Carbon Tax, Not More Financial Engineering, Best Way to Reduce Greenhouse Gas Emissions: Jeffrey Sachs

jeffrey sachs speaking university of north carolina photo

Jeffrey Sachs speaking at University of North Carolina, photo: Kevin Tsui.

Both Barack Obama and John McCain think implementing a cap-and-trade system is the best way to decrease carbon emissions. On that one bit of policy, both candidates are in near perfect agreement, and many people tend to agree with the principle that a market-based solution is a better/more palatable method of reducing emissions than a direct carbon tax (particularly in the United States, a nation where the mere mention of the word ‘tax’ sends people into fits).

Jeffrey Sachs, special advisor to the UN Secretary General and director of Columbia University’s Earth Institute, doesn’t think so:

Having a lot of people engineer financial instruments for carbon when there are much more direct ways to do this strikes me as not really a great investment. (Reuters)

Getting the Prices Right With a Carbon Tax
Sachs is advocating a straight carbon tax on energy production as a simpler, cheaper and more direct method of incorporating the price of pollution into the cost of goods. Such a tax would be assessed directly at the well head or at the refinery, with the increased costs being passed onto products using carbon-emitting fuels: So pretty much everything. Such price increases (internalizing environmental externalities, or ‘getting the prices right’ in eco-economics speak) would quickly make green energy, and green products, that much more financially attractive.

Sachs says, in addition to being cheaper, such a direct tax system would be more efficient than a cap-and-trade system.

A Whole Generation of Young People Not Solving Social Problems
Elaborating on his comment on engineering financial instruments for carbon emissions, Sachs referenced the current Wall Street woes:

I’m also not so keen on sending out best and brightest off to do more financial engineering. I think the kind of [financial] meltdown we have right now is a little bit of an example of how we’ve taken a generation of young people and put them in tasks that don’t really solve social problems.

Carbon Tax v. Cap-and-Trade, Either/Or?
So what do TreeHugger readers think: San Francisco mayor Gavin Newsom recently expressed sentiment that carbon tax versus cap-and-trade isn’t an either/or decision; Sachs thinks carbon taxes are the best way to go; McCain and Obama are all cap-and-trade.

I tend to agree with Sachs—that no matter how politically unpalatable it may be, a carbon tax is both symbolically, theoretically and practically the best way to address the issue of decreasing carbon emissions—but, where do you stand?

via :: Reuters
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