Unintended Consequences of Carbon Taxes or the Real Deal

Live local, get around without breaking the bank
stand@desk
Posts: 377
Joined: Sun Dec 08, 2013 9:40 pm

Unintended Consequences of Carbon Taxes or the Real Deal

Post by stand@desk » Tue Oct 23, 2018 8:48 pm

Hi,
Just looking for this boards perspective on Carbon Taxes. Canada is set to start taxing carbon in 2019 and I seem to think it will not improve the environment and there will be dollars lost somehow, somewhere along the way. The dollars (90%) are supposed to go back to families and the (10%) is supposed to fund "green initiatives."

Are the carbon taxes a scam or will they actually help the environment and grow the economy?

Colibri
Posts: 38
Joined: Thu Dec 28, 2017 1:26 am
Location: Northern Canada

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by Colibri » Tue Oct 23, 2018 10:52 pm

It is likely a scam in my humble opinion but at the same time if things like gas price and electricity climb, I am hopeful (naive?) that it will force people to re-evaluate their consumption (lower). People don't change until you touch their wallet.
Perhaps, no more jumping in your F-150 to go get bread at the corner store ?

vexed87
Posts: 1477
Joined: Fri Feb 20, 2015 8:02 am
Location: Yorkshire, UK

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by vexed87 » Wed Oct 24, 2018 6:34 am

Interesting idea, I just read in Ottowa they will have a rebate system, so paying $20/tonne CO2 up front tax on emissions on your goods, but in reality you get most of it back in a tax rebate, minus a 10% deduction. So in practices, it's only $2/tonne of CO2, so long as you can afford the 'deposit' in the first place.

Did I get that right? That won't break many banks, but it will force those who can't afford the deposit to avoid practices with high emissions, or force them in to debt until they get the rebate.

It's probably better than nothing, but too little too late for the environment or averting climate catastrophe. It will make many people worse off if they continue to pursue CO2 intensive lifestyles.

1) The problem with carbon taxes are if taxation were high enough to influence the behaviour of the better-off, it would price the poor out of the market, crippling the economy, or making a society of energy haves and energy have nots.

2) Unless the carbon taxes increase massively over time, there's no incentive to reduce emissions beyond what's affordable under the new tax structure. If taxes increase, return to point 1).

We already know, generally the biggest emitters are the wealthiest, any approach needs to limit these emissions drastically, higher taxes in the above proposed arrangement would decimate the working classes.

Really, taxation takes money from the poorest people just at the time they need it most, if they are to achieve substantial reductions in emissions, people will need to invest siginficantly in a whole range of infrastructural changes and technologies, or social systems. Unless the taxes are diverted to those projects, or are coordinated alongside the aforementioned changes, the taxes are doomed to fail (IMO).

prognastat
Posts: 995
Joined: Fri May 04, 2018 8:30 pm
Location: Texas
Contact:

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by prognastat » Wed Oct 24, 2018 9:50 am

I think it will work about as well as how well taxes on tobacco affected the sale of tobacco, which is rather minimal.

jacob
Site Admin
Posts: 11062
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by jacob » Wed Oct 24, 2018 10:43 am

It's better to think of it as "carbon pricing" because there are several ways to account for the externalities and tax is just one of them. Carbon pricing presumes that external damage can be controlled via the market. Carbon regulation presumes it can be done with regulation.

Do neither and the external damage will be paid for in wars, famines, refugees, etc.

So pick your poison. Most humans generally favor letting other people pay while they themselves enjoy the benefits. The issue here is that "other people" includes both those who live in different places ... and those people who live in the future who essentially have no say but pay a larger piece of the cost, so that's anyone under the age of 18. It seems to me that a majority of humans lack the maturity to think much beyond themselves, so here we are...

I think humans will pick famine, war, refugees, ... so in general shorter lifespans.

Basically, for this to work the average human needs to be "tricked" into helping others. This is not as nefarious as it sounds. For example, ERE is one such trick. By reducing consumption and therefore emissions, people who pursue FIRE gain autonomy, freedom, etc. which for those who do is more valuable than increasing consumption. Solutions like this are the only ones I can see working in [this] democratic society.

Culturally, this has worked differently in Europe and China. In Europe, government is generally seen as a benevolent factor. After the 1973/79 oil crises, energy costs were taxed heavily. This changed consumer behavior and because of this, Europe now enjoys a much better infrastructure than the US in terms of transportation and energy distribution. In China, the Party sets the course. This allows them to be more rational (elitist rather than populist) and consequentially---because the government is well aware of the pickle China finds itself in wrt population, climate, and US/Russia---the government is investing heavily in solar, wind, and AI.

"Sustainable growth" is the worst oxymoron ever invented. It can not---by definition---work within a bounded system. The problem here is that all the financial "systems" of the developed world has been built on a structure of exponential-growth assumptions. Since finance is where most people interact with the world outside their homes, this makes it incredibly difficult for humans to make any changes even if they wanted to. Consider the very fact that the [solution] is being phrased as a financial problem i.e. what price to put on carbon. It reminds me of those calculations where economists try to put a price on human lives depending on where they live---or how McNamara used body-count as a metric of success during the Vietnam War.

TL;DR - Trying to put a price on carbon is a massive fail in terms of grokking the predicament we're in. (That does not mean we should not do it.)

enigmaT120
Posts: 1070
Joined: Thu Feb 12, 2015 2:14 pm
Location: Falls City, OR

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by enigmaT120 » Wed Oct 24, 2018 11:31 am

What is the point of taxing something, then returning 90% of it back later? Why not just collect only the 10% the government intends to keep and use?

slsdly
Posts: 272
Joined: Thu Mar 14, 2013 1:04 am

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by slsdly » Wed Oct 24, 2018 12:06 pm

My understanding is there will be some redistributive effect of that 90% is returned. So you won't get back 90% of the tax you pay, you will get some percentage based on whatever factors the government decides. I suspect however it will not reward living below one's means as they have no idea how much of one's income is actually spent, except as part of avoiding the tax in the first place.

jacob
Site Admin
Posts: 11062
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by jacob » Wed Oct 24, 2018 12:22 pm

@enigmaT120 - The collection of revenue is only of secondary importance to a carbon tax. The primary goal is to change consumption behavior via the market(*) instead of via regulations. Also see, https://en.wikipedia.org/wiki/Pigovian_tax

(*) By pricing in the cost of externalities which are currently sold down the river for future humans to pay while the present humans enjoy all the benefits.

Jean
Posts: 977
Joined: Fri Dec 13, 2013 8:49 am
Location: Switzterland

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by Jean » Wed Oct 24, 2018 12:29 pm

I'de rather have carbone torture, were carbon émissions are paid for with physical pain.

ZAFCorrection
Posts: 160
Joined: Mon Aug 14, 2017 3:49 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by ZAFCorrection » Wed Oct 24, 2018 4:05 pm

To add an extra Krugman twist, the carbon money could be dumped down moneshafts which are then refilled. Licenses could then be given to extract the money using only electrically powered equipment.

Only half joking.

jacob
Site Admin
Posts: 11062
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by jacob » Wed Oct 24, 2018 7:24 pm

Another example of carbon (externality) pricing is cap&trade. This was used successfully to reduce SO2 emissions (the cause of acid rain). Cap and trade works by issuing a bunch of permits for the maximum total emissions (the cap) and then trading them on the free market. This more or less solved the acid rain problem.

Likely it worked because the only players were all power plants delivering the same product (electricity) in the same market. This made the trade "fair".

CO2 is different since it involves multiple different products all around the world. It's pretty easy to set the cap. Trading them fairly is not so easy. An average can easily price out 10 average Africans and it could be argued that this does not maximize utility when the former wants the CO2 to run the AC because the cozy log fire is too hot (true story) and the latter wants it to grow food. Cap&Trade seems to work best when traders are evenly matched. Otherwise the market can be cornered leading to large inefficiencies.

Jean
Posts: 977
Joined: Fri Dec 13, 2013 8:49 am
Location: Switzterland

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by Jean » Wed Oct 24, 2018 11:08 pm

Thats why I proposed to pay with pain, because we are mostly equals regarding pain, and carbon emmision isn't a capital we share, it is an aggression toward mankind, so paying for it would be like paying to rape, and that's sound weird.

BRUTE
Posts: 3803
Joined: Sat Dec 26, 2015 5:20 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by BRUTE » Thu Oct 25, 2018 12:11 am

jacob wrote:
Wed Oct 24, 2018 10:43 am
Europe now enjoys a much better infrastructure than the US in terms of transportation and energy distribution.
lol what. importing oil from Russia, solar power in a cloudy climate, wishful thinking - not exactly a strong position? at least France invested in nuclear power for a while.
jacob wrote:
Wed Oct 24, 2018 10:43 am
"Sustainable growth" is the worst oxymoron ever invented. It can not---by definition---work within a bounded system.
there are a lot of atoms left in the universe. the system is bounded only in the same sense that solar energy is finite and dinosaur juice is renewable.
jacob wrote:
Wed Oct 24, 2018 10:43 am
Consider the very fact that the [solution] is being phrased as a financial problem i.e. what price to put on carbon.
prices are used to allocate resources. brute does not see the problem.

vexed87
Posts: 1477
Joined: Fri Feb 20, 2015 8:02 am
Location: Yorkshire, UK

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by vexed87 » Thu Oct 25, 2018 4:04 am

BRUTE wrote:
Thu Oct 25, 2018 12:11 am
prices are used to allocate resources. brute does not see the problem.
Well, for starters you can't buy more time! It marches on regardless :roll:

ajcoleman22
Posts: 22
Joined: Mon Apr 16, 2018 8:45 am

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by ajcoleman22 » Thu Oct 25, 2018 9:32 am

Scam. Follow the money after it is extracted from the economy.

jacob
Site Admin
Posts: 11062
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by jacob » Thu Oct 25, 2018 7:05 pm

To compare and contrast the different methods:

Regulation: This will meet the target, but since it's regulation based, it might not be the best allocation of resources---something the market usually does better. OTOH, it will be possible to allocate based on things that the market doesn't price in well, such as starving people or anyone who lack bidding money, really.

Cap&Trade: This will meet the target (cap), but it will allocate consumption according to what the current market discount rate is. This discount rate might not be the correct one. If it is too high, it will prioritize the present over the future. This will lead to crazy suggestions such as cutting down the Amazon [the rain forest] for the lumber and investing the proceeds in Amazon [the company] because the latter grows faster. It is a crazy suggestion because the latter corporation can not exist without the former rain forest.

Taxes: This will not necessarily meet the target unless the tax rate is exactly right. All the calculations of the social cost of carbon (SCC) are intended to figure out what said tax rate should be. If the tax rate is too high, present humans are worse off because the economy doesn't grow as fast as it could have. If the tax rate is too low, future humans are worse off because their world will not be able to afford to repair the damage caused by the economy. (Think of it as how much money to allocate to car maintenance. Too much and your car is smaller than it has to be. Too little and you can't afford to fix it when it breaks.)

BRUTE
Posts: 3803
Joined: Sat Dec 26, 2015 5:20 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by BRUTE » Fri Oct 26, 2018 2:32 am

vexed87 wrote:
Thu Oct 25, 2018 4:04 am
Well, for starters you can't buy more time! It marches on regardless :roll:
unclear what this has to do with anything, and also wrong. brute pays money all the time to save the aforementioned - for humans to prepare his food, construct shelter, make clothes.. brute saves TONS of time using this method. vexed87 should try it.

BRUTE
Posts: 3803
Joined: Sat Dec 26, 2015 5:20 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by BRUTE » Fri Oct 26, 2018 2:35 am

maybe the flip question: if regulation leads to inefficiencies and taxes won't meet the target, what could be done to lead market participants to correctly price in externalities or internalize them?

in essence, government is just one method to solve the tragedy of the commons. there are plenty of others. AAGW (the first A stands for allegedly) is probably one of the harder tragedies of the commons, but brute is not inherently convinced government is the only way to solve it.

by the way, is there a word for "methods to solve the tragedy of the commons" or "things that turn zero-sum games into positive-sum games"? brute is tired of using a sentence instead of a word.

stand@desk
Posts: 377
Joined: Sun Dec 08, 2013 9:40 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by stand@desk » Sat Oct 27, 2018 7:14 am

Further to the discussion, in Canada, certain industries are exempt (now this is where I have trouble with a carbon tax) "to protect sectors and industries that are trade exposed" to jurisdictions without carbon taxes.

Industries including agricultural processing and "purple fules." Fertilizer plants and smelting. Also, I think the B.C. LNG plant is exempt as well, as I am sure others are. To be fair, some of these exemptions have a time frame around them and are not indefinite. But what bugs me about this is that companies with strong legal teams can use exemptions to Carbon Taxes as a bargaining chip to set-up their business in Canada. If they don't get what they want (exemptions from tax), they will move their business elsewhere.

So it becomes a mish mash of who pays what based on someone else's (governments) idea of who is free to polute and who is not based on lobbying. Kind of like everything else. Just another layer of bureacracy where the strong can use their will and influence and the poor can not. Also, to get the rebates, income taxes have to be filed (maybe this is really the end goal, to have more people filing there taxes which I think more people should) to be eligible for a partial rebate.

The management of the carbon tax collection and redistribution seems like a chance for the sharks to come in a pick away at the weak spots, where the common citizen is left paying for most of the program. I see we need to change our actions on this planet but I suppose most change usually just comes from the middle class and not the rich or poor. The middle class is easiest to change. The very rich can find ways around it and the poor are not organized enough or too marginalized to change significantly.

stand@desk
Posts: 377
Joined: Sun Dec 08, 2013 9:40 pm

Re: Unintended Consequences of Carbon Taxes or the Real Deal

Post by stand@desk » Sat Oct 27, 2018 7:19 am

Some current context of the political side of the Carbon Tax in Canada.

Post Reply