05/13/09 Baltimore, Maryland “The war on the so-called greenhouse gases is officially under way,” writes Chris Mayer, “and it is going to be expensive. Each passing month brings us closer to capping, taxing or cutting the gases thought to cause global warming.
“I don’t think investors appreciate how far-reaching such efforts could be. And there will be definite winners and losers as a result. Some of these are far from obvious and some are in plain sight.
“The first obvious big loser is American coal, from which we get half about of our electricity needs. Already, you see companies reacting to this news. Consol Energy, a big coal company, said it halted two big mines in Appalachia because of uncertainty over the costs of pending new regulations. If you own a U.S. coal miner, I’d fold the hand, so to speak.
“Natural gas-fired plants, though, may be one winner relative to coal, because natural gas burns cleaner than coal. Already, in just the last few months, as the market ponders talk of new emissions caps, you could see gaps opening up between coal utilities and natural gas utilities.
“For example, here is a three-month chart of a Capital & Crisis pick, National Fuel Gas, which uses gas, versus AES, the big coal utility.
“Though the new rules could be a year or more away, those gaps may well widen over time as investors anticipate the likely bad ending for coal. So I would not own a U.S. coal utility right now, either. It is no fun wearing a target on your back — especially since the guy throwing the darts makes all the rules.”
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We should be taxing carbon emissions. Even if global warming does not matter, fossil fuels are a dwindling resource. People that use the most of this dwindling resource should pay the most taxes.
This is just plain common sense.
A carbon tax and dividend as suggested by James Hansen would be the best approach. The tax would be returned to the people and the government would get no chance to game the money. It would simply reward those that use less fossil fuels and reward those that conserve–no more and no less.
The market, through the law of supply and demand, already ensures that those who use more of a dwindling resource will pay more.
On the flipside, those who conserve are rewarded by having their money freed up for other uses.
I don’t see why we need to add taxes to influence consumption. Rising prices will take care of that by itself.