
Elon Musk: Only a Carbon Tax Will Accelerate the World's Exit from Fossil Fuels - cpeterso
http://fortune.com/2015/12/02/elon-musk-carbon-tax-paris/
======
valvar
Not that I disagree (in fact I strongly agree), but is Musk really the person
we should be taking this from? It's a bit like taking investment advice from
your bank, meseems. Not necessarily a bad idea, but you might want to hear
with people who don't have an active interest in the placement of your money
first.

~~~
jdc
Aren't there significant carbon emissions released during the production of a
Tesla car and its components?

~~~
samcheng
After accounting for emissions during manufacturing, even if you powered an
electric car with coal power only, carbon emissions of an electric car are
roughly a 25-30 MPG car equivalent.

However, those numbers get much better as the electric power generation mix
improves (at both the car factory and your garage). In California, now, an
electric car is about equivalent to a 70 MPG car.

Note that significant efforts are underway to reduce the carbon-intensiveness
of our electricity generation, so these numbers will get better over time.

[http://shrinkthatfootprint.com/electric-cars-
green](http://shrinkthatfootprint.com/electric-cars-green)

~~~
brianclements
I think it's a bootstrapping issue. What does one do first when they want an
entirely new power ecosystem? I would argue it's wiser to start with the sexy
public facing segment on the demand side (awesome looking electric sports
cars) and have the public start this exact conversation and demand the
infrastructure changes. Because it seems like a pretty steep climb for one to
try to make this huge change simply by supply side first.

------
3pt14159
Not just a carbon tax, but a system of well thought out taxes that cover the
negative externalities of _every_ part of pollution so that the market can
efficiently allocate investments. For example, most people don't know that
coal causes more radiation damage to humans than nuclear. Why is this? Because
coal gets released right into the atmosphere, while spent fuel rods get stored
away from human contact.

I know that there are political realities that prevent all of the taxes that
should be in effect from coming into effect, but those political realities can
change once the issue is reframed. Every dollar of pollution tax could, for
example, be directed at lowering the income tax rate. This can make the
proposal much more tenable to voters and the more right wing side of the
intelligentsia that pushes for changes in government policy.

~~~
sukulaku
> _well thought out taxes that cover the negative externalities of every part
> of pollution so that the market can efficiently allocate investments_

But it's not "the market" that decides how electricity is produced in a
country, right? It's the government.

~~~
alerkay
Good point

------
danieltillett
I used to think that carbon taxes were the way to go, but I have seen how
effective the fossil fuel industry is at creating FUD. When you consider an
effective carbon tax makes all their assets worthless it is not surprising
that they will do whatever it takes to block anything other than a nominal
carbon tax.

There really is only one way to get past the fossil fuel industry and that is
to buy them out. Given the benefit from stopping global warming is spread over
the whole community it is actually fairer if we did this rather than push a
disproportionally share onto the owners of fossil fuel. Lets get serious and
just pay off Exxon and their buddies.

~~~
pzone
This is a point which gets overlooked pretty often.

It's the same as the value of taxi medallions in the Uber debate. Allowing
Uber to operate in a city where technically only medallion owners were
supposed to drive is actually really shitty to the owners of those medallions.
You open it up, suddenly tell them that their investment is worthless because
of a change in regulations. It's really unfair to them. Perhaps the way to
quiet the medallion owners would be to pay them like 25% or 50% of what they
were worth earlier in compromise bill allowing Uber in. They don't feel so
slighted, everyone else gets Uber. That's win-win.

How it would work in this case: pass a compromise bill which involves paying
these companies some amount of cash so their shareholders won't feel so
slighted. They will give up their fight against carbon taxes, and we avert
global catastrophe.

~~~
reitzensteinm
It's not "really shitty" to the owners of the medallions, the risk of a loss
of the artificial monopoly should have been baked into the price from the
start.

That the prices got as high as they did indicates the confidence the owners
had over the stability of their political situation, which I have no sympathy
for.

~~~
pzone
In that case, then the medallions _also_ include the value of owners being
able to maintain their monopoly through lobbying efforts.

Whether or not you have any sympathy for them, striking a deal is the best
solution.

(Other question: do you have any sympathy for poor people who are hurt a bit
by a carbon tax? Elsewhere in this discussion people are arguing against the
tax because it hurts the poor. I think it would be a bit weird to be
sympathetic to poor people who are hurt a little by a policy decision, but
unsympathetic to slightly less poor people who are hurt a lot by a policy
decision.)

~~~
reitzensteinm
I don't have sympathy for losses sustained via poor investment decisions. I
have lost a small fortune in my life because of mistakes I've made, and I
don't want or deserve sympathy for any of it. Losing is part of playing the
game.

Poor people just trying to get by (and this included me at many points in my
life) are who we should be saving our empathy for. Not wannabe businessmen.

------
Synaesthesia
Another thing that would help is to stop subsidizing the fossil-fuel industry!
The IMF estimates that about $5.3 trillion is spent annually subsidizing
fossil fuel energy.
[http://www.imf.org/external/pubs/ft/survey/so/2015/NEW070215...](http://www.imf.org/external/pubs/ft/survey/so/2015/NEW070215A.htm)

~~~
danieltillett
This is certainly the low hanging fruit.

------
ghouse
A phased-in revenue-neutral carbon tax of $30/ton would increase electricity
rates in (most of) the US by < 10%. And could lower income taxes (or if not
revenue neutral) reduce the debt. What's not to like?

~~~
eru
If it's revenue neutral and lowering income taxes, where would the big
`victims' be?

~~~
bigiain
The answer used to be "aluminum smelters" (aluminum, aka "frozen
electricity").

Interestingly, the aluminum smelters in the mountains behind Portland closed
down when the datacenters moved in and bought all the cheap hydro electricity
they used to use.

My guess is that a tax increase on electricity will hit the
Google/Facebook/Amazon/Apple/Microsoft and other "cloud businesses" pretty
hard...

~~~
crdoconnor
Aluminium smelters in Germany are actually getting a big subsidy. They're
varying their electricity usage based upon the output of Germany's solar/wind
farms and getting paid a hefty sum to do so (possibly too much).

This is having a negative impact on other smelters across the world.

Effectively they're doing the same job we were always told batteries would do.

~~~
greglindahl
If they're paying a fair amount for electricity, it's not a subsidy. And it's
probably not a minute-timescale change like batteries. Energy storage and
batteries are quite different things.

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TheWoodsy
Carbon tax in Australia. All extra expenses were passed along down the chain
to the consumer. We got rid of the tax. Prices stayed the same. _sigh_

Implementation and/or regulation is key.

~~~
crdoconnor
>Carbon tax in Australia. All extra expenses were passed along down the chain
to the consumer. We got rid of the tax. Prices stayed the same.

In general if a corporate think tank said something happened or something is
going to happen and it impinges upon their profits, there's a better than even
chance they're lying through their teeth.

See also: minimum wage, regulation of the financial sector, anything to do
with debt, etc.

------
friendzis
Carbon tax becomes a peculiar piece of legislation when viewed from Pirate
Party's perspective (not necessarily that I agree with it, no _ad hominem_
please). According to Rick Falkvinge [1] legislation must:

    
    
      * Be targeted at a problem
      * Solve the problem
      * Not create other problems in best case, worse problems in worst case
      * Be evidence based
    

Carbon emission is considered a problem because it contributes to climate
change. For carbon tax to be considered targeting a problem we must accept
that climate change is a problem.

Does it solve a problem? At least not directly. Taxes on tobacco and alcohol
do not eliminate consumption, prohibition in US created a Mafia, jail-time for
drug possession does not eliminate consumption, we have hard evidence
confirming that.

Such tax hinders accessibility, though. Since at least transportation is
fossil fuel dependant, more or less everything (commodities including: food,
public transportation) will get more expensive, thus less accessible.

Do we have hard evidence (numbers, not general economic speculation) that x
level carbon tax will lower carbon emissions by y?

[1]: [http://falkvinge.net/pirate-wheel/principles/quality-
legisla...](http://falkvinge.net/pirate-wheel/principles/quality-legislation/)

~~~
pzone
You don't have to reduce carbon emissions to zero to solve global warming, you
just have to discourage emissions to some degree. That is exactly what a
carbon tax does. It directly solves the problem.

Revenue-neutral tax is the key to dismissing the point about accessibility.
You can take the tax revenue and mostly give it to poor people who are hurt
the most by the tax.

------
walsh-cloonagh
Spending is a lot easier than taxing.

A country could just offer to buy a increasing amount of zero emission
electricity and sell it on the free market until electricity was no longer
generated from sources that yielded carbon.

The same approach could work for battery cells that could be used in cars
until non-electric vehicles were no longer competitive.

This could be funded by that country's current (probably) progressive tax
system.

This doesn't cover air, sea, heating and agriculture emissions. But a carbon
tax may not be an adequate incentive to develop electric aircraft or cargo
vessels in any case.

~~~
pzone
what?

~~~
adventured
The parent is arguing for extreme subsidization to alter the market for
electricity and vehicles (etc).

They effectively want the government to spend a lot of money to bankrupt the
fossil fuels industry and fossil fuel vehicles, with subsidies toward the
generation of renewables and producing electric vehicles.

They're wrong that spending is easier however. Republicans control Congress
and the US made a massive mistake in taking on ~$15 trillion in new public
debt between 2000 and 2015. Simply put, the US doesn't have vast excess
spending room (which means it would require tax increases or new taxes). It
would cost trillions over a few decades to pull off the parent's plan.

~~~
pzone
I agree that a subsidy is infeasible policy. But it wouldn't be effective even
if it were feasible to pull off.

Suppose the government gives out free Priuses. Well, then people are going to
drive more. Even though some people may be driving more fuel efficient cars,
it's not clear that total carbon emissions decrease.

Suppose the government provides free solar cells for everyone. Then people
will use a lot more electricity. But solar cells require some carbon emissions
to produce, and since people use so much more electricity overall, it's not
clear whether carbon emissions decrease or increase.

Either way it's just a totally goofy thought experiment, since a carbon tax is
exactly the right answer, and this subsidy idea is so misguided that it could
possibly even _increase_ carbon emissions

------
piokoch
The question is who will pay that tax? In Musk vision governments should lower
other taxes (which one?) and introduce carbon tax.

I am afraid that the devil is in the details and it may turn out that this tax
will be paid mostly by car owners (rising delivery costs, so food prices would
grow) or people in rural areas who use coal heaters. The poor will suffer most
in such case.

I am also afraid that governments wouldn't do anything else to lower carbon
emission - doing that would be stupid, they get more money thanks to large
carbon emission.

I think it is time to figure out honestly, without any eco/anti-eco bullshit
what it the best (clear, cheap and practical) way to produce energy.

I suspect this will never be done, as eco people would have to admit that
nuclear energy is a viable option to go (I don't believe we can base modern
economy on energy sources that depend on weather). Anti-eco people would have
to admit that fresh air is something more important than coal mine owners
interest (and coal mine workers interest too).

I really regret nuclear energy had such a bad press and, as a result, there
weren't any significant innovation in that area (in particular how to reuse
nuclear wastes).

~~~
pzone
Well, lower taxes on poor people. Increase welfare, subsidize public
transportation and other things that help transfer money to people who are
hurt by the tax.

"Figure out the best way to produce energy" is not something we can figure out
posting on HN, or even in a presidential debate. It is a complex and very
uncertain question, but since it is a question of innovation, it is the kind
of question that markets are very good at answering. A carbon tax directs the
market toward finding out the solution efficiently.

------
funkyy
You cannot just introduce tax and hope for best when the whole tax system and
tax recovery is a joke that hurts mainly SMBs. Its not like big corporations
will pay them anyway.

If you want to introduce a tax on something so intangible as emissions, you
would need to build easy to track and easy to use tax system.

~~~
pzone
??

You just tax sales of oil, natural gas, etc. and a few other specific
activities, like raising livestock, it's super easy

If Congress can implement something as complex as the Dodd-Frank act, I'm sure
it can measure and tax something as basic as carbon emissions

~~~
dagw
If only a few countries introduces/enforces this tax it will simply drive the
huge carbon emitters to move their emissions to other countries. The only
people that will be hurt are those that are too small to move.

~~~
pzone
Yes, and that's why 160+ world leaders are gathering in Paris to take steps
toward a global carbon emissions agreement

~~~
funkyy
US and China are unlikely to go with it or they will end up playing the rules.
The same as it is now.

Also - you are right, taxing will work. Its not like corporations and huge
manufacturers will play the system and avoid paying taxes or getting them back
through loopholes.

Only ones affected will be mostly SMBs and regular folks - as always.

------
transfire
Or a new battery that holds twice the power, charges twice as fast and costs
half as much. Yeah, or that.

------
whazor
In my opinion a carbon tax is also interesting for oil and gas companies. As
the carbon tax would enable them to compete on technologies that minimize the
carbon output of their machines. It would enable them to differentiate from
each other.

------
tmaly
how would another tax benefit the current economy? How would this tax be
spent?

------
netcan
When it comes to carbon reduction using tax, tradable, caps or any other
instrument that tries to use the price system to alter consumption levels… I
think you need a very sober economic estimate of efficiency and cost. A tax is
not very different economically from other price increases in carbon fuels.
These prices vary a lot over time. We also already have fairly variable taxes
between countries on the use of carbon fuels for (eg) cars.

Here's oil: [http://www.nasdaq.com/markets/crude-oil-
brent.aspx?timeframe...](http://www.nasdaq.com/markets/crude-oil-
brent.aspx?timeframe=10y)

The price varies a lot. Consumption does not vary that much or that fast. This
is called price inelasticity of demand. Demand does not drop much for
incremental increases in price. This means that to decrease consumption we'd
need a very high carbon tax. In Europe, petrol has been taxed heavily for a
long time and prices are higher than in the US. The long term effect has been
somewhat smaller cars, not a completely different transportation market.

There are also the realpolitik problems. When the public is concerned about
something (say water), it's not impossible to convince the public (consumers)
to bear a burden. But, entrenched economic interest are harder to sway or
wrangle. This leads to weird regulation. An area where water use is
distributed 15/35/50 between households/industry/agriculture will successfully
enact water restrictions of some sort on _households,_ the minor participant.
There are equivalents in energy.

I'm not saying do nothing, but I am saying be smart. Some plans are winers
from a public debate perspective but do not solve the problem. I am against a
plan that acts a a regressive tax affecting the middle and lower classes
harshly unless it is going to have a big impact.

If a household with $4,000 annual fuel costs (heating and transport) is to pay
$7,000, the overall expected result better be big steps towards carbon goals.
I have a hard time seeing this happen.

Lets do a back of the envelope: take that $5.3 trillion externality at face
value. Lets assume the world's 2 billion top consumers pay the majority of it.
Call it 4 trillion, $2k each, $8k for a family of 4. How much of a reduction
will we see? 10%? 25%?

I'm not completely down on the idea. Elon Musk suggests lowering taxes
elsewhere, being revenue neutral. This is a realistic politics problem again.
Lets say we can do that though, globally. Reduce bottom level income tax and
value added taxes by this much, people would be less harmed. Still, transport
& heating make up a large part of poorer people's income so it's hard to think
of a way this would not be regressive. I'm sure it is theoretically possible,
but very hard.

At the end of this ramble, I'm not sure where I am. I'd like to see a
realistic estimate of actual reductions in emissions. This is too big a deal
not to fix the problem.

~~~
mac01021
The best solution I've seen is a "fee and dividend" system, where a carbon fee
is collected and the proceeds are rebated in equal amounts to every legal
resident of the nation.

This means that, when gas prices go up, a lower-class person whose carbon
footprint is exactly that of the average citizen will be reimbursed for the
extra gas money by exactly the right amount. And the tax ends up being not
regressive.

Compare the carbon footprint of a well-to-do businessman who flies coast-to-
coast on a monthly basis with that of a working-class guy who drives ten miles
a day and heats his house with oil. The former is greater then the latter by
several times. The working-class guy contributes a relatively small share to
global warming, but bears an equal share of the public cost induced by the
changing climate. Under the fee-and-dividend system, every man reimburses the
public for the cost that he is imposing on them through his CO2 emissions, and
is reimbursed by everyone else for the cost they impose on him.

Because of this I argue that a carbon fee and dividend is the right policy
from a social justice perspective, and should be enacted _even_ if it is not
going to be sufficient to push us as a society off of fossil fuels.

Google "carbon fee and dividend" or see this
([http://www.skepticalscience.com/CCL-pushing-for-US-fee-
and-d...](http://www.skepticalscience.com/CCL-pushing-for-US-fee-and-
dividend.html)) for more.

------
sukulaku
Elon might want to investigate the issue he's talking about:
[https://www.youtube.com/watch?v=lQqPQ0i_fl0](https://www.youtube.com/watch?v=lQqPQ0i_fl0)

>> _Don 't you hate when Fox News and the other MSM spin-meisters use simple
tricks to skew and misrepresent data and statistics? How about when the World
Meteorological Organization does it? Or NASA? Or the Journal of Climate? Or
GISS? Join James for today's thought for the day as he shows you some of the
grade school level parlour tricks the global warming alarmists use to
misrepresent their data and bamboozle the public._

~~~
tempestn
His quibble with the bar graphs there doesn't make a lot of sense given that a
Y-axis starting at 0 degrees is just as arbitrary as starting it at 13.4
degrees.

~~~
sukulaku
The point was that starting the Y-axis "suitably high" makes it look like the
relative differences in the values are greater than they actually are.

In this case, it was done to make "climate change" look like a _vastly_ bigger
problem than it actually is.

It wasn't just "his quibble" \- it's a very real problem with the way the
(actual non-)issue is presented to the masses.

------
ulfw
also can be read as "Only a Carbon Tax Will Accelerate Sales of My Extremely
Expensive Vehicles"

------
jbb555
Yeah I was a big fan of Elon Musk, and then he says this. Ugh. Tax never
solved anything except letting politicians take your money for their own uses.
He's fallen for it.

~~~
pzone
Are you joking? It is harder to find a tighter consensus among experts than
the conclusion that a tax is the best policy to curb carbon emissions.

[http://www.brookings.edu/research/opinions/2013/03/12-taxing...](http://www.brookings.edu/research/opinions/2013/03/12-taxing-
carbon-gale)

------
dclowd9901
Would this mean my company would charge me for using the break room microwave?

~~~
madeofpalk
Yes, I'm sure it does.

In practice though, I'm sure it will just get added to the electricity bill
your employer sends you every month.

------
EGreg
I am worried. Even if we switch to other forms of energy, aren't we heating up
the planet? Or do we expect it all to be radiated faster to space over time?

[http://physics.ucsd.edu/do-the-math/2012/04/economist-
meets-...](http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-
physicist/)

~~~
pzone
Oh god, that article, classic /r/badeconomics

No, we don't have to worry about heating up the planet from our energy use,
the only major factor is the degree to which the atmosphere traps heat

------
DAddYE
I don't think will ever work. There are countries where taxes are way higher
than US. For example in Italy [1] we are around 50% (including VAT and local
taxes) and other than decreasing the productivity of companies it never had a
"mind" impact. In fact Italy is one of the countries with most cars (per
citizen) and that invest less/nothing in alternative energies.

[1] [https://home.kpmg.com/xx/en/home/services/tax/tax-tools-
and-...](https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-
resources/tax-rates-online/corporate-tax-rates-table.html)

~~~
cma
That's just a generic across the board tax you are talking about and linking
to isn't it? Rather than a specific incentive/disincentive in one area (carbon
emissions).

------
karmacondon
_> "This approach already occurs, Musk said, citing how taxes are higher on
cigarettes and alcohol than fruits and vegetables"_

This is a good point, but generally discouraging the use of cigarettes or
alcohol through taxation only effects people who consume those products. If
you raise the tax on carbon, that cost could be passed on by businesses in
unexpected ways. If the cost of me shipping vegetables across the country goes
up by 2%, I'm just going to increase what I charge for shipping by at least 2%
and the cost could well be passed on directly to consumers. Eventually I might
be outcompeted by someone who has a fleet of electric trucks. Maybe, at some
point. But until that happens, people could end up paying slightly more than
they do now for essentials.

Maybe this effect is covered in the policy details or by the term "revenue
neutral". Either way a carbon tax is probably a good idea, but the chain of
cause and effect isn't so clear.

~~~
jowiar
It's absolutely covered by "revenue neutral".

We tax things, but then distribute the tax revenue among the citizenry. The
cost absolutely will get passed on, but that is accounted for in the end when
you receive a check for ~1/300,000,000th of the net tax paid. The increased
cost of essentials would be a total wash, as presumably everyone is paying
roughly the same -- except to the extent that by pricing the externality,
there might be space to undercut the market with a non-polluting option where
one didn't exist before, encouraging R&D.

