Monday, November 6, 2023

Carbon Tax Details and Cognitive Dissonance

Earthbeat, a project of the National Catholic Reporter, raises the possibility that the cognitive dissonance associated with admitting that climate change is a serious problem, after years of believing it is a hoax, a normal earth cycle, or just a low-priority issue, inhibits necessary response particularly by Catholics in the United States. 


Carbon Tax and Climate Change



Devout members of any institution who have believed something for a long time can be psychologically blind to failures or misleading from their institutions or leaders. This includes information about climate change: its existence, causes, environmental harm, economic impact and existential threat to life. 


Indeed, it is less threatening to our egos and peace of mind to maintain a deep-rooted belief that climate change is a nonissue, than to realize that climate scientists (the experts) have been right all along. Doing so would mean admitting one's own error, one's inadequacy at defending life, or one's gullibility to disinformation. We tend to unconsciously block acceptance of ideas that contradict our own long-held convictions. (In US, 'Laudate Deum' Won't Make It Into Many Homilies or Prompt Any Marches, 2023)


Angela Köppl and Margit Schratzenstaller have published  Carbon taxation: A review of the empirical literature in the Journal of Economic Surveys. The conclusion of their study includes attention to the big picture of climate change. Public acceptance of carbon taxes can be increased by providing public information, avoiding negative distributional effects, and channeling part of the revenues into "environmental projects."


Environmental taxes in general and carbon taxes in particular need to be considered in a broader perspective in the context of climate change, and it is important to keep in mind that the transition to climate neutrality requires a profound structural change that cannot be achieved through incremental (political) steps. The focus therefore needs to be on a broader policy mix that integrates a wide range of policy interventions such as price-based instruments, subsidies, standards, and public infrastructure investments, and not to forget the greening of finance. (Köppl & Schratzenstaller, 2019)


The researchers have made several recommendations that can be derived based on the results presented in their report.


Carbon Tax Effectiveness Checklist

First of all, carbon tax rates should be implemented at a sufficiently high level in order to trigger emissions reduction and innovation.


Second, exemptions which on the one hand very likely will undermine environmental effectiveness of carbon taxes, will on the other hand improve acceptance and public support; therefore, these two contradicting objectives need to be balanced carefully.

 

Third, revenue recycling is important: to increase public support and acceptance, but also to mitigate undesirable distributional effects. If possible, recycling schemes should be created in a way to support innovation and employment. 


Fourth, revenue recycling schemes cutting the labor tax burden seem to be more favorable regarding macroeconomic effects compared to lump-sum revenue recycling, whereas the latter is more supportive regarding public acceptance. Policymakers therefore should consider both mechanisms when designing carbon taxes and recycling schemes.

 

Fifth, compensation measures to cushion off regressive effects should not only consider vertical distributional effects, but should also account for horizontal aspects, that is, socio-demographic household characteristics. 


Sixth, information and communication are important to secure public support for carbon taxes: not only with regard to the positive impact of the carbon tax on emissions reduction and further co-benefits, but also the future costs of inaction in a business-as-usual scenario.


Finally, apart from the broad theoretical and empirical consensus on the usefulness of environmental taxes in general and carbon taxes in particular, any specific policy reform must take into account both the system boundaries and the specific political context as well as general socioeconomic conditions and policy styles in the country concerned.


Last but not least, more ex-post evidence is urgently needed to enable the diffusion of experience and knowledge gained on the effectiveness of climate policy instruments across countries (Carraro et al., 2015), as informed policymaking requires sufficient empirical evidence (Green, 2021). (Köppl & Schratzenstaller, 2019)



Michael Wright, father of three, a retired NASA engineer, and a licensed social worker writes about the environment and faith. He comments on the Earthbeat website that in the United States, 'Laudate Deum' won't make it into many homilies or prompt any marches. 


Another reason why Laudate Deum probably won't make it into many homilies or prompt any marches is due to the faith community's misperceptions of the climate crisis. Conservative policymakers have benefited from millions of dollars in contributions from the fossil-fuel industry — the purveyors of products that cause climate change in the first place. Recently revealed documents show that Exxon promoted a climate-disinformation campaign for years. 

Conservative media's disinformation campaigns about climate change have been effective at sowing doubt. Millions have accepted inaccurate information. Many have labeled climate change a "liberal" issue, with solutions that are suspect and should be opposed. In fact, that includes conservative priests who paradoxically judge Francis as too liberal for his emphasis on social and environmental justice, even though Catholics are bound to honor pontifical teachings like Laudato Si' and Laudate Deum. (In US, 'Laudate Deum' Won't Make It Into Many Homilies or Prompt Any Marches, 2023)



Presentation of a simple solution and a catchy phrase to explain climate change may be politically effective as it sets barriers to comprehensive understanding and effective response to an existential threat.



References

In US, 'Laudate Deum' won't make it into many homilies or prompt any marches. (2023, November 6). National Catholic Reporter. Retrieved November 6, 2023, from https://www.ncronline.org/earthbeat/viewpoints/us-laudate-deum-wont-make-it-many-homilies-or-prompt-any-marches 

Köppl, A., & Schratzenstaller, M. (2019, March 9). Carbon taxation: A review of the empirical literature. Wiley Online Library. Retrieved November 6, 2023, from https://onlinelibrary.wiley.com/doi/full/10.1111/ 



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