Let policy follow science: Tie a carbon tax to actual warming

The temperature of the troposphere above the tropics has changed little.

from the December 3, 2007 edition

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Policymakers should implement a dynamic strategy that ties the stringency of emissions controls to actual greenhouse warming. The best way to do this would be to base a revenue-neutral carbon emissions fee on the mean temperature of the tropical troposphere. The formula I have proposed (ross.mckitrick.googlepages.com) would start low, at about $5 per ton of carbon, similar to what most economists have proposed.

My "T3" formula – short for Temperature of the Tropical Troposphere – guarantees that, if carbon emissions do not cause global warming, the charge will not go up. But if they do cause warming as the IPCC projects, the emissions tax will start rising by between $4 and $24 per ton per decade. The upper-end corresponds to a very aggressive emissions-control scheme. Because the emissions fee would depend on actual warming, the stringency of the policy would depend on the actual, observed severity of the problem.

Some people have responded to my T3 idea with the concern that essential increases in the carbon fee might be delayed due to lags in the climate system. But the lags are associated with oceanic responses. According to models, the tropical troposphere responds relatively quickly to carbon emissions. And even if there is a short delay, it is better to learn with a lag than not to learn at all, which is the problem with all other policy plans.

Another advantage of the T3 tax is that it would create a market for accurate climate forecasting. Someone building a billion-dollar power plant would want an objective estimate of the likely carbon emissions price five or 10 years out. Competition would create strong incentives to get the science right. The T3 rule would create market incentives for climate modelers to eliminate sources of exaggeration in their models. And investors would search out the best forecasts to guide their current planning, thereby factoring long-term greenhouse warming changes into today's investment decisions.

Nor would we need politicians to argue about how weak or strong the long-term policy should be – the atmosphere would decide. If the policy turns out to be too weak to force emission reductions, it would indicate that the climate is not sensitive to emissions.

Climate policy needs to shift from static to dynamic thinking. This requires tying policy to actual greenhouse warming. Anything else is like taking a shot in the dark.

Ross McKitrick is an associate professor of environmental economics at the University of Guelph in Canada.

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