‘An evidence-based approach to pricing CO2’ could benefit from some evidence

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The Global Warming Policy Foundation (GWPF) is a think-tank associated with noted climate dissentient Lord Lawson. So it is somewhat surprising to see it publishing a paper arguing for a carbon tax today.

Most of the paper, by Ross McKitrick, is a standard and sound statement of the reasons why economists tend to favour a carbon tax, including an acceptance that a carbon tax could bring macroeconomic benefits.

The most novel part of the paper is a suggestion that future tax levels should be linked to tropical temperature rises. But the paper does not seem to recognise that scientists expect temperature rises to lag emissions by years, even decades. Using a lagging indicator to adjust tax levels is problematic to say the least.

As someone who has written on carbon taxes, I was most interested to see what evidence McKitrick brought forward, and what his suggested initial tax level is.  But his only statement on this is ‘ Suppose we set the initial carbon tax at about US $10 per tonne’ (page9). He doesn’t present any evidence to support this suggestion. This could be seen as a slight fault in a paper entitled ‘An evidence-based approach to pricing CO2’. Particularly as the best evidence we have is that the initial carbon price should be set about $100 per tonne of CO2 higher.

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