How Do We Curb Carbon: The Debate Over an Emissions Cap or a Tax

Yale Environment 360. Posted May 19, 2009.

An economy-wide cap-and-trade policy is supported by President Obama, by Congressional leaders drafting bills in the House and Senate, and by the 25 major corporations and 5 NGOs working together as the U.S. Climate Action Partnership. Greater flexibility to achieve emissions reductions in a cost-effective manner and greater certainty that environmental objectives will be met are key advantages of a cap-and-trade policy.

Baruch Fischhoff, Howard Heinz University Professor of Social and Decision Sciences and Engineering and Public Policy at Carnegie Mellon University.

I favor a well-designed, comprehensive national energy policy, comprised of simple components, such a revenue-neutral energy tax.

A national energy policy with simple components would focus on easily understood outcomes, such as reducing environmental damage and improving industrial efficiency. It would reward innovation in engineering, rather than in designing financial and legal instruments. It would be transparent and trustworthy. It would favor a simple carbon or energy tax over a complex cap-and-trade program. Such a tax has clear goals (e.g., use less energy) and direct responses (e.g., adopt efficient technologies). It should even have simpler loopholes, such as giving special interests explicit exemptions, rather than giving them unfair portions of the capped allowance of permissible energy consumption.

A comprehensive national energy policy would create pressure to look for common ground that allows the players to support one another's programs. It would provide politicians with the cover that complex options can offer: "I'm supporting subsidies for nuclear power, but I'm getting aggressive energy conservation, focused on low-income families." It would signal to the public just how big the problems are.

Designing the best simple, comprehensive policy will require analytical and empirical research. For example, electricity-pricing programs will need rigorous pre-tests and field evaluations, along with tariffs providing appropriate incentives for utilities to reward their customers' energy conservation. Energy-saving products will need intensive usability tests. Political leaders will need clear, nuanced descriptions of the public's desires, free from pundits' interpretations and opinion polls' simplifications. Such descriptions can come from intensive interviewing and case studies of experiences like British Columbians' responses to the province's revenue-neutral carbon tax and Americans' responses to our complex, fragmented financial bailout.

I predict that a well-designed, comprehensive, simple energy policy would convince many individuals that its proponents are serious about addressing the energy-and-environment problem, not using it as an excuse to do more favors for special interests.

See more stories tagged with: global warming, climate change, cap and trade, waxman-markey, climate bill, climate legislation, carbon tax

Liked this story? Get top stories in your inbox each week from Environment! Sign up now »