Thursday, April 10, 2008

Carbon tax

I ran a poll for a while asking what structural alteration to the economy you would most like to make. 6 of you voted for nationalizing health care, 3 for nationalizing education funding. Nobody thought that a high carbon tax was the most appealing.

A carbon tax made the list because of a New Yorker piece by Michael Specter six weeks ago and a related NPR interview with Specter that I had listened to the week before. The short story is that calculating carbon footprints is very difficult and results are often counterintuitive. But even learning that it may make sense for Britain to import lamb from New Zealand (because the transportation carbon cost from New Zealand is far less than the carbon cost of the much higher fertilizer use for pasture in Britain) does not tell us the relative carbon load of lamb vs. fish. And it certainly doesn’t tell us the relative carbon savings of choosing lamb from New Zealand versus choosing to take the train for a week instead of commuting by car. In order to prioritize our lifestyle changes, we need to know which changes are 10 times more important or 100 times more important.

A carbon tax, if implemented in a broad and balanced way, would be an important step. Sellers have to take their costs into account as they set prices, so translating carbon costs into dollar costs would create a bigger price spread between products and services that have higher carbon costs vs. lower carbon costs. If the dollar costs of fertilizer and fuel are increased to take into account their carbon costs, then the lamb from New Zealand will be priced less than the lamb from Britain.

The rising cost of fuel is already forcing people to make different decisions. In my business, the shipping cost of a print run as a percentage of the total print run cost has more than doubled in the past five years, and the shipping cost of sending out an individual book has become comparable to or greater than the printing cost of the book. I have to take these facts into account as I choose whether to have my books printed 100 miles away or 1000 miles away, and as I set my shipping rates for my customers. The Boston Globe recently ran an article by Robert Gavin exploring how much less people are driving because of higher fuel costs, and last week an article by Noah Bierman crediting higher fuel costs with sparking a surge in public transit use. People can decide whether to pay attention to labels, but they have to pay attention to prices.

2 comments:

Vardibidian said...

I am, broadly, pro- carbon tax. I am skeptical about the practicality of it, both in the sense that I doubt anything at all sensible could pass the legislature without much, much more persuasion of the people generally, and in the sense that I don't really see how to make the carbon tax work the way it should both in taxing the actual carbon costs where they happen and in informing the purchaser where the carbon taxes were assessed.

On the other hand, it could all work out without my seeing how it would work out. Answers come from other people.

That said, it would be lovely to have some fairly simple carbon number to attach to a purchase (or maintenance). I'm a lazy consumer, but a big orange 19 or 2 on the package would make a difference.

Thanks,
-V.

Michael said...

One facet of having a carbon tax upstream is that you don't have to inform the purchaser of anything new. While some people will happily respond to the big orange number, far more people will respond to the little white price tag.