On the Simple Beauty of a Carbon Tax

On the Simple Beauty of a Carbon Tax

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    • #5691
      James Alcock

      On the Simple Beauty of a Carbon Tax and Its Implications            
      If you agree that we need to reduce carbon dioxide emissions and control global climate change, these two simple diagrams explain it all as to how and why a carbon tax would do the job. A carbon tax could be a beautifully simple way to direct our economy toward a more sustainable and a more just future. More on that later, but first examine the figures.            
      A systems approach to problem solving traces the flow of material, money or and (or) energy through a system to better understand points of access and control. In an analysis of the release of carbon (or carbon dioxide) to the atmosphere one might consider the three variables: the cost of fossil fuels, the amount of fossil fuels burned in a given time period, and the amount of CO2 released to the atmosphere. In tracing the movement of carbon from fossil fuel to the atmosphere, we can draw a flow chart[1] that includes those variables and how a change in one might impact the others.
      By classical economic theory, an increase in the cost of fuels reduces the amount of fossil fuels burned. This negative correlation is shown by the minus sign beside the arrow showing that the cost of fossil fuels affects the amount of fuel burned. In contrast burning more fuel increases the amount of CO2 released so that arrow has a plus sign to show the positive correlation. The problem with this simple system is that there is no potential for internal control because the amount of CO2 has no impact on amount of fuel burned. In systems talk, there is no feedback that would allow the system to self-regulate and establish an equilibrium or nearly constant amount of atmospheric CO2.            
      Feedback[2] can be introduced though by adding a carbon tax. If we were to establish a policy that set a tax on CO2 based on a goal of gradually establishing an equilibrium between the use of fossil fuels and the amount of CO2 in the atmosphere, the system could become self-regulating.

      With a tax on the carbon that use of fossil fuel releases to the atmosphere that reflected both a desired level of atmospheric CO2 and the amount of CO2 being released, the cost of coal, petroleum and natural gas can be made responsive to their impact on climate. A tax and a higher price for fossil fuels can lead to changes in economic behavior such as more efficient energy use and the development of alternative energy sources. These actions would reduce the amount of fossil fuel used and so the amount of CO2 produced. The system, now controlled by negative feedback[3], should act to create a stable steady state in which the variables only change in response to some external force or shock. For example, the price of fossil fuels is affected by many factors that decrease or more likely increase their cost and so alter the system’s behavior.  An intelligently designed tax could even be used to moderate a severe shock and so limit the impact of an event, like a war in the Middle East, on the economy.            
      Arguments are made that a carbon tax would be unfair because it will destroy jobs and disproportionately impact the poor and middle class because we spend a greater percentage of our income on energy – driving our cars, heating our houses, and cooking our meals. The issue of monetary fairness can be easily resolved by making the tax revenue neutral for lower income Americans it might harm either through direct rebates from the IRS or by using the carbon tax to reduce the income tax on lower income Americans. Even if the issue of job creation is real, a somewhat doubtful assertion because the tax should create new economic opportunities, the problem is easily resolved by using a portion of the tax to rebuild the nation’s energy infrastructure. This badly needed economic stimulus program would help to improve our nation’s economic future by improving efficiency and reducing the waste of human potential caused by the current state of high unemployment.            
      Of course, a carbon tax would amount to a WAR ON COAL! (and oil and natural gas). Powerful corporations and their owners will continue to do all they can to delay change through their powerful lobbies and their media campaigns designed to confuse. Bill McKibben’s analysis of the giant petroleum companies’ bottom-line dependency on getting every bit of fossil fuel of the ground is enlightening.  Because coal and oil, because Exxon, Mobil, Shell, Dominion Energy, the Koch brothers, etc. are able to invest hundreds of millions of dollars in controlling the political system they have prevented meaningful action on climate change and scuttled any serious political discussion of a carbon tax. Until enough of us are willing to reclaim our political rights, a simple, beautiful solution to what is probably the world’s most dangerous problem will not be implemented. Instead we can expect more Sandys, more wildfires, more heat waves, and in the future even worse as climate change leads to societal upheaval.
      [1] A little more about flow charts and systems.          
      In the flow chart, the arrow is used to designate that the variable at the arrow’s tail affects the variable at the arrow’s head.  In the first flow chart, the cost of fossil fuel has an affect on the amount of fossil fuel used. The sign next to the arrow shows how the first variable affects the second. In this case, the negative sign is used because there is a negative correlation between the variables. An increase in price lowers the amount of fossil fuel used. A decrease in price will result in more being used as, for example, thermostats are set a little higher in winter when heating oil is cheap and a little lower when it is expensive.  
      [2] Recognizing feedback in the flow chart            
      If a system contains feedback, the arrows connecting the variables will form a continuous loop. In this example, an increase in the carbon tax increases the cost of fossil fuels  which in turn reduces their use and then the amount of CO2 released to the atmosphere. If the level of CO2  in the atmosphere were to fall, then the tax could be reduced and the price of fuel would go down leading to another round of changes. In other words there is a continuous and circular cascade of effects until the system reaches an equilibrium state, assuming the system is stable. There are feedbacks that destabilize the system and lead to ever increasing change. Possibly the extreme greenhouse conditions of the planet Venus are the result of a runaway climate system controlled by a destabilizing feedback.  
      [3] The sign of feedback and stability           
      The sign of feedback is the algebraic product of the signs attached to the arrows in the flow chart that form the loop. Here a minus times plus times plus times plus produces a minus or a negative effect or negative feedback. Negative feedback will always act to stabilized systems it controls. Positive feedback is not so consistent. There are systems in which the positive feedback acts to control the system in a stabilizing manner. There are also systems that are destabilized by positive feedback. The good news for the carbon tax is that it produces a negative feedback so long as its level is tied to amount of CO2 being produced and so can create a stable system.  

      • This topic was modified 7 years, 11 months ago by James Alcock.
      • This topic was modified 7 years, 11 months ago by James Alcock.
    • #5751
      Richard Hake

      I agree with James Alcock about the virtues of a Carbon Tax. However, I doubt that a Carbon Tax is a panacea that will save Planet Earth – see, e.g., my MAHB post “Would a Carbon Tax Alone Save Life on Planet Earth? Probably Not: Overpopulation Must Also Be Addressed” at  http://stanford.io/11jEOGS . See also Hake (2013).
      Richard Hake
       “If any fraction, large or small, of the observed global warming
      Can be attributed to the actions of humans,
      Then this is positive proof that the human population,
      Living as we do,
      Has exceeded the carrying capacity of the Earth.”
         – Al Bartlett (2013)
      REFERENCES [URL’s shortened by http://bit.ly/ and accessed on 26 July 2013.]
      Bartlett, A. 2013a. “Re: Our planet passes a climate benchmark,” online on the CLOSED! Physoc archives at http://bit.ly/10loNjf. Post of 4 Jun 2013 12:07:22-0600 to Physoc. To access the archives of PHYSOC one needs to subscribe : – ( , but that takes only a few minutes by clicking on http://bit.ly/dVm2AM and then clicking on “Subscribe or Unsubscribe” in the right-hand column.  If you’re busy, then subscribe using the “NOMAIL” option under “Miscellaneous.” Then, as a subscriber, you may access the archives and/or post messages at any time, while receiving NO MAIL from the list!
       Hake, R.R. 2013. “Would a Carbon Tax Alone Save Life on Planet Earth? Probably Not: Overpopulation Must Also Be Addressed.” Online on the OPEN! Net-Gold archives at http://yhoo.it/1aRLIqF. Post of 27 Jun 2013 14:55:33-0700 to AERA-L and Net-Gold. The abstract and link to the complete post are being distributed to various discussion lists including MAHB and are also on my blog “Hake’sEdStuff” at http://bit.ly/19zyUHo with a provision for comments.

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