Fisking Hansen

A reader writes:

Many climate change activists -- myself included -- do wish that James Hansen would shut up. The man has a deserved reputation as an environmental hero because of the attention and moral urgency he has brought to this issue. Unfortunately, the closer we get to implementing actual solutions, the more his naivete and lack of policy knowledge get in the way.

Although carbon tax advocates furiously resist this notion, carbon taxes and cap-and-trade are functionally equivalent programs. Either will work fine to put a price on carbon emissions. Let's dissect the passage you quote:

A gradually rising carbon fee...

A gradually declining carbon cap...

would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas).

There's no distinction being made here. Either carbon pricing mechanism requires measurement of fossil fuel use, and the method can be exactly the same in both cases.

The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel.

Here there's a genuine difference: carbon taxes require the government to pick prices (which are subject to intense bargaining and political pressure). Cap-and-trade requires the government to pick emission levels (which are also subject to intense bargaining and political pressure, but also have some grounding in science).

The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used in their production.

Once again, there is no distinction being made here.

The cost of carbon permits is a fee paid by producers in direct proportion to the amount of fossil fuel used, and that fee gets passed along in the same manner regardless of the structure of the carbon pricing scheme. This is true regardless of whether permits are given away or auctioned.

And on and on. It's trivially easy to design equivalent carbon tax and cap-and-trade schemes because the two are means of achieving the same end. To be sure, the policies have small differences that translate into minor theoretical advantage (cap and trade systems are easier to harmonize internationally, carbon taxes exhibit less price volatility, etc.), but the overriding question is which policy has any chance of passage in the U.S. Congress. And by that criterion, there's never been any contest.

The other objections you raise are similarly insubstantial. Cap and trade requires a mountain of regulation? This is just the complexity whine raised by any issue advocates pushing their own "clean and simple" version of a bill. Carbon offsets are deservedly controversial, but they can exist just the same under a carbon tax scheme. And regardless of whether financial "speculation" (an oddly populist left-wing notion for you to embrace) takes place under cap-and-trade, it has absolutely no bearing on the environmental integrity of the cap.

Hansen's proposal is indeed elegant; it's the type of program I would put in place if I were dictator. But I'm not dictator and neither is James Hansen, and by the time his elegant little proposal made it through Congress, we'd be lucky if it looked half so pretty as Waxman-Markey.