I don’t prefer a carbon tax over a “cap and trade” system because I believe “capitalism good, government bad”, as Paul Krugman suggests. I prefer it because it provides less opportunity for political meddling. Europe’s cap and trade system resulted in lots of, shall we say, fine tuning which prevented it from achieving any actual reductions in emissions.
Government is inherently political; that’s a tautology and when you place something into the political arena there will be negotiating, logrolling, hornswoggling, and outright theft, fraud, and abuse. That’s the nature of politics. That doesn’t mean that capitalism is always good nor that government is always bad. It just means that we should approach each with our eyes wide open and have realistic expectations.
Philosopher-kings are hard to come by.
We also have experience with emissions trading here in Illinois and it is complex regulatory scheme that require companies to hire specialists to get right. But it only impacts the largest, centralized sources of VOCs. I don’t see how such a problem could regulate the numerous small and medium -sized sources of CO2. So, part of the “politics” is that it would probably exempt all of the most common CO2 sources, making it pretty ineffective unless you believe all the CO2 is being produced at the top percentile.
IIRC the largest polluters in Europe found ways of getting themselves excluded. So, when you exclude the largest sources and the small and medium sources are too difficult to regulate and enforce, it doesn’t leave much.
That reminds me of another reason to prefer the carbon tax. You can avoid the politics of it by deferring a lot of the decisionmaking to an agency. But then it takes forever to implement the program. Agencies need to develop a scientific and economic record to develop a program and have it survive a court challenge. EPA still has to meet deadlines under the Clean Air Act of 1990.
Of course, having a program that only gets implimated after you leave office might be a feature, not a bug.
I would prefer a carbon tax too – I think most liberals would in truth. But it doesn’t matter at this point, since neither is likely to be implemented over the objections of Republicans and coal state Democrats.
If you are making referrals on philosopher-kings, I’m available.
And my rates are reasonable.
I think Krugman actually has stated earlier on that he prefers a Carbon Tax (along with most economists of both sides of the aisle, like Greg Mankiw), but that political reality basically meant that it was either going to be Cap-and-Trade or nothing. Of course, I don’t think we’re that restricted, and doing a Cap-and-Trade system badly might make it harder to eventually get a Carbon Tax passed, but that’s his opinion.
A Carbon Tax, once you define what it does, would be much simpler, at least in theory. You would have to design a collection process for it, though.
I prefer cap and trade as it places a harder limit on the Quantity of carbon instead of the price of carbon and it has some anti-cyclical properties to the schema that I prefer
http://www.newshoggers.com/blog/2009/04/minding-our-ps-and-qs.html
Cap-and-Trade does not actually place a more certain limit on the quantity of carbon emissions reduced. Fraudulent offsets, overallocation, difficulties in measurement and enforcement all set the stage for the appearance of reductions without the reality of reductions. In addition, cap-and-trade has historically led to price volatility. This will tend to undermine clean energy investment and in at least one other cap-and-trade program called RECLAIM, in Los Angeles, has led to program suspension, when insufficient investment in the technology needed to reduce emissions left a choice between rolling blackouts and temporary cancellation of the program to require by command and control that additional control technology be installed. For more details on this problem and on the reasons by carbon fees with rebate is better suited to rapid reductions in fossil fuel emissions, please see our discussion paper at http://www.carbonfees.org/home/Cap-and-TradeVsCarbonFees.pdf.