The Agenda

Two Perspectives on Carbon Pricing

Robert Frank wrote a column for the NYT this weekend on climate change that states the following:

According to estimates by the Intergovernmental Panel on Climate Change, a tax of $80 a metric ton on carbon dioxide — or a cap-and-trade system with similar charges — would stabilize temperatures by midcentury.

This figure was determined, however, before the arrival of more pessimistic estimates on the pace of global warming. So let’s assume a tax of $300 a ton, just to be safe.

After thinking through the implications of such a tax, he writes:

In short, the cost of preventing catastrophic climate change is astonishingly small, and it involves just a few simple changes in behavior.

Let’s assume that Frank is correct in every aspect of his analysis. Brad Plumer of TNR, a strong advocate of pricing carbon, offers the following characterization of the House cap-and-trade bill:

The House climate bill, after all, was written by Democrats, since most Republicans are too busy cackling about how global warming is all a hoax. And a lot of Democrats represent coal interests, while a lot of Republicans represent oil interests. Plus the American Petroleum Institute has been working overtime to thwart any and all climate legislation, while the Edison Electric Institute (which represents utilities) has decided to help craft a bill. So the House cap-and-trade program ended up being designed in a way that gave more leeway to coal-fired power plants. And, since there’s still an overall cap on emissions, someone else has to pick up the slack—namely, oil producers and refiners. …

And you could even make an argument that it makes more sense to crack down harder on coal, instead—coal emissions are a larger threat to the climate, and it could prove easier in the short term to revamp our electricity system than our transportation system.

Leaving aside the question of whether we’d be better off if Republican legislators backed cap-and-trade in an effort to secure more rents (or should I say even more rents for oil producers and refiners), let’s just observe that the House cap-and-trade bill bears no resemblance to the clean carbon tax or auction-based cap-and-trade system that Frank presumably has in mind. Rather, it privileges the owners and operators of coal-fired plants and the clean coal lobby at the expense of oil producers and refiners.

This actually has important implications for straw-mannery. Because there is an actual House cap-and-trade bill, I think it makes sense to criticize it. It could become legislation. I could spend my time criticizing Frank’s ideal proposal, and I have criticized things like it. But I’d actually object far less strenuously to a clean carbon tax than to something like the House cap-and-trade bill. 

Wait a second! Don’t I want people to engage with the best, most serious arguments of the other side! Actually, I want people to engage with actual legislative proposals that have a chance of passing. So when Jim DeMint’s tax plan starts getting near 60 votes, I will write a thumbsucker blog post criticizing it. Until then, I’ll focus on bills that might actually pass. 

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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