So what does James Hansen suggest we do?

However, fossil fuel addiction can be solved only when we recognise an economic law as certain as the law of gravity: as long as fossil fuels are the cheapest energy they will be used. Solution therefore requires a rising fee on oil, gas and coal – a carbon fee collected from fossil fuel companies at the domestic mine or port of entry. All funds collected should be distributed to the public on a per capita basis to allow lifestyle adjustments and spur clean energy innovations. As the fee rises, fossil fuels will be phased out, replaced by carbon-free energy and efficiency.

A carbon fee is the only realistic path to global action. China and India will not accept caps, but they need a carbon fee to spur clean energy and avoid fossil fuel addiction.

Governments today, instead, talk of \”cap-and-trade with offsets\”, a system rigged by big banks and fossil fuel interests. Cap-and-trade invites corruption. Worse, it is ineffectual, assuring continued fossil fuel addiction to the last drop and environmental catastrophe.

How wondrous to find an environmentalist who actually gets regulatory capture, public choice economics and the economics of Pigou taxation!

For, yes, this is exactly what we should be doing, assuming that the IPCC is indeed correct about climate change.

We\’ve even got two different approaches we could use to this.

One is the Stern Review one: the social costs of carbon emissions are $80 a tonne, so tax carbon emissions $80 a tonne (in detail, CO2-e).

Excellent, we in the UK already largely do that. We\’ve not got the taxes properly distributed, it\’s too much on petrol, about right on flying and not high enough on farming for example, but over all we\’re at about the right level.

There\’s also the William Nordhaus idea, start with a low tax and (credibly) commit to raising it. Perhaps $5 or $10 a tonne now, rising to $250 or so around 2040. This allows both the development of new technologies and also works with the grain of the capital cycle.

The Nordhaus solution is almost certainly better for those places (yes, USA, we are looking at you) which do not at present have anything like the required carbon taxes. Whacking $80 a tonne on right now would cause huge dislocation: better to let the economy adapt more gently.

We\’d also rather like to stop those $550 billion of subsidies to fossil fuels as well: the $100 billion that Iran spends on consumer subsidies for petrol and natural gas, the $70 billion or so Russia does and so on.

But what really intrigues about what Hansen is suggesting is that it\’s obvious that he\’s actually been reading real economists on this problem. whether or not he\’s actually got his ideas from these sources or not I don\’t know, but the rising fee idea is what Nordhaus suggests and the cap and trade inviting corruption is a point Greg Mankiw has made (although he\’s politer and calls it corporate pork).

Isn\’t that amazing? Someone who desires to change human activity actually going to the experts in how to change the incentives humans face so as to change their activities?

You\’d almost think the guy was a scientist or something.

11 comments on “So what does James Hansen suggest we do?

  1. Those $550 billion subsidies are not fossil fuel subsidies, they are domestic energy subsidies. If the likes of Iran have to use higher cost energy, then the subsidies will have to get bigger or their citizens will have to choose between doing without or burning the furniture.

    China and India are not going to make energy more expensive for their citizens, such things are the luxury of those suffering from middle class angst who voluntarily pay a monthly levy on their fuel bills (which they can well afford) so that green atoms flow through their electrical appliances.

    But no need to worry, cos the IPCC is wrong.

  2. “…to allow lifestyle adjustments…”

    Strange use of the word ‘allow’ there. When ‘force’ would have been more appropriate…

  3. The beatuy of Carbon Taxes, versus cap & trade is that on a net basis, they actually don’t have to cost anything. Just cut taxes elsewhere.

  4. Isn’t this the crux of the whole ‘global warming/climate change’ issue? That IF (and I stress the massiveness of that IF!!) it is real, and we have to deal with it, we all in the West need to become massively poorer? IE able to buy less stuff, travel less, generally consume less energy, which is pretty much what makes life ‘better’ – improvements in life come down to energy consumption in essence.

    And all the tinkering at the edges – banning plastic bags, and forcing everyone to recycle their rubbish – is not going to cut much ice. The reality is rather nastier, and politicians don’t tell the electorate that, they pretend (like Tony Blairs ‘Third Way’) that you can save the planet AND continue to have your 2 car household, holidays abroad, centrally heated house full of electric consuming gadgets, etc etc. That someone somewhere else will have to take the pain.

    As far as I can see, once the electorate see what it means for them in hard terms (Higher costs for EVERYTHING) then environmentalism will hit the buffers rather quickly.

  5. Serf said: “The beatuy of Carbon Taxes, versus cap & trade is that on a net basis, they actually don’t have to cost anything. Just cut taxes elsewhere.”

    They don’t have to but, they will. Especially if the entirely unnecessary UN administered ‘climate change’ fund comes to pass – the green revenue will pass to them to spend rather than going into national revenue coffers.

  6. “assuming that the IPCC is indeed correct about climate change”

    Rather a big assumption is it not?

    And increasingly undermined by the actual evidence, as more evidence is accumulated.

  7. “Andrew Duffin // Aug 27, 2010 at 3:42 pm

    “assuming that the IPCC is indeed correct about climate change”

    Rather a big assumption is it not?

    And increasingly undermined by the actual evidence, as more evidence is accumulated.”

    Actually, if anything, as more evidence is produced it becomes more and more clear that the IPCC have been conservative, rather than alarmist, in their research. Don’t let evidence get in the way of your preconceptions though.

  8. Duffin is correct and Left Outside was.

    There is no, repeat No, repeat NO! credible evidence of global warming, much less man made made global warming.

    The entire onus of proof is on the alarmists. They must prove to us why we should change our lives for the worse and they have done nothing but lie their heads off and steal everything not nailed down. Faked evidence left, right, centre and sideways.

    And were it not Friday evening and time for a cocktail I’d tell you much more about what lying, power mad, greedy, loons the alarmists are.

  9. Calling Hansen a “scientist” is like calling Hitler an “ethnologist.” Hansen uses distorted science and outright lies to push his political agenda of fearmongering as a reason for enviro-tyrany and central planning. Hitler distorted the study of ethnology to push his political agenda of Aryan superiority as a reason for German conquest of other nations.
    The only “science” behind AGW is the science of propoganda perfected by Hitler’s regime. Tell the “big lie” often enough while suppressing inconvenient truths to ensure that “everyone knows” only what you want them to.
    Stretch your brain a little, read and think about climate science and stop letting the BBC or NPR tell you what to think.
    The fallacies behind the AGW hoax of a trace gas (>0.04% of the atmosphere) being the only factor affecting global climate–a complex system we do not even begin to understand–should be obvious to anyone with a shred of common sense and rational thought processes.
    If the government must tax something to raise revenue, taxing energy is no stupider than taxing clothing, food, housing or any other necessity, but it has nothing to do with saving anything but the governments ability to spend money they take from their citizens.

  10. “Excellent, we in the UK already largely do that. We’ve not got the taxes properly distributed, it’s too much on petrol, about right on flying and not high enough on farming for example, but over all we’re at about the right level.”

    Fair enough I suppose, but doesn’t this ignore the issue of imports, whereby we effectively offshore our emissions?

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