When You Absolutely Need a Carbon Tax

We’ve mentioned here, as the cap-and-trade legislation heats up, that conservatives have had a problems with it despite it being the more conservative carbon emissions reduction method. The more liberal one is a carbon tax, which could conceivably have some kind of progressivity, or become more onerous as years passed, but would really put an immediate burden on the energy section.

We’d position them this way ideologically because cap-and-trade aims to introduce a free-market element – a trade in carbon credits - that appeals to conservatives while a carbon tax does not, placing the public good over other qualities, most especially business comfort. But sometimes ideology just skids away on oily tracks.

We offer this preamble to bring you here:

On the topic of carbon emissions, Smith advocates a straight carbon tax.

“We would support, if the Congress in the United States wants to do it, a carbon tax,” he said, according to the Commercial Appeal.

And who’s Mr. Smith? That villainous duplicative agent from The Matrix? No, Mr. Smith is FedEx Chief Executive Officer Fred Smith. Here’s more:

“It’s straightforward. It’s clear. It’s directly related to the sin, which is the production of CO2, the burning of carbon,” he continued. “I agree very much with former vice president Al Gore, who said, ‘Tax carbon, which you don’t want to have, and reward work, which you do want to have.’ Tax carbon and reduce the payroll tax.”

Anything else?

“Anybody who’s concerned with national security, our balance of payments, with our national economic security, should be a proponent of nuclear power,” he said.

Now we’re cooking with gas. Obviously, the nature of the overnight delivery business suggests pretty heavy carbon emissions. But FedEx is trying:

Today, the success story for cleaner truck technology continues. FedEx now operates more than 172 hybrid vehicles around the globe, including the largest fleet of commercial hybrid trucks in North America, which comprises nearly one-third of the deployed North American hybrid market. The FedEx hybrid vehicles have logged more than two million miles of revenue service.

FedEx has about 48,000 delivery vans, so a very tiny drop in the bucket. Early days, though, and FedEx is clearly trying to get ahead of an issue that could bite it hard. We’re not sure this is the right way to put it, but business will move, out of self-interest as well as corporate good citizen goals, to be sensitive to customer concerns as they take hold. But it also has to live in the world that’s here while waiting for the world that’s coming. That means 172 hybrids out of 48,000 total.

And it’s almost a sure bet that a carbon tax would get that number up quickly. In a way, what Smith wants is to kick FedEx all the way ahead of the curve.

The nuclear comment is nice, but the interest here is in a company arguing for short-term pain where long-term gain can be seen. That’s not usual and it throws a fascinating spanner into Congress’ cozy embrace of cap-and-trade.

See here for more on FedEx’s current environmental initiatives from its perspective.

Fred Smith. He founded Federal Express in 1971; it became FedEx in 1998 after a merger with another company. Surprising longevity in the modern business world.