But if you believe, as the majority of climate scientists do, that warming has a large probability of being catastrophic, then some price has to be put on it.

Jamie, if this wasn’t just a typo, I would urge you to go reread the latest IPCC report. They say the THC isn’t shutting down, that sea level rises in 21st century will be in the ballpark of 30 – 60 inches (don’t quote me on that, but it’s that range), and if you really parse their human impacts section, they are saying (though not in so many words) that there is a definite probability that there will be net benefits from warming in 21st century.

So again, I know people like Hansen are saying we have to act very quickly to avoid catastrophe, but I don’t think he is in the “consensus” here.

If we don’t get noticeably more projected damage than the tax costs us, then I say give up on the tax.

redo of second half:
——————–

But is this because:
Prob(TOpt<0) >= Prob(TOpt>0)

or is it because:
Distance(TPol,TOpt) > Distance(TZero, TOpt)

or is it neither of these, i.e.:
TOpt is likely > 0
Distance(TPol, TOpt) likely <= Distance(TZero, TOpt)
but nevertheless
Cost(TPol) > Benefit (TPol)

Let’s define some terms:
TZero = The current tax rate of zero.
TOpt = The (unknown) true optimal tax rate
TPol = The tax rate resulting from the political process
Benefit(TPol) = The (unknown) true benefit of having a tax rate of TPol, compared to TZero. This is the benefit from more accurate pricing of externalities. (This can be negative if TZero is closer to TOpt than TPol is).

Cost(TPol) = The cost of the political process, and all other costs associated with setting the tax rate at TPol.

Now, anyone who says what Will/Jim are saying must be saying this:

Benefit(TPol) < Cost(TPol)

But is this because:
Prob(TOpt= Prob(TOpt>0)

or is it because:
Distance(TPol,TOpt) > Distance(TZero, TOpt)

or is it neither of these, i.e.:
TOpt is likely > 0
Distance(TPol, TOpt) likely 0
but nevertheless
Cost(TPol) > Benefit (TPol)

???

For those who like to frame mitigation as a public good that needs to be subsidized, I think I can reframe my point in those terms, too. Growth is an underprovided public good that needs to be subsidized. But it also contributes to warming. If growth is a tax on mitigation, and mitigation is a tax on growth, then what do we end up with? Again, see Jim.

Briefly, just for the heck of it:

A carbon tax that is >0 but still too low is still necessarily better than a carbon tax of 0;

It doesn’t matter one teensy bit what % of global warming is attributable to human activity.

Here’s the relavant section:

2. We have no idea how to set the price. Burning fossil fuels adds CO2 to the atmosphere and thereby increases the risks from AGW, but these fuels create social utility by generating energy at lower direct costs than alternatives, but the US needs to bear a huge military burden to protect oil supply chains in unstable geographies, but a car-based economy allows more people to satisfy their desire to live in detached homes with yards, but roads are subsidized to do this and it crates excess congestion, and so on and so on ad infinitum.

There is an unending set of externalities created by fossil fuels, and there is no logical reason to privilege AGW-related costs over any others. If I die in an AGW-caused flood or I die from cancer caused by inhaling the fumes from somebody else’s car, I am in both cases equally dead.

But surely economists have worked through this, and come to some imperfect but tolerable estimate of fossil fuels externalities, right? A recent review of such analyses by European academics finds that the estimates for the external costs per kilowatt-hour of, for example, coal range from about .01 cents to $10. Glad they cleared that up. Even the middle 50% of studies have cost estimates that range by a factor of about 20. Depending on the analysis, AGW-related externalities might be anything from a dominant to a trivial component of external costs.

Now, a reasonable person might say: “So what, after all, we believe there are some external costs, so why wouldn’t some tax be a good idea?” The problem, as this same study indicates, is that the every form of energy production from fossil fuels (coal, oil and gas) to alternative fuels (nuclear, solar, biomass, etc.) has a huge range of estimated external costs. The cost estimate range for every energy source overlaps with the cost estimate range for every other energy source. How can we rationally choose which ones should be taxed at what level vs. the others for the purposes of pricing the externalities? Or are we to tax all energy production vs. other economic activities? Surely, this would provide an even higher-level challenge than comparing different methods of energy production, which is one we’ve failed. There is a world of difference between accepting the concept that pretty much any important activity has large external effects, and believing that a government has the ability to measure these externalities and tack them onto existing market prices in a rational manner.

We have to make policy decisions in the face of incomplete information all the time, but if we decide that it’s a good idea to use less oil for geopolitical or other reasons, we shouldn’t pretend it is some kind of fancy, analytical construct called “pricing an externality”. In practice, the actual level of a carbon tax would be set entirely politically, that is, based on the bargaining power of various interest groups, rather than through some abstract economic logic.

Here’s a link to the research paper that I reference:
http://www.handels.gu.se/econ/seminar/Article1.pdf

The fear of a too-high carbon tax is about as realistic as the fear of worldwide catastrophe by 2025. Decades of panic have lead to absolutely no effective controls on greenhouse gasses. I can’t imagine the political will being likely to change before Orlando’s under water.

1. “I don’t think there exists a good estimate…”

I broadly agree, but you might be interested in Richard Tol’s work on this, e.g.:

Tol, R.S.J. (2005) The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties. Energy Policy, 33, 2064–2074.

2. “…which I think gives us good reason to worry about proposed carbon taxes.”

I disgree. We can never know the correct tax, but that is not a valid reason for inaction. Not implementing a tax still implies a choice of tax rate (0$). The question is: Do we reckon x$ is closer to the (unkown) correct tax rate than 0$?

Nothing in life is certain, but that doesn’t argue for inaction. I drive my car, without know the precise risk of death that entails.

Of course, we still have problems with finding the optimal subsidy (which deals with measuring total CO2 and its effects on the climate), but we don’t have to worry about how much climate change is anthropogenic.