A proportionate response to Trump’s climate plans?

An interesting article by Chris Hope (a climate change policy researcher, PAGE model developer, and faculty member at Cambridge Judge Business School, interested in environment and energy; archive) of – oh dear – Arctic methane ‘time bomb’ could have huge economic costs fame. But never mind that. CH looks at Sarkozy’s mooted plans to levy a “carbon tax” on US goods if trump leads the US out of the Paris agreement.

Tol, in the comments, correctly points out that France couldn’t do this alone: it would have to be EU-wide. Never mind, pretend its a EU wide plan. Tol, in the comments, points out that WTO rules only permit border taxes if there is an equivalent domestic tax which if you think about it is fair enough. If you’re going to penalise the US, you should be penalising domestic folk too. You can’t penalise the US just for storming out of your favourite agreement in a huff. But you could probably finesse that if you could demonstrate that your membership of Paris had imposed equivalent tariffs on domestic production. However, lay that aside and consider the proposal assuming it is possible.

Which brings me to part 2, which is CH’s rough calculation of the tariffs required. His numbers, which I won’t check, are that $1000 of production costs 0.4 tonnes of CO2-equiv, and the EU-cost of a tonne2 is $150. Which is $60 per $1000, or an implied tax rate of 6%. Whether you agree or not, it is interesting to see the numbers written out like that. And of course you could put in your own pet cost of carbon; and you could fiddle it into energy cost per dollar for particular industries, if you wanted to make it too complicated to be usable.

How does that compare with the tariffs that are actually imposed? I find I haven’t a clue. The top Google hit is Trade in goods and customs duties in TTIP (TTIP! Horrors! Remember to hiss under your breath at the very sight of the initials). It says At just under 2%, average [I do hope they mean value-weighted, let’s hope so] customs duties between the EU and the US are generally low. But the average hides a different situation for individual products1. So, 6% is bigger than 2%. But, since the US wouldn’t actually do a great deal under Paris in the near future even if it doesn’t leave, there’s no obvious reason why you’d whack on the full 6% immeadiately; it would be more reasonable to ramp up slowly. So you could just do nothing at all, except label the existing tariffs as “carbon tariffs”, if you were feeling somewhat dishonest.

Notes

1. The document is mad, of course. Or rather, reveals the madness of existing policy (and not just in the EU). [F]or train carriages… the EU charges only 1.7% on imports from the US. WTF? Why do we charge any duty at all on train carriages? Let alone having a special category for it. No wonder we’re drowning in bloody stupid regulations when things like this are allowed to occur. It continues The EU wants to remove these duties and other barriers to trade… but doesn’t explain why, if the EU wants to remove duty on train carriages (and it bloody well should) it doesn’t simply do so; instead of pratting around producing stupid documents. But I digress.

2. Clarified. Happy now ;-?

Refs

* Trump carbon and the Paris agreement – RC
* Slate Star Codex – You Are Still Crying Wolf; via Scott Adams (If you insist that Trump would have to be racist to say or do whatever awful thing he just said or did, you are giving him too much credit. Trump is just randomly and bizarrely terrible. Sometimes his random and bizarre terribleness is about white people, and then we laugh it off. Sometimes it’s about minorities, and then we interpret it as racism.)

20 Comments

  1. An interesting article by Chris Hope (a climate change policy researcher, PAGE model developer, and faculty member at Cambridge Judge Business School, interested in environment and energy; archive) of – oh dear – Arctic methane ‘time bomb’ could have huge economic costs fame. But never mind that. CH looks at Sarkozy’s mooted plans to levy a “carbon tax” on US goods if trump leads the US out of the Paris agreement.
    Tol, in the comments, correctly points out that France couldn’t do this alone: it would have to be EU-wide. Never mind, pretend its a EU wide plan. Tol, in the comments, points out that WTO rules only permit border taxes if there is an equivalent domestic tax which if you think about it is fair enough. If you’re going to penalise the US, you should be penalising domestic folk too. You can’t penalise the US just for storming out of your favourite agreement in a huff. But you could probably finesse that if you could demonstrate that your membership of Paris had imposed equivalent tariffs on domestic production. However, lay that aside and consider the proposal assuming it is possible.
    Which brings me to part 2, which is CH’s rough calculation of the tariffs required. His numbers, which I won’t check, are that $1000 of production costs 0.4 tonnes of CO2-equiv, and the EU-cost of a tonne2 is $150. Which is $60 per $1000, or an implied tax rate of 6%. Whether you agree or not, it is interesting to see the numbers written out like that. And of course you could put in your own pet cost of carbon; and you could fiddle it into energy cost per dollar for particular industries, if you wanted to make it too complicated to be usable.
    How does that compare with the tariffs that are actually imposed? I find I haven’t a clue. The top Google hit is Trade in goods and customs duties in TTIP (TTIP! Horrors! Remember to hiss under your breath at the very sight of the initials). It says At just under 2%, average [I do hope they mean value-weighted, let’s hope so] customs duties between the EU and the US are generally low. But the average hides a different situation for individual products1. So, 6% is bigger than 2%. But, since the US wouldn’t actually do a great deal under Paris in the near future even if it doesn’t leave, there’s no obvious reason why you’d whack on the full 6% immeadiately; it would be more reasonable to ramp up slowly. So you could just do nothing at all, except label the existing tariffs as “carbon tariffs”, if you were feeling somewhat dishonest.
    Notes
    1. The document is mad, of course. Or rather, reveals the madness of existing policy (and not just in the EU). [F]or train carriages… the EU charges only 1.7% on imports from the US. WTF? Why do we charge any duty at all on train carriages? Let alone having a special category for it. No wonder we’re drowning in bloody stupid regulations when things like this are allowed to occur. It continues The EU wants to remove these duties and other barriers to trade… but doesn’t explain why, if the EU wants to remove duty on train carriages (and it bloody well should) it doesn’t simply do so; instead of pratting around producing stupid documents. But I digress.
    2. Clarified. Happy now ;-?
    Refs
    * Trump carbon and the Paris agreement – RC
    * Slate Star Codex – You Are Still Crying Wolf; via Scott Adams (If you insist that Trump would have to be racist to say or do whatever awful thing he just said or did, you are giving him too much credit. Trump is just randomly and bizarrely terrible. Sometimes his random and bizarre terribleness is about white people, and then we laugh it off. Sometimes it’s about minorities, and then we interpret it as racism.)

    Related

  2. The EU is the sort of bureaucracy that can’t change a light bulb without producing several reams of stupid documents. I sometimes wonder if the people who write these things get paid by weight. (It’s not unique the EU of course – most large bureaucracies, including most large private enterprises, are like this.)
    [I can confirm that large private firms can be bureaucratic at times :-(. One crucial difference though is that private firms can die. If they get too schlerotic, they will not survive. Alas, the same discipline does not exist for governments. Although we may be discovering that it exists for the EU 🙂 -W]

  3. Governments and corporations are more similar than different. They are, after all, both organizations of people.
    Corporations with monopoly positions can be more bureaucratic than governments. Example Bell Telephone in America before the government breakup. In some ways great (Bell Labs), but a real pain to deal with. I remember well getting my first phone line.
    Remember that the first large governments got most of their power from the water monopoly. Egypt, etc.

  4. Isn’t the US the only country to meet Kyoto goals by trading coal for gasland? Perhaps a negative tariff for US goods imported to EU PM2.5 disaster zone until they give up the love affair with fake clean diesel and stop building new coal PPs. Perhaps then your lovely melting Alpine glaciers won’t be so black.

  5. Forty odd years of drip feeding misinformation about the EEC/EU and I suppose that it’s not surprising that people start to believe it. Anyone up for bent bananas?
    [You seem to have fallen for the misinformation that there are no such problems -W]

  6. I notr that although you mentioned the EU duty on rail carriages, you didn’t mention the USA duty:
    for train carriages:
    o the US imposes a 14%
    duty on imports
    o the EU charges only
    1.7% on imports from
    the US.
    [Yes, that’s right, because I’m talking about the EU in this post. Also, I am (to some tiny extent) responsible for the EU rules but not at all for the US rules -W]
    Do you think that there may actually be some reason for this that makes sense to both parties because they have information that you don’t?
    [No, I don’t think so. I think the reason is likely to be the influence of domestic industries lobbying for their own interests and against the interests of their countries.

  7. ...and Then There's Physics

    Sea ice might be needing a comment.
    Although I think I may have RTd the figure in the above comment, I do think it is slightly problematic. When the combined sea ice area was high and being used by the denialists to argue that there was nothing to worry about, people – correctly, I think – argued that the increased Antarctic sea ice doesn’t really compensate for reduced Arctic sea ice. Now that the combined area is low we’re arguing that this is indicative of something major. Some consistency would be good.
    [You bastard! You’ve stolen my comment 🙂 -W]

  8. [You bastard! You’ve stolen my comment 🙂 -W]
    You had your chance 😉

  9. Congratulations to W & ATTP both on being mentioned in dispatches.
    [I’m famous – I like “acidic”, my recent appraisal at work said “abrasive” which I thought a touch coarse – but I see no ATTP -W]

  10. Kevin O'Neill

    Arctic and Antarctic are usually anti-correlated, in both recent and paleo records.
    http://onlinelibrary.wiley.com/doi/10.1029/2010GL042793/full
    Which seems to not be the case in recent months. Why?
    Seems like an interesting question.

  11. ...and Then There's Physics

    Re:[You bastard! You’ve stolen my comment 🙂 -W]
    That is the logic that makes sense – but I think the fact the combined number is like 10 sigma low may confound that logic a bit 🙂

  12. > [but I see no ATTP]
    I thought you might recognise me from the “dumber than a box of rocks”.
    Kevin,That is the logic that makes sense – but I think the fact the combined number is like 10 sigma low may confound that logic a bit 🙂
    I think it’s interesting but it seems to me that they should still really be considered separately, rather than considering the combined sea ice area.
    [Stop stealing my ideas! There’s a post coming just now. Well, soon. Meanwhile: I searched for you as ATTP, of course. And I half-trained myself to not see your name when it was half-secret -W]

  13. So soon you forget Eli Rabett’s Simple Plan to Save the World
    Nations wishing to make major progress on decreasing greenhouse gas emissions should introduce emission taxes on all products. These taxes should be levied on imports as well as domestic goods at the point of sale, and should displace other taxes, such as VAT, sales taxes, and payroll (e.g. social security, health care) in such a way that tax revenues are constant, and distributed equitably.
    These should be introduced as an Emissions Added Levy (avoiding the bad jokes). EAL would be imposed on sale for emissions added in the preceding step and inherent to the consumption of the product, as would be the case for heating oil and gasoline. Manufacturers would pay the EAL on electricity they bought, and incorporate this and the levy on emissions they created into the price of the product they sell.
    Imports from countries that do not have an EAL would have the full EAL imposed at the time of import. The base rate would be generic EALs based on worst previous practices in the countries that do have EALs, which would be reduced on presenting proof that the actual emissions were lower.
    All countries with EAL systems would reserve a portion (say 5%) for assisting developing countries with adaptations (why not use acclimations?) and mitigating programs.
    By basing the levy on emissions rather than carbon all greenhouse gases stand on a common level, sequestration is strongly encouraged as well as such simple things as capturing methane from oil wells and garbage dumps (that gets built into the cost of disposal). The multipliers would come from CO2 equivalents on a 10 year basis.
    The bunny has been there.
    [France’s scheme would indeed vaguely resemble your plan, but the missing bit of their plan is “equivalent domestic taxes”. That would be part of your plan -W]

  14. Eli’s plan may appeal to ship spotters and marine painters.
    By roughly doubling the cost of bunker, it would soon drive all but monster megaships out of circulation in the sea lanes, and militate for postmodern five masters sailing in the oastwise trade.

  15. [France’s scheme would indeed vaguely resemble your plan, but the missing bit of their plan is “equivalent domestic taxes”. That would be part of your plan -W]
    Well yeah, but the bunnies get a decrease in their other taxes:) Did you think Eli was a dumb bunny?
    [No, but it isn’t obviously any part of Sarkozy’s scheme; he don’t seem to be as smart as you -W]

  16. ...and Then There's Physics

    ATTP:I thought you might recognise me from the “dumber than a box of rocks”.
    WC, inline to ATTP:And I half-trained myself to not see your name when it was half-secret
    Semi-serious question: does this mean ATTP’s IRL name is no longer even half-secret? I don’t want to assume incorrectly…

  17. Mal,
    I’m not sure what IRL means, but my identity is no longer really secret.

  18. [You seem to have fallen for the misinformation that there are no such problems -W]
    Perhaps you would so kind as to share some details…
    [You want the discussion in http://scienceblogs.com/stoat/2016/11/12/corruptissima-re-publica-plurimae-leges/ -W]

  19. In Real Life, something Eli tries to avoid if at all possible

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