To Beat the Climate Crisis, Carbon Taxes Should Start High 'to Give Us Breathing Room'
Most models have called for starting with a small price per ton of carbon and increasing it over time. But a study published in the Proceedings of the National Academy of Sciences Tuesday argued the opposite: A carbon tax should start at more than $100 per ton, increase and then start to fall.
The reason is that previous models have not fully taken into account the uncertainty surrounding the climate crisis: We can't know how bad things will really get if we don't act.
"It's been broadly accepted that carbon prices should start low and increase over time," Gernot Wagner, study co-author and New York University (NYU) professor, said in an NYU press release. "Our paper argues that high uncertainty turns this view on its head: high prices today, which are expected to decrease in the long run as uncertainty clears up and technological change makes mitigation much cheaper."
Out in @PNASnews today: "Declining CO₂ price paths"— Gernot Wagner (@GernotWagner) October 1, 2019
It introduces EZ Climate, a climate-economy model financial economists would recognize. It's joint with two stellar ones: Columbia's Kent Daniel & ex top Goldman Sachs risk manager @BLitterman.https://t.co/lrJQeGcYPY pic.twitter.com/7mwHrdQ5Py
The new model is called the "EZ Climate" model, and Wagner developed it along with Kent Daniel of Columbia Business School and Robert Litterman of Kepos Capital.
"Our model shows that properly taking climate uncertainty into account leads to the conclusion that we need to take stronger action today to give us breathing room in the event that the planet turns out to be more fragile than current models predict," Daniel reiterated in the press release.
That wasn't the only key financial revelation contained in the study, as MIT Technology Review explained:
Another notable finding from the model is that the cost of putting off a carbon price rises at a staggering rate the longer we delay. If we wait a year to implement an effective carbon tax, the estimated cost of additional climate-change impacts will reach approximately $1 trillion. If we wait five years, that swells to $24 trillion. A 10-year delay could cost the world $100 trillion.
"To me the most surprising result of the research was how quickly the cost of delay increases over time," Litterman, who used to be the lead risk manager at Goldman Sachs, said in the press release. "When we modeled optimal carbon pricing policy with various start dates in the future, we quickly realized that the impact of the mitigating effects are closely tied to when you actually start ascribing a price to carbon emissions."
Or course, there are political difficulties with implementing a carbon tax. A Washington state initiative that would have passed one failed at the polls last November after the oil industry pumped a record $30 million into the No campaign.
There is currently no carbon tax in place anywhere in the U.S., and the ones implemented in other countries have been too low to make a difference, Grist explained.
"For me, the crux of the paper is that it points to the value of acting now — this emerges clearly and it is still perhaps not as forcefully appreciated as it should be," Cameron Hepburn, the director of Oxford's Smith School of Enterprise and the Environment who was not involved in the study, told Earther. "The challenge with the paper is the inadequate reference to real-world politics, which is a bit surprising given the authors."
In a Twitter feed, Wagner acknowledged this point.
"Of course, saying we need a high price doesn't make it so ..." he wrote.
"Nerdy but important" indeed. @BLKahn on why we may have been thinking about a CO₂ price all wrong all along https://t.co/f4u4vK4dHG— Gernot Wagner (@GernotWagner) October 1, 2019
Thanks for your thoughts in that article, @camjhep! Of course, saying we need a high price doesn't make it so...
However, Grist pointed to another study that suggests how the idea could win more support with voters: Frame it as a "fine on corporations" instead of the dreaded t-word. When an Emerson College poll asked about voters' support first for a carbon tax and then for "a fine on corporations that pollute the air with carbon dioxide," that support jumped from 35 to 52 percent.
- Trump Insider Embeds Climate Denial Into Agency Reports ... ›
- Climate Denier Is Named to Leadership Role at NOAA - EcoWatch ›
EcoWatch Daily Newsletter
New Jersey is one step closer to passing what environmental advocates say is the strongest anti-plastic legislation in the nation.
Did you know that nearly 30% of adults do, or will, suffer from a sleep condition at some point in their life? Anyone who has experienced disruptions in their sleep is familiar with the havoc that it can wreak on your body and mind. Lack of sleep, for one, can lead to anxiety and lethargy in the short-term. In the long-term, sleep deprivation can lead to obesity, diabetes, and cardiovascular disease.
Fortunately, there are proven natural supplements that can reduce insomnia and improve quality sleep for the better. CBD oil, in particular, has been scientifically proven to promote relaxing and fulfilling sleep. Best of all, CBD is non-addictive, widely available, and affordable for just about everyone to enjoy. For these very reasons, we have put together a comprehensive guide on the best CBD oil for sleep. Our goal is to provide objective, transparent information about CBD products so you are an informed buyer.
The House of Representatives passed a sweeping bill to boost clean energy while phasing out the use of coolants in air conditioners and refrigerators that are known pollutants and contribute to the climate crisis, as the AP reported.
- Renewable Energy Could Power the World by 2050 - EcoWatch ›
- Net Zero U.S. by 2050? House Dems Unveil Sweeping Climate ... ›
- Delayed Senate Energy Bill Promotes LNG Exports, 'Clean Coal ... ›
By Governor Jay Inslee
Climate Week this year coincides with clear skies in Washington state for the first time in almost two weeks.
In just a few days in early September, Washington state saw enough acres burned – more than 600,000 – to reach our second-worst fire season on record. Our worst fire season came only five years ago. Wildfires aren't new to the west, but their scope and danger today is unlike anything firefighters have seen. People up and down the West Coast – young and old, in rural areas and in cities – were choking on smoke for days on end, trapped in their homes.
Fires like these are becoming the norm, not the exception.