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Is Carbon Tax the answer to climate catastrophe?

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UPDATE: A complete list of climate series pieces is available here:
The Climate series: a reference post.

Lately we've been looking at climate catastrophe — what it is and how we can stop it. That series has included these posts so far, ordered by topic.


  ■ Hugging the monster: Climate scientists and the C-word
  ■ What is "climate catastrophe"?

A walk through the numbers:

  ■ McKibben's Three Numbers—Measuring the march toward climate catastrophe
  ■ Illustrating global warming—What does "a 2°C increase" refer to?
  ■ Hansen on 3°C: Quarter to half of species on earth may die from global warming
  ■ We're on track for 7°C temperature rise by 2100
  ■ Koch-funded climate denier reverses: "Humans almost entirely the cause" of global warming

Along the way, we looked at two recent phenomena:

  ■ The epic heat wave: "Of course it's about climate change"
  ■ Radical decline in Arctic ice "at least 70 percent" man-made

Our most recent posts have started to look at solutions, the politics of the problem:

  ■ Climate strategies that don't work
  ■ Who is the enemy leading us to climate catastrophe?

We're almost finished. Here I want to examine one of Bill McKibben's suggested solutions — the imposition of a carbon tax — from near the end of his Rolling Stone piece, "Global Warming's Terrifying New Math", which we've referred to previously.

McKibben's problem statement — three numbers

We know what doesn't work, because we've tried it. Individual action, though needed, isn't enough. All the self-greening in the world won't let us beat the deadline — less than 3½°F (2°C) increase globally before 2100.

Broadly, the answer for McKibben is to target the real enemy, the carbon producers. The math is simple:
  • To stay below 3½°F (2°C) warming, we can only pour an additional 565 gigatons of carbon into the air.

  • The carbon producers have 2795 gigaton reserves (five times what will kill this way of life) waiting in the ground.

  • As the Arctic ice melts, they're looking for even more carbon than that to put into the air.

  • The do-nothing, business-as-usual scenario puts on track for 12½°F (7°C) warming — a death sentence.
The real problem is thus to force the carbon producers to keep 80% of their carbon in the ground. And then make them stop looking for more.

In other words, put them out of business so the species can survive.

The problem with that is that these people are power-freaks, filled with Trumpism, relentlessly drilling for money-money-money, and they're not going to be stopped by asking or argument. My assessment:
So what do you think the Oil & Gas Barons (Our Betters) think of the fact that global warming — of all things — is opening up the Arctic for more oil and gas exploration?

Mission Accomplished, of course. For them, it's an opportunity.

Watch as they clamor for the chance to get rich by accelerating the catastrophe they're causing. Watch as world-wide government types (eager retainers all) fall over themselves to enable the world-wide destruction. (I include Mr. Eager-For-Keystone Obama in this) ...

These people are conscienceless. ... They plan to make money till it kills us all.
As with most problems involving humans, when conscience fails utterly and education won't work, adjusting the incentives often provides the answer.

What will "incentivize" the Koch Bros to keep their carbon in the ground? Let's look. (By the way, I'm leaving violence off the table for now. Those of you who want it, don't worry — you'll get your fill if all else fails.)

Is Carbon Tax the answer?

Let's start with market incentives. Is a carbon tax the answer? McKibben on that (my emphasis and paragraphing throughout):
Until a quarter-century ago, almost no one knew that CO2 was dangerous. But now that we understand that carbon is heating the planet and acidifying the oceans, its price becomes the central issue.

If you put a price on carbon, through a direct tax or other methods, it would enlist markets in the fight against global warming. Once Exxon has to pay for the damage its carbon is doing to the atmosphere, the price of its products would rise. ...

And you could do it all without bankrupting citizens – a so-called "fee-and-dividend" scheme would put a hefty tax on coal and gas and oil, then simply divide up the proceeds, sending everyone in the country a check each month for their share of the added costs of carbon. By switching to cleaner energy sources, most people would actually come out ahead.
Not a bad solution. But:
There's only one problem: Putting a price on carbon would reduce the profitability of the fossil-fuel industry. After all, the answer to the question "How high should the price of carbon be?" is "High enough to keep those carbon reserves that would take us past two degrees safely in the ground."

The higher the price on carbon, the more of those reserves would be worthless.

The fight, in the end, is about whether the industry will succeed in its fight to keep its special pollution break alive past the point of climate catastrophe, or whether, in the economists' parlance, we'll make them internalize those externalities.
This raises two questions the article addresses. One is about the use of market pressure on the carbon producers. Can that be effective?

To a degree, yes. The theory is that if the cost of climate catastrophe to other industries — for example, insurance and agribusiness via megafloods and megadrought — is great enough, there will be pressure from those industries, plus an investment threat to the stock of the carbon producers, to force them to turn from carbon to energy alternatives.

In other words, this theory says that at some point the cost born by other dinos feeding in the predatory money forest will threaten the profits of the carbon industry. Predator-on-predator violence — i.e., incentivizing the loser predators — might solve the problem. McKibben:
"The regular process of economic evolution is that businesses are left with stranded assets all the time," says Nick Robins, who runs HSBC's Climate Change Centre. "Think of film cameras, or typewriters.

The question is not whether this will happen. It will. Pension systems have been hit by the dot-com and credit crunch. They'll be hit by this."
That's one route to a carbon tax solution. But the second question is — can that route be effective enough to succeed, to keep us below 2°C? On this McKibben is doubtful:
Still, it hasn't been easy to convince investors, who have shared in the oil industry's record profits. "The reason you get bubbles," sighs Leaton, "is that everyone thinks they're the best analyst – that they'll go to the edge of the cliff and then jump back when everyone else goes over."
He concludes that "pure self-interest" even in the face of market incentives will not be enough.

Is he right in his pessimism? I think the political establishment — retainers who work for the dinos in power, who win by keeping them in power — are betting he's wrong.

They're hoping, in other words, that this can be kept as a war between predators as they duke it out amongst themselves. They're hoping that they — politicians, opinion makers, shepherds of us sheep — can stay out of it, thus keeping their own food chain intact.

Will relying on market incentives work? I agree with the assessment of the last quote above. No.

I think the investor class is much more likely to let markets sink to chaos — and the world with it — than to guide an orderly market solution to a problem everyone hopes will go away on its own. Bubbles and crashes, so common lately, offer ample evidence of the inability of top market predators to keep the feeding orderly.

Bottom line — A sufficiently high carbon tax would solve the problem. But there's no way to get there using market forces.

Where does that leave us?

That leaves us with McKibben's solution (read ahead if you like; start at "If pure self-interest") and suggestions of my own.

Obviously the answer requires effort and involvement — something nearly everyone on the planet with power is trying to avoid. But that doesn't mean the solution doesn't exist — something I think the readers of these pages often fear. As I always say, the game is not over yet.

The next piece will be the last in this series. It will focus on more effective strategies — what we haven't tried yet to apply maximum pressure to leverage points.

This is not about helplessness. It's about intelligently designed effort — my contributions anyway.

As noted earlier I exclude violence — as impractical, if for no other reason. Remember, we're trying to reduce the chaos, not increase it. If your solution is increased chaos, you may be right in the end. But that's not where most of us want to go first.

Please stay tuned; just one more piece to go. And thank you for following this far.


To follow or send links: @Gaius_Publius

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