Cap-and-Trade Promoter on My Doorstep

Whooee! Well friends an' foes, I been in a few yammerin' comments section gabfests with boogers like Cam and Steve and Scott and Pogge and StageLeft. One thing we been talkin' about on the boogs is, "Which is faster -- carbon tax or cap'n'trade?" It's been rainin' here again today and I just looked out the front door. Danged if there weren't a buncha cap'n'traders on my doorstep. I took a photo of one of 'em.


I reckon the cap'n'traders'll get to where they're headed... eventually.

JimBobby

Selling the Carbon Tax to Climate Change Skeptics

Whooee! Well friends an' foes, I just left a bigass comment over to Jennifer Smith's fine boog, Runesmith. She's got a good piece about the Green Shift and it attracted a comment from AGW skeptic and anti-Green Shifter Raphael Alexander. I like ol' Raph. He ain't afraid to wander into the Pergressive Boogeysphere and he don't bow down and worship the infallible King Steve like a lot o' Boogin' Tories do.

Here's how I tried sellin' the carbon tax to Rafe.

Even if you're an AGW skeptic, there are many advantages to the tax shift. GHG's are closely related to other pollutants. When we reduce GHG's we reduce many conventional pollutants at the same time. While you may doubt AGW, I suspect you accept the fact that pollution kills. "Bad air days" in the Great Lakes basin are killing people. The latest estimate of premature deaths due to poor air quality is 9,000+/year. The most conservative estimates put the figure at 3,000. Take your pick. Neither is acceptable.

Regarding the shift away from income tax, this is something most people should welcome. We should try not to penalize success and the less we tax income and profits, the more we encourage entrepreneurship and productivity. Some people call it "takin' care of business and workin' overtime."

With or without a carbon tax, energy costs are rapidly rising. This trend isn't going to reverse itself. Energy costs will rise and our dependence upon fossil fuels will further hurt our economy. Anything we can do to reduce our dependence on expensive fossil fuels will make us more competitive. A carbon tax is specifically aimed at reducing fossil fuel use. Whether that reduction is for the sake of the planet or for the sake of competitiveness and financial efficiency doesn't matter. Reduction of dependence is a worthwhile goal in and of itself.

I don't take much issue with the "tax on everything" characterization. So what? If you can get an offsetting reduced tax on income and the average Canadian is not clobbered with thousands of dollars in new taxes, it really doesn't matter if it is on everything. What matters is how many dollars you pay and how many dollars you get back via reduced income taxes or, in the case of low income Canadians, refundable tax credits.

The per capita average carbon footprint for Canadians is between 15-18 tonnes per year. If we are to pay $10/tonne, the average Canadian's net share would be about $200-$250 after some administrative and overhead costs are added.

Almost everyone can reduce their carbon footprint and, by doing so, reduce both their taxes and their outlay on fossil fuels. In a relatively fair system, those who use more than average fossil fuel will pay more tax. Those who use less than average, will pay less. Everyone will pay, though. Nobody denies that.

AGW aside, the planet's in trouble and our taxation system is designed to stifle income. We allow industry to use the shared atmosphere as a dump without any charge to them at all. Oil industry insiders refer to the practice of burning off waste gas at refineries as "sky dumping." Saves money. So what if it pollutes and kills.

Economist after economist is lining up behind a carbon tax. If you believed King Steve on income trusts, then you can believe he won't do exactly as Dion and most economists are suggesting... years from now. It's already too little, too late.

JimBobby

Green Party reveals detailed Green Tax Shift plan

Whooee! Well friends an' foes, Lizzie's released the details of the Green Party Green Plan. Here's the full press release.

Media Release
For Immediate Release
June 18, 2008

Green Party reveals detailed Green Tax Shift plan

OTTAWA – The Green Party today announced a detailed plan to implement a revenue-neutral carbon tax in Canada. After releasing an outline of the Green Party approach to action on climate in 2006 (Green Party Green Plan or GP Squared) and more detailed climate plans in 2007 (Averting Climate Catastrophe and Vision Green), the Green Party is now making public greater levels of detail on a fully-costed carbon tax plan.

“By taxing carbon at the rate of $50 per tonne, the Green Party will raise $40 billion for the federal treasury. Three quarters of this revenue will come from business and industry,” said Green Party leader Elizabeth May. “This will enable us to provide tax relief to Canadians by cutting income and payroll taxes, bringing in income splitting, increasing support to low-income and rural families and helping students with crippling student loans."

Ms. May said the Green Party’s revenue-neutral carbon tax is not designed to make Canadians pay more in taxes but will shift taxes onto undesirable aspects of society, like emissions and pollution, and away from desirables like jobs and income. Most Canadians will experience overall savings or stay at the same level.

“The principle behind a carbon tax is simple: stop taxing what we want and start taxing what we don’t want,” said Ms. May. “The Green Party’s carbon tax plan is a Robin Hood approach to solving the climate crisis – we take from pollution and give to the people. A Green Tax Shift will provide a Carbon Tax Holiday by allowing income taxes and payroll taxes to be reduced, income supplements to low income Canadians to be increased, student loans to be cut in half, and GST rebates to provide more relief to rural Canadians as society makes the transition to a low-carbon economy.

“The tax cuts we will be able to bring in as a result of carbon tax revenues will both save money for Canadians and stimulate the economy. As the cornerstone of our plan to combat climate change, a carbon tax will help make life better for Canadians while simultaneously reducing greenhouse gas emissions and pollution.”

Ms. May said the Green Party’s costing exercise shows how different types of families in Canada will be affected by a carbon tax. For instance, an urban, upper-middle-class family in Ontario would pay 1.2 per cent less income toward taxes while a low-income, rural senior would save 9.2 per cent every year.

While some rural families may not experience savings initially, the Green Party will provide income supplements to such families to ensure they are not treated unfairly by a carbon tax. In addition, the Green Party’s full climate plan will include some cap and trade measures for the largest polluters, stimulate the development of renewable energy, increase energy efficiency, assist municipalities to bring in mass transit and other energy saving infrastructure, and bring back passenger rail service.

“A carbon tax is just one piece of our plan to reduce greenhouse gas emissions, but it is one of the most critical components,” said Ms. May. “Economists and environmentalists agree that putting a price on carbon is essential to combating the climate crisis. As countries in the European Union have shown, a carbon tax can help achieve emissions reductions with economic success and protection for low-income citizens. The government’s own research shows that a carbon tax can be implemented without affecting Canada’s GDP.

“It is time for political parties in Canada to advance bold, new solutions to the current climate crisis and the Green Party is prepared to do so.”

Here are some supporting documents

• Carbon Tax Plan - HTML - PDF
• Carbon Tax Plan Q & A - PDF
• Press Release - HTML - PDF
• Excerpts from Vision Green and Averting Climate Catastrophe - PDF

I like how they've outlined several different categories of Canadians by income and locationa nd they've shown what he tax shift will mean to their annual bottom lines.

JB

Woo, Woo, Woo Your Vote - Dion Targets Greens

Whooee! Well friends an' foes, I was just over to Jason Cherniak's boog and I seen a quote from Stephane Dion that makes it even more clear that the Grits are casting a covetous eye at us treehuggin' Greens. Here's what Jason said that Dion said:

"We will ask Canadians to join our growing coalition - one that crosses party lines and moves us beyond outdated notions of what it means to be right-wing or left-wing".

Coalition? I ain't sure what coalition he's talkin' about. His reiteration of Green Party policy was sure to get support from Greens but I don't think there's much of a coalition beyond a non-compete agreement that affects just 2 of 308 ridings. Greens will be running against Liberals in 306 ridings.

It ain't the "coalition" part that says Dion's targeting Greenies, though. It's the part about "outdated notions of what it means to be right-wing or left-wing." Sheesh! The gal I adore, Earth Mother Lizzie May, has been describing the Greens as neither right nor left forever. Jimmy Harris was on that theme before Lizzie.

Fiscally conservative, socially liberal. That's the mantra us treehuggin' Greenies been chantin' since day one. Neither right nor left.

It's flattering that Dion has been so eager to adopt GPC policy. First, he says he's going to impose a "price on carbon." Then, he morphs it into a a carbon tax, straight out of Vision Green. Then, he lets everybody know that it ain't just a new tax but it's a tax-shift and it's revenue neutral. If you've been keepin' up with Green Party policy, you'll know that these are longtime GPC planks.

Now, Dion is not just taking our policies, he's starting to describe his party as neither right nor left. I can't really blame Dion for trying to siphon off soft Green support. He may just find, however, that Green support isn't as soft as it was once considered. In the recent by-elections as well as the October 2007 Ontario election, Green support at the ballot box was pretty much the same as Green support in pre-election opinion polls. Even so, there was no concerted Liberal effort to grab Green votes. Next time will be different.

With the Liberals and Conservatives polling at a see-sawing virtual dead heat, the double-digit support that the Greens have been getting looks mighty attractive, I'm sure. If Dion could woo just half of GPC supporter into the Liberal fold, he could win a minority. If he could reduce GPC support back to the 4%-5% we got in the last two elections, he might even get a majority.

It's gonna be a lot tougher than just talkin' the talk on a few lifted GPC policies, I reckon. A lotta new Green support is coming from disgruntled Grits who had their fill of talk-no-walk.

JimBobby

Revenue Negative, Revenue Neutral, Revenue Positive

Whooee! Well friends an' foes, I was just over to BigCityLiberal MJ's boog where he's on about Andrew Coyne. Coyne says Dion flubbed the presentation of the tax-shift (d'uh...) and should have presented it as a massive reduction in income tax and then explained where the lost revenue would be coming from. Coyne floated the idea that the tax should be introduced as "Revenue Negative".

Coyne's on the money when he sez Dion flubbed the presentation. Bigtime. As to the Revenue Negative aspect, I'll get into that soon. First, I need to take issue with one thing BCL said:

Dion's promise is that, if the average Canadian is going to pay an extra $1,000 to for example heat their home, they will get $1,000 in income tax cuts.

Wrong and wrong.

I disagree with Coyne's across-the-baord Revenue Negative idea and also with the idea that everyone who spends an additional $1000 in Carbon Tax will have their Income Tax reduced by exact same amount. As far as I know, Dion has not made such a promise. I'm open to be corrected but if Dion has any understanding of how a tax-shift actually works to reduce carbon, he cannot make such a promise.

Of course, we don't have any real details from Dion, so far, as to how the tax-shift will be implemented. That's another part of his flub-a-dub on presenting his idea when it was only half-baked. Half-baked wouldn't be so bad if we got a peek at the recipe and knew what the tax-shift would mean for various types of income earners and carbon outputters.

If the eventually to be released LPC plan is like the GPC plan, Revenue Neutrality is at the receiving end -- not at the paying end. Total taxes collected will remain at the same level as now. Taxes payable by individuals will be directly related to their carbon output.

I think that for many middle-income earners, the tax-shift will, indeed, be Revenue Positive. That's positive for the taxpayer, negative for the tax receiver (that's the Receiver General for Canada). Those who have taken or do take measures to reduce their carbon footprint will pay less carbon tax while still enjoying a break on income taxes. Low income earners will be accommodated and those who pay no tax at all will get "refund" cheques - just like many low income earners and poor people get credits under current tax laws.

Consider two typical middle-income earners with equal incomes. If all other things are equal (i.e. family size, RSP contributions, age, etc.), these two tax payers will each pay the same (reduced) amount of income tax.

Overall taxes will rise for the middle-income earner who owns a couple of SUV's, a power boat, some ATV's and snowmobiles; who drives everywhere instead of walking when practical; and who fails to be efficient with home heating and cooling.

Overall taxes will go down for the middle-income earner who practices conservation and efficiency. This practice is often referred to by naysayers and Luddites as "freezing to death in the dark."

I've taken many measures to reduce my own carbon footprint. I've also taken a few online tests to estimate my output and have consistently found that Ma and I use about 60% of what the average Canajun uses. We don't freeze in the dark. CFB lighting, thermal underwear, walking when practical, multi-tasking whenever we use a motor vehicle, digging dandelions and never buying chemical pesticides, composting, keeping the hot water heater set to a reasonable temp, etc. etc.

Despite the fact that we already use only about 60% of the energy used by average Canadian, we live in an older (1880), detached, wood frame house that could use plenty of energy efficiency upgrades. We live in a small town with only one supermarket, one drug store, one gas station, one lumberyard, one hardware store and one set of traffic lights. Not everything we need is available locally but most of it is and much of our shopping can be done on foot.

But, dang it all, we can do a lot better. Our old shack could really use better doors and windows. Once we start paying less income tax and we can see we'll be better rewarded by increasing our energy efficiency through tax reduction (and possible government incentive programs), we'll be a lot more likely to spring for a few thousand bucks' worth of 21st century windows and doors. We're already shopping.

I expect that a revenue neutral tax-shift will reward people like me and punish people like my boat-owning, 3 vehicle-owning, frequent jet traveling, air conditioner-using neighbours. Without a tax-shift, the best way Ma and I can save tax money is to lower our incomes by purchasing more expensible stuff -- like new business vehicles, trips to professional conferences, socking away more in RSP's or actually taking a cut in pay. With a tax-shift, we can make more money, spend less and ultimately pay less tax simply by reducing our carbon footprint -- something almost everyone can do, even if we've already done a lot.

That's the whole concept of a carbon tax: to get people to quit wasting energy. If we were to simply offset all carbon taxes with equal income tax reductions, we would create little incentive. The fact that consumers can lower their tax bill while lowering their energy bill is what makes a carbon tax work.

JimBobby

Elizabeth May Pens NatPo Article on Carbon Tax

Whooee! Well friends an' foes, the gal I adore, Earth Mother Lizzie May, has written an article for the dang National Post. I reckon she's gotta go where she can get readers and maybe win over a few converts or shore up some soft support.

The article's all about tax shiftin' and carbon taxin' and cappin'n'tradin'. Lizzie spells out some details of the Green Party plan. So far, Dion's been stealin' GPC policy so if anyone wonders what the Liberals might come up with, the Green policy oughta offer a dang good clue.

The Simple Solution

Elizabeth May, National Post
Published: Wednesday, June 04, 2008

"Pollution must have a price tag. It is currently too cheap to pollute and too expensive not to."

-Don Drummond, Chief Economist, TD Bank (March 7, 2007)

The debate on the various ways to put a price on carbon--a goal now endorsed by a wide range of think tanks and NGOs, from the National Round Table on Environment and Economy to the Canadian Council of Chief Executive Officers --needs to take place in a proper factual context.

A carbon tax is a policy response to two crises: higher energy prices brought on by declining reserves of conventional, accessible oil; and the gathering storm of climate instability. Before plunging into the rationale for carbon taxes, one thing needs to be clear: Doing nothing is not an option. Energy prices will continue to climb if we do nothing. And the ultimate costs of the climate crisis -- as estimated by Sir Nicholas Stern, former senior economist to the World Bank -- will be in the trillions. We are faced with nothing less than a catastrophic threat to our children's future.

In order to bring down greenhouse gases at anything like the rate recommend by the Intergovernmental Panel on Climate Change, we will need a wide array of programs and regulations. We will also need to harness the market to send a meaningful pricing signal to the economy. In this regard, the most popular mechanisms to harness the market are cap-and-trade and a carbon tax.

This need not be an either/or proposition. The Green party believes a cap-and-trade system -- of the type advocated by the NDP, for instance -- can help bring down emissions from the largest polluters. In particular, such an approach might be used in certain sectors -- allowing coal-fired electrical plants to trade carbon credits amongst one another, for instance, as the cap goes down on their collective emissions.

But to bring down emissions in the nation as a whole, and provide the fiscal flexibility needed to significantly reduce the tax burden and alleviate energy poverty, we also need a carbon tax.

A carbon tax has the advantage of minimal new bureaucracy. It can be implemented quickly, and most economists see it as the most effective approach. As The Economist magazine put it in a 2006 editorial: "Ideally, politicians would choose the more efficient carbon tax, which implies a relatively stable price that producers can build into their investment plans." In contrast, cap-and-trade has high transactional costs and a greater risk of fraud. It is likely best reserved for targeted sectors.

The essence of the Green party plan is the Green Tax Shift. We propose a tax of $50/tonne on carbon. This would be applied at the tar sands and at the pumps. Our carbon tax would bring in $40-billion to the federal treasury every year -- thereby allowing significant decreases in income and payroll taxes, as well as income-splitting within families.

The funds also would allow us to raise the minimum level at which our lowest-earning taxpayers start paying income tax, as well as increasing income supports to seniors and the poor. Any carbon-reduction plan also needs to exhibit regional sensitivity, for the benefit of rural Canadians who are reliant on fossil fuels as we also want to buffer effects for those who use fossil fuels to earn a living, like farmers and fishers.

It is nonsense to claim that consumers can be shielded from price increases under either cap-and-trade or a carbon tax. But the benefit of the tax shift I advocate is that cuts to income taxes and payroll taxes will reduce the pain of rising fuel prices. In fact, most Canadians will be better off. They will also make sensible decisions, such as getting a more fuel-efficient vehicle or a home energy audit.

Such a plan must evolve. Over time, a carbon tax would have to rise as the amount of carbon being used shrinks. Eventually, over decades, with carbon virtually eliminated, another tax shift will be needed.

As noted recently in these pages, some Canadians are skeptical that a government would ever keep the carbon tax revenue-neutral by returning the newly levied funds to the taxpayer. One advantage of the Green party approach is that, with the generation of $40-billion in new revenue, no government could get away with failing to use such an enormous cash influx to improve Canada's economy.

Overall, our Green Tax Shift is all about cutting taxes while cutting greenhouse gases.

It all makes sense, sez I. When Dion finally does unveil the Liberal tax-shift plan, I reckon it'll look a lot like what Lizzie's described.

JimBobby

Do McGuinty and Charest Reject Carbon Tax?

Whooee! I was just over to Steve V's fine blog, Far and Wide, where he's talkin' about the new cap-and-trade deal between McGuinty and Charest. Steve's post is mostly about how PitBullBoy Baird is all hot under the collar and don't like the idea of the provinces workin' independently for the sake of the planet. I hear Dubya says the same things about Schwartzenegger.

An anonymous commenter characterized the deal as a rejection of carbon taxes. Here's what the nameless one said.

Anonymous said...

Interesting that you do not note that the two Liberal premiers of the two largest provinces where the Liberals need to maintain and acquire new seats have REJECTED Mr. Dion's carbon tax and favour the NDP cap and trade approach.

I agree that a realignment in QC may be in the works but I wouldn't be gleeful about it if I were a Liberal activist.

The Charest/Dion enviro message will reinforce the NDP narrative come election time.

8:06 AM, June 02, 2008

I think we can safely assume the anonymous commenter is an NDP backer.

REJECTED? I ain't so sure about that.

I don't see this as a rejection of a carbon tax. In many European and Scandinavian jurisdictions, carbon taxes and cap-and-trade work side-by-side to reduce GHG's.

McGuinty has said he prefers the cap-and-trade tactic but I can't recall any quotes where he's rejected or even REJECTED a carbon tax. Dion did reject a carbon tax not long ago. I'm sure we'll all be reminded by anonymous NDP commenters soon enough. Dion changed his mind and the carbon tax idea is getting quite good acceptance. McGuinty and Charest won't be afraid of embracing a winning idea; especially, one that they haven't actually rejected.

If I purchase a new sofa, that does not mean I REJECT chairs. It simply means that I am adding one component to my living room seating capacity.

The Green Party is calling for a multi-pronged approach with two of those prongs being a carbon tax and sector by sector cap-and-trade implementation. Most observers and experts seem to think each system has merit. Proponents of each argue as to which is faster to implement.

In an interview last week, Iggy broadly hinted that the Grits will include cap and trade in their tax shift proposal.

The only ones who are REJECTING actions known to be positive are the NDP and the Con's. The NDP's rejection of a carbon tax flies in the face of EU experience and Kyoto target-meeting results.

Only the Con's are rejecting cap-and-trade and rejecting a carbon tax. Their plan: wait until after the US election to see what their masters dictate. Stall, obfuscate, nit-pick, demonise, scare and promote the status quo.

It is a well known fact that the federal government is the most effective arm of government when it comes to applying and collecting taxes. Outside of Quebec, we use the federal government to collect provincial income tax as well as most taxes. Also, wrt the revenue neutral tax shift idea, the provinces don't collect enough income tax to make a revenue neutral carbon tax a well-funded environmental solution.

Besides, somebody has to do something. The provinces, like some US states, are realizing that the federal level i sluggish and ill-inclined to act to save ol' Mother Earth. BC has introduced a carbon tax. The Western provinces are working on an international carbon market with some western states. Ontario and Quebec are collaborating on a cap-and-trade system.

The Fed's are doing just about nothing and the NDP is insisting it has the one and only solution.

JimBobby
(Note: This post is an edited version of a comment I posted at Far and Wide.)

Carbon Tax or Cap-and-Trade or Both?

Whooee! Well friends an' foes, everybody's talkin' about Stephane Dion's tax shift plan. Right? No, they ain't. They're talkin' about Dion's carbon tax. Dumbass Dion shoulda come out and leaked the idea of a bigass change in the way the gummint collects taxes. First thing he shoulda leaked was a massive reduction in income and business taxes. Then, when everybody asks where the money's gonna come from, he comes clean an' tells 'em it's gonna come from a carbon tax.

But the absent-minded perfesser didn't think about politics and how the adoption of Green Party policy was gonna get spun an' twisted an' misrepresented. He shoulda thought o' that and the fact that he's bein' so dang clumsy in how this is comin'out might make some people question his political acumen.

Now everybody's talkin' carbon tax and the Con's an' Dippers is goin' all out with the attacks on carbon taxes. Nobody, so far that I seen, has gone on the attack against tax-shifting.

The Con's is playin' up the fact that Dion went flippety-flop on carbon taxin'. They're usin' a lotta scare tactics an' tellin' everybody that the carbon tax is gonna mean poor, old seniors are gonna freeze in the dark, starvin' on account they can't afford gas fer the chugmobile. I reckon they never heard-tell of rebate programs to create a safety net for the weakest or least financially secure in society. Social safety net stuff ain't something the Con's is familiar with -- except when it comes to dismantlin'.

The Dippers is at least talkin' an alternative to carbon taxes. They're sayin' we gotta tax the crap out the big polluter corporations and create a cap-and-trade system to reduce GHG's. Now, taxin' the crap out polluters ain't a bad idea. The carbon tax, as I understand it, is designed to do exactly that. Yeah, it's also gonna tax Joe SUV Driver and Ma & Pa TurnUpTheThermostat. If they're hurtin' they can apply for a rebate. Almost every single one of us can reduce our CO2 output. That means we can all reduce our taxes, if we have a carbon tax.

The Dippers say they don't want a revenue neutral tax shift. Instead they want to increase taxes. Now, who doesn't think increased corporate taxes are gonna trickle down and make increased prices? In a revenue-neutral scheme, there's a corresponding reduction to help the conscientious consumer offset the increase in fuel costs. In a non revenue neutral set-up, like the NDP proposes, costs are passed on to the consumer without any corresponding reduction in taxes.

The Dip's also say they want a marketplace solution. The marketplace has been such a successful vehicle for social change, after all. The marketplace created the dotcom boom and bust bubble that saw thousands of Canadians lose millions on Nortel and other tech stocks. The marketplace was instrumental in creating the US housing boom bust bubble that has thousands of working class Merkins gettin' foreclosed on. The marketplace is dictating the price of oil and we all know how that's helpin' regular folks. The marketplace has pushed the price of basic food stocks so high that 25,000 people are starvin' to death each and every day.

Here's a bit from a Wired article on cap-and-trade and carbon offsets:

Nationally managed emissions-trading schemes could do a better job than Kyoto's we-are-the-world approach by adding legal enforcement and serious oversight. But many economists favor a simpler way: a tax on fossil fuels. A carbon tax would eliminate three classes of parasites that have evolved to fill niches created by the global climate protocol: cynical marketers intent on greenwashing, blinkered bureaucrats shoveling indulgences to powerful incumbents, and deal-happy Wall Streeters looking for a shiny new billion-dollar trading toy. Back to the drawing board, please.

While I was diggin' around this mornin' for info about carbon taxes, I come across a year-old Washington Post article that I found interesting.

Tax on Carbon Emissions Gains Support
Industry and Experts Promote It as Alternative to Help Curb Greenhouse Gases

By Juliet Eilperin and Steven Mufson
Washington Post Staff Writers
Sunday, April 1, 2007; A05

As lawmakers on Capitol Hill push for a cap-and-trade system to rein in the nation's greenhouse gas emissions, an unlikely alternative has emerged from an ideologically diverse group of economists and industry leaders: a carbon tax.

Most legislators view advocating any tax increase as tantamount to political suicide. But a coalition of academics and polluters now argues that a simple tax on each ton of emissions would offer a more efficient and less bureaucratic way of curbing carbon dioxide buildup, which scientists have linked to climate change.

"We want to do the least damage to the growth of GDP," said Michael Canes, a private consultant and former chief economist for the American Petroleum Institute, who led a Capitol Hill briefing on the subject in late February sponsored by the conservative George C. Marshall Institute. Between a cap system and a carbon tax, "a carbon tax will be the much more cost-effective way to go," he said, though he added that there are other ways to reduce emissions.

Robert J. Shapiro, a private consultant who was a Commerce Department official in the Clinton administration, agrees. A cap-and-trade system -- involving plant-by plant-measurements -- would be difficult to administer, he said, and would provide "incentives for cheating and evasion." And the revenue from a carbon tax could be used to reduce the deficit or finance offsetting cuts in payroll taxes or the alternative minimum tax.

A carbon tax offers certainty about the price of polluting, which appeals to many economists and businesses. William A. Pizer, a senior fellow at the centrist think tank Resources for the Future and a former senior economist for President Bush's Council of Economic Advisers, estimates that the benefit-to-cost ratio of a tax-based system would be five times that of a cap-and-trade system.

"You're going to pay one way or another, whether it's a tax or a permit program," Pizer said, adding that while a cap would provide more certainty on how much emissions would be cut, "the consequences of being uncertain about emissions over any short period of time just aren't that serious."

Under a cap-and-trade system, the government would set an overall limit on emissions and allocate permits to emitters. If one plant reduces its emissions more quickly than another, it can sell its credits to the other emitter. A carbon tax would simply increase the cost of emitting each ton of carbon, which could then be passed on to consumers.

While Democrats have vowed to push through some sort of carbon dioxide control in this Congress, Bush has consistently opposed mandatory limits, so it remains unclear whether the United States will adopt any system before the next election.

Moreover, the fact that many economists back the tax approach is no guarantee that it will prevail over the five cap-and-trade plans already proposed in the Senate.

The complexity of the cap-and-trade system is part of its virtue for some politicians, since it may mask the system's impact on prices. Such a system also appeals to conservative lawmakers who like the idea of letting the market determine the price of carbon, while keeping revenue out of the hands of government. Some economists say it would channel capital to the most economically worthwhile projects first.

Environmentalists are split on a carbon tax. Fred Krupp, president of Environmental Defense, which is handing out baseball caps emblazoned with the slogan "Just Cap It" on Capitol Hill, called such a tax "an interesting distraction."

"It doesn't give us the guarantee the emissions will go down," he said.

But Carl Pope, executive director of the Sierra Club, said: "It will be more effective if people know that in year 'X' they will pay this much. Companies are highly motivated by costs." Moreover, he worries that rationing carbon allowances based on historical emissions would reward companies that spew out the most greenhouse gases now and did the least to limit them in the past.

Dan Becker, director of the Sierra Club's program on global warming, said the nation may need to adopt a carbon tax in several years but "we're not there yet."

Some industries that have historically opposed carbon limits embrace the idea of a tax because their sectors would not be singled out for regulation. "A poorly constructed cap-and-trade system can be as punitive as a regressive tax," said Scott Segal, an electric utilities lobbyist.

Red Cavaney, president of the American Petroleum Institute, told a National Press Club audience in February that his industry prefers that lawmakers explore a range of policy options before imposing a cap.

"A cap-and-trade system isn't necessarily the be-all and end-all," he said. "A carbon tax, everything, should be on the table from the beginning."

Few lawmakers, Democrat or Republican, have the stomach for a carbon tax, however. Some are still smarting from a vote in the early 1990s when President Bill Clinton persuaded the House to adopt a BTU tax -- a tax on the heat content of fuels -- only to abandon the effort in the Senate.

Democrats such as House Natural Resources Committee Chairman Nick J. Rahall II (W.Va.) say they have no desire to revisit the issue. "I'm not an advocate of a carbon tax," Rahall said. "That's going to be passed on; the consumer would end up paying for that."

Some analysts said former vice president Al Gore's endorsement of both alternatives in testimony before Congress last week was so politically unpalatable that it was a sign that he is not seriously thinking of running for president.

Only one House Democrat, Rep. Pete Stark (Calif.), has drafted a carbon tax proposal. Stark, who first proposed such a tax 16 years ago as a way to ease the nation's energy crunch, plans to introduce a bill in April that would levy a tax of $25 per ton of carbon released for five years.

"It's more efficient, more equitable, and it's less subject to gaming, I might add," Stark said, estimating that it would raise the cost of gasoline by 10 cents a gallon.

As Congress debates how to regulate greenhouse gases, however, several European officials have said it would be a mistake to choose anything but a market-based trading system that could be linked to the emerging carbon market in Europe.

"Political leaders in the United States need to make a decision, and make it quickly, whether they want to be left behind in a market that is going to evolve, or whether they want to get involved quickly," said Stephen Byers, a member of Britain's Parliament who helped establish the European Union's trading system. "Wall Street could become the world center of carbon trading."

And Stavros Dimas, the E.U. environment commissioner, speaking at a recent lunch hosted by the D.C.-based European Institute, called it ironic that the United States would question the cap-and-trade system, because U.S. negotiators essentially forced Europe to agree to such a system in the Kyoto Protocol negotiations in 1997.

"There was suspicion about market-based instruments," Dimas said. "In a way you did us a favor, because now we also are familiar with these market-based activities. It's functioning very well, actually."

"If we would go together into a world tax regime, that would be preferable," Jos Delbeke, the top E.U. official on climate change, said after a Senate Energy and Natural Resources Committee hearing Monday. "But practically speaking, it is not a likely way to go. Emissions trading is a very solid second best."

Now, as suspect as I am about marketplace solutions, I ain't completely unsold on cap-and-trade. I think that it could be a valuable addition to a carbon tax policy. I don't think it's an entirely either/or proposition and there's some consensus that both systems have value, even if each claims to have better value.

If the NDP wants to help ol' Mother Earth, they'll join forces with the Libs and Greens on the tax-shiftin' carbon tax. If they make their support conditional on the establishment of a cap-and-trade system, I think the Greens and Grits'll be willing to play ball.

JimBobby