Efficient allocation of products in a market economy requires that their prices reflect their full costs of production. Regrettably, that’s not true for those intensive in carbon. The atmosphere is an unpriced resource, free to pollute.
So, carbon-intensive products are too cheap, consumption is too high and environmental damage is too great.
To correct this, more than 3,500 economists favor a carbon tax toraise the price of goods intensive in carbon. There are other climate policies, but all share the necessity of an accurate measure of the social cost of carbon emissions.
That makes it troubling to read (“U.S. judge strikes down Biden climate damage cost estimate,” Feb. 12, Page A2) that a federal judge just struck down the Biden administration’s attempt to raise the value of climate damage to $51 a ton of CO2 from the $7 dictated by the Trump administration. That estimate was clearly far too low; it was just the cost imposed on the United States. Since the damage is global, the cost estimate must be global, too.
A higher estimate means some consumer prices will rise, but there is proposed legislation before Congress, called the Energy Innovation and Carbon Dividend Act, that would refund the tax revenue to all American households, thus mitigating the impact of the higher prices.
The choice of climate policy is properly political, but estimating the cost of carbon, on which any wise policy must necessarily be based, is not. It is a matter to be based on science! There is no role for politics and no role for the courts.
Henry Landis Gabel