from Energy, Security, and Climate and Energy Security and Climate Change Program

Gas Price Worries and Climate Myopia

April 28, 2011

Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

More on:

Fossil Fuels

Dan Esty and Michael Porter say that high gas prices are a “reminder that our dependence on oil carries a great cost”. They argue that “what we really need is to address the full set of energy-related problems, with a focus on spurring clean energy innovation”. And, writing in the New York Times, they have a solution: a carbon tax.

“The best way to drive energy innovation would be an emissions charge of $5 per ton of greenhouse gases beginning in 2012, rising to $100 per ton by 2032…. In tackling our trade imbalance, budget deficit, competitiveness challenges and oil-related vulnerability — not to mention climate change — our plan has a powerful logic.”

Actually, not so much.

This is all pretty simple. A $100 carbon tax would add a dollar to the price of a gallon of gasoline. Would Esty and Porter have written an op-ed claiming that we should solve our oil problems by hiking gas prices by a dollar in 2032? Of course not, because it would have been transparently unpersuasive. By calling for a carbon tax, they’re able to use numbers that no one understands, and thus pretend that their plan would have a much bigger impact than it actually would.

I’d be remiss if I didn’t flag the one place where the authors attempt to bridge this gap:

“In the short term, an emissions charge would create a major impetus for a move from oil and coal to natural gas, with its much lower carbon content. Gas would likely become the preferred fuel for new power generation, and by extension, for transportation, as electric vehicles become cost-effective alternatives to internal combustion cars.”

But why will people switch to electric vehicles? In this telling, it doesn’t appear to be their carbon tax. Yet if people switch to electric vehicles without a carbon tax, then the oil dependence problem will be solved – without a carbon tax. You can’t have it both ways.

[UPDATE: A commenter suggests that, yes, it is the carbon tax. Perhaps I was being too generous in trying to find a place where they made the link to oil consumption. Someone still needs to explain to me why a $1 gas tax will incentivize a wholesale shift to electric cars, when there are approximately zero economic models that agree.]

These are very smart guys. The puzzle for me, then, is why they believe what they’ve written. I can’t help but think that there’s a case of climate change myopia at work. A big slice of the political spectrum has been so invested in identifying climate change as the ur-energy problem that whenever another energy problem arises, they look to climate policy for a solution. High gas prices? Carbon tax. Oil revenues flowing to Iran? Cap-and-trade. People driving gas guzzlers? More wind and solar. No one is stopping to ask a pretty basic question: are these policies well suited to the problems they’re being newly touted for? Don’t get me wrong: I’m all for strong climate policy. But if people who invoke climate policies as answers to our other energy woes really take those other energy problems seriously, they’ll start proposing solutions that actually do something about them, rather than trying to sell climate policy as something it’s not.

More on:

Fossil Fuels