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On the Carbon Tax

Posted By Barry Ritholtz On June 30, 2013 @ 7:00 am In Energy,Video | Comments Disabled

NPR:

Climate change seems like this complicated problem with a million pieces. But Henry Jacoby, an economist at MIT’s business school, says there’s really just one thing you need to do to solve the problem: Tax carbon emissions.

“If you let the economists write the legislation,” Jacoby says, “it could be quite simple.” He says he could fit the whole bill on one page.

Basically, Jacoby would tax fossil fuels in proportion to the amount of carbon they release. That would make coal, oil and natural gas more expensive. That’s it; that’s the whole plan.

Jacoby’s colleague John Reilly told me the price of gasoline might rise by 25 cents a gallon in the first year. Over time, that would increase. By 2050, Reilly figures the carbon tax would add about $1 to the price of every gallon. Across the economy, prices of energy-intensive goods and services would rise. This would encourage people and businesses to be more efficient.

This is why economists love a carbon tax: One change to the tax code and the entire economy shifts to reduce carbon emissions. No complicated regulations. No rules for what kind of gas mileage cars have to get or what specific fraction of electricity has to come from wind or solar or renewables. That’s by and large the way we do it now.

 


Source:
Economists Have A One-Page Solution To Climate Change [1]
David Kestenbaum
NPR, June 28, 2013
http://www.npr.org/blogs/money/2013/06/28/196355493/economists-have-a-one-page-solution-to-climate-change


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[1] Economists Have A One-Page Solution To Climate Change: http://www.npr.org/blogs/money/2013/06/28/196355493/economists-have-a-one-page-solution-to-climate-change

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