• About
    • Which Energy Mix is this?
  • Climate News Network Archive
  • Contact
Celebrating our 1,000th edition. The climate news you need
No Result
View All Result
The Energy Mix
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
No Result
View All Result
The Energy Mix
No Result
View All Result
  FEATURED
BREAKING: No Public Finance for East Coast LNG Projects, Wilkinson Says July 4, 2022
‘Climate Math Gets Harder’ as Radicalized Supreme Court Upends U.S. Carbon Regulation July 4, 2022
Dire Living Conditions, Climate-Driven Heat Wave Produce Deadliest Human Smuggling Event in U.S. History July 4, 2022
Ex-Fossil Workers Convert Old Oilfields to Solar Farms After ‘Rapid Upskilling’ in Alberta June 29, 2022
London Becomes Biggest City to Sign Fossil Fuel Non-Proliferation Treaty June 29, 2022
Next
Prev
Home Climate & Society Energy / Carbon Pricing & Economics

How Tackling the Carbon Taboo Could Solve U.S. Republicans’ Budget Problem

November 5, 2017
Reading time: 2 minutes

byrev/pixabay

byrev/pixabay

 

America’s Congressional Republicans could close most of the US$1.4 trillion (at last count) gap in their moving target of a tax reform, a top ex-Goldman Sachs risk manager says. There’s just one catch: they’d also have to recognize the danger that carbon poses to the global climate.

“If you price things appropriately, people will make the right decisions,” said Robert Litterman, who led Goldman’s quantitative asset management investments until he left the company, later becoming chair of the risk committee at Kepos Capital. “They’ll do the right thing.” The free atmospheric dumping of carbon dumping is “a bug in the tax code” that ultimately creates “an asset-pricing problem,” he declares.

But Bloomberg’s Eric Roston notes that “a $25 per ton carbon tax would go a long way toward balancing out the cost of reforms” the GOP is determined to push through, to slash taxes for corporations and certain private business families with the same tax profile as Donald Trump’s.

At $25 a ton—a modest rate by world standards and well below the actual damage likely done by each incremental ton of carbon released—an American carbon tax would raise $1 trillion over the next decade, getting the GOP more than two-thirds of the way to solving its budget math problem.

The party could close the gap entirely if it adopted a carbon tax at the same level as Canada’s 2022 target.

Even that would fall short for Litterman, whose research on carbon brought him to the conclusion “that taxes on greenhouse gas pollution should be higher than anything proposed or enacted almost anywhere in the world,” Bloomberg notes. Sooner or later, he predicted, “we’re going to recognize this for what it is, which is an extremely dangerous risk management failure. That means we’re going to have to price emissions at a high level—globally—very quickly, or much more quickly than people expect.”

Some countries have legislated carbon prices ranging from US$3.00 per tonne in Mexico to $130 per tonne in Sweden, to roughly reflect the damage caused by each additional tonne of emissions. Canada plans to establish a national benchmark price of C$10 a ton next year, rising to $50 by 2022.

During the Obama administration, U.S. government economists assumed a price of between US$30 and $40. The Trump administration lowered that estimate to under $5, in large part to justify repealing Obama’s Clean Power Plan, which would have reduced America’s emissions from coal-fired power plants.

Litterman believes most of those benchmarks are dangerously low, mainly because they underestimate “worst-case scenarios, which are a critical input for professional risk assessment.” He compares government low-balling of climate risk to the mistakes made in the American financial sector in the mid-2000s, “shortly before bad mortgages nearly destroyed the financial planet”.

For all its good sense, Litterman’s argument falls on deaf ears in America’s Congress, dominated in both houses by Republicans for whom taxes of any kind are anathema and climate change a left-wing conspiracy. Quips Roston: “To call a carbon tax dead on arrival would be an insult to dead things, since they have spent at least some time being alive.”



in Energy / Carbon Pricing & Economics

The latest climate news and analysis, direct to your inbox

Subscribe

Related Posts

Seci/wikimedia commons
Climate Denial & Greenwashing

Saudi Aramco Talks Net-Zero, Plans to Boost Production Through 2035

July 4, 2022
18
David/flickr
United States

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
1.2k
Graco/Facebook
Food Security

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ for Emissions, But Farmers Struggle to Limit Use

July 2, 2022
217

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Trending Stories

Wikimedia Commons

BREAKING: No Public Finance for East Coast LNG Projects, Wilkinson Says

July 4, 2022
101
angela n./flickr

‘Climate Math Gets Harder’ as Radicalized Supreme Court Upends U.S. Carbon Regulation

July 4, 2022
98
U.S. Navy/picryl

Montreal to Host New NATO Climate Centre as Military Analyst Confronts Global ‘Hyperthreat’

July 4, 2022
77
opinion polling gender green recovery climate action

Conservative Women Far More Likely Than Men to Support Green Transition, EcoAnalytics Research Finds

July 4, 2022
72
Maurits90/Wikimedia Commons

San Francisco Commuter Train Derailed by Scorching Track Temperatures, Extreme Heat

July 4, 2022
45
Fadi Hage/wikimedia commons

Indoor Farming Revolution Comes with Significant Carbon Cost

July 4, 2022
33

Recent Posts

EdmondMeinfelder/flickr

Dire Living Conditions, Climate-Driven Heat Wave Produce Deadliest Human Smuggling Event in U.S. History

July 4, 2022
32
Adrian Grycuk/Wikimedia Commons

Youth Climate Case Moves to Top Tribunal in European Court

July 4, 2022
30
Seci/wikimedia commons

Saudi Aramco Talks Net-Zero, Plans to Boost Production Through 2035

July 4, 2022
18
Keith Weller/Wikimedia Commons

U.S. Methane Plan Gives Big Ag a Free Pass

July 4, 2022
24
Mont SUTTON snow terrain

Southern Quebec Towns Scramble for Solutions as Water Sources Dwindle

July 4, 2022
33
Pxhere

Marine Stewardship Figures Prominently in Latest Project Drawdown List

July 4, 2022
22
Next Post
Tennessee Valley Authority/Wikimedia Commons

U.S. GOP Tax Reform Gives to Nuclear, Takes Away from Wind and Solar

The Energy Mix

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Navigate Site

  • About
  • Contact
  • Privacy Policy and Copyright
  • Cookie Policy

Follow Us

No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}