Why A Carbon Tax Is A Truly Good Idea
Address climate change and send Americans a check at the same time. That’s the nut of an intriguing idea put together by a group of Republican elders. The plan would curb emission of greenhouse gases by taxing them at the refinery, at the mine, or wherever they enter the economy. The proceeds would be sent to Americans in the form of dividends. A family of four could expect to receive about $2,000 in the first year.
Those leaning left also see beauty in a carbon tax, though some environmentalists want the revenues to go toward developing renewable energy sources. I’d prefer that, too, but the prospect of dividends makes for a much easier sales pitch. And frankly, the private sector is doing a very good job of clean-energy innovation.
The plan would tax carbon dioxide emissions at $40 a ton, with the rate rising over time. There would be “border adjustments” to punish imports from countries lacking a comparable carbon pricing system. And former President Obama’s Clean Power Plan would be repealed. (Hold on; we’ll get back to that.)
The authors include former Secretaries of State James Baker and George P. Shultz, former Treasury head Henry Paulson, and leading conservative economists. Their group is called the Climate Leadership Council.
Whether this would fly in today’s Washington remains to be seen. A different kind of Republican currently occupies the White House and much of Congress. These politicians hold that a) the planet isn’t warming, b) if it is warming, humans play little part in it and/or c) we’ll be gone by the time catastrophe hits.
President Trump has called climate change a Chinese hoax. He’s also claimed an “open mind” on the matter. You figure it out.
President Obama pushed for a cap-and-trade system — not the same as a carbon tax but another market-based means for reducing emissions. Environmentally minded conservatives have endorsed cap and trade also, but the Republican House voted no. Whether it objected to cap and trade on policy grounds or because Obama wanted it, we cannot be sure. And let the record show that Trump’s crowd doesn’t hold much love for establishment Republicans, either.
The Clean Power Plan called for reducing power plant carbon emissions by 32 percent within 25 years (to 2005 levels). Setting such limits would have its virtues, especially at a time when congressional leadership is limp. But it would also be a magnet for legal challenges.
A carbon tax would elegantly put strong financial incentives in place to discourage use of fuels that emit greenhouse gases. It also would provide a measure of predictability that companies need for making long-term capital investments — something government-set renewable energy targets don’t do well. Simply put, the targets are not bankable commitments against which green energy companies can get financing.
When companies have to pay for pollution, there’s less need for micromanaging laws requiring such items as smokestack scrubbers. In sum, until you get to zero emissions, you are paying.
Less government involvement also means less politics. Recall how Republicans flogged the Obama administration over losses at Solyndra, a solar energy company that stimulus money helped finance.
Private capital knows that often only 1 in 10 investments pay off. Political demagogues don’t know or don’t care to know. The program used by Solyndra happened to have many successes, but who can name a single one?
Expectations that the current administration will take up even a conservative approach to global warming are dismally low. The single candle lighting the darkness is the new secretary of state, Rex Tillerson, who supported a carbon tax as CEO of Exxon Mobil.
Trump has been king of surprises. Isn’t it time for a good one?
Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at firstname.lastname@example.org.
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