Increasing The Cost Of Carbon Is Critical For Climate Control


Don’t call it a carbon tax. Everybody hates the idea of taxes. But unless society addresses the damage done by burning fossil fuels, the world is on a collision course with reality. Cataclysmic changes are in the offing and those changes will impose enormous costs on our global society. Who will pay them?

The bottom line is that the carbon dioxide created when fossil fuels are consumed is accelerating the rise in global average temperatures. Higher temperatures are melting glaciers and polar ice caps, which leads to rising sea levels. Those higher waters threaten most of the world’s major cities. What will be the cost of protecting them from the ravages of sea water? No one knows the answer precisely, but the opening estimates are in the trillions and go up sharply from there. Americans don’t want to pay 25 cents a gallon more for gasoline under the president’s plan to add a carbon fee of $10 a barrel on oil? Imagine how they will scream when New York City asks for $5 trillion to keep the ocean from flooding Wall Street?

Climate change is leading to alterations in global weather patterns that are still not completely understood. But the best guess is that many parts of the world will become much drier than before, making it impossible to grow crops. Other regions will be far wetter, which will also inhibit normal agriculture. Fewer crops means famine and starvation for hundreds of millions of people. Billions may be affected. We just don’t know. What will be the cost of feeding all those people?

Atmospheric pollution is recognized as a leading cause of illness and disease among humans. Who should pay for the medical care all those unhealthy people need? Who will make up the millions of man-hours of lost productivity when workers are home sick instead of contributing to the economy? If food and water become scarce, wars will be fought over declining resources. Would Americans be happy to see the world explode in conflict and pay for endless war rather than have the price of gas go up a quarter? If we are horrified by the Syrian refugee crisis today, expand it by a factor of 10. Are we willing to countenance that for the sake of a few pennies?

The point is, burning fossil fuels has costs. Enormous costs, in fact. But the wealthiest citizens of the world have convinced themselves and convinced us that they should not have to pay the costs associated with their products. They are so brazen as to suggest that doing so puts an unreasonable burden on the capitalist system. Are you buying that?

A new report from MIT entitled “Will We Ever Stop Using Fossil Fuels?” certainly does not. According to Science Codex, it suggests that in the absence of a rational carbon pricing structure, “the world is likely to be awash in fossil fuels for decades and perhaps even centuries to come.” It goes on to find that burning all the available conventional fossil fuel will raise global average temperatures 10 to 15 degrees Fahrenheit by the year 2100. Burning oil shale and methane hydrates, two more potential sources of copious fossil fuels, would add another 1.5 to 6.2 degrees Fahrenheit to that. “Such scenarios imply difficult-to-imagine change in the planet and dramatic threats to human well-being in many parts of the world,” the report concluded.

“You often hear, when fossil fuel prices are going up, that if we just leave the market alone we’ll wean ourselves off fossil fuels, but the message from the data is clear: That’s not going to happen any time soon,” says co-author Christopher Knittel, an energy economist at the MIT Sloan School of Management. “If we don’t adopt new policies, we’re not going to be leaving fossil fuels in the ground,” he says. “We need both a policy like a carbon tax and to put more R&D money into renewables. Clearly we need to get out in front of climate change, and the longer we wait, the tougher it’s going to be,” Knittel emphasizes.

In economic theory, things like rising sea levels, famine, and poor health outcomes are called externalities. Elon Musk made a clear and powerful argument for including the costs of such externalities when he addressed the Paris Conference on Climate Change last December. A video of his presentation is included above. “Taxes on externalities are not inconsistent with the free-market system,” Knittel says. “In fact, they’re required to make the free-market system achieve the efficient outcome. This idea that a pure free-market economy never has taxes is wrong.” In other words, the so-called leaders of the Republican party who are always bleating about the evils of government regulation are spouting ideological drivel, rather than sound economic policy.

The case for a carbon fee is simple. Mankind has been using the earth as a toilet since the beginning of the Industrial Revolution. Doing so is simply unsustainable. Continuing to do so is like playing Russian Roulette with an automatic rifle and full clip of ammunition. Ideology won’t save us. In fact, it will bury us just as surely as global nuclear war. We make dog owners clean up after their pets. Why do we not insist that industrialists like the Koch Brothers clean up the mess they have created for their own selfish purposes?

About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.
  • Rick Danger

    +1,000,000,000 couldn’t have said it better Steve!

  • GregS

    I’d much prefer a straight carbon tax as opposed to those cap and trade schemes that can be manipulated.

    • Steve Hanley

      I agree. Thanks for sharing your thoughts with us.

    • Guy Hall

      I love the simplicity in the carbon tax approach, or the carbon fee and dividend program. It does need to be pointed out however that funding is necessary for items critical to EV adoption, but without a supporting business case or that need support as they come down the cost curve. Examples include current ev prices and fast charging stations. California used its cap and trade dollars to fund these two.

  • JohnCz

    While I like the even handedness of the $10 per barrel approach, lets not kid ourselves … this will not move consumers. I’d cut that to $5 dollars per barrel and add $1000-5000 per ICE vehicle based on its MPG rating or displacement. Perhaps even add $200 per year to vehicle registration for vehicles 10 years or older.

    • bioburner

      Your ideas do have merit. I like the idea of taxing the cars based on miles driven and MPG. It night be simpler to just tax the gasoline. Oil is used to produce many other products some of which may have little impact on climate change.
      Its just sad that here in Virginia at lease going after the holy grail—gasoline is not going to happen.

    • Steve Hanley

      I applaud your ideas. Whether it is a fee on oil or fees imposed on ICE cars, the effect is the same — make driving a fossil fuel car more expensive. People vote with their wallets. Most people are going to go with the least expensive option most of the time. That is economics 101.

      Most people don’t care as much about saving the world as they do about getting to work and back again as inexpensively as possible. Let’s arrange things so that driving an electric car is the most affordable option. The rest will take care of itself.

  • Eco Logical

    I agree with putting a price on CO2 due to it’s climate affects. Also, there are many toxic emissions from ICEs such as NOx and SOx that create nitric acid and sulphuric (battery) acid when they combine with water in our lungs causing asthma, emphysema and asphyxiation (death). CO (carbon monoxide) is toxic, in small amounts causing headaches but higher concentrations interfere with oxygen exchange in our lungs causing asphyxiation. Then there’s ozone but the really slow killer is soot (particulate matter primarily from diesels) that consists of tiny carbon fibers that embed in our lungs. Similar to asbestos fibers, our lungs can’t remove the soot fibers so they ‘scar over’ and eventually when our lungs are completely scarred over they can no longer exchange oxygen causing asphyxiation, otherwise known as asbestosis. In my opinion there should be a higher price on toxic emissions since they represent a clear and present danger to our collective health.

    • Steve Hanley

      An excellent exposition!