Welcome to the Carbon Tax Ticker

Here in the United States the carbon tax has receded in prominence in 2019. We’d like to keep it that way. To that end, the American Energy Alliance, IER’s 501(c)(4) sister organization, is building a carbon tax landing page that we hope will serve as a hub for the coalition of organizations opposed on principle to greenhouse gas emissions taxes. On the landing page we plan to list the many organizations that have come to the same conclusion as we have: a carbon tax is the wrong response to global warming.

I plan to begin outreach to the various organizations that subscribe to this newsletter directly, but if you want to beat me to the punch respond to this email with the name of your group (and a .jpg of your logo if you want to save our website team a few minutes of time).

—Jordan McGillis

National Post, 20 November 2019:

Economist Mark Jaccard is a veteran of the carbon tax wars.

In 2007, he was part of a team advising then-B.C. Premier Gordon Campbell on how to implement a provincial carbon tax, among other climate policies.

Then, instead of going back to the dry docks of academia, he appeared on radio shows defending his policy, speaking to voters and getting a hot blast of the angst the policy conjures up.

By the time Stéphane Dion came to Jaccard for advice in 2008 about the Liberals’ proposed “green shift” carbon tax, Jaccard had already decided the whole idea was political quicksand.

“While the carbon tax might be good policy, it doesn’t appear to be good politics,” Jaccard told Dion, according to his forthcoming book The Citizen’s Guide to Climate Success, which will be available in February.

Dion told him that “good policy is good politics” before being soundly defeated by Stephen Harper, who made the “job-killing carbon tax” the focal point of his case against Dion and the Liberals in the 2008 federal election.

IER’s Take

While our judgment at IER would differ from that of Mr. Jaccard on the merits of a carbon tax as pure policy, we share his assessment of the carbon tax’s political problems. Real world experience and polls we trust have shown consistently that people are not keen on paying more for their energy and that taxes on energy, such as carbon taxes and petrol taxes, make the cost more evident to the average person than alternatives. The yellow vest protests in France, which recently commemorated their one-year anniversary, began as a paroxysm against an explicit fuel tax increase as part of the Macron climate plan. The visibility of this price hike enabled Macron’s opponents to point to something tangible that was hurting the bottom line for people dependent on automobiles.

In terms of polling, MRW Strategies has provided us with insights about how people outside of the Beltway and academic bubbles think about environmental policy. The majority of likely American voters responds positively to a wide array of costly policy proposals, including many in the Green New Deal. But when asked about personal willingness to pay, support for policies dries up. MWR has recorded median responses to inquiries about likely voters’ willingness to pay for climate policies at $2 to $50 annually. In one recent round of polling, when asked how much they would be willing to pay to address global warming each year, respondents answered with a median of $4. The percentage of respondents who said “zero” or “nothing” was 42 percent.

From Mr. Jaccard’s standpoint, this deep unwillingness to personally bear policy costs is reason to bury costs in layers of regulation that will conceal cause-and-effect from voters. From our perspective, these datapoints suggest all we really need to do is strip down carbon taxes and fuel taxes to their basics. Remove all illusions about “revenue-neutrality” and “dividends” and the fact of the matter is that few people are willing to take a personal hit, no matter what lip service they pay to the problem of global warming.


Foreign Policy, 16 November 2019

A carbon tariff has received considerable attention on both sides of the Atlantic as a means of addressing carbon leakage and breaking the deadlock of international climate action. Such a scheme would involve applying a tariff to imports from countries that have not already accounted for their carbon emissions. However, past efforts to set up a border adjustment have been resisted.

In 2010, then-French President Nicolas Sarkozy proposed a border adjustment for the EU, but Karel De Gucht, who was the European commissioner for trade, objected on the grounds that it could lead to retaliation. In 2017, the current occupant of the Élysée Palace, President Emmanuel Macron, proposed a similar carbon tax at Europe’s borders, but there were again concerns that it would ignite a trade war with the United States and China. In the United States, meanwhile, politicians across the aisle have considered border adjustments as a way of winning allies for climate action among energy-intensive industries that fear carbon leakage. It was for this reason, for example, that a border adjustment provision was included in the 2009 American Clean Energy and Security Act, which did not pass.

But past failures have not stopped efforts to revive the idea of a border tax. In July, Ursula von der Leyen, who is now the president-elect of the European Commission, promised in a speech to the European Parliament to introduce “a carbon border tax to avoid carbon leakage.” A year earlier, in the United States, then-Rep. Carlos Curbelo, a Florida Republican, introduced a federal carbon tax bill in Congress that proposed a “tax equivalent to the domestic carbon tax” for importers. This year, Sen. Mitt Romney was also said to be “looking at” a carbon tax and border adjustment. Furthermore, two leaders for the Democratic presidential nomination, former Vice President Joe Biden and Sen. Elizabeth Warren, have proposed fees on carbon-intensive imports as a means of protecting American workers and advancing climate action around the world.

IER’s Take

Climate policy’s dirty little secret is that it is futile without strict enforcement mechanisms that extend policies beyond the borders of the E.U., the U.S., or other regions considering new taxes or regulations on greenhouse gas emissions. The preferred nomenclature for such a mechanism is the “border adjustment,” so I find it refreshing that FP’s Joseph Curtin has opted here for the more explicit term, tariff.

For the trade-wars-are-good-and-easy-to-win set, the prospect of a carbon tariff may not itself be bothersome, but the segment of our intelligentsia that is most likely to place the carbon tax at the center of its climate policy—the neoliberals, we might call them—is also a segment that tends to view tariffs negatively.

I have yet to receive an adequate description of how this tension within the pro-carbon tax camp will be resolved.

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