The Climate Olive Branch
Why Republicans and everyone else should consider the latest carbon tax proposal.
“Don’t let perfect be the enemy of good.”
Voltaire’s felicitous phrase, “Don’t let perfect be the enemy of good,” can be used in almost any situation to describe nearly every solution. More recently, this phrase has been used in the media to tout a nationwide carbon tax proposal that was brought to the White House in February by the Climate Leadership Council and is being spearheaded by three retired Republican statesmen. For everyone who has been waiting to see some semblance of bipartisan effort on climate change, this plan is a breath of fresh air. In fact, of all climate change solutions in the United States right now, a carbon tax easily boasts the most bipartisan support as it is a free market solution. However, past carbon tax initiatives have found opponents in both environmentalists and fossil fuel companies—hence why everyone is adamant that we don’t shoot ourselves in the foot by trying for “perfect” and that we settle for “good.” So, how “good” is this carbon tax proposal?
The “Conservative Case for Carbon Dividends” proposes a carbon tax of $40 per ton, with the intention of increasing the cost every year to further encourage low-carbon solutions and a clean energy transition. Non-profit organization Resources for the Future has found that a carbon tax of $38 per ton implemented in 2017 ceteris paribus would result in the emissions cuts promised by the United States’ Paris pledge. For reference, the U.S. promised an emissions reduction of 26-28% below 2005 levels by 2025. We have achieved a 9% reduction in emissions since 2005. Thus, in terms of climate change solutions and meeting our international commitments, this conservative carbon tax proposal is checking boxes so far.
This proposal would tax carbon emissions at their point of entry into the market, meaning that consumers would not have to pay a fee on the emissions out of their car, for example. In fact, this tax is projected to only raise the price of gasoline by 36 cents per gallon. It is also expected to raise the price of goods and of electricity powered by oil, coal, and natural gas. This is why the proposal also includes a rebate program for everyone with an American social security number in the form of a quarterly check. While the frequency of these checks would somewhat reduce its burden on those living paycheck to paycheck, this rebate program does not factor in income. The biggest point of contention with a carbon tax is almost always where the revenue should be reallocated. An Oregon DEQ report has found that a state-wide carbon market would disproportionately hurt rural and low-income communities because fuel consumes a larger portion of their incomes. The report suggests that revenue generated could be used to fund job training and energy efficiency programs for these communities. The simple rebate program of this GOP carbon tax proposal makes it a difficult sell.
The scariest part of this carbon tax proposal is that it promises the removal of other carbon regulations. This makes both Democrats and environmentalists uneasy as illustrated by NRDC’s lawsuit. This stipulation alone could threaten bipartisan support for this potential bill. However, such a stance by the left could lead to another lost opportunity which will probably not come again. With the Republican legislative majority, many climate regulations are already under assault; this would at least provide a necessary compromise. Many conservatives who disavow any climate action are encouraging lawmakers to take the easy win to dismantle much of Obama’s climate legacy and many Republican congressmen are refusing to consider a carbon tax. However, this dismissal of this latest carbon tax proposal would be a huge mistake.
Good for the U.S., Good for Paris
A carbon tax will help the U.S. lower its impact on climate change, transition to a low-carbon, clean energy economy, and reach its Paris Agreement pledge. The landmark Paris Agreement was the first time 197 countries came together to agree on a global initiative for climate change. People may argue the effectiveness of the Paris Agreement, but its significance to the international community cannot be overstated.
The post-U.S. election climate convention in Marrakech, Morocco discussed next steps for Paris with cautious optimism. Amid worry of future U.S. involvement, countries released the Marrakech Action Proclamation reaffirming their Paris commitments. China expressed resolve and has embraced a leadership role. A group of 47 developing countries agreed to transition to 100% renewables “as rapidly as possible.” After Marrakech, 365 businesses, including huge brands like Hewlett-Packard and General Mills, signed a letter reaffirming their support of the Paris Agreement and a low carbon economy. More and more fossil fuel companies are investing in renewable energy while their CEOs increasingly express concern and a willingness to act. Exxonmobil CEO, Darren Woods even called for a carbon tax in his blog saying that it “would promote greater energy efficiency and the use of today’s lower-carbon options, avoid further burdening the economy, and also provide incentives for markets to develop additional low-carbon energy solutions for the future.” More recently, Europeans have been reaching out to China, Canada, small island nations, Latin American and African states to form a coalition of climate change progressives. The world is serious about climate progress, yet we decline to act.
U.S. President Donald Trump is currently deciding whether to keep his campaign promise to pull out of the Paris Agreement or to pass that decision to the Senate. Not only has Secretary of State Rex Tillerson been advocating that the U.S. keep a “seat at the table,” but quite a few Republicans on the Hill agree that canceling Paris is simply not worth it as it is hardly enforceable. As Paul Bodnar, former climate advisor to Obama has said, "Staying in is not hard. You just have to show up and file some paperwork. Leaving, on the other hand, will cause a huge diplomatic uproar.” Experts are even concerned the U.S. could not only lose prestige by leaving Paris but could also face punitive measures in the form of tariffs from other countries as they attempt to mitigate their emissions and the U.S. falls back. If the U.S. decides to stay in the Paris Agreement, the international community may give an initial sigh of relief. But the U.S. government will continue to roll back climate regulations and in 2020, when countries are reviewing their Paris contributions, they will notice inaction and will expect further U.S. commitments.
A carbon tax would serve as a much needed olive branch to the international community. Climate leadership is becoming more so led by Europe and China, which harms the United States’ image as the indispensable power. No matter how much Republican leadership wants to deny climate science and restrict the growth of clean energy, the rest of the world and many U.S. cities, states, and businesses surge ahead. Officials largely agree that pulling the U.S. out of the Paris Agreement would be a mistake, but the U.S. will soon not be able to afford simply avoiding a huge mistake. We will have to actively contribute and with this carbon tax proposal comes a sliver of potential U.S. climate action. By all means, this proposal should be scrutinized and criticized, it’s not “perfect” after all—and Republican lawmakers should give everyone a seat at the negotiating table—but ultimately a nationwide tax should be supported.
The views expressed in this piece do not reflect the views of other Arbitror contributors or of Arbitror as a whole.
Photo: "Into the Night" by Tumblingrun (CC BY-ND 2.0). Use of this photo is not endorsement from its creator.
