Megan McArdle points out the real problem that carbon taxes and other CO2-abatement approaches have -- they only really work if it they are painful. I mean, the whole point is not supposed to be to raise government revenue or just arbitrarily raise prices. The whole point is to change behaviors, and the most powerful tool for behavior change is price changes.
Global warming activists are talking about 80% CO2 reductions. This is an enormous number, especially since the relative cut has to be even higher to account for future growth, as reductions are generally pegged to current (or as in Kyoto, past) CO2 emissions levels.
A 40-cent gas tax is not going to do it. Or, looking at how much behaviors changed when gas prices recently went up to $4, a $2.00 gas tax is not going to do it. The Europeans have $6+ gas taxes and that is not enough to reach the levels activists want for this country. It is likely going to take $10+ gas to even start to get the reductions in use and the shifts to much more expensive carbon-less technologies that would be required to hit 80% type goals.
All this means that we are NEVER going to have a carbon tax that really reflects the necessary rates to hit the emissions targets Obama and the alarmists claim to be committed to. That is why we will get backdoor taxes that try to hide the tax and shift the blame away from Congress. But none of these schemes, including cap and trade, will have any meaningful impact unless they lead to consumer price increases that change behaviors of the end users**. But these approaches are preferable to lawmakers, as they somewhat disguise the relationship between legislation and prices, and give them some ability to blame private companies for the price increase, even where these increases are the inevitable result of carbon caps.
Postscript: This is further complicated because the major technologies the government is attempting to subsidize as part of meeting these goals are virtually useless. Two in the transportation sector - ethanol and electric vehicles - are of questionable merit. Ethanol has about zero efficacy in reducing Co2, and may actually increase it (but it is essential if one wants to win the Iowa caucuses). Electric vehicles have some potential, but their impact is dependent on how electricity is generated. Based on the current mix, shifts to electric vehicles just shift emissions from one place to another without much net reduction. If someone were to propose a massive nuclear and electric vehicle program, they might convince me they were on to something.
**PS#2: I suppose you could reach these goals without fuel price increases. Two alternatives:
- Mandate certain transportation and other technology solutions, as well as certain limits (e.g. maximum house size, maximum number of TV's, etc). This still has cost, though, in terms of enormous losses in personal liberty as well as likely enforced higher costs of major purchases, like cars. So this is still likely a price increase, it just shows up in a different place. Also, this may well not work -- there is very good evidence that without price changes in fuel, consumers react to higher MPG in their cars by driving more, thus sibstantially dilluting the carbon effect.
- Enforce carbon limits combined with price caps on fuel and electricity. This would be effective, probably, but of course would result in massive shortages of gas and electricity. The rationing challenge would be enormous.