Hey, Paul Krugman, We Happen to Have ‘Carbon Tax’ Legend Charlie Komanoff Right Here

Photo: Max Pixel.
Photo: Max Pixel.

On Wednesday, Nobel economist and New York Times columnist Paul Krugman posted an epic Twitter monologue pegged to the congestion pricing win, calling it a mini-Green New Deal experiment — the same tack our columnist Charles Komanoff took in his essay for The Nation last month. Krugman also threw in some tough and maybe gratuitous words for “carbon tax purists.” Earlier this week, Komanoff, who runs the Carbon Tax Center, sketched the links between winning congestion pricing in NYC and the fight for a national carbon tax, which he cast as a key pillar for a Green New Deal. Following is the text of his CTC blog post, An Historic Win in NYC Could Pay Huge Climate Dividends.

“We have now disproved the idea that we’re never, in this country, going to tax or charge a significant environmental harm.” That quote, uttered by me this morning to a writer for Earther magazine, is as good a lead-in as any to tell you about an historic victory in New York that I view as a big shot in the arm for carbon taxing.

This past weekend, the state legislature approved a far-reaching, first-time-in-this-hemisphere plan to charge vehicles driven in the heart of a big city — mid and lower Manhattan in this instance — a congestion fee. While the bill punts key details to a new city-state panel, the contours are clear enough: driving a private car into the “congestion zone” south of 60th Street will cost as much as $12 during peak hours, with higher fees for trucks. When the plan starts up, in January 2021, traffic in the zone is expected to thin enough to raise travel speeds in the zone by 12-15 percent; that figure will rise as the estimated billion dollars a year in congestion revenues (paid by the remaining vehicles) are invested in modernizing the subways.

As most Carbon Tax Center followers and supporters know, I worked hard for this win. Over the past dozen years I spent 5,000 hours (!) creating and deploying a spreadsheet model that is kaleidoscopic enough to calculate the traffic and revenue and environmental benefits of any Manhattan pricing scheme, yet transparent and nimble enough to be used by other Excel jockeys — including the consultants that the governor’s office hired to scope out congestion pricing. I also wrote scores of posts for Streetsblog, the scrappy and admirable blog that is a nerve center for NYC’s “livable streets” community, each post aimed at steeling advocates on some aspect of congestion pricing math, policy and politics.

I say this not to tout my role. The forces that coalesced behind congestion pricing and made it unstoppable were immense, as they had to be to bring along the governor and legislature in the face of widespread cynicism, apathy, resentment and motor-worship. There were scores, then hundreds, then thousands of advocates pushing for this. That said, I believe that my years of calculations, both mathematical and political, lend some gravity to my thoughts on the meaning of this victory.

New York’s enactment of congestion pricing is a big win for climate. Not in the sense of immediately reducing carbon emissions. By itself, the charging scheme will eliminate only around a million tons of CO2 a year (half by reducing vehicle use, and half by diminishing stop-and-go traffic). That’s a mere 1/5,000 of U.S. emissions. But it will make New York — and other U.S. cities, if they follow suit — more fair, civilized and prosperous. That will help shrink the country’s carbon footprint by fostering growth in “inherently green” (smaller-footprint) cities rather than sprawled-out suburbs and exurbs, as Jeff Blum and I pointed out last month in The Nation.

But an even bigger payoff lies, I believe, in establishing the precedent of finally taxing an environmental harm. With congestion pricing, the harm being taxed isn’t emissions, it’s traffic congestion (more technically, each vehicle’s “congestion causation” from abetting the slowing of traffic). The same principle — the most direct way to effectuate less of something is to price it at its true cost — animates carbon taxing.

Society is concluding at last that carbon emissions must be shrunk,  rapidly and radically. That requires (i) intelligently regulating sources of emissions (building codes, efficiency standards), (ii) judiciously subsidizing evolving alternatives (wind, solar), (iii) researching and developing promising new low-carbon demand and supply technologies, and (iv) taxing fossil fuels so that their climate damage figures in their price.

U.S. states and, at times, the national government haven’t done a bad job on the first three. But we’ve never done the last: taxing fossil fuels’ carbon content and emissions. Indeed, we’ve never explicitly taxed any large-scale environmental harm. And the double defeat of carbon tax initiatives in Washington state made it easy to lose hope that we ever would.

Now, the enactment in New York of a plan that frontally taxes a major societal harm — driving in a congested (and transit-rich) city center — has disproved the idea that substantially taxing an environmental harm is impossible in the U.S. We can put that particular bit of defeatism to rest.

To be sure, enacting a national carbon tax remains a far heavier lift than a single city or state passing congestion pricing. While regional factionalism — between Manhattan and the boroughs, between NYC and its suburbs — was a big hurdle, its lesser scale allowed the transit benefits from the congestion revenues to take center stage in the advocacy campaign for congestion pricing.

Indeed, subway relief paid for with congestion tolls emerged as a far more powerful organizing theme than congestion relief itself. So be it. The takeaway is to make a publicly guided, investment-based program — a Green New Deal — the rubric for tackling climate change and enacting a robust carbon tax as both a pay-for and a powerful change agent.

For now, it’s fair to say that carbon taxing for the U.S. has taken a big step forward. With enactment of congestion pricing for New York City, the road to a carbon tax and meaningful climate policy has gotten a good deal clearer.

[Editor’s note: If you don’t get the Woody Allen reference in the headline, please click here.]

  • Larry Littlefield

    A carbon tax would hit people in rural areas harder than people in cities. While that may be what is needed to change how people live, those people aren’t going to like being punished, especially since they are poorer on average. And some industries, such as farming, inherently use more fossil fuels that others, since as finance, regardless of how efficient those in each industry choose to be.

    So the one way I could see it happen is if the entire carbon tax was rebated back to people per person. And the rebate was larger in counties where fossil fuels use was higher per capita to start with. Same with industries — farming compared with finance.

    Under that proposal everyone would still have an incentive to use less fossil fuels, compared with their neighbors, but on average the initial hit would be no greater in one place than another. And better off people in NYC, even though they already use less and could thus afford the tax, would still be pushed to use less still.

    Note that with regard to congestion pricing, both the costs and the benefits are local.

  • Brad

    We’re doing just fine and these taxes will do nothing but give governments more money enabling them to borrow more money to buy more votes.

  • Larry Littlefield

    Another reason for the proposal above — Brad wouldn’t be able to say that.

    In any event, the federal government seems to have no problem borrowing money to buy more votes (or should I say campaign contributions from the rich) for tax cuts.

  • Joe R.

    The problem with a broad-based carbon tax is that it would invariably hit the little guy everywhere. Food production uses prodigious amounts of fossil fuel. Some of this is amenable to being replaced, some is not. Either way, food prices would certainly go way up if we heavily taxed carbon. That will hit everyone, but especially the poor will be hit the hardest proportionally. Ditto for electricity. Utilities are gradually moving to renewables anyway solely based on the economics. With commercial solar production costs rapidly heading towards less than 1 cent per kW-hr, it’s only a matter of time before the conversion is complete.

    To me the best way to transition to a carbon-free future is to do all of the following:

    1) Heavily invest in R&D to develop lab prototypes into commercial products. For example, I’ve heard of 40+% efficient solar cells working in the lab. This needs to be developed into commercial solar panels as rapidly as possible.

    2) Implement temporary subsidies when carbon-free alternatives cost more to bring them on par or less than conventional solutions.

    3) Instead of taxing carbon, have a reasonable timeline to just phase out fossil fuel use. For example, you might prohibit the sale or manufacture of ICE road vehicles after 2020, and outright ban their use on public roads by 2030. You would also prohibit the commercial sale of gasoline or diesel fuel at the time the ban starts in 2030. You could ration air travel, say one short haul flight per year, and two or three long-haul flights in your lifetime. Those not intending to use their flights could sell them on the open market to those who travel more.

    Governments are always seeking to get more money via taxes, but in the end the best ways to change behavior is via a combination of incentives for good behavior, and outright bans, not taxes, on bad behavior. For example, we don’t tax people when they rape, we just legally ban it. We should eventually do the same with most types of fossil fuel use.

  • Larry Littlefield

    Not with regard to what I proposed.

    Collectively no one would be hit, because all the money raised would be sent back out again. And it would be sent per capita, which means the poor, who use less fuel adjusted for where they live, would make out relative to the affluent, who use more.

    Sending more back to people in places — and industries — that are using more fossil fuel today adjusts for the situation people find themselves in to start with, but with an incentive for everyone to reduce fossil fuel use.

  • Joe R.

    Well, the key is if it was done that way. One good idea might be to use the carbon tax receipts to implement a universal basic income. Unfortunately, what would most likely happen is the carbon tax money would be spent on other things, perhaps yet another round of retroactive pension increases, which mostly don’t benefit anyone outside of certain connected groups.

    Call me a skeptic, but lately I’m loathe to give governments any new sources of revenue as they rarely use them to benefit the common good. Just like crony capitalism, we have crony government where all people are equal but some are more equal than others.

  • Nives Dolšak

    Interesting way of framing the importance of the measure–the only city in the western hemisphere. Are we sure that London congestion pricing zone is east of Greenwich only?
    Nives

  • Nives Dolšak

    Now more seriously. I am not as excited about this measure as Charles Komanoff. Not for the measure itself–that is good news for New Yorkers. I disagree that it necessarily means good news for carbon pricing. Before I get into details, let me first acknowledge that a tax forcing those who contribute to the problem, to at least pay for it (if not, hopefully down the road change behavior to reduce it) is an improvement. Let me also acknowledge that supporting this policy for years was a tremendous dedication on Charles Komanoff’s part and that the City of New York should be grateful for the positive impact this will have. Hopefully drivers will not just pay to continue driving, but actually use alternative modes of transportation, thereby reducing congestion, lost time, and air pollution.
    Where I disagree is about the lessons this measure offers regarding support for carbon tax. If you are a policy wonk you will probably say that this is an empirical question. I agree and would add that it will be difficult to answer it, especially in terms of actual political support via voting. It would, of course, be easier to answer it in terms of declared support ( say with a survey experiment). However, I have teoretical reasons for my doubt and policy reasons for being concerned about it. Congestion charge brings solutions for a local problem that the public understands very well and probably experiences on a daily basis sitting in the traffic. Carbon tax, on the other hand, would bring uncertain, global, much more difficult to measure solution to a problem voters are not even really sure they have (if Yale climate communication center data are to be believed). The different views of the severity of the two problems and the perceived ability to solve one versus the other gives me pause. This is not a critique of congestion pricing, but of how we use data and (sometimes without justification) apply them to address a fairly different problem. So, the two problems differ in important ways. Fine, those are theoretical discussions. If that was all, we could keep this discussion within the ivory tower. However, drawing this parallel might have policy implications. As I see it, we fail when we incorrectly draw parallels across environmental issues and devise policies that ultimately do not get public support. Those failures then demotivate supporters and provide fodder to the opposition at the next iteration.

ALSO ON STREETSBLOG

Bloomberg Declares Support for a National Carbon Tax

|
New York Mayor Michael R. Bloomberg will declare his support today for a national carbon tax, according to a report posted this morning on the New York Times City Room blog by metro reporter Sewell Chan: Mayor Bloomberg plans to announce today his support for a national carbon tax. In what his aides are calling […]

The One Carbon Tax That Couldn’t

|
Assembly Member Richard Brodsky, archenemy of Mayor Bloomberg’s congestion pricing plan, is urging the mayor to seek a carbon tax instead. So he said, following Monday’s meeting of the Traffic Congestion Mitigation Commission, as reported by Streetsblog and confirmed by at least one other observer. I wish Brodsky (pictured) had checked with me first. After […]

The Introduction of a New Order of Things

|
In his essay, "Valuing the Commons," Charles Komanoff discusses congestion pricing and carbon taxes and the difficulty in convincing people to pay for their negative externalities. Komanoff wrote it back in June and it’s on Grist this week: What, then, is standing in the way of congestion fees and a national carbon tax? The power […]