Carbon tax probably won't save us

[jahav]

Hi,

I have been thinking about carbon tax recently and wondered if it would even make a significant contribution to decrease of CO2?

Of course people are price sensitive and if something costs more, it tends to be less used. But only up to a point. Elasticity is not limitless.

I have a concrete example: our water consumption is 88,7 liter/personday (compared to 361,66liters for american person day or 170 liter/personday here in 1990), low flow showerheads, dual flush toilets and other stuff since forever.... When I look at the inflation, the price of water has increased by tenfold since 1990. It used to be 1.5CZK per m^3 (1990), now is 48.30CZK, adjust for inflation and you get roughly tenfold increase in price, but only halving of consumption (because you need water, it's essential).

The red line is price, the blue columns are consumption.

Ok, let's look at the price of the carbon tax for transportation, which is also essential for modern life.

I think average car here drives ~13k km/year. Not sure about average consumption, but it is low, for same reason as the water example (e.g. our car has a real life consumption 5.1 liter/100km or 46 MPG and when I asked around, I am more or less norm).

1 liter of petrol should produce roughly 2392g CO2, so 13000km / 100 km * 5.1 liter * 2.392 kg CO2 will give me 1 585 kg of CO2 per average car per year.

How much would we pay in carbon tax(=what is politically possible)? Wikipedia says notbody is sure. The highest one in the world is in Sweden (rather rich country): USD168/tCO2 , so let's go with this one.

Liter of petrol costs USD 1.47, so (USD 1.47 * 5.1 / 100) = USD 0,07497 per km is price of a fuel.

The tax would be USD 0,02048 per km (1.585 tCO2 * USD168/tCO2 / 13000 km), in other words 27% increase. just to reiterate, this is the highest tax in the world, the rest (=much more likely amount) is ~USD40/tCO2, such sum would be 6.5% increase.

Nearly 30% increase is very substantial, but we had such prices here already. We could use LPG or NG cars which are taxed at considerably smaller rate, yet they are very rare (1-3% of all cars).

However, this increase is on top of already very high fuel taxes, which could be counted as a form of goods-specific CO2 tax. These fuel taxes are even higher than hypothetical calculated CO2 tax and they are here since forever. Yet we still drive petrol cars, not LPG or NG cars (which are cheaper). If batteries were not sufficiently advanced, no amount of (politically viable) taxes would be enough to move us off the oil. After all, the fuel tax has been here for decades and no electric cars appeared for decades, despite obvious economic advantage.

Sweden started their CO2 tax in 1991, their CO2 emissions decreased from 6tCO2/capita to 4.5tCO2/capita (2014), 25% decrease. In UK (that has only fuel tax, at least according to Wikipedia), it decreased from 10tCO2/capita to 6.5tCO2/capita, 35% decrease. In Czechia (no carbon tax, only fuel tax) it decreased from 13.5 tCO2/capita to 9tCO2/capita (2014), 33% decrease. It obviously must have some effect, but I looked at other countries in Europe and it doesn't look like very high carbon tax in Sweden has somehow dramatic effect that would enable casual observer to distinguish CO2 emission decreases of Sweden or Norway from other countries that don't have carbon tax.

What will save won't be taxes, but same thing that saved our species since forever: technology and progress. I would like to thank Tesla and Nissan for staring the transformation nearly a decade ago.

All these dances in politics, about carbon tax, cap&trade and similar trading schemes... I don't think it matters very much. It might help, but at prices that are politically feasible, they won't help much.

 

[Domenick]

Hi,

I have been thinking about carbon tax recently and wondered if it would even make a significant contribution to decrease of CO2?

Of course people are price sensitive and if something costs more, it tends to be less used. But only up to a point. Elasticity is not limitless.

I have a concrete example: our water consumption is 88,7 liter/personday (compared to 361,66liters for american person day or 170 liter/personday here in 1990), low flow showerheads, dual flush toilets and other stuff since forever.... When I look at the inflation, the price of water has increased by tenfold since 1990. It used to be 1.5CZK per m^3 (1990), now is 48.30CZK, adjust for inflation and you get roughly tenfold increase in price, but only halving of consumption (because you need water, it's essential).

The red line is price, the blue columns are consumption.

Ok, let's look at the price of the carbon tax for transportation, which is also essential for modern life.

I think average car here drives ~13k km/year. Not sure about average consumption, but it is low, for same reason as the water example (e.g. our car has a real life consumption 5.1 liter/100km or 46 MPG and when I asked around, I am more or less norm).

1 liter of petrol should produce roughly 2392g CO2, so 13000km / 100 km * 5.1 liter * 2.392 kg CO2 will give me 1 585 kg of CO2 per average car per year.

How much would we pay in carbon tax(=what is politically possible)? Wikipedia says notbody is sure. The highest one in the world is in Sweden (rather rich country): USD168/tCO2 , so let's go with this one.

Liter of petrol costs USD 1.47, so (USD 1.47 * 5.1 / 100) = USD 0,07497 per km is price of a fuel.

The tax would be USD 0,02048 per km (1.585 tCO2 * USD168/tCO2 / 13000 km), in other words 27% increase. just to reiterate, this is the highest tax in the world, the rest (=much more likely amount) is ~USD40/tCO2, such sum would be 6.5% increase.

Nearly 30% increase is very substantial, but we had such prices here already. We could use LPG or NG cars which are taxed at considerably smaller rate, yet they are very rare (1-3% of all cars).

However, this increase is on top of already very high fuel taxes, which could be counted as a form of goods-specific CO2 tax. These fuel taxes are even higher than hypothetical calculated CO2 tax and they are here since forever. Yet we still drive petrol cars, not LPG or NG cars (which are cheaper). If batteries were not sufficiently advanced, no amount of (politically viable) taxes would be enough to move us off the oil. After all, the fuel tax has been here for decades and no electric cars appeared for decades, despite obvious economic advantage.

Sweden started their CO2 tax in 1991, their CO2 emissions decreased from 6tCO2/capita to 4.5tCO2/capita (2014), 25% decrease. In UK (that has only fuel tax, at least according to Wikipedia), it decreased from 10tCO2/capita to 6.5tCO2/capita, 35% decrease. In Czechia (no carbon tax, only fuel tax) it decreased from 13.5 tCO2/capita to 9tCO2/capita (2014), 33% decrease. It obviously must have some effect, but I looked at other countries in Europe and it doesn't look like very high carbon tax in Sweden has somehow dramatic effect that would enable casual observer to distinguish CO2 emission decreases of Sweden or Norway from other countries that don't have carbon tax.

What will save won't be taxes, but same thing that saved our species since forever: technology and progress. I would like to thank Tesla and Nissan for staring the transformation nearly a decade ago.

All these dances in politics, about carbon tax, cap&trade and similar trading schemes... I don't think it matters very much. It might help, but at prices that are politically feasible, they won't help much.

In places like the Czech Republic, where petrol prices are already high, and people tend to use very fuel efficient vehicles, I don't think carbon tax on gasoline is especially helpful. The carbon savings it might produce are minimal and the financial pressure on society too great. Plus, if there is anything like here, the political price could also be steep.

In the US, I think we missed a great opportunity to increase our gasoline tax. The price had plunged to ridiculous levels because demand had dropped severely in the wake of the economic collapse of '08. If, say $.25 per gallon (roughly $.06 per liter) had been placed on gasoline then, most drivers wouldn't have suffered much in the way of hardship, since we'd been paying much more than that before the collapse. This, over time, could have generated huge amounts of money which could have been put to use replacing coal for electricity generation with natural gas and renewables. Sadly, that didn't happen, and now with gas remaining relatively low, people are buying bigger, thirstier vehicles, and we aren't cutting emissions like we had been.

In most places, it's probably better to encourage change with electric vehicle incentives. Allow people tax savings or lower interest rates on financing or what have you. Before long these may not even be needed because, as you mentioned, technology is improving and becoming cheaper. Hopefully soon, electric will be the "normal" way to go when buying a new car.

 

[bwilson4web]

For me, the most promising option is to raise all vehicle registration costs to make up for the shortfall in highway revenue. Indexed to fuel efficiency in wight class, works for me.

Bob Wilson

 

[101101]

@bobwilson4web I like it and Norway does something along those lines but remember that both Clinton and Davis paid a price in the 80s and 90s over the VLF. Different today but points to my take on what @Domenick was suggesting on the virtue of a carbon tax. What it does is override the hidden subsidies.

You remember when Musk put out what are likely low ball numbers on direct state subsidies of the fossil fuel industry at about 5 trillion a year. Well note that the industry on paper is only worth about that much. That is way above its global revenues. And that doesn't even touch its externalities which are defacto subsidies which are more than double that or its private lending and constant and cumulative losses there.

Just the level of subsidy Musk was mentioning scaled the US's share of the global economy leaves an amount that is about 1/3 of its Federal budget. But this is all hidden behind secret energy policy and the stupidity of sequestration and all this obfuscation of the petrol rent seeking.
The way to go is to work to expose and eliminate the subsidy (expose its historical toll too) and use that also to justify the carbon tax.

None of this as Marx pointed out at some point in the work day the laborer has produced to cover their wages and produced to cover the capital invested and any return you'd grant it and beyond that is simply working for free in pure rent seeking. To cover this theft the capitalists in society based on theft always needed secrecy and that is what hidden unknown subsidies accomplish for fossil fuel rent seekers. Same with allowing it to drain the life from the financial and insurance sectors. Its not a new game, get wages down, get debt up and limit opportunity to create enclosure for not other reason than to control and enforce slavery. Call it a tax on slaves. In a sense money is just a tax and tax and monies turn out to be a way to get people to identify with a society and continue to participate in it and so is the wall or enclosure the slaver build around his human and animal chattel.

 

[Pushmi-Pullyu]

Hi,

I have been thinking about carbon tax recently and wondered if it would even make a significant contribution to decrease of CO2?

It depends on what time scale you're looking at. On the scale of 1 year, it won't make any measurable difference. On the scale of 10 years, it probably will make only an insignificant statistical difference... altho even a small difference in the percentage of CO2 in the atmosphere will make a very great deal of difference to the lives of many individuals, and to the ecology and weather patterns of many regions, and very possibly a significant difference to the acidification of the oceans. On the scale of 100 years, it will make a great deal of difference.

Sadly, humans are generally abysmal at long-term planning. If it's something that will take longer to implement than the time to the next Presidential election, or to the next "five year plan", then who cares?