A pretty good way to contrast and compare the carbon tax with cap and trade. Hansen's core case:
A gradually rising carbon fee would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas). The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel. 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.
At some point, the public decides to switch to cheaper, greener goods. Krugman's response is that cap-and-trade is a de facto kind-of-carbon fee (except with a mountain of regulation, speculation in selling pollution permits, and the possibility of just moving carbon emissions around - through dubious off-sets - rather than reducing them). But Krugman's core point is political: cap and trade is all our system can achieve; it's that or nothing; so shut up.
I hope Hansen doesn't shut up. His proposal is simpler, clearer, fairer and more likely to wean us off carbon sooner.
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