Frank Bernheisel: The View From Here
Frank Bernheisel
Frank Bernheisel
Posted 05.29.09
Just Outside Washington


Bring on the Carbon Tax

May 29, 2009

Dear President Obama,

We need to have a new energy policy in the United States. The cap and trade approach plus subsidies for industry of the Waxman-Markey bill is not the solution. W-M is too complicated, too expensive, and hobbled by picking favorites. Also, it includes a big give-away to coal.

A tax on most carbon emissions, human breath excepted, would be the simplest to administer and would start producing much-needed federal revenue soon after it was passed, say in 2010.

Cap and trade works fine for large power plants but does not address the many small CO2 sources, such as cars and home furnaces.

The carbon tax could be built into the price of the fuel: gasoline, fuel oil, natural gas, coal, or whatever. We do not want to shock the economy with a big carbon tax hitting all at once in 2010, so the application would be gradual over a ten year period.

Say the ultimate tax, adjusted for inflation, is to be $12 per ton of CO2 emitted in 2020, then in 2010 it would be $1.20 per ton, in 2011 it would be $2.40 per ton, etc.

The advantage of this ramped approach is that industry and all of us could see were it was going and make plans accordingly.

The average car driven 1000 miles per month emits about 5.5 tons of CO2 per year, so $12 per ton would only amount to $66 per year.

Whatever the amount of the carbon tax , it needs to be large enough to force a move to low emissions energy; solar, wind, nuclear, renewables, etc.

One problem that would need to be solved is that other countries would not have a carbon tax and their goods would have an advantage in the American market. This could be solved by charging the carbon tax on imported goods.

For example, if Caterpillar paid $2400 in carbon tax to build a 990 front loader, then a competitive machine coming from a country with no carbon tax would have to pay the same $2400 tax upon entry to the U.S.

Waxman-Markey is supposed to be revenue neutral. It probably is not and that is the wrong approach. The US has an $11 trillion national debt and it is rising. The carbon tax could be used to pay down this debt.


Frank Bernheisel