29 Jun 2014
by Jim Rose
in environmental economics, global warming
Tags: cap and trade, carbon tax, emissions trading, global warming, rent seeking
- The history of cap-and-trade systems suggests that the carbon emission allowances are given away to carbon emitters, which they can use or sell at market prices. The prices of energy products would rise, but governments would collect no revenue to reduce other taxes and compensate consumers.
- Agreement on a global cap-and-trade system is hard to imagine. A global carbon tax is easier to negotiate. All nations use a carbon tax to raise revenue and use the proceeds to compensate consumers with tax relief. No money needs to change hands across national borders.
- A carbon tax is now being championed by groups and political parties that previously would deny to their graves that taxes have significant incentive effects, and that taxes do not affect the supply of labour or the rate and direction of investment to any important degree. It is suspicious that groups and parties that deny tax cuts increase economic growth take time out from these foundational beliefs to support a tax because of the incentives it gives to reduce carbon consumption. They want it both ways.
16 Jun 2014
by Jim Rose
in applied price theory, environmental economics, environmentalism, global warming
Tags: Brayan Caplan, cap and trade, carbon tax
If relatively clean countries switch to clean energy (via command-and-control regulations, cap-and-trade, pollution taxes, or green norms), fossil fuels don’t vanish. Instead, their world price falls – encouraging further consumption in relatively dirty countries. The net effect?
Bryan Caplan
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