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Thursday, January 31, 2008

Not capping carbon

An insightful TCS article by Kenneth Green on "How Not to Address Climate Change," i.e., with a cap-and-trade system. I don't agree, though, with his closing that a carbon tax should be "modest" and "revenue-neutral." The tax should be substantial enough to provide real incentives away from carbon (and should increase over time, so as to avoid shocks and spur innovations), and while the tax should be used to enable tax cuts elsewhere, it should also play a role in addressing the country's long-term fiscal meltdown.

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