I came across this recent op-ed in the Houston Chronicle whose authors argue for a carbon tax which increases over time. I'm a strong supporter of a price on carbon but I'm not convinced about the efficacy of a tax for a few reasons. First, I think its a hard sell these days. Cap and trade has a difficult enough time getting traction in a down economy, I can't imagine a hard tax getting through. Secondly, I don't think it'll be as straight forward as proponents suggest. Anyone who has ever done their own taxes knows how complex they can be.
Most importantly, I don't think a carbon tax offers the same environmental certainty you get from a cap and trade program, in which the cap tightens over time. Not only does a "cap" ensure the emissions reductions necessary to avoid dangerous climate change, the "trade" allows for greater flexibility in the market place enabling business (that's right, business) to make the appropriate choice in meeting its targets. But it's also important to remember that cap and trade is one element of a wider suite of options needed to deal with the challenge.
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I think that a revenue-neutral carbon tax (or better yet, a carbon tax shift approach) will end up being more politically feasible than cap and trade. Cap and trade has already taken on so much baggage that I don't think it's tenable with Rust Belt Dems or with Republicans of any stripe. A carbon tax, on the other hand, is being supported by leading scientists, economists and opinion leaders and is something that far-left and far-right pols can get behind. But the worst outcome is to be so married to cap and trade that we don't even allow for the possibility of alternate approaches and then nothing gets done...
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