07 November 2007

Carbon Taxes

Today The New York Times has a useful article reporting on the proospects for and consequences of a "carbon tax" on various sources of energy. I generally think this sort of approach is a good, if dramatically incomplete, one. However, it is important to consider a couple of matters. (1) Such a tax is essentially a way of trying to internalize the costs of making energy or, in other words, of assigning a cost to the externality (in terms of carbon released 'costlessly' into the atmosphere) from burning one or an other kind of fuel. That is a good idea. But it is an incomplete one. Why not have an 'externalities' tax? This, would, to take an important example, tax the radioactive waste created by nuclear power plants. You could look at each of the sources of energy and identify the primary externalities they generate and tax them in order to more reasonably capture the costs of relying on them. (2) I suspect that such a tax is likely to be quite regressive. This is because many lower income folks who, say, live in older housing or drive older vehicles, would consume energy at relatively high rates (all other things equal). And without reasonable alternatives (e.g. reliable mass transit) would be hostage to the tax.



Blogger James Aach said...

FYI: In some ways radioactive waste from nuclear plants is "taxed" - there is a small surcharge attached to the energy generated by a nuclear plant that goes into the US government fund for disposition of nuclear waste. So far this has added up to billions of dollars, and some utilities have sued the government, because this was suppossed to have resulted in a permanent storage repository by now (Yucca Mountain) and hasn't - so utilities are paying for continuing onsite storage.

If you'd like to learn more about large scale energy generation in general - and nuclear in particular - see my book "Rad Decision", avaialble at no cost to readers at RadDecision.blogspot.com and in paperback. We'll make better decisions about our energy future if we first understand our energy present.

07 November, 2007 14:04  
Blogger Jim Johnson said...

Thanks for the comment. My understanding is that the reason Yucca Mtn (or other possible waste sites) have not come on line is that they are technologically infeasible - by which I mean we have no way of assuring that the sites will be stable for anything like the half-life of the materials we'd deposit in them. I am not keen on retaining waste in "temporary" on-site storage either. But this is just the sort of 'externality' that ought to be considered when we start talking about taxing energy generating processes.

07 November, 2007 17:41  
Anonymous Jobo said...

As you say, the point of such a tax would be to force businesses and people to internalize certain externalities, not to raise revenue. You can use the tax income for any purpose, my favorite would be a universal tax credit.

08 November, 2007 02:30  

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