Last week, there was a flurry of interest in University of Guelph economist Ross McKitrick’s proposal for a carbon tax that would rise and fall with atmospheric temperatures. I didn’t like the idea because of the lag between greenhouse-gas emissions and the time the world actual warms up, meaning there’d always be a gap between the damaging effect of emissions and the price for those emissions.
David Jeffrey at Oikos has another concern:
A related problem is that it doesn’t deal with dangerous thresholds. The tax is linear: it increases by US $20 for every 1 degree rise in temperatures. But damage isn’t linear. What happens if our best science suggests that damage will be moderate up to, say, two or three degrees but that, above that, there will be feedback loops and greatly increased risks of catastrophic damage? If that was the case, we’d want an aggressive tax before those dangerous levels are reached. McKitrick’s tax would only start becoming aggressive once those levels were passed, by which time even much higher tax rates may have become much less effective.