Carbon tax: The lesser of two evils

It's a sad commentary when CEOs have to support things that aren't in their interest, solely to survive, says Investor's Business Daily (IBD). That's certainly the case with Exxon Mobil CEO Rex Tillerson, who in a speech last Thursday, said a carbon tax would be a "more direct, a more transparent and a more effective approach" than many of the current plans for curbing greenhouse gases, including the cap-and-trade approach favoured by President-elect Barack Obama.

"My greatest concern is that policymakers will attempt to mandate or ordain solutions that are doomed to fail," Tillerson said. Like cap-and-trade. Or new Environmental Protection Agency rules that essentially seek to regulate everything in our economy that uses carbon-based fuel. Since 85 per cent of our energy comes from carbon-based fuel, that means the entire economy, says IBD.

Unfortunately, many of the proposals now being considered to cut C02 and other greenhouse gas emissions would entail enormous costs with very little benefit, says IBD. Take last fall's Advanced Notice of Proposed Rulemaking (ANPA) by the EPA, which the new president has vowed to implement. ANPA sounds innocent, but cutting C02 output by 70 per cent, as Congress has mandated, won't be easy. The costs will be enormous and could wreck the economy, says IBD:

  • According to Global Insight, ANPA could cost the United States nearly $7 trillion in real output by 2030, or about $650 billion a year.
  • Meanwhile, 800,000 U.S. jobs would be lost annually for several years.

    For the record, as the world shivers through a second frigid winter in a row, the United States is already cutting back on its CO2 output, says IBD:
  • According to Energy Department data, from 2000 to 2006, per capita output of C02 in the United States plunged 4.7 per cent.
  • Meanwhile, it increased by 3 per cent in Europe, yet, Europe's energy taxes are five to 10 times what they are in the United States.

    Source: Editorial, Carbon Tax: The Lesser Of Two Evils, Investor's Business Daily, January 12, 2009.

    For text:

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    FMF Policy Bulletin/ 13 January 2009
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