Jun 15, 2018 - Energy & Environment

The promise and peril of carbon pricing

A wide-ranging new report on a decade's worth of public opinion surveys shows that backing for taxing carbon emissions in the U.S. has grown, but remains limited and deeply split along partisan lines.

Why it matters: The findings are another sign of why carbon pricing proposals in the U.S. face massive hurdles, despite the view among many advocates and economists that its an essential tool for fighting climate change.

"While the increase in support marks a significant shift in public attitudes, there is no evidence of a groundswell of support for a carbon tax among Americans in general."
Analysis Thursday from National Surveys on Energy and Environment, a joint project of the University of Michigan and Muhlenberg College.

By the numbers: Newly published data shows that in the fall of 2017...

  • 47% supported taxing CO2, compared to 44% in opposition.
  • That's similar to a survey the prior year and much higher than surveys in 2013 and 2014.
  • More broadly, support levels in 2016-2017 are substantially higher than their joint surveys showed over the past decade in any year except 2012.

Check out the interactive chart above: It shows how Republicans surveyed still oppose CO2 taxes, but the level of that opposition has lessened significantly between 2013 and 2016.

The big picture: Currently just six percent of U.S. emissions are subject to a carbon price, according to the Rhodium Group.

The intrigue: A new and instantly controversial essay in Foreign Affairs by Jeffrey Ball argues that carbon pricing — via taxes or emissions-trading — has been ineffective as an emissions-curbing tool worldwide where it has taken hold.

  • That includes several U.S. states, the E.U., a suite of local and regional governments, and an emissions-trading system in China — the world's largest carbon emitter — begins in coming years.
  • One reason they're not working, Ball says, is that prices are typically set too low and are applied too narrowly, affecting only some economic sectors.

Quoted: Ball argues that carbon pricing, while useful in theory, is even proving counterproductive in practice in the wider fight against global warming.

"The result is that a policy prescription widely billed as a panacea is acting as a narcotic. It’s giving politicians and the public the warm feeling that they’re fighting climate change even as the problem continues to grow."

The controversy: The piece drew pushback on Thursday from some climate policy analysts.

  • "The essay provides useful/important evidence of real problems carbon pricing programs (particularly cap-and-trade) have encountered. But I don't see any evidence to support its claim that other policies offer a more 'politically realistic path' to deep decarbonization," tweeted Noah Kaufman, an economist with Columbia University's Center on Global Energy Policy.

Connecting the dots: Bringing things back around to the new National Surveys on Energy and Environment report, it provides some grist for Ball's argument about the challenge of creating CO2 prices steep enough to substantially alter emissions levels.

  • The authors note that in a fall of 2010 survey, support for a carbon tax that amounted to $15 per month was nearly identical to support for a tax with no cost listed, "but when asked if they would support a carbon tax that increased energy costs by $50 per month, support dropped 17 percentage points, from 32% to 15%."
  • However, a more recent survey with somewhat different wording — asking about costs on a percentage basis rather than as a dollar amount — found less resistance.

One level deeper: In a fall of 2016 survey, they asked about a carbon tax without assigning a price, and then about a tax that drove up energy costs by 10% per month. Half of the respondents supported a tax in the abstract, and support barely dipped when they assigned a 10% cost increase.

"This may indicate that Americans are growing less price-sensitive toward a carbon tax as their urgency to address climate change grows," the new report states.
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