12 Jan 2016

How to GET to my solution to climate change

I -- like many economists -- think that a carbon tax GHG-fee would do more to reduce GHG-emissions than all other programs combined, but there's a well-known barrier to such a great idea: GHG-emitting companies that stand to lose sales, assets, etc.

How do we get them to stop bribing politicians who thus refuse to implement GHG-fees?

Give them money!

Yes, it sounds crazy, but here's how to make it work:
  1. All (domestic) emissions of GHGs attract a fee of F$.
  2. Divide R(evenue) = Q(antity) * F(ee) into two buckets, in proportion to p(percent)
  3. One bucket is distributed to citizens evenly.
  4. The other bucket is distributed to GHG-producers in proportion to their share of average, 2012-14 GHG emissions.
Politicians will have to find the right p that keeps citizens and GHG-emitters happy, but that share does not matter, as emitters will have an incentive to emit less while collecting the same share of revenues according to the 2012-14 baseline.

Bottom Line: A direct bribe to help the public is better than hidden brides that harm everyone.