Carbon taxes - Reducing carbon-dioxide emissions by putting a price on carbon

1. Carbon taxes -Reducing carbon-dioxide emissions by putting a price on carbon Welcome!

2. The rise of the C tax and its recent stumble

3. Overview • Reasons for a C tax • Pigouvian-tax game - what’s a C tax & how will it work • Economic impacts of a C tax • 2 current versions of C tax • What you can do • Questions!

4. Why a carbon tax? It’s time for Bob to talk about the reasons we would want to consider a carbon tax.

5. Thanks, Bob! • Incentives • Innovation • Changes in behavior and technology

6. What have you already heard about C taxes? . . .

7. Externalities • Who knows what an economist means by “externality?”

8. Pigouvian-tax game • Nutritionists and medical doctors say that we consume too much salt. How can we fix that? • Apply a tax • A model of an economy reducing consumption of a good with externalities by taxing it

9. Pigouvian tax • Arthur Pigou • Externalities • Impact of externalities on consumption • A tax applied to a market activity that generates negative externalities (costs for somebody else).

10. Social Costs External Costs = Pigouvian tax Private Costs Salt Health effects Delivery Marketing Processing Transportation Mining Exploration Fossil Fuels Global warming Damage to environment Damage to property Health effects Delivery Marketing Processing Transportation Mining Exploration Social Costs

11. Components • 3 goods - cherries, salted almonds & unsalted almonds • 3 salt-tax levels - none, low and high • 3 income levels - 20, 30 and 40 cents per round • 3 rounds • Round 1 - pre-tax • Round 2 - low tax • Round 3 - hi tax

12. Volunteers / employees • Qualifications • Willing to eat cherries, almonds and salted almonds • 3 roles • Producer • Banker • Worker

13. Pre-tax round • Pay wages • Purchase goods • Prices • Cherries 10 cents • salted almonds 2 for 5 cents • unsalted almonds 2 for 5 cents • Consumption

14. How to tax • Game • Problem - Salt isn’t a separate good in our model economy. Can’t tax it directly. • Solution - Tax the good with added salt • Carbon • More complicated

15. Taxing carbon - a misnomer, ... • CO2 is the real problem. • Except that some other green-house gases are even more potent. • Fossil fuels differ in the amount of CO2 they emit when burned. • We don’t buy carbon or carbon dioxide by themselves very much. • Carbon is converted to CO2 at many places in our economy.

16. CO2 equivalentsFrom 2013 IPCC AR5 p714

17. Pounds of CO2 emitted per million Btu of energy(From Energy Information Administration)

18. Some answers • What to tax? • Tons of CO2 equivalents emitted by each fossil fuel • Where to impose the tax? • At the mine, well or border • Let the tax percolate thru the economy, affecting everybody in proportion to their CO2 emissions.

19. Low-tax round • Choose tax level to achieve target reduction in salt consumption • Adjustments to and impacts of tax - by income level • Conservation • Substitution • Tax collected

20. High-tax round • Dividend • Equal amounts • Progressive nature • Adjustments to, & impacts of tax & dividend - by income level • Reduction in salt consumption

21. End of game What answers has it provided? What questions has it prompted?

22. Economic models It’s time to let Bob tell you about some serious attempts to explore the impacts of a C tax.

23. Comparison of 2 legislative proposals • Sanders-Boxer Bill • Carbon Fee & dividend

24. Comparison of 2 legislative proposals

25. Helping build political will for a stable climate • Write letters to editors and to members of Congress, and op-ed articles • Lobby Congress • Join groups • 350.org • 350Vermont • Citizens’ Climate Lobby • National Wildlife Federation • Rising Tide • Sierra Club • Vt Natural Resource Council • . . .

26. More than 5,000 volunteer members • More than 1,600 letters to the editor published last year • More than 480 meetings with members of Congress or their staffs at annual Conference last month