A new variation on the carbon tax could put the US on track for meaningful cuts in greenhouse gas emissions.
Breakthrough Thinking on Carbon Control?
Breakthrough Thinking on Carbon Control?
Owen Davies, Executive Editor
In a time when the usual Republican response to climate change is denial and obstruction, some of the party’s elder statesmen have done something remarkable. They have created a plan to reduce carbon emissions that might actually work.
The idea comes from the Climate Leadership Council (CLC), a group of almost exclusively Republican luminaries and corporate sponsors whose stated goal is “to promote a carbon dividends framework as the most cost-effective, equitable and politically-viable climate solution.” It contains some novel and interesting features. (See Washington Post, Jun 19, 2017.)
The plan has four basic provisions: a $40-per-ton tax on carbon emissions, gradually rising in the future; a rebate program to distribute the tax money to the public, a “dividend” estimated at $2,000 per year for a family of four; for countries that don’t tax carbon, taxes on imports and tax breaks on US exports to help American companies compete on an even footing; and elimination of regulations that presumably would not be needed once the plan has been adopted.
There is good reason to believe a carbon tax would reduce greenhouse emissions. A January 2017 study by the Department of Energy found that by 2025 a tax of $20 per ton would cut them about 27 percent below 2005 levels. That is enough to meet American obligations under the Paris Agreement. The study also found the tax would promote new technology that would bring the reduction to 37 percent. It seems reasonable to guess that a $40 tax would be even more effective.
Carbon taxes in general have wide approval. A Yale study this February found that nearly 80 percent of Americans and 60 percent of Trump voters support taxing and/or regulating carbon emissions.
This version comes with an impeccable conservative pedigree that should, but probably won’t, guarantee it a fair hearing. Coauthors include George P. Shultz, formerly US Secretary of Labor, Treasury, and State and Director of the Office of Management and Budget; CLC founder Ted Halstead; plus two more former Treasury secretaries and two ex-Chairmen of the Council of Economic Advisors, all under Republican presidents. Corporate sponsors include BP, ExxonMobil, Royal Dutch Shell, and GM.
A bit farther to the left, its supporters include Lawrence Summers, former director of President Obama’s National Economic Council, and famed physicist Stephen Hawking. Both are CLC founding members.
Even some environmental groups have signed on. “We should all welcome the carbon dividend proposal,” the Nature Conservancy—yet another founding member—unsurprisingly concurred. Kevin Kennedy, of the World Resources Institute, declared, “A strong, gradually rising and comprehensive carbon price like that proposed by CLC could be foundational for a US strategy to rapidly transition to a low carbon economy.” The World Resources Institute doesn’t even belong to the CLC.
However, other environmentalists are more skeptical. At Food & Water Watch, executive director Wenonah Hauter doubts that oil companies would support a measure they believed would shrink the market for fossil fuels, as an effective carbon tax surely must.
And energy analyst Ellen R. Wald believes the carbon dividend is, or in today’s political environment would become, a cover for doing away with all climate-change regulations, whether they are needed or not.
It could be some time before the carbon dividend gets a hearing in Washington. Both House Speaker Paul Ryan and the House Ways and Means Committee, which writes tax law, have declared the plan dead on arrival.
Yet, for the longer run, a properly designed carbon dividend may be the most interesting proposal we have seen for dealing with greenhouse gases. It is well worth exploring how it could best be put into practice.
For more on climate change, including a look at many possible solutions to the problem, subscribers can read our forecast, Climate Control.
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