ClimateGate news

Tuesday, June 12, 2007

The T3 tax

Canadian economist, Dr. Ross McKitrick proposes a carbon tax based on and tied to actual measured levels of anthropogenic global warming. To the climate alarmists, this is called putting you money where your mouth is.

From today's Financial Post: [emphasis added]

The approach is based on two points of expert consensus. First, most economists who have written on carbon-dioxide emissions have concluded that an emissions tax is preferable to a cap-and-trade system. The reason is that, while emission-abatement costs vary a lot, based on the target, the social damages from a tonne of carbon-dioxide emissions are roughly constant. The first ton of carbon dioxide imposes the same social cost as the last ton.

In this case, it is better for policy-makers to guess the right price for emissions rather than the right cap. Most studies that have looked at that the global cost per tonne of carbon dioxide have found it is likely to be rather low, less than US$10 per tonne. We don't know what the right emissions cap is, but, if we put a low charge on each unit of emissions, the market will find the (roughly) correct emissions cap.

Second, climate models predict that, if greenhouse gases are driving climate change, there will be a unique fingerprint in the form of a strong warming trend in the tropical troposphere, the region of the atmosphere up to 15 kilometres in altitude, over the tropics, from 20? North to 20? South. The Intergovernmental Panel on Climate Change (IPCC) states that this will be an early and strong signal of anthropogenic warming. Climate changes due to solar variability or other natural factors will not yield this pattern: only sustained greenhouse warming will do it.

Temperatures in the tropical troposphere are measured every day using weather satellites. The data are analyzed by several teams, including one at the University of Alabama-Huntsville (UAH) and one at Remote Sensing Systems (RSS) in California. According to the UAH team, the mean tropical tropospheric temperature anomaly (its departure from the 1979-98 average) over the past three years is 0.18C. The corresponding RSS estimate is 0.29C.

Now put those two ideas together. Suppose each country implements something called the T3 tax, whose U.S. dollar rate is set equal to 20 times the three-year moving average of the RSS and UAH estimates of the mean tropical tropospheric temperature anomaly, assessed per tonne of carbon dioxide, updated annually. Based on current data, the tax would be US$4.70 per ton, which is about the median mainstream carbon-dioxide-damage estimate from a major survey published in 2005 by economist Richard Tol. The tax would be implemented on all domestic carbon-dioxide emissions, all the revenues would be recycled into domestic income tax cuts to maintain fiscal neutrality, and there would be no cap on total emissions.

This tax rate is low, and would yield very little emissions abatement. Global-warming skeptics and opponents of greenhouse-abatement policy will like that. But would global-warming activists? They should -- because according to them, the tax will climb rapidly in the years ahead.

The IPCC predicts a warming rate in the tropical troposphere of about double that at the surface, implying about 0.2C to 1.2C per decade in the tropical troposphere under greenhouse-forcing scenarios. That implies the tax will climb by $4 to $24 per tonne per decade, a much more aggressive schedule of emission fee increases than most current proposals. At the upper end of warming forecasts, the tax could reach $200 per tonne of CO2 by 2100, forcing major carbon-emission reductions and a global shift to non-carbon energy sources.

Global-warming activists would like this. But so would skeptics, because they believe the models are exaggerating the warming forecasts. After all, the averaged UAH/ RSS tropical troposphere series went up only about 0.08C over the past decade, and has been going down since 2002. Some solar scientists even expect pronounced cooling to begin in a decade. If they are right, the T3 tax will fall below zero within two decades, turning into a subsidy for carbon emissions.
More at Newsbusters.

It sounds logical enough. A carbon emissions tax offset by income tax cuts. If anthropogenic global warming continues to increase, the carbon tax will increase accordingly. If, as many suspect, man-made global warming is greatly exaggerated and temperatures do not rise as predicted, the tax will remain low or even disappear if temperatures cool.

Let's see if this proposal has any legs.


Tom Harris said...

I think this proposal is potentially dangerous since it is based on the idea that the climate models are right, CO2 warming WOULD be reflected in that part of the atmosphere first, and this may very well not be true.

Initially, I think warmers would not agree to the proposal since they really do know the models are suspect and then we would win: we could say, "See, you are not confident enough about your models to put your money where your mouth is."

But what if they take our bluff and say yes, we are confident the models are correct and the, perhaps entirely coincidenatlly, the atmosphere does warm as the models predict (perhaps for entirely different reasons than the models predict), then we are stuck with the large carbon tax. Since the models are so suspect, the warming may have nothing to do with CO2 but we are then stuck with a big tax simply because, coincidentally, temp rose as the models predicted.

I'd say this game of chicken is too risky.


Terry said...

If the temperature goes down, will we get a rebate for emitting more CO2? That would be VERY interesting.