A straightforward carbon tax is still a better solution than cap-and-trade, and there are still similar options to offset the impact of carbon taxes on low-income energy consumers.

The perfect carbon tax package or the perfect cap-and-trade, which to prefer? The problem is that neither the perfect nor the imperfect will fly politically. You are not going to get anywhere telling people you are going to increase their fuel costs. If oil prices remain high this winter (and presumably they will) you are going to hear some real howling.

How about this: a program to modernize energy efficiency in poor housing stock. I used to live in a poor person's house in college - ancient insulation, front door with a hole in it, terrible windows. All this in Des Moines, Iowa. My wife and I paid through the nose to heat this place, and we kept it cold. We had a timed thermostat, so it was 50 degrees from 11 pm to 7 am, 60 degrees from 7 am to 5 pm, and 68 degrees from 5 pm to 11 pm. We put plastic over our windows, thermal stripping on the door, and wore sweaters and blankets and hats, stocking caps, to bed. Not only would energy efficiency improve the quality of life for the poor after carbon restrictions are put into place, it would improve the quality of life for the poor right now.

A different way to offset an increase in price for gasoline for low-income people, is to further subsidize and improve public transit. This could be done partly by not taxing fuel used for collective public transit (buses, streetcars, commuter and intercity rail, etc). Public transit is usually further subsidized in any case, but expansion of quality, speed, frequency and geographic reach of service would require additional public investment.

But rich people spend a smaller percent of their income on food, housing, transportation, haircuts, and everything else that both rich people and poor people buy. They spend a bigger percent on things like airplanes, vacations, politicians, and college.

Just because someone doesn't pay taxes doesn't mean you cannot send them a check. The problem you mention only exists if you build the rebate into the current tax paperwork.

Don't refund income or payroll taxes. Refund the emissions tax itself - i.e. send an equal refund in the form of a check or ATM card to every person. See Peter Barne's Cap and Dividend plan.

How do we fund energy efficiency and such? Take it from the military budget unless you really think the U.S. needs to continue to maintain a highly aggressive foreign policy, spend as much on war capacity as the rest of the world combined.

Who really cares? Cap and trade schemes don't work anyway (look at the EU's failed system). They stifle competition and innovation while failing to bring meaningful reductions in carbon levels.

True regulation, on the other hand, is not only fair, but adheres to strict capitalist principles by providing a level playing field for all participants.

Listen, progressives bluffed their way through the 90's with their market based this and their market based that; in the bargain, they left their core constituencies twisting in the wind. It's time to shed the faux republicanism and give the voters (not donors) what they want.

tax credits can be refundable. I think it can be simple -- expanded EITC plus expanded TANF.

Wealth transfers are a problem in our society. Regardless if poor people do not have enough to eat or freeze in the winter, transferring a bit of wealth to ensure they have a minimum amount of social security is unpopular. I like the idea of refunding the emissions tax to lower income households that Gar Lipow suggested, but such a solution will not be popular and difficult to achieve politically.

shed the faux republicanism

Too late. Faux republicanism is the only feasable way to battle Republicans, according to the lesser of two evils doctrine. Only one Democratic candidate for the presidential nomination was not a bluff progressive, and of course the biggest bluffer won the nomination. Obama will undo some of W. Bush's worst, but it is doubtful he will want to confront the Washington Consensus rather than embrace it.

A carbon tax with all of the revenue returned on an equal, per capita to every citizen is the way to go. Of course, politicians hate the idea since it is an explicit tax and a tax whose revenues they don't get to use to benefit their cronies. And, of course, people like Kevin and Matt don't like the idea because they don't get to do social engineering by giving out the proceeds to their own special interests and subgroups.

If you are really interested in doing something constructive, this is the only politically viable way to do so. Otherwise, Americans will see it for what it is- another way to tax them more and waste and/or redistribute their wealth.

A few other things: ALL new housing, including low-income housing WILL be energy efficient to the best technology. Current home owners (low and upper alike) WILL be given credits (if you pay taxes) or outright subsidy (if you don't) to upgrade your home to higher efficiency.

ALL new homes in areas where it works WILL have solar water heating built in or the builder will be penalized.

More credits and inducements for geothermal heating/cooling for homes. MUCH larger credits and inducements for photovoltaic additions - and this overrides any and all neighborhood association rules to the contrary.

Wrong solution, Kevin and Matt. James Hansen favors carbon taxes. Here’s my idea of how to take that beyond taxing just utilities.

Here’s Hansen on why he favors taxes over cap and trade.

Oh, and SCATblogging is coming up.

Lots of utilities charge more at higher utilization rates; e.g. the per-kilowatt-hour price rises after the first 100 KH, and again after 200, etc. In principle it should be straightforward to attach escalating taxes in the same fashion, levied through the provider.

A real solution w/o all the hocus pocus & mumbo jumbo would be to base everything on a measuring system that has NO SIGNIFICANT EXTERNALITES like the one suggested by the Odum brothers, Eugene and Howard.

Not likely to happen of course cause of all the jerks that feed off the present faith based crap system w/o actually providing value.

"...Growth is more of the same stuff; development is the same amount of better stuff (or at least different stuff)...." - Herman Daly

As Aaron suggests, we can and should improve the energy efficiency of homes (rather than simply helping to pay energy usage bills). Federal Weatherization programs available through Community Action Agencies target such help on those who need it most, and can least afford to pay for it, and would help the rest of us in the process. We should expand the Weatherization program immediately and dramatically.

When the associated retards of the world refused to accept the premise of people like Paul Ehrlich in the early 70s that overpopulation was going to lead to a world of hurt, the number one argument was that economic forces would take care of the problem.

Well here we see the economic forces in action. WTF do you think economic forces are except that certain things become more expensive, and this is harder on people without money???

I can't say I'm going to weep any tears here. A large fraction of the forces of idiocy that continued to breed, continue to breed, in fact scream bloody murder when you point out that their breeding is not sustainable and claim that god will provide, are, in fact, the poor. They are reaping what they have sowed.

A carbon tax with all of the revenue returned on an equal, per capita to every citizen is the way to go.

No, because we'll need some of that revenue to build things that can't be built privately, like mass transit systems and intercity passenger rail.

But I'd agree that at least half of the carbon tax/auctionable cap&trade revenue ought to be rebated equally to all citizens.

Kevin mentions the problem with poor people often not paying taxes. There are ways of dealing with this, too. One is that poor people can file a tax return just for purposes of claiming their rebate, as is happening with the current rebate.

But an even better way would be an idea that's been kicking around for several years: that since the IRS already has most of our tax info already, it could easily do most taxpayers' returns for them.

They could send out a provisional tax return to each person who'd had any income tax or FICA withheld, or had received a 1099 for interest or dividend income or deductible mortgage interest (likely with some ceilings with respect to income or complexity of return), along with a postage-paid return envelope, and say, "Here - this is what we think your tax return looks like. If you agree, sign and return. If not, revise by April 15."

The IRS could do that for everyone with gross income under, say, $60K, with very few mistakes. Provision could be made for citizens with no income at all to register with the IRS so they didn't miss their rebates.

"But an even better way would be an idea that's been kicking around for several years: that since the IRS already has most of our tax info already, it could easily do most taxpayers' returns for them."

I used to think this, but I've now been subject to three successive years of the IRS questioning my return (and eventually admitting its error), and I'm rather less convinced of this. My returns are nothing fancy --- no kid related stuff, no mortgage related stuff; the errors were twice that they had no clue about cap-gains in my mutual funds, and once that they made bad assumptions about when I received certain income.

I say this not to bitch about the IRS (although their grievance procedures strike me as rather less efficient than they could be) but simply to point out that, when you actually deal with them, they appear largely clueless about huge swathes of information related to your tax bill. Conceivably this *could* be changed, but there is a small (but very wealthy, and politically influential) group that presumably like the current situation, where certain items are not reported to the IRS, just fine, so I don't think this will change without a vicious political fight.

Praedor Atrebates wrote: "More credits and inducements for geothermal heating/cooling for homes. MUCH larger credits and inducements for photovoltaic additions ..."

Unfortunately, not only has the US Congress failed to renew the meager investment tax credits for solar energy and the production tax credits for wind energy, both of which are due to expire this year, but now the Federal Bureau of Land Management has declared a two-year moratorium on construction of any new solar electricity generating facilities on public land.

Citing Need for Assessments, U.S. Freezes Solar Energy Projects
By DAN FROSCH
June 27, 2008
The New York Times

Faced with a surge in the number of proposed solar power plants, the federal government has placed a moratorium on new solar projects on public land until it studies their environmental impact, which is expected to take about two years.

The Bureau of Land Management says an extensive environmental study is needed to determine how large solar plants might affect millions of acres it oversees in six Western states — Arizona, California, Colorado, Nevada, New Mexico and Utah.

But the decision to freeze new solar proposals temporarily, reached late last month, has caused widespread concern in the alternative-energy industry, as fledgling solar companies must wait to see if they can realize their hopes of harnessing power from swaths of sun-baked public land, just as the demand for viable alternative energy is accelerating.

“It doesn’t make any sense,� said Holly Gordon, vice president for legislative and regulatory affairs for Ausra, a solar thermal energy company in Palo Alto, Calif. “The Bureau of Land Management land has some of the best solar resources in the world. This could completely stunt the growth of the industry.�

Much of the 119 million surface acres of federally administered land in the West is ideal for solar energy, particularly in Arizona, Nevada and Southern California, where sunlight drenches vast, flat desert tracts.

Galvanized by the national demand for clean energy development, solar companies have filed more than 130 proposals with the Bureau of Land Management since 2005. They center on the companies’ desires to lease public land to build solar plants and then sell the energy to utilities.

According to the bureau, the applications, which cover more than one million acres, are for projects that have the potential to power more than 20 million homes.

All involve two types of solar plants, concentrating and photovoltaic. Concentrating solar plants use mirrors to direct sunlight toward a synthetic fluid, which powers a steam turbine that produces electricity. Photovoltaic plants use solar panels to convert sunlight into electric energy.

Much progress has been made in the development of both types of solar technology in the last few years. Photovoltaic solar projects grew by 48 percent in 2007 compared with 2006. Eleven concentrating solar plants are operational in the United States, and 20 are in various stages of planning or permitting, according to the Solar Energy Industries Association.

[...]

While proponents of solar energy agree on the need for a sweeping environmental study, many believe that the freeze is unwarranted. Some, like Ms. Gordon, whose company has two pending proposals for solar plants on public land, say small solar energy businesses could suffer if they are forced to turn to more expensive private land for development.

The industry is already concerned over the fate of federal solar investment tax credits, which are set to expire at the end of the year unless Congress renews them. The moratorium, combined with an end to tax credits, would deal a double blow to an industry that, solar advocates say, has experienced significant growth without major environmental problems.

So, an government that promotes offshore oil drilling and mountaintop-removal coal mining, not to mention a dramatic increase in highly toxic uranium mining to support a massive expansion of nuclear power, is declaring an moratorium on new solar power plant construction, threatening the very existence of this crucial new industry -- on "environmental" grounds.

You can't make this stuff up.

Direct Transfer Carbon Tax/Cap.

Just take all the revenue collected and give it straight back, but divide it equally for each person in the country. 300 million cheques of exactly the same size.

The rich may only spend 4% of their income on energy but they earn so much more that 4% of a rich persons income is more than 22% of a poor person's income. According to your chart that 4% of a rich person's income is actually $6,249, while the 22% of a bottom quintile person is $2,227. That is, a rich person spends almost three times as much on energy as a poor person even though is 4% vs 22%. All you have to do is give back all of the carbon tax/cap revenue equally and poor people, (and the middle class) will be financially better off, and have an incentive to save on carbon emmissions, and have the money to make carbon lowering investments. Direct Transfer Carbon Tax/Cap.

To the anonymous commenter at 5:25 p.m. June 27,

Then your proposal is politically dead. My idea is unlikely enough to ever pass (just watch the outrage over $4.50/gallon gas), but your's has no chance without being completely useless as method of reducing carbon emissions.

All you have to do is make fossil fuels expensive enough that alternatives are competitive, then let the market work the rest of it out.

Yancey - in terms of effectiveness, I'm missing the difference between my idea and yours. (I was the anonymous poster in question.)

As long as there's no connection between your carbon emissions and your rebate, the amount of the rebate and the effectiveness of the carbon tax (or auctionable cap and trade) in reducing emissions are independent of one another.

However, for "the market [to] work the rest of it out," there need to be choices. And the creation of some of those choices - particularly those involving mass transit - will require public investment. It's the only way to build the subways, the light rail, the fast intercity trains.

Once you've got mass transit, the market can do its thing pretty well in terms of getting people to use it as carbon-fueled transport gets more expensive. But absent that, all the market can do is get them to buy a more economical car when their current car wears out in five years.

Low-Tech Cyclist,

No, public investments are not the only way to build these things. Government builds them now because it is insane to try to compete with an entity that doesn't have to recover the costs of it's investments. It is thinking like yours that caused the overbuilding of interstate highways.

A system that significantly reduces the income of Americans is going to be politically impossible to pass. This is what your proposal amounts to- you want to use at least half of the tax revenue for more spending. To make the carbon taxes even halfway palatable to the electorate, you have to do one of two things- either you return the revenue in full by per capita rebates, or you pass much smaller taxes. In the latter case, you reduce the effect you were attempting to induce in the first place.

If you want to reduce carbon dioxide emissions, you only need give people a clear price signal to look at alternatives- alternatives to energy, transportation, and alternatives to other consumption.

People like Kevin and Matt are trapped in the mindset that only government can decide on and implement these alternatives. Whatever plan you come up with needs to be kept as simple possible since you are asking for a large increase in taxes to enable it. And even with that, I am quite confident nothing will be done, I am just pointing out the approach that will be the most politically viable- an approach that also has the benefit of being the least intrusive, the most flexible, and the least open to rent-seeking.

Yancey: how long has it been since a private entity constructed a subway line in a built-up area?

The problem with the private construction of such a thing is that the benefits that 'pay' for it are too widely spread: one can't recoup the cost at the farebox unless and until gasoline becomes vastly more expensive than now. And if you wait that long to build, it's going to take another decade or two past that point before a completed subway system is in place. But public entities can say, 'this will pay off by reducing congestion on roads, by reducing CO2 emissions by individual car owners, by spurring development along transit lines and increasing the tax base.' These things are worthless to the private builder, who cannot respond to these distant but real data because they're useless to him.

If the goal is to decrease carbon use, you've got to start doing these things much sooner than the market will reward them. Your belief in the efficacy of the market is touching, but it seems to live in a world where investments and payoffs are more neatly matched than they are in this one.

As for the political palatability of auctionable cap-and-trade, I think that - like CAFE standards - is a much easier sell than a direct tax. Somebody else besides the consumer will pay the immediate cost (which initially won't be much anyway; nobody's angling to decrease carbon outputs 50% by 2010), and the market you have such faith in should be able to find the efficiencies that see to it that the cost to the consumer turns out to be modest over the long haul as well.

THe USA should adopt the British CERT funding where utility companies raise their bills slightly ($20 pa) and use this money to fund discount price weatherization. This should be a Federal programme, run by agencies who manage the money. These could set up a network of installers. Later one can add in micro-generation technology for homes. If you have any questions email rintelen@aol.com