So a tax or whatever of $12 per tonne of fossil carbon equals a tax or whatever of $44 per tonne of carbon dioxide.

With a safety valve, when prices reach a predetermined dollar value, businesses no longer have to rely on the established supply of allowances available in the market. Instead, the federal government makes new allowances available for sale at a specified price - potentially in an unlimited quantity.

This creates two serious problems:

1. It destroys the cap, and the hard limit on emissions is critical, as you point out. A safety valve gives the illusion that we are controlling emissions while allowing more greenhouse gas pollution into the atmosphere.

2. It limits the economic opportunity of those who develop cleaner technology. Higher prices for emissions allowances are a good thing if you’re inventing and selling ways to cut pollution. A safety valve sharply reduces the incentive for innovation.

Sheryl Canter
Environmental Defense
http://climate411.org

Perhaps the biggest problem with Lieberman/Warner is that it calls only for Cap and Trade rather that Cap, Auction and Trade. As such it represents a giveaway of at least 500 billion dollars to the biggest polluters. Also, its targets are too low (60% CO2 emissions reductions by 2050).

I agree that it is better to wait until 2009 and get a decent bill. If L/W is passed those forces opposed to stopping Climaticide will claim that we have already done enough and resist any future efforts to revise the bill. Better to get it done right the first time.

While an argument can be made that companies should have seen emission limitations coming and already started doing the research and planning necessary, that unfortunately is overestimating some who run our companies. Once the law is enacted, then it’s certainly their own fault if they don’t adjust accordingly. Reasonable caps that lasted for a few years would help protect consumers and investors from the inevitable existence of incompetent business people that are still either asleep or having wishful daydreams.

In effect this is a hybrid system starting with the predictable costs of a carbon tax and ending with the predictable environmental outcome of the cap.

Joe… do you have a pointer to a description of what a bank and borrow version of this legislation might look like? What would happen if some big polluting utility borrows all they can and then declares bankruptcy? Is there trading under this scheme?

Let’s go for $.67/kg and we can momentarily replace the income tax. Or go for $.57/kg and replace payroll taxes. (These rates would need to go up once people start conserving, which would be rather quickly.)

Offer conservatives a complete replacement of an existing tax, and you might have some success getting them on board for a carbon tax. Offer a carbon tax on top of existing taxes, or offer some Stalinist quota system, and you’ll continue to get stonewalled.

Via this strategy, a steep carbon tax may well be an easier sell than a “reasonable” carbon tax.

Derivations of the above figures at:
http://www.holisticpolitics.org/ GlobalWarming/ Calculations.php

http://carbonmonitor.blogspot.com/ 2008/ 02/ will-enron-kill-climate-change.html

http://www.canada.com/ vancouversun/ news/ story.html?id=ecea1487-507c-43ef-ab88-5a972898e0b7&k=38130

although I have not found a source which gives the $ (CA) per tonne.