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The following article has gone a long way to convince me that we
might need a small carbon tax as a hedge against the uncertainty of
our climate change projections. We would need to keep it small,
because a carbon tax will affect everything from the price of gas to
the price of milk. If we care about the underprivileged in our
society, we'd want to phase it in slowly and give our society time
to make more fuel-efficient cars and whatnot. I would set it up so
that the taxes fund more research into alternative energy solutions,
power grid updates, and energy storage solutions. I would also
suggest setting up potential adjustments to this tax so that as the
uncertainty goes away we use raise or lower it as appropriate.<br>
<br>
The reason I could get behind a small carbon tax and not carbon
credits is basically a look at where the money goes. Money from a
tax can be tracked and re-purposed as needed with accountability.
Carbon credits will only make the richest of us richer, and more
work will go into ways to screw the system than will go into
research into possible alternative energy sources. <br>
<br>
I wish more people would look towards the center of this debate.
You have the Far Right kooks (of which I'm not one) and you have the
Far Left kooks (of which I'm also not one). A complete lack of
concern on one side and a desire to return us to the Middle Ages on
the other.<br>
<br>
Anyway, here is the article:
<a class="moz-txt-link-freetext" href="http://blogs.telegraph.co.uk/finance/timworstall/100017600/yes-climate-change-is-a-problem-and-yes-we-do-have-to-do-something-but-in-britain-weve-done-it-already/">http://blogs.telegraph.co.uk/finance/timworstall/100017600/yes-climate-change-is-a-problem-and-yes-we-do-have-to-do-something-but-in-britain-weve-done-it-already/</a><br>
<br>
<h1>Yes, climate change is a problem and yes, we do have to do
something: but in Britain, we've done it already</h1>
<br>
<p><span class="byAuthor">By <a
href="http://blogs.telegraph.co.uk/finance/author/timworstall/"
title="Posts by Tim Worstall" rel="author">Tim Worstall</a></span>
<span class="lastUpdated bylineCategory"><a
href="http://blogs.telegraph.co.uk/finance/category/economics/"
title="View all posts in Economics" rel="category tag">Economics</a></span>
<span class="lastUpdated">Last updated: June 1st, 2012<br>
</span></p>
<p><span class="lastUpdated"><br>
</span></p>
<p>Perhaps we can sit down and discuss this climate change thing
like the adults we are? Put the Delingpoles over here, the
vilenesses that are Greenpeace, FoE and the rest of the
forward-to-the-Middle-Ages crowd over there, and in that vast
howling wasteland between the two positions discuss what we really
know and what we ought to do about it?</p>
<p>Start with the simple fact that there are really only two
important things we know about the entire idea. The first of these
is that the direct effect of a doubling of atmospheric CO2 is
trivial, something simply not to get worried about. Yes, we
convert all the methane, NOx and all the rest into their CO2
equivalents, giving us not CO2 but CO2-e. And we know very well
what the effect, directly, of a doubling of this from
pre-industrial levels will be. A 0.7 degree rise in average
temperature. This is simply straight physics and it is indeed
highlighted in all of the IPCC reports. Less than the difference
between Yorkshire and Cornwall, possibly than Somerset and
Cornwall. At this level, quite frankly, who gives a damn?</p>
<p>The second thing we know absolutely is that this is not the end
of the story, for there are feedbacks, and the really important
thing is that we don't know where they will lead. Feedbacks are
all of the processes started by that 0.7 degree warming, and which
then amplify (positive feedbacks) or dampen (negative feedbacks)
that initial direct effect of the CO2. You can take your pick from
an improbably long list: sea ice melting reduces reflection of
light back out into space, allows the ocean underneath to be
warmed: a positive feedback. More CO2 increases plant growth
(which is why commercial greenhouses pump the stuff in) which
leads to more humus formation and thus more carbon locked up in
the soil: a negative feedback.</p>
<p>The cumulative effect of all of these feedbacks is something we
simply do not know. We don't even know what all the feedbacks are;
and of those we do know about, we're not sure in which direction
they move. While there are some reasonable guesses about what the
total number and direction of them all added together, we're not
certain whether that total effect is positive or negative.</p>
<p>The general answer from the IPCC and the like is that climate
sensitivity, the total effect adding in all the feedbacks positive
and negative, is in the 2 degree to 4.5 degree range, most likely
at about 3 degrees. But there are entirely honest and reasonable
scientists (meaning those not bought by either Big Oil or Big
Environment) out there arguing that this range is either too high
or too low: that climate senstivity is such that possible outcomes
range from "who the hell cares" to "whoops, there boils Flipper!"</p>
<p>It is this "we don't know" that leads to needing to do something.
Economists call this uncertainty, and the correct and reasonable
reaction to uncertainty is insurance. It can sound a little odd:
the idea is that the less we know about the effects of climate
change, the more we ought to do about it. But consider insurance
against your house burning down. If you know the chance is 1 in a
million then you'll not be willing to pay (much) more than one
millionth of its worth to insure it. If the risk is 1 in 10,000,
then perhaps one ten-thousandth of the value. But if you are
uncertain what the risk is then you are willing to pay much more
of the value in order to gain insurance.</p>
<p>At our current state of knowledge about climate change, we do not
face risk. We face uncertainty: the greater that uncertainty about
climate sensitivity, the more we should be willing to expend to
insure ourselves.</p>
<p>So this is what we know about climate change. We know there will
be some effect from emissions, and we also are uncertain about
what that effect will be. The uncertainty itself means that we
should do something. But what?</p>
<p>I've already explained this <a
href="http://blogs.telegraph.co.uk/finance/timworstall/100016929/why-the-answer-is-a-carbon-tax/">here</a>.
Don't listen to the ignorant hippies to our Left, or to those
shouting that there's nothing to it from the Right. The answer is,
quite simply, a revenue-neutral carbon tax.</p>
<p>The outcome of all of this climate science is that we face an
economic problem. How much will it cost us to reduce this
uncertainty, against the benefit we will receive from reducing it?
The answer is not going to come from those who are ignorant of
economics, nor from those who deny the uncertainty. It's an
economic problem, so we need to use the tools of economics to
study it.</p>
<p>Which is what a number of people have done. Amazingly, over on
the hysteria-about-Flipper side, Nasa's James Hansen manages to
get the point: a tax on fossil fuels as they come out of the
ground, rebated to households. It's worth noting that this would
add $1 to a gallon of gas in the US: in Europe we're already
paying this, so we're done on that score. There's also William
Nordhaus, the granddaddy of researchers into the economics of
climate change. Start with a small tax now and commit to raising
it in the future. This enables us to work with the technological
and capital cycle, reducing the total cost. Or there's the Stern
Review, which essentially states that throw a bit of money at
R&D and a carbon tax of $80 per tonne CO2-e and she'll be
right. Gaia that is, or at least our relationship to her.</p>
<p>Which brings us to our final question: is this expense worth the
reduction in uncertainty? Entirely arguable, that one. The
argument revolves around how much you value what happens now
against how much you value what happens in the future.</p>
<p>Except for one little point: we in the UK are already paying that
carbon tax. With emissions around the 500-million-ton mark, that
$80 per tonne tax works out at about £25 billion or so that should
be paid in tax to solve the problem, entirely and absolutely. And
in the UK, when you add up fuel duty, Air Passenger Duty and all
the rest, we already pay that and more in carbon or greenhouse
taxes. We're not paying it in all the right places, this is true:
fuel duty and APD are too high, while diesel for farmers and
trains is too low. But given that the total amount is already
being levied, all we need to do is shift around what is already
being charged to solve the climate change problem.</p>
<p>We've then got to go and convince everyone else: but think how
much easier that will be once we show quite how cheap and simple
the solution is. No more of the mantra that we've got to end
industrial civilisation: three squares a day has become something
of a habit for many of us. And no more of the shouts that nothing
needs to be done.</p>
<p>There really is a Climate Change Conspiracy, of course, something
we'll come to next time. But it isn't about the science. The
science tells us that there is uncertainty; uncertainty is an
economic problem to be solved through economic methods. And given
that we're all already being forced to cough up enough green taxes
to provide that economic solution, why don't we just get on with
the tinkering around the edges of the current system to enforce
that solution?</p>
<p>Rather than, say, either version of howling at the Moon that is
the current Left and Right of the debate?</p>
<p><br>
</p>
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