Oh dear, John Sauven doesn't understand how a carbon tax works
John Sauven is the Director of Greenpeace. As such we would rather hope that he understands how a carbon tax works. For, you know, his organisation is rather vocal on the idea that we need to do something about climate change and the carbon tax is the thing that all the economists say we should be doing. It would behove such a campaigner to understand the subject, no?
But here he is:
Davies’ “solution” exists as fragments scattered through his 600-page multi-volume report in an as obscure and obfuscatory manner as he could manage. It’s designed, very effectively, not to be understood. It consists primarily of demand-control measures, primarily carbon taxes. Davies is saying (or rather whispering in pig Latin with a paper bag on his head) that we can build a new runway that has the specific purpose of increasing flights so long as we increase the price of those flights so much that demand drops to a level that reduces the number of flights overall. There are two ways to interpret this “solution”.
No, the purpose of a carbon tax is not to get emissions down to any particular nominal level. Not at all.
At the Stern Review exhaustively pointed out we have a problem here with externalities. And our aim is to maximise human utility over time. We thus wish to add those externalities into the price system for this is the manner by which the costs of emissions are compared to the benefits from having made those emissions.
The utility maximisation means that we want (yes, really, want and desire) those emissions which increase utility more than their costs to continue. And that those where the costs in the future are greater than the benefits now do not. That's the whole point of intervening in the price system. The carbon tax should thus be at the future cost of those emissions to incorporate the damage into the price system.
The net result of this is, as Lord Stern showed, that if we value the holiday creating half a tonne of CO2 more than the $30 of damages that will produce in the future then we *should* take that holiday by this metric.
The carbon tax is not a method of getting to any particular nominal level of emissions. It's a method of getting to a real value level of emissions. Where emissions that add value to human existence, on net, take place and where emissions that do not do not.
This is all entirely explained in the literature, yea even in that near biblical report of Sir Nicholas. Thus all in the debate should grasp the point - but it appears that John Sauven does not. Which doesn't say much about the quality of either his research nor the general level of debate on the subject, does it?