Using Offsets with a Carbon Tax? Use what works.

Posted on August 21, 2017 by Jeffrey C. Fort

Proposals to adopt a fee on emissions of greenhouse gases (also called "Carbon Taxes") have made headlines, with both "conservative Republicans" and "liberal Democrats" releasing ideas.   An elevated price on carbon -- the centerpiece of the suggestions for a federal program from both camps -- is not predicted to lower emissions, except by setting a very high price.  Such an approach is not practical, unless room is allowed for states to continue their innovations and for volunteers to also reduce emissions.   Getting the best result for the least cost - i.e. the most efficient emission reduction -- ought to be used.

EPA already has its Mandatory Reporting Rule.  It does not cover non-obvious sectors like farming who could be affected by the proposed fee.  The MRR reports provide a sound basis for any further federal program such as carbon fees.

Carbon taxes have yet to show direct evidence of any reductions in emissions of carbon equivalent greenhouse gases.  As another cost which can be passed on in many sectors, it is a clumsy way to achieve environmental benefits.

However, if a "fee" is imposed, it should recognize state programs such as the ARB and RGGI programs.  Those allowances ought to be counted and credited -- "a tonne is a tonne is a tonne" regardless of where emitted into the troposphere. 

Voluntary reductions from non-regulated sectors ought to count too.  Known as carbon offsets, they are issued by the several independent registries and have real environmental benefits and integrity. They are at least as real as monitored -- or more often estimated --emissions from AP-42 or other EPA-sanctioned sources.  Offsets can only be recognized: (1) for reductions which are not required by law and not business as usual; (2) if based on a scientific methodology to measure such which has been accepted after public comment and peer review, (3) from a project has been announced, undertaken and proven to have occurred.  Only after all such has been proven, is a credit awarded and available to be purchased and (4) then the offset credit must be chosen (i.e. purchased) for use by a regulated entity.  Thus, there are several steps at which such are scrutinized by independent parties.

The proposals for carbon taxes are well-intentioned.  But the most efficient and least disruptive approach would include not only recognizing state programs but also unlimited carbon offsets from economic sectors not under the tax.  All businesses should have a role; those who are more efficient in producing their products for lower climate impact ought to have a way to contribute.



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