“What is RFF hiding–and why? Yes, a carbon tax produces revenue and would reduce CO2 emissions. But what about its retail effects on consumers–on gasoline, diesel, home heating oil, natural gas, and electricity for starters? And what the tax effect on global climate (the ostensible reason for the tax)?”

Resources for the Future (RFF), full of PhD economists–and claiming to be scholarly and nonpartisan–has lost its intellectual way on the all important global warming issue.

Previous posts at MasterResource have documented how the once scholarly organization got corrupted by Malthusian thought in the 1970s–and then climate alarmism in the 1990s forward. Former head Paul Portney (a great guy, to be sure) went for the big funding bucks (from private foundations and government) and decided to assume the climate problem, not debate it, and not seriously assess public policies toward climate from a critical perspective. Portney’s beginning (he joined RFF in 1972 and was president from 1995 to 2005) has been continued by Phil Sharp (2005–2016) and now by Richard Newell. (2016–).

A Selective Calculator

The latest example of RFF’s myopic views toward climate issues is its E3 Carbon Tax Calculator. RFF Fellow Marc Hafstead explains its origins:

Here at RFF, we are regularly asked by policymakers and reporters to estimate the impact of a specific carbon tax price path on future carbon dioxide (CO₂) emissions. To project future emissions under a carbon tax, we utilize a large-scale, computable general equilibrium (CGE) model of the US economy—the Goulder-Hafstead Energy-Environment-Economy (E3) CGE Model. To provide more information about carbon taxes and future emissions, we are pleased to introduce the E3 Carbon Tax Calculator.

Notice how RFF uses the term gross revenue and not tax collected. The Model does not account for declines in economic growth from the new tax–reducing tax collections elsewhere. And finally:

The E3 model does not include non-energy-related CO₂ emissions nor non-CO₂ greenhouse gas emissions. Therefore, we cannot project whether or not a given carbon tax can meet the US targets under the Paris Agreement (i.e., greenhouse gas emissions 26–28 percent below 2005 levels) without making assumptions about future non-energy-related CO₂ emissions and non-CO₂ greenhouse gas emissions.

Still, the reductions in CO2 emissions can easily be run in a climate model to calculate the year 2050 and 2100 temperature and sea-level-rise amounts. And let it be said the amount will be inconsequential. And it will be even more so if industrial activity shifts to more CO2-friendly jurisdictions (the leakage effect).

Debate, Don’t Assume

Why a tax on carbon dioxide in the first place? Why does RFF refuse to debate physical science assumptions behind climate/energy policy? (Lobbyists, lawyers, and technicians, not economists, can do the assuming.) Why not have a discussion about the reasons to not impose such a tax? After all,

A carbon tax requires mass correction to avoid hurting poorer people the most.

A carbon tax requires international trade rules and restrictions.

A carbon tax is a whole new source of government revenue. It is a qualitative change in favor of larger government.

Then there is the whole Public Choice side of the debate that RFF scholars and guests do not discuss. It should be part of the conversation. As economist Robert Murphy has stated: “If the political process has produced a crazy tax code with stultifying barriers to savings and investment, why would we trust that same political process to do the ‘optimal’ thing with a giant new carbon tax?”

Conclusion

What is RFF hiding–and why?

Yes, a carbon tax produces revenue and would reduce CO2 emissions. But what about its retail effects on consumers–on gasoline, diesel, home heating oil, natural gas, electricity for starters? And what the imputed tax’s effect on global climate (the ostensible reason for the tax)?

An E3 Carbon Calculator with four outputs instead of two would be Exhibit A for rejecting the tax, not supporting it. [1]

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[1] The four outputs would be gross tax receipts, CO2 emissions reduction, climate effects (temperature and sea level rise); and retail energy price effects (gasoline, diesel, home heating oil, natural gas, electricity).