Forget Kyoto

An important essay by Oxford economics professor Dieter Helm at Yale’s e360 explains the fundamental flaw with Kyoto (in a way which actually makes the US refusal to participate look far less unreasonable than it otherwise might) and suggests a way for the advanced countries to improve upon it without having to get Chinese cooperation.

The lede is somewhat buried. Here is the key idea:

Unless people pay the cost of their pollution, they will not do much about it. And that pollution is best measured by carbon consumption, not carbon production. Therefore there has to be a price (a tax) on carbon consumption — a carbon tax with border adjustments to ensure that imports of carbon-intensive goods from countries without a carbon price are treated on the same basis as domestic production.



  1. The majority of the piece can be summed up as advocating a carbon tax with import tariffs. He's hardly the only person making that argument.

    As for Kyoto, it's over anyway. So no courage points for calling for an end to that.

    In the last few paragraphs he throws his lot in with the "innovation" crowd. I'm certainly not against "innovation," but I'm not willing to wait 50 years for an invention that will take another 50 years to deploy. We have technologies that are good enough; we should be using them now. Deployment is crucial; energy technologies cannot be perfected in the lab.

    I'll add that his list of potentially disruptive technologies is bizarre: solar thermal (hardly an innovation), higher efficiency PV (current efficiency is actually quite acceptable), smart meters (over-hyped as a climate solution, and in general), and artificial photosynthesis (decades from deployment). There are promising ideas in nuclear and storage, but what if they don't pan out? We could easily find ourselves in 2049 thinking that those solar panels, wind turbines and AP1000s actually looked pretty good.

  2. The thing I like about this spin is about China. It forces China to play, because China's economy is export driven. And it removes the American excuse that we can't do anything until China and every other less developed country plays along. That's because it allows the original G7 to call the tune. Everybody else has to play or be tarriffed out of contention.

    Yes, in some ways it's nothing new. There has always been the question as to whether carbon should be taxed on extraction or on combustion; this emphasizes consumption rather than combustion, which is another way of saying imposes the tax at the border.

    This puts the screws, more than a little bit, on the less developed countries. Paul Baer won't like it, since it throws the equity argument into the winds.

    I for one would be strongly in favor of compensating the less developed countries in other ways.

    But the culture gaps seem to be too vast for a successful negotiation invovling everybody. If America gets on board with Europe this can be made to happen. The rest of the world will have little choice but to go along with whatever we come up with, just as has been the case with many other global decisions, such as the WTO, the Law of the Sea, etc.

    So all we have to do now is get a majority in the House and a fillibuster proof senate, and we'll be well on the way to having the power to turn this into a workable legal framework.

  3. Revenue neutral compared to what? Saving the distant future at present cost is not going to look good on the books compared to the prognosis in a universe which does not actually have this problem. Unfortunately we do not live in that universe.

    The revenue will have to go in large measure toward decarbonization. So I think not neutral.

    The boundaries of the public/private sectors in energy have to be worked out.

    The energy companies and the energy producing states would do well to stop their foot dragging and their kowtowing to crabby old men, and get with the program. Otherwise they'll be cut out in favor of either their competitors or of entirely new institutions. I would not be surprised if something spun off of Google ended up being the instrument of progress. In another time it would have been the Tennessee Valley Authority. I am a pragmatist and could hardly care less which it ends up being.

  4. with our fuel prices (c.1.70€/l = c.8,1984dollars/gallon) we still haven't reached the so called 'painful limit', where people a forced to significantly diminish their consumption. This is estimated to be somewhere around 2,10€/l = 10,1274 dollars/gallon. Of course the taxation of automobiles here is such that the poor in the cities cannot afford to have and use one (legally) so this presents some problems for these to get to the worksites, if they have jobs. So I'd say you have some room for taxing the gasoline, but in order to keep the workforce mobile, I can't say if that's possible...

  5. Yeah. I just filled half of my gas tank (planning for 300km this weekend), happily noting its currently somewhere below 1,60€/l, which is amazingly cheap. And I'm still too lazy to bike to work. For me German the 'Merrican whining about gas prices (or about not hurting the economy with doing anything about fossil carbon emissions) is ridiculous beyond any conceivable vocabulary. Your economics is stupid, stupid.

  6. Pingback: Another Week of GW News, November 11, 2012 – A Few Things Ill Considered

  7. Frankly I am not sure how I feel about Natural Gas. On the one hand it is cheap right now, but there are still enough emissions that gas isn't a long term answer.

    If we build up a bunch of gas infrastructure we will be be forced to abandon it before the end of its useful life if we want to avoid devastating climate consequences. Is gas still cheap if we do this?

    And this doesn't even get to what cheap gas might do to the prospects of wind and solar energy. ( I don’t really have a good idea on exactly what the effects might be, since everything I read seems to have been heavily spun and I haven’t taken the time to un-spin it).

    But the idea of using our existing gas infrastructure to replace some of our coal infrastructure seems like a great short term move.

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