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Carbon tax may provide a better way

At a hearing on climate and energy in March, Bob Corker allied himself to an old, often preached but less often practiced notion — to reduce pollution through market-based fiscal measures.
A carbon tax, especially if designed to be revenue neutral, our senator suggested, “would be a much better way” than regulatory approaches to help solve the problem of greenhouse gas emissions and changing climate.
Taxing activities that hurt the environment and people was first advocated by a British economist, A. Pigou, in the 1920s.
As summarized in a Worldwatch Institute report, he analyzed the hidden costs of sulfur and smoke from coal burning factories and fireplaces in Manchester at that time.
At today’s prices, costs of extra laundry cleaning, repairs to corroded buildings, and artificial lighting necessitated by the smoke-darkened air were about $10 million a year.
A steelmaker’s $100 profit, “from a furnace full of coal,” in fact came at a cost of $200 to the city’s residents, making them poorer as a result.
If governments taxed polluting activities for their economic costs, Pigou argued, this would create powerful incentives to prevent or at least reduce the pollution.
In our time with sulfur damage now being much reduced through the Clean Air Act, costs of natural disasters driven by carbon pollution in the atmosphere have risen a thousand fold.
In the U.S. in 2012 alone, agricultural losses from drought and property and infrastructure damage from hurricanes, exceeded $100 billion. Worldwide, the weather-related disaster costs are staggering — and continually and sharply rising since 1980.
As World Bank analysts documented late last year, averaging around $50 billion in 1980, they now exceed $200 billion a year.
The headline for the economic-damage facts collated in that report sums it up nicely: “Natural Disasters Have Cost $3.8 Trillion Since 1980, World Bank Says.”
Against the background of such horrendous costs, Tom Friedman of the New York Times has long advocated a carbon tax to reduce our greenhouse gas emissions. In “The Market and Mother Nature,” he asked: “How could a carbon tax not be on the table today?”
Twenty-five years ago, a government scientist from NASA alerted policy makers in the Congress to the potentially grave problem of climate disruption that rising concentrations of greenhouse gases would cause.
At the Congressional hearing now, Corker both praised Dr. James Hansen’s “excellent credentials” in climate science and acknowledged a “like-mindedness” to the latter’s recommendation, in testimony in the hearing and earlier writing, of a revenue-neutral carbon tax.
In Hansen’s proposal, 100 percent of the money from a simple fee on the carbon content of fossil fuels, collected at domestic mines and ports of entry, would be rebated back in equal amounts to all legal U.S. residents.
The fee rising gradually, it would promote energy efficiency and spur more innovation and speedier development of clean, renewable energy sources.
A carbon tax, as Corker seemed to suggest favoring, would indeed set the right signal to “the market” to solve the urgent climate-disturbance problem we face.