Let's Give Carbon Tax a Whirl

With the new President and Congress getting set to (finally!) tackle climate change, the mainstream commentariat seems to be almost exclusively focusing on what is called a "cap and trade" system, whereby the overall level of greenhouse gas emissions is capped, but polluters who can't meet the cap have options to trade for credits or allowances. Very few are talking about the easiest, most direct way to change the market and lower greenhouse gas emissions - a carbon tax. Now, out of the blue, or should I say, out of the sludge and muck, comes word that Exxon Mobil has come out in favor of a carbon tax! This is, after all, the company that spent years and millions of dollars funding bogus "research" to say climate change is a myth. So, should we view this as a dastardly plot to trick people into supporting a carbon tax or should we take them at their word and try to pass legislation (with their support?).

I say give it a whirl.

Many economists believe a carbon tax is the best way to attack climate change. There is no need to create a complicated trading scheme, nor is there any room for gaming the system. It's a very straight forward approach - a tax on carbon emissions. Yes, this would impact our gas prices, and electricity prices... but that's a good thing. We need loud and clear price signals to make the market work. This is what happened earlier in 2008. When gas prices skyrocketed, sales of gas hogging SUVs dropped. Now that gas prices are lowering, sales of gas hogging SUVs are increasing. I'm not an economist, but even I can see the relationship there!

Politically, some people are afraid to death of the word, "tax." But I have more faith in the American people. They understand the need to stop climate change and know that some things must change. Setting a strong price signal will allow clean energy and green tech companies to invest in growth without fear of too-low fossil fuel prices.

And heck, maybe the folks at Exxon Mobil will actually lobby for it!