Odds on a carbon tax

May 7th, 2008

If New Zealanders were allowed to trade like adults on prediction markets I bet there’d be shortening odds on our emission trading scheme being dumped in favour of a simple carbon tax.

The evidence is piling up (before the Select Committee as well as in every morning’s papers) that emission trading will suffer a very long settling down period, if indeed it gets the chance to mature.

There must be a serious likelihood that Labour will not be able to hold its majority for the Bill, as the risks become more apparent, of measurement uncertainties, disputed exemption rationales, international confusion, scope for gaming, and rorts.

A carbon tax would avoid much of that, and postpone the tricky issue of agricultural emissions at least until other countries have shown what they are likely to do with them. The Greens might even prefer to have something simple and comprehensive (as far as it goes), than a scheme delayed indefinitely by complexity.

I have not been following this closely enough to have a preference, but a prediction market could give a better steer than any other measure.

Filed under Economy, Environment

Comments

Stephen,
Some of the people I talk to don’t count of course, because their wages and our Country has been reduced by Helengrand, and they say
well what they say is fuck Carbon tax.
NO

This is a subject where being first in the world makes no sense at all and most likely a disaster for the country.

I listened pre-Kyoto to an economist on optimal design of future schemes. While he was in favour of emissions trading between countries – within a country he thought a carbon tax would be optimal. Tax works on externalities – e.g. excise taxes generally.

Having seen all the effort going into emissions schemes and quite frankly bullshit about offsets it confirms for me that this is all a costly bureaucratic and ineffective method. Fossil fuels are the problem – so deal with them. The rest of the offsets and trading is hard to measure and often bad science (e.g. carbon sequestration).

I am for a carbon tax – provided there is a corresponding reduction in other taxation. There would be a case for reducing/removing GST as a carbon tax would be a proxy consumption tax.