WSJ article Carbon’s New Battleground, Sept 12, 2007 describing the choice as basically between cap-and-trade scheme vs. a carbon tax. The carbon tax is virtually universally favored by economists as being superior. So we will end up with a cap-and-trade system that is susceptible to political nonsense.
Much of the figures on carbon tax were attibuted to the AEI :
“An American Enterprise Institute paper estimates that a tax of $15 per ton of carbon dioxide emitted would increase the cost of a gallon of gasoline by about 14 cents and the price of coal-fired electricity by $1.63 per kilowatt-hour.”
also would add “81 cents to a cubic foot of natural gas”
[my emphasis added] The underlined units don’t make sense to me. Perhaps they are off by decimal places? WSJ online did issue a correction:
A tax of $15 on each ton of carbon dioxide emitted would add an estimated 81 cents to a thousand cubic feet of natural gas and 1.63 cents to a kilowatt hour of electricity. An earlier version of a chart accompanying this article incorrectly said a $15 tax would add 81 cents to a cubic foot of natural gas and $1.63 to a kilowatt hour of electricity.
The amount quoted for a ton of coal, $28.50, and the gasoline at 14 cents a gallon sounds right.
Fundamentally, when burned each carbon atom (from whatever fossil fuel) binds with two oxygen atoms (from the atmosphere). So the amount of C02 you get for a given amount of energy depends on how many hydrogen atoms you have relative to the number of carbons — so coal is more carbon intensive than, say, natural gas.
The AEI has some very sensible sounding ideas on carbon tax, see e.g. What Would a Rational Energy Tax Policy Look Like? . Being free-market oriented, they tend to recognize that socialized (a.k.a. externalized) costs are a bad thing: “Taking into account accident externalities, congestion, and unpriced pollution, one recent paper finds that the optimal gasoline tax in the