The New York Times had an editorial yesterday about carbon pricing by the head of Connecticut’s Environmental department. The authors argue:
The best way to drive energy innovation would be an emissions charge of $5 per ton of greenhouse gases beginning in 2012, rising to $100 per ton by 2032. The low initial charge, starting next year, would make the short-term burden on consumers and businesses almost negligible.
An emissions charge is not a radical idea; making people pay for the harm they cause lies at the heart of property rights. European countries participate in a cap-and-trade system that effectively imposes a carbon charge. Even China is pushing to shut down inefficient coal-burning plants by imposing emissions charges. Thus, instituting a carbon charge would have only a minimal impact on American competitiveness — and might even improve it as the incentive for efficiency and innovation kicked in.
Our proposal would apply to all greenhouse gas emissions, so that everybody, and every fossil-fuel-dependent form of energy, would be included. Coal-burning power plants would pay based on the emissions measured at their smokestacks. Oil companies would pay for every gallon of gas or oil delivered. Yes, these costs would be passed on to consumers, but this is what motivates changes in behavior and technological investments.
Some will say that even the modest emissions charge we propose is politically impossible, given the death of the cap-and-trade bill that the House passed in 2009. But the ballooning federal deficit has created a new political imperative. A modest emissions charge will look attractive compared with raising individual income taxes or burdening the economy with new corporate or payroll taxes.