Carbon Taxes? Happer & Everett Respond

By Paul Homewood

London, 13 December – The Global Warming Policy Foundation recently published a new paper by Professor Peter Hartley (Rice University) which argued in favour of carbon taxes as the economically optimal way to address global warming.
The paper’s appearance prompted some controversy among climate sceptics and resulted in the submission of a critique from Professor Will Happer and Dr Bruce Everett.
Their criticism and Professor Hartley’s response are now being published in an open debate format.
Dr Benny Peiser, the GWPF’s director said:
“Many climate sceptics criticised us for publishing Professor Hartley’s paper, but we at the GWPF do not fear discussion of controversial issues. In sharp contrast to climate orthodoxy and dogmatism, we foster a culture of open and fair debate. That’s why we continue to invite authoritative experts and critics to comment formally on our reports. As the energy crisis deepens, the need for open debate has never been more urgent.”

Are carbon taxes a good idea?
Happer and Everett versus Hartley (pdf)

I covered the Hartley paper at the time, writing:

The paper appears to be rather muddled.

It begins by labelling carbon dioxide as “pollution”. It cannot be overemphasised that it is nothing of the sort. Unfortunately this sloppy thinking leads the author down the road of a Pigouvian tax – the “polluter pays principle”. Yet as the paper acknowledges, there is no evidence that increasing levels of carbon dioxide in the atmosphere are detrimental, even if they have led to a small amount of warming.

And even if such damage did occur in future, how would we be able to quantify it? By setting a tax too high, we would end up causing much greater economic damage.

I would not disagree that mandating/subsidising renewable energy is probably the worst policy, as it is government and not market driven. But worse still, Hartley does not seem to recognise the monumental risks being taken over grid and energy security by this over reliance on wind and solar power.

But the real economic objection to a carbon tax is that it will end up having the same result as our current policies. Fossil fuels will end up being priced out use, and society will be left with an unreliable and expensive alternative, just the same as it is now.

Whatever the costs of global warming may or may not be in decades time, we know for a fact that the wellbeing of people around the world will suffer now without access to cheap, reliable fossil fuels. Eventually some new technology will come along, which will replace fossil fuels because it is better.

That is how economics works, and why the world is so much better off than it used to be. We should not be trying to interfere in that process.