Though proponents of carbon cap-and-trade programs are in the ascendancy over advocates of straight carbon taxes at the moment, that hasn’t stopped some eminent scientists and thinkers from coming out in favor of the latter.
Most recently, climatologist James Hansen (the first scientist to state before Congress that greenhouse gases were causing climate change, some 20 years ago, and director of the NASA Goddard Institute of Space Studies) has come out in favor a carbon tax and has urged president-elect Obama to adopt one. Hansen explained how he envisions an effective carbon tax:
Carbon Tax & 100% Dividend
Calling it a Carbon Tax and 100% Dividend approach, Hansen said that,
The entire carbon tax should be returned to the public, with a monthly deposit to their bank accounts, an equal share to each person (if no bank account provided, an annual check – social security number must be provided). No bureaucracy is needed to figure this out. If the initial carbon tax averages $1200 per person per year, $100 is deposited in each account each month (Detail: perhaps limit to four shares per family, with child shares being half-size, i.e., no marriage penalty but do not encourage population growth).
A carbon tax will raise energy prices, but lower and middle income people, especially, will find ways to reduce carbon emissions so as to come out ahead. Product demand will spur economic activity and innovation. The rate of infrastructure replacement, thus economic activity, can be modulated by how fast the carbon tax rate increases. Effects will permeate society. Food requiring lots of carbon emissions to produce and transport will become more expensive and vice versa – it is likely, e.g., that the UK will stop importing and exporting 15,000 tons of waffles each year. There will be a growing price incentive for life style changes needed for sustainable living.