Thursday, August 30, 2007

Some Good Ideas on Energy Tax Policy

Kevin Hassett and Gib Metcalf outline "An Energy Policy for the Twenty-First Century" in a recent AEI short publication. The policy prescription:

  1. An end to energy supply subsidies
  2. A green tax swap
  3. An end to the gas guzzler loophole and possible use of "feebates"
  4. Conservation incentive programs
I consider #2 to be by far the the most important element. I've got a higher tolerance for the carbon tax than most, I suspect, and don't particularly feel the need to make all of it revenue neutral. In particular, I'd make the carbon tax large enough to not just eliminate the gas guzzler loophole in #3 but the entire program of which it is part. Beyond that, I like #1 for making the government smaller (a hint to you conservatives out there) and, for the same reason, would wait for the first three to take hold to see how much of a need there is for #4.

Read the whole thing.

1 comment:

CFD said...

I believe the implementation of market-based pricing for electricity could play a large role in reducing energy consumption in this country. In other words, the price for electricity paid by the consumer should reflect the real-time wholesale costs throughout a 24-hour period. As electricity wholesale prices fluctuate due to supply and demand, the retail price would go up or down accordingly. This would replace the current practice of charging (for the most part) one flat rate. Market-based pricing means people would pay more for electricity as reserve margins decrease thus promoting conservation and load reduction when needed most.