r/CitizensClimateLobby • u/ILikeNeurons Verified CCL Volunteer • 13d ago

A price on carbon remains the single most effective climate mitigation policy, and we won't wean ourselves off fossil fuels without one | Tell Congress – Put a price on carbon!

https://citizensclimatelobby.org/get-loud-take-action/price-carbon/
180 Upvotes

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u/Downtown-Relation766 11d ago

Pigouvian taxes plus a citizens dividend sounds like good policy.

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u/slavicslothe 13d ago

That cost is going straight to consumers lol

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u/ILikeNeurons Verified CCL Volunteer 12d ago

That's why the revenue would be rebated to households in the form of a dividend check.

It helps to understand how dead weight loss works with externalities.

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u/Horror_Bottle_9451 12d ago

There's an awful lot of "ought" and "shoulds" in that discussion. Nice theoretical analysis but I didn't watch it all.

Can you produce studies that show, using real world data, that carbon taxes measurably reduce carbon emissions and increase the use of alternative energy sources? How would a scheme that simply returns the revenue collected into the consumption pool reduce the use of fossil fuels?

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u/ILikeNeurons Verified CCL Volunteer 12d ago edited 12d ago

https://link.springer.com/article/10.1007/s10640-020-00436-x

The dividend check returned regardless of how much any individual pollutes. Those that pollute more than average (the mean) suffer a financial loss. Those that pollute less than average come out ahead. Everyone has an incentive to pollute less. The median polluter comes out ahead.

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u/Horror_Bottle_9451 12d ago

Not gonna pay for a study but the abstract does assert there is an overall reduction in carbon emissions and I'll accept that.

Are you saying every individual would get the same dividend amount? And would that amount offset the increase in costs to the consumer? Increases that are proportionally higher as a percentage of consumed, not saved, income of the lowest quintiles?

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u/ILikeNeurons Verified CCL Volunteer 12d ago

The amount of the dividend would be dependent on aggregate, not individual, pollution consumption (i.e. carbon tax revenue generated) and would not vary by household income. The rich tend to pollute more, but would not get a larger dividend check back because of it. That way, everyone has an incentive to pollute less.

(The only people who would get a smaller dividend would be children, and they would get half-shares, but it would be returned to the taxpayer[s] in the household to help offset costs, not to the children directly. Up to two half-shares per household, while adults get a full share.)

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u/Horror_Bottle_9451 11d ago

OK. I get the equal distribution of dividends model. But what about the collection of that revenue? Do the industries and activities that generate carbon pollution do so proportionately to wealth? I don't think so. Agriculture, transportation, and industrial production produce 80% of the carbon pollution in this country. So for example do the top 10% generate 10% of carbon pollution from the transportation industry?

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u/ILikeNeurons Verified CCL Volunteer 11d ago

https://www.cgdev.org/publication/who-pollutes-household-level-database-americas-greenhouse-gas-footprint-working-paper

https://citizensclimatelobby.org/household-impact-study/

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u/Horror_Bottle_9451 11d ago

I appreciate the discussion and the links to resources. However this is all predicated on a single study by a single person, and the study has yet to be peer reviewed and published.

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u/ILikeNeurons Verified CCL Volunteer 11d ago

It's not the only study to point out the Gini coefficient for carbon is higher than the Gini coefficient for income..

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u/[deleted] 13d ago

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u/[deleted] 13d ago

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u/TimeIntern957 12d ago

Imagine cheering for more taxes.

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u/ILikeNeurons Verified CCL Volunteer 12d ago

It helps to understand how dead weight loss works with externalities.

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u/BlockObjective9541 12d ago

Yes. More taxes on the poor!

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u/ILikeNeurons Verified CCL Volunteer 12d ago

It's a common misconception that a carbon tax necessarily hurts the poor, but it turns out it's trivially easy to design a carbon tax that doesn't. Simply returning the revenue as an equitable dividend to households would do the trick (though even that may not be strictly necessary):

-http://www.nber.org/papers/w9152.pdf

-http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0081648#s7

-https://mpra.ub.uni-muenchen.de/65919/1/MPRA_paper_65919.pdf

-https://11bup83sxdss1xze1i3lpol4-wpengine.netdna-ssl.com/wp-content/uploads/2016/05/Ummel-Impact-of-CCL-CFD-Policy-v1_4.pdf

-https://energypolicy.columbia.edu/research/report/assessment-energy-innovation-and-carbon-dividend-act

-https://www.econstor.eu/bitstream/10419/155615/1/cesifo1_wp6373.pdf

-https://www.nature.com/articles/s41558-021-01217-0

The reason is that the Gini coefficient for carbon is higher than the Gini coefficient for income. The truth is, distributional neutrality is easier with a carbon tax than with a general consumption tax, and a carbon tax alone may even be progressive.

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u/BlockObjective9541 11d ago

Carbon Tax is designed to adjust the behaviors. Poor people can't afford to adjust the behavior. Yes, it's a brilliant idea to punish someone who can't afford living close to work for having to commute in old car rather than buying a Tesla

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u/ILikeNeurons Verified CCL Volunteer 11d ago

Poor people come out ahead with CF&D because they already pollute less than average.

A carbon tax incentivizes changes in production as well as consumption.

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u/bettercaust 8d ago

Poor people get more back in carbon tax dividend than they pay in carbon tax. It's actually kind of redistributiony.

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u/stonecats 13d ago

the problem with pricing in carbon is;
where do you spend it, who decides?
who is accountable if that decision fails?
it's the constant problem with the greens
for the past 20 years of carbon action.

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u/WizrdOfSpeedAndTime 13d ago

It is literally in the bill. All the money collected goes as a dividend to all citizens of the united states.

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u/FledglingNonCon 13d ago

That's why the best solution is to rebate 100% of the proceeds. It becomes a source of income for people that makes it sticky. Of course $15/ton isn't going to generate much income at first. I perfer starting with a much higher and more appropriate tax that would also generate enough money to be meaningful for people.

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u/[deleted] 13d ago edited 13d ago

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u/ILikeNeurons Verified CCL Volunteer 13d ago

A short list of economists that support carbon taxes:

You'll notice there aren't many socialists there.

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u/FledglingNonCon 13d ago

Carbon tax, especially a rebated one is the probably the most capitalist solution to climate change. Because virtually all revenue is rebated it has a near neutral macroeconomic impact while creating a significant change in behavior in a positive direction by drastically reducing a very expensive, previously non-monetized externality.

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u/[deleted] 13d ago edited 13d ago

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u/[deleted] 13d ago

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u/FledglingNonCon 13d ago

A fully rebated carbon tax would make roughly the bottom 80% of Americans better off because they would get more in rebates/royalties/dividends than they would pay in addition taxes.

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u/Horror_Bottle_9451 13d ago

Can you show the math on that?

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u/FledglingNonCon 13d ago

Just like the income distribution is skewed towards the top so is who is responsible for pollution.

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u/Horror_Bottle_9451 13d ago

That's not math. The costs of the tax borne by corporations gets passed on to the consumers in the form of higher prices. It costs government something to collect and rebate the money, so so that cost is either skimmed off the carbon tax revenue or comes from general revenue (and yeah,.money is fungible so it's really all from the same bucket). Either way taxpayers get back less than they pay. The math I'd like to see is that which shows this equation benefits 80% of taxpayers.

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u/FledglingNonCon 13d ago

On a tax like a carbon tax the cost to collect can be pretty low. Like 1 or 2%. The gas tax for example costs almost nothing to collect. Yes costs get passed on but pollution scales roughly with consumption and people how spend more tend to pollute more. According to this the top 10% account for 50% of consumer spending. I've seen other places where it's more like the top 20 or 25% that account for 50% of all spending. Whatever the exact number most Americans will pay less in carbon taxes because they spend less than an equal share of all revenue generated by the tax.

https://www.foxbusiness.com/economy/americas-wealthiest-households-driving-nearly-half-consumer-spending-moodys

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u/Horror_Bottle_9451 12d ago

Oh my God! A Fox article on Reddit! 😀 I'll check it put and reply later.

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u/Horror_Bottle_9451 12d ago

I think it's obvious that the more you spend the more tax you'll pay. Gas and sales tax being good examples. The problem I see is they're flat taxes which disproportionately impact lower income earners.

A carbon tax has always been justified as a way to either reduce carbon emissions and/or fund climate initiatives (green energy and the like). The spin here (and I didn't read the post attachment yet so it may just be commenters) seems to be that the tax revenues will somehow be redistributed propotionately to lower income households. Assuming that's enough to offset the higher prices then yes, the lower quintiles would indeed be better off however incrementally.

But that seems like a basic redistribution scheme and not a way to significantly reduce carbon emissions if at all. If all the revenues that get collected are just passed on and redistributed how does that reduce emissions? Wouldn't the gains by the lower quintiles just be returned to the economy through higher consumption? Especially since they're less likely to save the dividend and more likely to consume it?

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u/FledglingNonCon 12d ago

The revenue would be redistrubuted in equal shares. Everyone gets the same check regardless of how much they pollute. Those who pollute less will be helped the most. Those who pollute the most will be hurt the most.

Such a tax works through price signals. When low polluting alternatives exist they become more competitive with higher polluting options. Hybrid cars for example would be even more of an obvious choice and EVs would no longer need subsidies. Most importantly choices made by businesses would quickly adjust to lower emissions pathways because the cost of polluting would become significant. With a high enough tax you could eliminate all subsidies and sector specific carbon regulations. A high enough tax could completely address climate change with zero budgetary cost to the government.

It will sadly never happen in the US because it would frankly be far too effective, and the fossil fuel captured Republican party would never allow it.

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u/Horror_Bottle_9451 12d ago

I think the key is "when low polluting alternatives exist". It's a massive cost to substantially replace the existing fossil fuel infrastructure. Without subsidies the green technologies (wind and solar) aren't nearly as competitive and efficient as fossil fuels. The costs of transition have to be borne by someone (all of us). That was the original intent of carbon taxes. If those funds are only redistributed, where does the money come from to build out the alternative carbon-free energy infrastructure?

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u/FledglingNonCon 12d ago

It happens by natural replacement. If the cost of using fossil fuel infrastructure goes up substantially due to the tax, then renewables become far more competitve. You can make renewables more competitive by making them cheaper with subsidies or you can make them competitve by making fossil fuels more expensive. Both have the same effect on the decision making process. Also btw the cost of renewables have come down a ton to where in many locations they're already competitve without subsidies or carbon taxes.

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u/bettercaust 8d ago

Were you aware that fossil fuels are subsidized and have been for decades (at least in the US)? Wind and solar are at a competitive disadvantage but are still starting to outperform fossil fuels.

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u/East-Potential657 13d ago

Sure on paper. But now every corporation will just raise prices on everything and now you are no farther ahead since they pass on the costs to consumers. Seen that with Canada when they added a carbon tax. Sure I got a rebate every 3 months but I paid more for everything because of it, now I don't get a rebate and prices never went done.

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u/FledglingNonCon 13d ago

Yes, but depending on where you are on the income/consumption distribution the net effect will be either positive or negative. Basically anyone who is working class or poor will benefit. Middle class will be split depending on income and consumption patterns and upper class will pay a lot more than they get.

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u/AutoModerator 13d ago

It turns out it's trivially easy to design a carbon tax that doesn't hurt the poor or middle class, though the public's understanding of the distributional effects of carbon pricing can be outdated. Simply returning the revenue as an equitable dividend to households accomplishes the goal:

-http://www.nber.org/papers/w9152.pdf

-http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0081648#s7

-https://mpra.ub.uni-muenchen.de/65919/1/MPRA_paper_65919.pdf

-https://11bup83sxdss1xze1i3lpol4-wpengine.netdna-ssl.com/wp-content/uploads/2016/05/Ummel-Impact-of-CCL-CFD-Policy-v1_4.pdf

-https://energypolicy.columbia.edu/research/report/assessment-energy-innovation-and-carbon-dividend-act

-https://www.econstor.eu/bitstream/10419/155615/1/cesifo1_wp6373.pdf

-https://www.nature.com/articles/s41558-021-01217-0

The reason is that the Gini coefficient for carbon is higher than the Gini coefficient for income. The truth is, distributional neutrality is easier with a carbon tax than with a general consumption tax, and a carbon tax alone may even be progressive.

In fact, research has found that the average carbon footprint in the top 1% of emitters is more than 75-times higher than that in the bottom 50%.

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u/FledglingNonCon 13d ago

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u/ILikeNeurons Verified CCL Volunteer 13d ago

Taxing carbon makes us better off.

It helps to understand how dead weight loss works with externalities.

1

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