The Heat Is Online

Bloomberg Calls for National Carbon Tax

Bloomberg Calls for Tax on Carbon Emissions

 

The New York Times, Nov. 2, 2007

 

Mayor Michael R. Bloomberg plans today to announce his support for a national carbon tax. In what his aides are calling one of the most significant policy addresses of his second and final term, the mayor will argue that directly taxing emissions of carbon dioxide and other greenhouse gases that contribute to climate change will slow global warming, promote economic growth and stimulate technological innovation  even if it results in higher gasoline prices in the short term.

Mr. Bloomberg is scheduled to present his carbon tax proposal in a speech this afternoon at a two-day climate protection summit in Seattle organized by the United States Conference of Mayors. (A copy of the speech was provided to The New York Times by aides to the mayor; the full text is below.) The summits other keynote speaker, former President Bill Clinton, on Thursday announced an effort by his private foundation and the mayors conference to help 1,100 American cities buy energy-efficient products as groups and qualify for volume discounts.

In calling for a carbon tax, Mr. Bloomberg is again speaking out on national issues, as he has on gun control and public health matters like smoking and obesity. The mayor, who was elected in 2001, left the Republican Party in June of this year and declared himself a political independent, fueling speculation that he might run for president. While the presidential talk has simmered down lately, todays environmental address could revive it.

At the least, the tone and scope of Mr. Bloombergs proposal suggest that he is eager to maintain a national profile on major issues and determined not to be seen as a lame duck for the remaining two years of his term. (He is barred by term limits from seeking re-election in 2009.) Mr. Bloombergs speech accuses the federal government of failing to develop a meaningful response to global warming and asserts that both major political parties have dodged the issue.

In 1993, President Clinton persuaded the House to adopt a B.T.U. tax (a tax on the heat content of fuels), but the effort died in the Senate. Many American politicians have considered endorsing a carbon tax politically suicidal; among the few who publicly support the concept are Senator Christopher J. Dodd, a Connecticut Democrat and presidential candidate who has called for a corporate carbon tax, and former Vice President Al Gore, who won the Nobel Peace Prize last month for his work on climate change.

The idea of a carbon tax has slowly been gaining support, not only among scholars and environmentalists, but also in an unlikely quarter: business groups and even the companies that emit carbon dioxide and would be the most directly affected. Earlier this year, several businessmen formed the Carbon Tax Center to argue for a revenue-neutral carbon tax. Under that proposal, the revenue from a carbon tax could be used to reduce the deficit or to finance cuts in income taxes or the alternative minimum tax.

Most economists consider a carbon tax a more effective instrument for reducing greenhouse gas emissions than the other major policy alternative, a cap-and-trade system that would require plant-by-plant emission measurements and could prompt companies to cheat. Mr. Bloombergs staff cited research by Gilbert E. Metcalf, a Tufts University economist who is on leave to work with the National Bureau of Economic Research, and Kenneth P. Green, a resident scholar at the American Enterprise Institute, in support of that argument.

Mr. Bloombergs speech calls on political leaders to make necessary if unpopular choices  citing, as an example, his call for a congestion pricing plan that would tax vehicular traffic in Manhattan during the busiest weekday periods. Despite the support of the Bush administration, which has offered to help finance the effort as a model for traffic mitigation, the plan has been controversial, and it is being studied by a commission made up of state and city lawmakers.

In todays speech, Mr. Bloomberg calls for four key measures on climate change: a vast increase in energy-related research and development; an end to certain agricultural subsidies, especially that of corn-based ethanol; an increase in federal fuel efficiency standards for vehicles; and laws to make pollution more expensive for companies. He acknowledges that a cap-and-trade system is politically more feasible, but argues that it obscures costs and is less effective than a carbon tax. Based on his decades in Wall Street and as head of his financial services company, Bloomberg L.P., Mr. Bloomberg argues that the certainty of a pollution fee  coupled with a tax cut for all Americans  is a much better deal.