGNITUDE of the effect. A 1 deg C over 100 years is actually a non-event.

Isolating that from natural variations of cycles which have very large uncertainty around their again the issue.

If noise swamps out the effect, then you can't figure out the effect, and you can't actually say if there is an externality at play. Let alone actually figuring out if the actual price of the externality is $0.05/ton or $50/ton.

1) Cost of the externality: It is positive. You are right, since the 95% certainty range tends to be rather broad in the estimates of temperature changes, the estimates of externality costs will also be rather unprecise. So, don't expect many decimal places in these estimates.

2) After a couple decades of extensive debate among scientists and much public policy inputs, the figure that has generally come out is that we should try to limit temperature increases to 2C. The number isn't pulled out of thin air, but for present purposes, I think it suffices to say that it would be rather complicated to rehash all the reasons and estimates involved in arriving at this number.

3) If you check the pdf at the beginning of that paragraph, then search for "trillion" in the document, refer to the footnotes in the previous page which cite the literature driving the methodology. Briefings rarely discuss methods, and the source paper was already quite long enough without extensive discussion of the methods. But the trail is not hard to follow if you want to.

4) What is the effect size? Usually this is discussed by looking at the 2.5% to 97.5% range of expected values. The answers are out there if you want to find them. If you have specific critiques about the methodologies, the world community I'm sure would be very grateful to have your constructive inputs.

The science is getting better. The fact that it is not yet perfect does not mean that answers to your questions do not exist. That you ask such questions suggests that you simply aren't interested enough in the answers to go find them.

"This is how one gets an EPA “estimate” ranging from $76 billion to $1.2 trillion. LOL So it’s either nothing…or its a huge. Ok which is it?"

Refer to the 2.5% to 97.5% interval of estimates. Recall that you're the one who berated me numerous times about discussing the analogues of statistical confidence intervals (in the case diverging from a very specific process for hypothesis testing) and assumed that I didn't understand a rather common statistical tool for the fact of discussing statistical confidence in a more general sense.

"If noise swamps out the effect ..."

Please stop embarrassing yourself. You're a PhD student with extensive knowledge of statistics, and should have very high understanding of how to interpret such a range. If the range bothers you, then just focus on the midpoint and pretend that the range doesn't matter, like we do in high school, before studying first year statistics.

And this demonstrates the actual stupidity of this AGW debate:

CO2 is a global warming gas. We are producing CO2. Therefore, we must spare no costs in eliminating CO2 consumption.

Jumping from point 1 and 2 to point not a scientific argument. It is a faith-based argument and decisively anti-scientific.

The scientific argument is precisely...and exclusively...on figuring out the EFFECT SIZE. This is what science is concerned about. This is what science is concerned about in virtually everything it studies. How much, does A affect B?

Now we already actually have estimates on this, which everyone on here seems to be ignoring. We actually have estimates based on satellite observations. The latest estimates range between 1-2deg over 100 years. The only problem with that, is that these estimates have been getting smaller ans smaller over studies as we get better data and analyze it better. It started out at 5-7deg C...and now its at 1-2 deg C.

Now, even this, is entirely without uncertainty. There are huge error bars around these estimates.

So it could be nothing! And that's the problem. If you can't reject the possibility that it is nothing, then how do you show that there even is an externality?

No, what is happening is that you are misrepresenting the actual arguments scientists in the field are making about AGW, either because you don't understand them, or because you don't want to understand them. Then you wonder why no one is willing to argue with your made up version of these arguments and declare victory.
1. Putting all of that CO2 in the atmosphere has to be doing something, it doesn't just disappear. You've even admitted that, but you're trying to make the claim that the something is not enough to explain the temperature rise, I guess? Maybe you can try and explain what your argument is here.
2. You claim that carbon pricing is dumb because it doesn't do a good job of figuring out exactly what effect releasing CO2 has so it can't possible price that correctly. Almost a fair argument, but the fact is, scientists and economists can compute some minimum value that is fair and slap that tax on without much argument about fairness. Government is stuck because fossil fuel producers are balking against *any* tax and lobbying hard on the very principle. Just like Big Tobacco did 50+ years ago.
3. If you're wrong and AGW is happening, then the consequences are dire. If the AGW people are wrong, the end result is we stop using fossil fuels sooner, which is what we should be doing anyways.

"If you can’t reject the possibility that it is nothing, then how do you show that there even is an externality?"

This isn't the problem you think it is. Calculating expected, discounted utility under conditions of uncertainty is a basic application of economic theory. People insure their houses and cars even thought they "can't reject the possibility" that they won't face insurable losses in the future. Same basic math applies here.

"Therefore, we must spare no costs in eliminating CO2 consumption."

There isn't a person on the planet suggesting that we should "spare no cost". Rather, to have incentives to reduce carbon. For an example of how absurd the "spare no cost" strawman is, we could have a completely renewable energy production with the exception of flight for somewhere in the range of 1% of GDP annual investment. 1% annual investment is hardly "spare no costs".

" It is a faith-based argument and decisively anti-scientific."

And to arrive at this conclusion, you introduce precisely zero science, nor do you introduce any specific criticisms of any of the scientific methodology (however, the fact that you can't be bothered to research specific aspects of the methods leads you to conclude that they simply don't exist).

"If you can’t reject the possibility that it is nothing, then how do you show that there even is an externality?"

Remember insulting me about p values? Well, when you discuss "can't reject the POSSIBILITY that it is nothing", um, please discuss in a context of p=0.01 and p=0.99, and then lecture me on what I don't know about statistics. Because you clearly have something to teach us.

PS: To illustrate the absurdity of the argument:

Lets take the EPA's worst case estimate of $1.2 trillion in "costs" (in their estimates it is over 40 years).

Humans fossil fuel use emits ~10 GIGATONES of CO2...per year.

Over 40 years of emissions, divided by the NPV of $1.2 trillion...means the actual worst case scenario measures of the EPA mean that per ton...the actual cost is....pennies. :)

So how do we get $20-30-40-50 per ton estimates? :) Wishful thinking is how.

Their own worst case estimates indicate that the externality is so tiny, if you actually priced it, the tax per ton would be so small as to be completely irrelevant.

How are "economists" like Krugman not bothered by the fact that the estimates say the cost is actually so minuscule it is hardly worth measuring, but on the other hand advocate a tax on it that is 1000x higher than the estimates worst case cost?

You are completely wrong. The $1.2 trillion figure you are throwing around is an estimate of the social benefit over 40 years of three specific vehicle fuel economy regulations in the United States. It is obviously not the estimate of the total worldwide cost of climate change. Furthermore, the EPA provides a helpful table and relatively clear explanation that shows its $1.2 trillion figure is a consequence of assuming a social cost per metric ton of CO2 that is not "pennies" or "so small as to be completely irrelevent" but is rather $105 in 2015 (inflation-adjusted in 2007 dollars) and increases from there.

Again, you are pronouncing on a topic you know nothing about and have not bothered to research.


I'll just leave this here as a fitting analogy to the AGW scare. It's lesser, but equally obnoxious and economically nonsensical cousin: recycling.

This is about sin atonement and meeting a psychological need. Not actual economics. At least in the recycling world we can physically measure the actual effect size, the actual externality, and the actual cost in reducing that externality. We can see it makes no economic sense. And yet we do it for reasons that transcend science and economics. We do it for the same reasons we did it for the Catholic Church.

It's a pretty low grade article. I'm surprised that the NY Times would even publish it.

So ... the act of teaching about recycling used up more resources IN THAT ONE LESSON than they recovered is evidence that recycling is dumb? And what if that student who used two plastic gloves and one plastic bag, but who only recovered a gum wrapper, then goes on to recycle regularly for the next 70-80 years?

I'm quite open to discussing the economic and environmental desirability of recycling programs, particularly when comparing between rural/urban programs, and looking at cost differences between the developing world where earning $1 a day from picking through trash can keep a child fed and the developed world where costs are much higher. It is not always the case that more recycling is better. However, the 20-year old dedicated anti-recycling article you point to is exclusively focused on costs and does not spare so much as a single word across 10 entire pages about even the plausibility of any benefit.

How could Krugman arrive at his conclusion without even considering the costs of reductions via different channels? Sure, eliminating coal may get us most of the way there in terms of a quantity. But who says this isn't a terribly costly channel? The whole point of a Pigouvian tax is that it achieves reductions at minimal cost.

If he thinks eliminating coal generation "isn’t all that complex", then he clearly doesn't understand very much about the economics of energy production and delivery in the US.

No, he doesn't, which is why Krugman is worthless in these energy discussions.

@Kevin Dick - Sounds reasonable, and I think cars generate more CO2 (without Googling it) than coal plants. in fact, the idea behind electric cars is that you could generate the energy to power cars at a coal plant, and use "Clean Coal" (sic, e.g. carbon capture) to remove the CO2 the cars would ordinarily produce.

What we need --soapbox--is a better patent policy so Clean Coal will be a significant prize to the first company that perfects it, with a bonus for the actual inventors. I favor deep sea sequestration of CO2 (CO2 stays liquid if pumped deep underwater, only the creatures down there suffer, and they're not cuddly so it's OK).

Googling it shows you are wrong (37% electricity, 31% transportation).

It says he's right. He said cars and coal plants. Not cars and electricity generation.

Can you quantify the CO2 impact of nuclear/solar/wind/hydro? Is it really a significant portion of that 37%?

Natural gas. Got it.

"If he thinks eliminating coal generation “isn’t all that complex”, then he clearly doesn’t understand very much about the economics of energy production and delivery in the US."

Why would you think that he would understand it?

Honest question: how much would it cost to buy off the coal industry? It might be the cheapest and most direct route to success.

The coal industry in China?

"Honest question: how much would it cost to buy off the coal industry?"

You have to replace the Base Load power with something. So, in addition to closing coal plants you must build additional Natural Gas or Nuclear Power plants. Or a combination of renewable plants with power storage.

Remember the German experience. They closed down a bunch of Nuclear power plants and they had to replace the void with coal and electrical imports.

Maybe the two tasks could be rolled together, with the government funding natural gas and nuclear plants in coal states.

The environmental movement wants noble savages not nuclear power plants, sorry.

Thomas - You're allowing the extreme 1-2% to represent the rest. Again.

Good idea, and the people who think that the sky is falling should be the ones who get to pay to buy off the coal industry.

Let us know when it becomes possible to opt out of undesirable mass surveillance that most people don't want, and to be able to tick a box on the tax return which says "please add X hundred dollars to my tax credits and take it out of the budget of the NSA".

When we get those kinds of options, I will be open to the kind of argument you propose.

We could start by imposing a fee on your interminable commenting here.

I imagine the NSA would rather like it is an identifiable financial transaction record were tied to any and all online communications.

Surely, the result would be a freer and better society. I cannot possibly imagine how it might be used for the purpose of political suppression by partisan, ideological and/or nationalist plants within the security apparatus.

If you've decided I only have boring and useless things to say, it is very easy to program yourself just to skip to the next comment and ignore me altogether. Some blogs even provide you with a feature to do this for you.

I perceive the opposite problem to be more prevalent - people jumping to the criticisms of Econ 101 without understanding its strengths. The Econ 101 take on free trade and minimum wage barely registers in public debate. Among informed people I rarely find outright criticism of comparative advantage, but they focus on exceptions to affiliate with critics of free trade.

I recall a great post by Bryan Caplan on teaching labor economics, and the need to teach the basic lessons rather than focus on the exceptions.

It depends. If you want to introduce folks to the concepts of economics with the assumption that they will then learn substantially more about the subject, then focusing on the basic lessons is appropriate. If this is the extent of the economics a student will learn, this gives a very incomplete picture for them to take into the real world. Pointing out examples of how traditional models break down is then crucial.

I believe the same is true for instruction in statistics. It's important to show students how things vary, the foundations for regression, etc. But if you don't show them Simpson's Paradox, you're doing a disservice.

You could be right, and I think that's how it's done in practice. But I took Caplan's point to be the opposite. We don't recall much of what we learn anyway. Spend too long on the exceptions and we'll never learn the rules. All representations, models, theories are incomplete, but better to concentrate on getting the big picture. A lot of people are quite knowledgeable about critiques of free trade without understanding comparative advantage properly.

My view of teaching introductory economics is that you should emphasize the generality of the main theories, but require that they can also regurgitate one or two important exceptions or negative effects related to the general principle.

My personal experience of earlier level economics courses was that they were incredibly dogmatic, basically pushing each and every neoliberal position. I think there is a strong language/culture divide, where in the anglosphere things are rather dogmatic, especially in 1st and 2nd year economics. In the anglosphere you will have profs occasionally mutter "ceterus parabus" every now and then, whereas elsewhere many profs will say "ASSUMING EVERYTHING ELSE IS EQUAL!!! ... the following is the case", or "this MODEL demonstrates the appeal of a THEORY which we should have a good understanding of...", without losing too much time to discuss why all else may not be equal or the specific ways in which the model and theory may be too simplistic.

Students will not detect any difference between those approaches, unless they are Communists and want an excuse to dismiss everything they are learning

Says the man who dismisses anything he disagrees with, regardless of whether he's so much as opened the first page of an introductory text on the subject, or even skimmed the Wiki entry on it.

The first approach says "this is reality". The second approach says "this is a learning tool, but reality is more complicated". If you cannot tell the difference between the two, probably you don't belong in university.

Cheap natural gas will kill coal burning, combined cycle power plants are the future. We shouldn't worry much about coal burning, the price systems will drive them out of business.

There's a good chance that that's right. Coal companies are already going bankrupt.

Plus I'm not sure what Krugman is saying here: apparently he wants us to concentrate on reducing coal consumption. But how? Via regulations which tell companies to stop using coal? A tax on coal? But then why not a carbon tax instead of a coal tax? And are these coal restrictions going to be more politically palatable than a carbon tax?

I think he's saying that a broad carbon tax is more efficient at getting a marginal reduction in carbon but assuming that coal is the problem, it may be better to just target coal directly (i.e. regulate to phase out anything with > 500 grams CO2/kWh). The hole in the energy market, assuming it works, will be to plug the gap with nuclear/gas/wind/etc.

Sure, but isn't a marginal problem. A carbon tax will tend to effect the worst offenders across the board.

"i.e. regulate to phase out anything with > 500 grams CO2/kWh)."

But what about the offenders that aren't coal plants. How much CO2 does Leonardo DiCaprio's jet emit when he flies to Switzerland?

Leonardo's going to fly with or without a carbon tax. I think the oil market is different because there is no easy substitute.

- Coal accounts for 26% of the GG emitted by the US (EIA)
- The cheapest way to replace goal is with NGCC at a cost of $2,060,000 per MW in overnight capital cost at a typical plant size of 340MW (EIA)
- There is currently 318GW of coal generation capacity in the US ( EIA)
- That's $655B to replace coal plants with 935 new NGCC plants
- Now, NGCC isn't even easily availability yet, with only some plants just coming on line, but we added 6.9GW of all gas generating capacity in 2013. So at least 46 years worth of plant construction at current rates
- Bottom line: roughly $650B and several decades to achieve a 26% reduction in US CO2 output.
- Run this through the climate models and see how much they say this will decreases temperatures in 2050

The climate models are wrong. Modelling the climate makes modelling a stock market seem like child's play.

The IPCC made a nod to this in its last report when following the inexplicable pause it downgraded its estimate of temperature sensitivity to CO2.

What was most impressive in the last IPCC report was the reduction in the minimum likely value of climate sensitivity. You know the religious fools went nuts in the meetings opposing that change. The house of cards that is climate science is slowly collapsing.

I hope we hold them accountable.

Your proposal is quite short sighted. You want to substitute a transportation and petrochemical grade fuel for one that is only good for steam power plants, steamers and obsolete trains.

Hydrocarbons are a limited resource, if you had a serious long term orientation, you would want to replace the coal power plants and the natural gas power plants by nuclear power.

It is fairly trivial to modify aircraft fuel systems to use natural gas, compared to the amount of work needed for aircraft running off electricity. Alternatively, natural gas is a good feedstock for synthetic liquid fuel.

Sure, nuclear is the obvious answer but the leftists would rather all drown then build a new nuclear power plant because they are certifiably loony

"the problem of limiting climate change isn’t all that complex. End coal-burning and you’ve gone a significant way" It's very comforting to know that there was limited climate change before man began burning coal. The Ice Ages were all a bad dream then.

Perhaps because climate change occurs over thousands of years? Can you twist any other facts that fit your conclusions?

The alarmists are claiming our activities since 1950 are the ones that are causing warming now. How's that a thousand years?

Economies fluctuate up and down, and have done so for a long time. Therefore we should be completely indifferent to whether a major recession occurs.

Also, the practice of war has ebbed and flowed over the ages, so we should be indifferent as to whether we enter into a state of global war.

The fact that something previous happened should make us indifferent as to whether it happens again.

Maybe the distinction is whether you can do something about stopping it from happening. I'm more with your line of thinking, its natural and prepare for it. I didn't know you were a denier though.

And what about all those volcanoes? And the wobbly earth? And those under ocean volcanoes? And all those plastic bags? So many issues, so little time. Poor Paul.

If AGW is the end of the world without a carbon tax or shutting down coal, why don't We see more attempts to negotiate by offering concessions?

I'm pretty sure if you offered up concessions like did to entice Iran that a deal could be done. But I never see an offer from the carbon tax people.

If it's a world ending issue they should be willing to make sharp concessions up front again like Obamas Iran deal. 10% Corp income tax and large budget cuts off the top of my head.

if suggest those truly worried about AGW to begin to think about what they'd be willing to sacrifice to get a deal done.

"If AGW is the end of the world without a carbon tax or shutting down coal, why don’t We see more attempts to negotiate by offering concessions? "

Because its a power grab, of course.

The fanatics are usually watermelons. They seek more government control of the economy and science is just the latest weapon.

"revenue neutral carbon tax" has 23,000 hits on Google. I.e., concessions are very much on the table.

While the existence of AGW alarmists is very real, and I think this unfortunately discredits legitimate concerns from the view of AGW skeptics, I think it is worth pointing out that you are adopting the rather common but irrational tool of pushing those on the other side of the argument into the most extreme possible position and then smacking it down. I believe that is the definition of the strawman, but in this case there are actually some people out there who hold that view.

The real issue is, what are real examples of revenue neutral new taxes that remain revenue neutral.

One example is (publicly owned) toll roads. In many cases, they are implemented to pay for a certain project (i.e. a tunnel, where a toll is collected at one or both ends of the tunnel. In most cases, the government agency in charge will find an excuse for continuing the toll collection beyond paying back the construction costs. Back in Norway I heard about one undersea tunnel that stopped collecting tolls, but that was about a decade after the construction loan was paid back.

Revenue neutrality is hardly a concession, it's the default. Otherwise it would be a massive tax increase unrelated to the supposed goal.

I propose a revenue neutral carbon tax in which we charge a carbon user fee to those who live in coastal cities and a $1,000,000 per flight fee for private jets owned by politicians or entertainers, and offset it by eliminating the corporate income tax as well as the federal income tax for people living in metropolitan areas with fewer than 100,000 residents.

Do you get it? Revenue-neutral doesn't mean much. Especially when you can be revenue neutral by harming your enemies and helping yourself.

This pretty much defines the strawman argument. You propose the most ridiculous logical extension of the idea and then smack it down.

How about a simpler idea. Reduce marginal income taxes rates on the middle class by 1-2% to compensate for it, and perhaps increase social payouts to the poor by $10 a month to offset the costs built into products they buy.

Considered separately, Paul Krugman and global warming raise hackles among certain people, considered together makes their brains freeze up. Pun intended. Krugman isn't saying that econ 101 is wrong, he's saying that sometimes it doesn't matter - Krugman is here to praise econ 101, not bury econ 101. As for the narrow econ 101 case for trade, comparative advantage (Krugman's hobby horse), how do models (including Krugman's) factor cultural differences, economic differences, social differences, political differences, all of God's and nature's differences? Not very well. Does shifting an enormous volume of production and the income it generates from, say, the U.S. to China have consequences beyond reaping the benefits of lower costs in China? For those who have eyes to see, including even a few economists, the answer is "uh-oh!"

Pure baloney. China WILL open, on the average, one new (old, dirty tech) coal-fired power plant per week for the next ten years. India at least half that number, closely followed by Indonesia, Brazil, Pakistan, Philippines, Egypt, etc, etc - no matter what the West does. Poorer nations will not remain poor to suit the tender sensibilities of rich Western elites - nor should they.

In the face of this, nothing the US & EU (who are already below 1995 carbon output, ahead even of Kyoto targets) do will have ANY measurable effect on the total of emissions. Besides which, no single factors more closely correlate with environmental stewardship than per capita wealth & income. Let economies grow, and the rest will take care of itself more efficiently than any idiotic Krugman proposal might.

In addition to what anon said ... your position about the effects of Western endeavours is kind of like arguing the following.

If you and I are both pouring water into a pool, the pool will fill up at the same speed if I stop but your behaviour does not change.

You might like to ignore the historical role of the West in the current stock of carbon in the atmosphere, or argue that we should reject renewable developments in favour of using existing non-renewable sources because we should not face more of the burden of developing renewable technologies. But, to argue that reducing the size of one flow has zero effect on the overall flow itself does not stand up to basic logic. It seems you have not considered that.

Now let's say he has a fire hose and you have an eye dropper

Global greenhouse gas emissions were stable last year despite growing worldwide GDP. Developed countries are reducing use of coal and poor ones are quickly slowing the number they build. More efficient technologies (think LED lights etc) means the US, for example, hasn't increased electricity use in a decade. Meanwhile, costs of green technologies are falling through the floor.

I'd say it's going to be surprisingly easy to reduce emissions. A carbon tax is just the most efficient way to reduce them more quickly. I'd rather tax something I don't want (like emissions) than something I do want (incomes). But maybe that's just me.

The most efficient way to reduce emissions is to slaughter every mammal on the planet.

Short of that, ban coal-burning and SUVs.

In consideration of the most extreme possible approaches, what is actually proposed starts to seem patently reasonable.

People with Krugman derangement syndrome should at least try to hide it, and make themselves look less like mad hatters.

You were so excited to see a post about Krugman you just raced to the comments and started typing away, didn't you?

No tax will happen. Politicians are going after specific things like the coal industry for political reasons. Coal miners are white and poor and didn't vote for the team in power so they are targeted. If Trump is elected then that will switch and universities will be the new target or unions or whatever.

Human caused climate change is useful to the left because it can't really be quantified or proven so you can do whatever you want and whomever you want without justification. The right has similar weapons too.

If there is some left wing that uses climate change for whatever/whoever, I'd say the right wing can play the same issue the same way.

It's simple, whenever you hear "climate" just say "so you can do whatever you want and whomever you want without justification".

It's too easy.

It is too easy which is why we need to hold climate change activists accountable.

By telling them that they just hate poor white people?

I'm not really sure that most madness is on the left, or that they are the ones needing to be "held accountable." It think the weight of madness might be on the other side, with the people who can't handle the serious question without wigging out.

Among the general population, I think the madness is roughly equal on both extremes. But, perhaps related to leftovers of the Cold War, I don't think there's much doubt which side of the spectrum is over-represented in the arms of the state which are largely hidden from view and which hold technological capacities which are kept secret as a matter of "national security".

Considering organizations such as the NSA or CIA, for example, how many communists versus pure laissez faire types to you think there are in each organization? How about SJWs versus white supremacists? Of course, even mentioning the likelihood of such things is banned in some circles (praised in others) and ridiculed in personalized attacks against those who discuss such things.

You are arguing there are more white nationalists and libertarians in the CIA than communists and SJWs?? Why? Who cares???

Cliff - none of those groups belong in the NSA. Period. Their views on threats will be ruled by ideology, not national interest in the stricter military security sense, and not by national interest as perceived by the broader population.

I would answer your question of "who cares" in more detail, but it would take many hundreds of pages to explain the answer properly. In due time, it will become easier to discuss that question rather more freely.

I was mostly responding to the suggestion that lower class white people, namely coal miners, may be "targeted". In some circles, that has a fairly specific meaning, and if you understood that, you would understand why my comment was relevant. Among other things, in some white supremacist circles eliminating inferiors among white people is the natural step to be taken after "that which cannot be spoken". Aka, little reason to treat these people any better than animals. Naturally, I do not agree with such thinking, since I do not believe that it could lead to a culture where people could enjoy meaningful experiences.

Cliff - Here's a Wiki on "non-consensual experimentation": The Wiki ends at the 1960s, but it would be naive to believe that the story ends there.

To get a picture of more recent happenings, try Googling "electronic weapons" together with things like "human experimentation" or "non-consensual experimentation". You might also be interested in "remote neural monitoring", which might be explained by things like "electromagnetic pulses" (outgoing communications) and an analogue of the "laser microphone" (surveillance).

Unsurprisingly, if you check the forums in searching any such issues, a large variety of anonymous people who do not refer to their qualifications or professional standing come out of the woodworks to proclaim full knowledge of the state of the art (among publicly known technologies), which is purported to not include such capacities (despite the fact that official PUBLICLY AVAILABLE military documents have long expressed the desire to use such technologies, in addition to some successes in using them). And, of course, individuals who speak of such things are generally directed towards a mental health professional where their credibility can be destroyed for the record by creating a file on them.

Of course, since this is all classified technology related to preparations for electronic warfare, you can only expect that there is a decent degree of guesswork in addition to intentional misinformation to muddy the waters.

Absolutely. People who believe in eugenics or even so far as genocide do not belongs within a million miles of such technologies.

"Politicians are going after specific things like the coal industry for political reasons. Coal miners are white and poor and didn’t vote for the team in power so they are targeted."

Right, because politicians usually try to attack people who MIGHT vote for them.

If a white and poor person is targeted by any nefarious forces which are refining their methods of, say, political suppression, it's probably because it is unlikely that these people will able to find a way to have strong credibility in making their concerns/experiences known.

You don't see Democrats attacking the incredibly disproportionate emissions of the Hollywood elite, now do you?

Why don't people buy more "right wing movies"?

Is there a billion dollar bill lying on the sidewalk?

Here's what's really wrong with the command and control model - suppose yo are wrong? There is some evidence for acting quickly to reduce CO2, but let's agree that it is not airtight, ether the modelling or the paleo reconstructions.

All arguing abut evidence aside, why not implement a tax tied to actual temperature increase (admittedly these measurements are not perfect, but nevertheless). Use satellite measurements to avoid tampering issues. Use a 10 yr moving average of global temperature anomaly to set the tax, updated annually. Yes, the tax can go down if temperatures drop. Can we subsidize carbon emissions if cooling happens? Sure why not - the argument is that current temperatures are eerily "perfect!"

With this approach if there is a temporary blip in temperatures, perhaps entire industries wont be eliminated at the stroke of a pen.

The government has plenty of existing poorly measured metrics that is uses that have great economic consequence (CPI escalators, GDP used for FED policy, etc). This doesn't strike me as that different. Open loop command and control seems like a really blunt instrument.

"When you have an efficient government, you have a dictatorship." H. Truman

"why not implement a tax tied to actual temperature increase"

Because the effects are down the road. Consider how sensible it would be to wait until fire strikes to decide which insurance policy you want. Fire insurance is based on the present evaluation of risk, not the observation of the future outcome.

Nope. The effects are supposed to be now and observable.

They are now and observable.

Vail Resorts spends more money on snowmaking than it did 20 years ago because there is less snowfall. On the plus side, they've gotten more efficient at it over time.

No one's going to cry for Vail, but the effects are clearly "now and observable."

That's great - slap on the tax and if temperatures continue to rise it will go up, if they fall it will go down.

Previous emissions affect the present situation. Present emissions affect the future situation. Rational economic policy puts future economic costs into the present using the same tools that accountants do in basically any private corporation.

This is a good solution, and something that could probably get some support on the right. The problem is that it doesn't sufficiently attack the enemies of the Democrats so it will never even be proposed. See Nathan's criticism of it, followed by assertions from the left that his own criticism of it is wrong. So why something like this doesn't have more support on the left? You've seen my hypothesis.

I just disagree with his conclusion. We do need to move on many fronts, so carbon pricing is definitely the way to go.

The biggest problem with this argument is not the econ theory but the political theory. It assumes the US can reduce global coal consumption by banning coal burning. The US would have to ban coal mining. Otherwise the coal goes just gets exported and burned elsewhere. If you try talking to Asian power generators you'll find they're closely watching the US coal debate and the take-away for them so far has been: more cheap coal coming to our markets ahead.

And more inefficiently elsewhere, with fewer regulations affecting the discharge of other air and water-fouling pollutants.

It seems like if we think there is a future where alternative energy is cheap and abundant, that the best policy in the interim might be to try to concentrate the most-potentially-polluting energy usage in advanced economies with heavy environmental regulation. Instead most policy prescriptions seem designed to outsource our polluting activities to areas where they will be less regulated.

Even in the worst of interpretations, refer to econ 101. If 20% of the global market drops out of the market, what happens to price and therefore quantity? Yes, others may buy more at a lower price, but the overall quantity is lower.

Anyways, I think banning coal is definitely not the optimal policy. If you want to target carbon, target carbon. Period.

Nope, not even that works to any significant degree, because coal and other fuels are substitutable. Consumption of other fuels besides coal outside the US would decrease, and those would be exported to the US to compensate for the ban on coal. The effect you're thinking of would only apply to energy consumption overall and would only work to the extent the politically imposed inefficiency would raise overall energy costs.

Your argument is contingent on the assertion that people would more expensive consume carbon fuels at the same level. However, many of the alternatives are not carbon based. You are correct to suggest that things are definitely more nuanced, but this means the effect would be lower than the first order estimation, not that it wouldn't exist.

US doesn't have to "ban" coal mining. That is a bit simplistic. US regulations have taken a multi-pronged attack on coal.

1.It is much easier intellectually to build the case to disallow/tax SO2, NOX and mercury emissions and the penalty costs on coal power plants for those emissions have risen substantially over the years. I actually applaud that and I am 100% against the war on CO2. This has resulted in acceleration of coal power plant retirements and almost all the new build in power coming from non-coal.

2.Mining "safety" regulations having made the underground coal mining traditionally seen east of the Mississippi a dying bizness. It is taking a awhile to phase out but all those underground miners are losing money/going bankrupt or ont he path to shutting down in the next decade.

3. as 1& 2 have occurred the energy corporations that can see the big picture have bet on NG over coal...the investments these companies have made and divestures AWAY from coal...have built a very strong energy industry lobby to help further the increased regulation of coal top the benefit of growing the NG market...the political inertia of this dynamic means the "banning" of coal is far more driven by "conservative" energy companies than the more easily dismissed watermellon clowns.

In case I did not make it clear enough....when a big power company decides to invest billions of dollars to only build NG plants and gradually close all of it's Coal power you think they will invest they will then lobby to reduce the costs/taxes/regulations that coal power plants are subject to?

I'm not saying the US has to ban coal mining, I'm saying to achieve the effect Krugman has in mind we would. As he often does, he is reasoning as if the US were a closed economy.

In fairness to Krugman, he wasn't writing about a "carbon tax"; he was writing about "cap and trade." (For his part, Ashok confuses the two.) If we've learned anything from Coase, it's that a Pigovian tax is NOT a market solution; it's just another form of command and control.

A $1/ton tax on carbon raises gasoline prices by 1 penny per gallon.

Canada seems to function quite well with a $1.25 tax per gallon of gasoline.

Even in California, we're only at about $0.65/gallon in gas taxes between state and federal excise taxes.

A $60/ton tax on carbon would merely raise US gas prices up to Canadian levels. If you use that revenue to reduce payroll taxes, we would have less pollution, more money in the pockets of working class people, and no growth in government.

If Democrats could agree to a revenue neutral carbon tax, they might be able to siphon off enough Republican support to make this happen.

Is there any evidence that business and consumers are using less fossil fuel in Canada due to the tax?

Unless economics is completely without scientific merit, higher prices lead to lower demand.

It would be truly extraordinary if the price elasticity of demand for energy was zero.

Tell that to the #fightfor15 crowd.

Assume for a minute that we could tax carbon at $60 per ton and use did not change. Where's the problem? We could then tax at $120 or a thousand per ton and have no other taxes. If there is no change in consumption with a tax, that the tax would be causing no inefficiencies or deadweight losses. That's kinda a nirvana from a policy perspective. Of course, the tax would change consumption.

CO2 is without question a greater insulator than nitrogen and oxygen.
Just like if you're building a house, certain materials insulate better than others.
The questions revolve around how much will it warm us, how quickly, what are the effects of warming, etc.
But there is zero doubt that an atmosphere with more CO2 will hold more warmth.
I have read intelligent articles by intelligent people that question global warming. They fail because the ones I've read start from the idea that some scientists noticed the warming and then searched for an explanation. And then discuss how much variability could be purely random. But people posited the potential for warming long before the warming started.

Off the main topic, Krugman is understandably putting comparative advantage in the international trade context.

But the main point of teaching CA is, or should be, to emphasize specialization per se. You can imagine a modern country that doesn't trade externally, but specialization is still at the heart of why an economy and exchange works. I'm engaged in "trade" every time I go to the supermarket.

Unilateral reductions in emissions are irrational and global warming is global.

There are no binding global treaties, and if they existed, they would have too much leeway for cheaters.

Therefore, we should just accept climate change and not burden the economy.

Start by banning air travel and building nuclear power plants. Then I can take you seriously. Otherwise you're just posturing.

Someone proposes an incentive to affect decisions on the margin. You propose that they are not sincere unless they accept extreme solutions.

A carbon tax should be combined with a payout to those who remove co2 from the air permanently, so the people acting rationally to a price increase is less of a problem.

Also coal burning is not so simple different places face different problems, not to mention the insanity of politics..

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