Don’t Ban Fracking — Pass A Carbon Tax Instead
The Trump administration’s formal notification that it will abandon the Paris climate agreement should be treated as a huge in-kind contribution to the Democratic Party. It’s an emphatic message to anyone who cares about the planet: Do not, under any circumstance, vote Republican in 2020.
The Democrats running for president could not be more starkly opposed to Donald Trump. He mocks climate change as a hoax, wants to dig coal until West Virginia is just a vast cavity in the ground, and thinks the Arctic National Wildlife Refuge should be a safe space for oil rigs. The Democrats recognize scientific reality, favor the Paris climate accord and are committed to curbing greenhouse gas emissions.
Some of the candidates, unfortunately, are enamored of the old command-and-control approach to environmental protection: forbidding this and requiring that. Elizabeth Warren, Bernie Sanders and Kamala Harris support a ban on fracking, a method that has greatly increased U.S. oil and gas production. Almost all the candidates would end new oil and gas leases on federal lands. Raising vehicle fuel economy standards and setting a deadline for all vehicles to achieve zero emissions are common ideas.
These proposals all suffer from the same flaw: dictating purported solutions from on high, with little regard for side effects, instead of devising incentives for creative, inexpensive remedies. This approach guarantees that the cost will be higher than necessary and results worse.
It appeals to politicians, though, because it allows the illusion that major progress can be made without any sacrifice by voters, except maybe those who frack for a living. The assumption is that if people realize environmental improvement is not cost-free, they will run screaming from the room.
That theory has prevailed for decades. So I am startled but pleased to discover that this year, many Democratic candidates have decided to treat voters as intelligent people who can be persuaded to embrace optimal remedies.
The best of all is a carbon tax, which would raise the price of different fossil fuels to reflect the harm they do. Among the candidates who favor it are Sanders, Warren and Harris, as well as Joe Biden, Pete Buttigieg, Amy Klobuchar and Julian Castro.
It would advance these purposes without draconian regulations, inflexible bans or cumbersome bureaucracy. The money collected could be rebated to every American — yielding a net tax increase of zero.
This represents a major shift. Even Barack Obama saw no way to sell it. His first energy secretary, Steven Chu, told Obama in 2012 that a carbon tax would be the ideal way to attack the problem. “It’s not gonna happen,” the president replied.
In 2015, Obama conceded publicly that it would be “the most elegant way to drive innovation and to reduce carbon emissions.” But he was not so masochistic as to try to get it through a Congress controlled by Republicans who wouldn’t admit the ocean was rising if it were lapping at their chins.
A carbon tax would stimulate good choices rather than force them, giving an advantage to those that are most cost-effective. It would discourage coal use, aid electric vehicles, foster conservation and boost renewable sources of energy. It would end fracking eventually rather than immediately, easing the journey to a low-emission future.
Asking economists if they favor the idea is akin to asking loggers if they like chainsaws. In January, an ad published in The Wall Street Journal endorsing a carbon tax boasted the signatures of 3,554 U.S. economists (“the largest public statement of economists in history”). Among them were 27 Nobel Laureates and 15 former heads of the White House Council of Economic Advisers, from Republican and Democratic administrations.
Contrast that with, say, a prompt ban on fracking, which would minimize flexibility and maximize pain. It would devastate an industry, sharply increase the price of oil, provide a windfall to Saudi Arabia and Russia and disrupt the transition away from coal-fired electricity.
“It would be a humongous shock to the global market and affect economies around the world,” Sam Ori, executive director of the Energy Policy Institute at the University of Chicago, told me. “But you wouldn’t do much to reduce emissions.”
Reducing emissions is the highest priority, to be achieved in the most efficient and least painful way. Democrats may be coming around to the realization that for most voters, a carbon tax is not nearly as scary as climate change.