Welcome to this month’s Carbon Tax Recap in which we’ll cover a critical topic in the climate science literature and dig into an important carbon pricing weakness, the challenge of carbon leakage.

Issues in Science and Technology, Summer 2021: 

The integrity of science depends on its capacity to provide an ever more reliable picture of how the world works. Over the past decade or so, serious threats to this integrity have come to light. The expectation that science is inherently self-correcting, and that it moves cumulatively and progressively away from false beliefs and toward truth, has been challenged in numerous fields—including cancer research, neuroscience, hydrology, cosmology, and economics—as observers discover that many published findings are of poor quality, subject to systemic biases, or irreproducible.

In a particularly troubling example from the biomedical sciences, a 2015 literature review found that almost 900 peer-reviewed publications reporting studies of a supposed breast cancer cell line were in fact based on a misidentified skin cancer line. Worse still, nearly 250 of these studies were published even after the mistaken cell line was conclusively identified in 2007. Our cursory search of Google Scholar indicates that researchers are still using the skin cancer cell line in breast cancer studies published in 2021. All of these erroneous studies remain in the literature and will continue to be a source of misinformation for scientists working on breast cancer.

In 2021, climate research finds itself in a situation similar to breast cancer research in 2007. Our research (and that of several colleagues) indicates that the scenarios of greenhouse gas (GHG) emissions through the end of the twenty-first century are grounded in outdated portrayals of the recent past. Because climate models depend on these scenarios to project the future behavior of the climate, the outdated scenarios provide a misleading basis both for developing a scientific evidence base and for informing climate policy discussions. The continuing misuse of scenarios in climate research has become pervasive and consequential—so much so that we view it as one of the most significant failures of scientific integrity in the twenty-first century thus far. We need a course correction.

IER’s Take

I strongly recommend reading Roger Pielke Jr. and Justin Ritchie’s full article at Issues. As the authors describe in this essential explainer, climate policy is being constructed upon false premises. It has now been clear for years that the alarming ramifications of RCP8.5 are near impossibilities. Real world climate inputs have not tracked with the assumptions that generate that high-end forcing scenario.

Last year in Nature, Zeke Hausfather and Glen Peters made this point, writing, “Happily — and that’s a word we climatologists rarely get to use — the world imagined in RCP8.5 is one that, in our view, becomes increasingly implausible with every passing year. Emission pathways to get to RCP8.5 generally require an unprecedented fivefold increase in coal use by the end of the century, an amount larger than some estimates of recoverable coal reserves.”

And yet, RCP8.5 is still being used to scare the ill-informed into adopting destructive policies. At a moment of rising distrust for the scientific enterprise, climate scientists should stake a claim to credibility by declaring the good news: RCP8.5 is not going to happen. For this, Hausfather and Peters deserve plaudits.

As the authors of the Issues article conclude, “Good science works to bring society the best possible images of the real world. The emissions scenarios of today’s climate science are delivering distorted pictures that compromise both understanding and well-informed policymaking. Until the climate science community addresses this fundamental problem of scientific integrity, its potential to contribute to pragmatic solutions for the vexing, extraordinarily difficult challenge of climate change will be unnecessarily compromised. Climate change has been solved countless times in fanciful models, but it is the real world that matters.”

 

New York Times, July 19, 2021:

Democratic lawmakers on Monday proposed to raise as much as $16 billion annually by imposing a tax on imports from China and other countries that are not significantly reducing the planet-warming pollution that they produce.

The tax would be levied regardless of whether Congress passed new laws to reduce emissions created by the United States. It would be designed to be approximately equivalent to the costs faced by American companies under state and federal environmental regulations.

Experts said a border carbon tax would almost certainly provoke America’s trading partners and could create serious diplomatic challenges ahead of United Nations climate negotiations set for November in Glasgow.

IER’s Take

From my July 19 column at The American Spectator:

Fundamentally, a carbon border tax is a mechanism by which a government raises prices for importers on goods made with affordable, carbon-based energy in other countries. Facing new costs themselves, those importers inevitably pass on higher prices to the rest of us. The plan Democrats sprung in mid-July includes new taxes on imports of petroleum, natural gas, and coal, but also on cement, iron, steel, and aluminum—industrial staples the prices of which factor into countless goods Americans buy each day. According to the New York Times, such products make up 12 percent of all imports to the U.S.

According to the logic of the carbon border tax, raising import barriers is a way to simultaneously nudge other countries to impose new carbon policies of their own and to discourage American companies from fleeing burdensome energy restrictions here at home.

The border tax is a way to plaster over carbon pricing’s fatal flaw: carbon leakage. When governments hamper domestic industry it’s inevitable that business will gravitate to regions of the world with more friendly regulatory environments. So, to the extent that a carbon border tax makes sense, it’s only because of the punitive policies governments themselves implement.

Democrats will try to sell this new tax as a way to save American jobs, but as has long been understood, tariffs deliver concentrated economic benefits to the powerful incumbents who lobby for them while spreading new costs across the wider population. Far from being an economically just approach, the carbon border tax would further enrich existing companies while taxing American households.

Making this proposal all the more vexing is the impossibility of accurately gauging the emissions intensity of products made abroad. What we have to assume is that the new taxes will overestimate the emissions any given product caused. Proponents will say it’s a matter of environmental prudence; the truth is that it will be a way to safeguard uncompetitive domestic producers. The European Union’s similar plan bears this out, assuming that ambiguous circumstances abroad emit at the rate of the E.U.’s highest-emitting companies. One big difference though is that the E.U. has a form of unified carbon pricing. The U.S. lacks such a policy, so any border tax will be a vague approximation of the myriad emissions regulations U.S. companies face. As David Weisbach, a professor at the University of Chicago Law School and an expert in carbon border tariffs, told the Times, “I’ve never seen a border adjustment that adjusts for regulatory costs. That’s going to be hard to do.”

Taxing affordable imports in this slapdash manner reeks of cronyism and would likely trigger retaliatory measures from U.S. trading partners, as even the New York Times concedes.

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