A Brilliant Carbon Tax Idea

Now this idea is pure genius. A carbon tax proposal by Ross McKitrick, an economist at the University of Guelph.

Why not tie carbon taxes to actual levels of warming?

Update; McKitrick's idea receives the Adam Smith Institute seal of approval!

Climate models predict that, if greenhouse gases are driving climate change, there will be a unique fingerprint in the form of a strong warming trend in the tropical troposphere, the region of the atmosphere up to 15 km in altitude, over the tropics. The IPCC states that this will be an early and strong signal of anthropogenic warming. Climate changes due to solar variability or other natural factors will not yield this pattern: only sustained greenhouse warming will do it. Temperatures in the tropical troposphere are measured every day using weather satellites,

Suppose each country implements something called the T3 tax, whose U.S. dollar rate is set equal to 20 times the three-year moving average of the estimates of the mean tropical tropospheric temperature anomaly (departure from its 1979-98 average), assessed per tonne of CO2, updated annually. Based on current data, the tax would be US$4.70 per ton.

This tax rate is low, and would yield very little emissions abatement. Global-warming skeptics and opponents of greenhouse-abatement policy will like that. But would global-warming activists? They should -- because according to them, the tax will climb rapidly in the years ahead.

The IPCC predicts a warming rate in the tropical troposphere of about double that at the surface, implying about 0.2C to 1.2C per decade in the tropical troposphere under greenhouse-forcing scenarios. That implies the tax will climb by $4 to $24 per tonne per decade, a much more aggressive schedule of emission fee increases than most current proposals. At the upper end of warming forecasts, the tax could reach $200 per tonne of CO2 by 2100, forcing major carbon-emission reductions and a global shift to non-carbon energy sources.

Global-warming activists would like this. But so would skeptics, because they believe the models are exaggerating the warming forecasts. After all, the tropical troposphere series went up only about 0.08C over the past decade, and has been going down since 2002. Some solar scientists even expect pronounced cooling to begin in a decade. If they are right, the T3 tax will fall below zero within two decades, turning into a subsidy for carbon emissions.

Under the T3 tax, the regulator gets to call everyone's bluff at once, without gambling in advance on who is right. If the tax goes up, it ought to have. If it doesn't go up, it shouldn't have. Either way we get a sensible outcome.

But the benefits don't stop there. The T3 tax will induce forward-looking behaviour. Alarmists worry that conventional policy operates with too long a lag to prevent damaging climate change. Under the T3 tax, investors planning major industrial projects will need to forecast the tax rate many years ahead, thereby taking into account the most likely path of global warming a decade or more in advance.

Pure bloody genius. But unlikely to be implemented because

'It wouldn’t generate any commissions for lobbyists and brokers or expense accounts in night clubs in Moscow and Montreal'

Via the excellent Not PC