The carbon tax/cap-and-trade royal rumble

You have missed the point:
"And then anybody who can produce stuff using less fossil fuel can sell it cheaper. If you get tax breaks and you have the chance to spend the same money to get more stuff that use less fossil fuel instead of fewer stuff that uses more, won't you do that?"

When you get to buy more stuff, the amount of CO2 goes up, unless there is a hard cap. My furnace is much more efficient, it saves me money, which I then spend on keeping the temperature in my house higher.

You have missed the point.

If heating costs more but you get a more efficient furnace, you can keep your house the same temperature and still not pay more. You use less fuel to heat your house.

Now say you get money from the government from the carbon tax. You can fly to Disneyland and it costs more because of the carbon tax. Or you can buy a big-screen TV and it doesn't cost more because the company that makes it found ways to use less carbon. Won't you be more likely to buy the TV instead, compared to before?

You can spend your carbon-tax money on things that don't use much carbon and get a lot for your money. Or you can spend it on things that do use as lot of carbon and a big chunk of your money goes to the carbon tax, to give away to other taxpayers.

On the other hand, with your cap-and-trade, you assume that the government will do the politically unpopular thing and reduce the amount of fuel that can legally be sold in the USA, and then when prices go up it will be the oil and coal companies that get the big profits. You think that's better? Why?

Any TAX is going to run into incredible right-wing vitriol. Any attempt to INCREASE it will have NO political friends.

If the money is given back to the voters, it will have a lot of friends. Maybe not big-spending lobbyists, though.

From my reading, scientists admit that all human activity currently produces only 3.6% of global CO2 emissions.

Sure, but that's the *increase* in carbon available to the carbon cycle. Back in the days of the dinosaurs there were no ice ages (though there were ice ages before and since). They had a climate that was well-suited to dinosaurs. But they slowly trapped carbon in forms that were inaccessible, and eventually the climate changed to something that better suited us.

Now we're releasing that carbon. Never mind that it's only a few percent per year of the cycle. It's like, if we kept increasing the national debt by just a few percent a year, it might eventually become unmanageable even though the increase was small relative to the total debt.

Cynics like me see cap&trade, and carbon taxes as both a power and money grab by governments acting under the cover of environmental political correctness.

That can easily happen. It's a serious concern.

How do we maintain economic stability in the absence of economic growth?

It was always a balancing act to get "stability" while we were growing. We can't base continued growth on continued increase in fossil fuel use because we'll run out. So we have to solve the problem you say is not solved, one way or another. Or else grow on alternate energy.

How do we maintain global competitiveness against countries that leverage our self imposed limits on business to undercut the prices of our products worldwide?

That's another serious issue. I say, it would take a lot of international cooperation to do much to alleviate global climate change. It looks like that cooperation will not happen, so we must instead prepare to adapt to climate change. This will be a great big issue but we can't even start until we get a US political consensus, and we're far from that. So -- to the extent that the US government can secretly prepare -- we should arrange to have the resources available when we do get that consensus rather than waste them now. But the current political consensus is that we should try to run the economy as fast as we can. I dunno. It's a tough problem.

As recently discussed in another FP article, governments around the world have been actively supporting their fossil fuel energy companies, and buying up control of most of the worlds supplies while the US government is actively demonizing producers, strengthening barriers to exploration, production, and refining, leaving only 12% of current reserves aqvailable to private producers.

This looks quite appropriate to me, though I can't really guess the government's intentions. Our current oil use is unsustainable. We must import a whole lot of oil, and we can't continue to do that. When the global economy falls apart we will need to have US oil -- because we won't be able to buy foreign oil. So a policy of "Burn America First" would be wrong. Better to keep US oil in the ground and underestimate reserves, so we'll have something left when the crunch comes.

But the government's strategy may not be that long-term. The approach may instead be to figure that our foreign wars run on oil, and we can't depend on foreign oil -- we might not have the money to pay for it, for example. So we may need to ship US oil to foreign countries so we can fight there, and that means we need to have that oil available and not already burned to support american consumers' consumption.

And anyway, maybe the US government has lots and lots of competing groups each with their own strategy, and they mostly cancel out, and the net result is policies that are pretty much random.

Alternative sources will not be able to supply our needs for many decades, yet we are backing ourselves into an untenable corner.

If it's true that alternate sources won't supply our needs for many decades, then we're already backed into an untenable corner. The world won't have enough fossil fuels to supply our needs for many decades. We're stuck.

In the short run it might make sense to use military force to keep oil prices down and to make sure we get our share. In the medium run it does not -- it will take more fossil fuels to apply that force than we get back. And as our energy resources go down, so does our ability to project force. We will probably always be strong enough to disrupt global trade -- we can easily destroy oil tankers and bomb refineries, and we can send cruise missiles to attack inland refineries etc. But we won't stay strong enough to prevent others from disrupting trade, and we will be unable to force them to trade with us on our terms.

So again, we will need domestic oil. We will have to reduce demand to match supply, and it's valuable for us to burn other people's oil first, while we can, and leave our own oil in the ground. We'll have many decades of declining standards of living until the new energy sources come online.

The faster we can get those alternatives online the better off we'll be.

How do we prevent existing enterprises from monopolizing existing co2 caps and using them as barriers to competition?

We can't. Cap-and-trade is a handout to favored corporations. There might be some sort of fair way to do it, that I haven't seen or thought of. But "the devil is in the details".

Will new businesses with carbon emissions, like the local dry cleaners, restaurant, or manufacturing plant, suddenly be prohibited by over zealous politicians using CO2 as political cover for no-growth policies?

Maybe for awhile. Then we'll decide that it didn't work and set aside the caps, leaving us with the original problems back.

So I say, provide economic incentives to make and use alternate fuels, and then let the economy equilibrate however it can. Suppose for example that airline tickets go up so much that a whole lot of corporations decide they can mostly get by with teleconferencing etc. That rips the bottom out of the airline fee schedules, and tourist rates go so high that dries up too, and airlines mostly go out of business -- we wind up with a few big planes carrying mostly freight, or possibly a larger number of smaller planes carrying mostly freight. If the government tries to make the various decisions about how to do that, it will get it wrong. There's no good way for the US government to preside over the death of the airline industry. So let the markets sort it out -- except it will be hard to keep the government from getting intimately involved. It's a problem.

All of these are schemes designed to ARTIFICALLY raise energy costs for politically incorrect fuels.

And correctly so. Other things equal, market forces will lead to using up the fossil fuels as fast as we can, and then dealing with the resulting crash after we lack the energy to rebuild. It's a good thing to slow the depletion of fossil fuels, and increase the adoption of alternatives.

But legislation intended to do that might likely get hijacked and turned into scams. So my proposal for a carbon tax is that 100% of revenues should be distributed equally to the voters. Then the tax has expenses to government -- the money to run the program must be found elsewhere -- but no income to the government. Transfer money from people who use more fossil fuels to people who use less. Provide an artificial incentive to conserve fossil fuels and to use alternative fuels whenever they are available.

I don't see any approach to reduce the scam potential for cap-and-trade, so I think that one is a worse idea.