More On McKitrick's T3 Tax

From David Reevely's (of the Ottawa Citizen) Ecolibertarian blog, further critical comments of McKitrick's version of a Carbon Tax. He too is concerned with the lag-time between emissions cuts and an end to the warming phenomenon:

Superficially, McKitrick’s proposal to tie the carbon-tax rate to observed warming is his idea’s best characteristic. Immediate feedback, adjusting to on-the-ground (or in-the-air) realities, and so on. The trouble is the extremely long lag that the overwhelming bulk of the world’s scientists believe exists between the emission of greenhouse gases and their effect (which is cumulative) on the amount of heat they cause the earth’s atmosphere to retain.

If we stopped all human greenhouse-gas emissions right now, the IPCC figures the earth would warm by another 1.1 degrees over the next century or so. That’s a timescale McKitrick’s proposed monitor-and-adjust carbon-tax system can’t cope with. Worst of all, because the T3 tax only responds to damage that’s already happened, it has little preventive effect.

In fairness, he does have a partial response to that in his FP piece:

Under the T3 tax, investors planning major industrial projects will need to forecast the tax rate many years ahead, thereby taking into account the most likely path of global warming a decade or more in advance.

And best of all, the T3 tax will encourage private-sector climate forecasting. Firms will need good estimates of future tax rates, which will force them to look deeply, and objectively, into the question of whether existing climate forecasts have an alarmist bias. The financial incentives will lead to independent reassessments of global climate modelling, without regard to what politicians, the IPCC or climatology professors want to hear.

Yyyyyyee-esssss, but that also encourages gaming the system, encourages blowing out extra carbon now while it’s cheaper to do so (creating a whole new tragedy-of-the-commons problem), and puts individual consumers, on whom any reasonable response to climate-change concerns primarily depends, at a distinct disadvantage in planning ahead.

In addition, there are other reasons to be cutting C02 emissions beyond mitigating the effects of AGW. For example, C02 increases Ocean Acidification. Insofar as the T3 tax might go down at some point because warming has slowed or reversed, and therefore encourage emissions increases, it will do nothing to solve this particular problem.

AGW Denier Suggests A Warming Tax

Ross Mckitrick is a Canadian economist who has made his name as a AGW Denier by raising a few trivial methodological issues against Michael Mann's Hockey Stick Graph. Recently, however, he has come up with an intriguing proposal: institute a carbon tax linked to actual levels of warming. From a Fin. Post article earlier this week:

The approach is based on two points of expert consensus. First, most economists who have written on carbon-dioxide emissions have concluded that an emissions tax is preferable to a cap-and-trade system. The reason is that, while emission-abatement costs vary a lot, based on the target, the social damages from a tonne of carbon-dioxide emissions are roughly constant. The first ton of carbon dioxide imposes the same social cost as the last ton.

In this case, it is better for policy-makers to guess the right price for emissions rather than the right cap. Most studies that have looked at that the global cost per tonne of carbon dioxide have found it is likely to be rather low, less than US$10 per tonne. We don't know what the right emissions cap is, but, if we put a low charge on each unit of emissions, the market will find the (roughly) correct emissions cap.

Second, climate models predict that, if greenhouse gases are driving climate change, there will be a unique fingerprint in the form of a strong warming trend in the tropical troposphere, the region of the atmosphere up to 15 kilometres in altitude, over the tropics, from 20? North to 20? South. The Intergovernmental Panel on Climate Change (IPCC) states that this will be an early and strong signal of anthropogenic warming. Climate changes due to solar variability or other natural factors will not yield this pattern: only sustained greenhouse warming will do it.

Temperatures in the tropical troposphere are measured every day using weather satellites. The data are analyzed by several teams, including one at the University of Alabama-Huntsville (UAH) and one at Remote Sensing Systems (RSS) in California. According to the UAH team, the mean tropical tropospheric temperature anomaly (its departure from the 1979-98 average) over the past three years is 0.18C. The corresponding ing RSS estimate is 0.29C.

Now put those two ideas together. Suppose each country implements something called the T3 tax, whose U.S. dollar rate is set equal to 20 times the three-year moving average of the RSS and UAH estimates of the mean tropical tropospheric temperature anomaly, assessed per tonne of carbon dioxide, updated annually. Based on current data, the tax would be US$4.70 per ton, which is about the median mainstream carbon-dioxide-damage estimate from a major survey published in 2005 by economist Richard Tol. The tax would be implemented on all domestic carbon-dioxide emissions, all the revenues would be recycled into domestic income tax cuts to maintain fiscal neutrality, and there would be no cap on total emissions.

There is more to the article (and I would suggest it be read in its entirety), but this is enough to give a flavor of the idea. Such blogosphere reaction that there has been, has been mostly from Conservatives/Deniers (see here for a sample), and their opinion seems to be that mainstream scientists and politicians ("warmers" in the parlance) would never go for such a thing, as it would "call their tax", essentially ask them to tie a carbon tax to the alleged reality of the warming phenomenon.

Well, there are some fairly formidable practical obstacles to getting such an idea off the ground; just try to convince 190 plus nations to implement it, for example. And there might be all sorts of debate as to what constitutes the favored global warming "footprint".

But one more serious issue, that I have not seen discussed elsewhere, concerns the lag time between emissions and the warming that results from these emissions. Specifically:

Recent studies in the world’s leading scientific journals indicate that due to the lag time between emissions and the earth’s climatic adjustment to them, we have already committed the planet to a certain warming trajectory we cannot halt. In other words, even if all anthropogenic emissions ceased tomorrow, we would still be committed to about a doubling of the warming we have already experienced.

So, under McKitrick's proposal, it seems that we might begin to cut emissions immediately, and still have our T3 tax bill increasing for decades because the price of the GWGs we are emitting (even if this number goes down) is driven upwards by warming already in the pipeline. And this makes me think that taxing emissions strictly by volume, rather than by volume X some temperature-based figure, is a more efficient means of meeting our problem.

(In fact, on further thought it seems to me that the T3 tax might provide a perverse disincentive to carbon emissions cuts even where the "fingerprint" clearly indicates warming. A direct tax on emissions offers the polluter an either/choice: cut emissions or pay more. McKitrick's tax, given the time-lag noted above, hits polluters with both increasing taxes in addition to whatever costs might be incurred in "going green", perhaps to the point where the best solution might be to pay the tax and emit like crazy)

(PS. McKitrick pointed out an obvious error in the original post, as did one of the commentators. Since the point still holds, I have adjusted the text above in response to this. Although read Ianf in comments)