Tag Archives: carbon tax

Carrots and Sticks

Yesterday, a climate-change denier was confirmed to head the EPA. This comes as Trump and the Republicans gut environmental regulations, including those preventing coal companies from dumping toxic waste into our rivers and streams.

Nevertheless, hope springs eternal.

In the midst of the crazy that is the Trump Administration–in the face of Congressional Republicans’ stubborn denial of science and evidence in general and climate change in particular, three prominent conservatives-Martin S. Feldstein, Ted Halstead and N. Gregory Mankiw– have issued “A Conservative Case for Climate Action.” They explained their plan in an op-ed in the New York Times.

CRAZY as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change. Before you call us nuts, hear us out.

The three are forthright about the fact that Republican congressional opposition prevented Obama from addressing climate change as vigorously as he wanted; he was only able to enact a handful of measures through Executive Orders, and those are likely to be reversed by Trump, who (they say with delicious understatement) “seems much less concerned about the risks of climate change, and more worried about how excessive regulation impedes economic growth and depresses living standards.”

They note that

an ideal climate policy would reduce carbon emissions, limit regulatory intrusion, promote economic growth, help working-class Americans and prove durable when the political winds change.

Hard to argue with any of those goals.

After listing a number of other notable Republicans who participated in authoring their proposal, they proceed to outline it.

Our plan is built on four pillars.

First, the federal government would impose a gradually increasing tax on carbon dioxide emissions. It might begin at $40 per ton and increase steadily. This tax would send a powerful signal to businesses and consumers to reduce their carbon footprints.

Second, the proceeds would be returned to the American people on an equal basis via quarterly dividend checks. With a carbon tax of $40 per ton, a family of four would receive about $2,000 in the first year. As the tax rate rose over time to further reduce emissions, so would the dividend payments.

Third, American companies exporting to countries without comparable carbon pricing would receive rebates on the carbon taxes they’ve paid on those products, while imports from such countries would face fees on the carbon content of their products. This would protect American competitiveness and punish free-riding by other nations, encouraging them to adopt their own carbon pricing.

Finally, regulations made unnecessary by the carbon tax would be eliminated, including an outright repeal of the Clean Power Plan.

The authors assert that a carbon dividends program starting at $40 per ton would achieve nearly twice the emissions reductions of all Obama-era climate regulations combined. They also report that, if all four elements are put in place at the same time, the plan would be sufficient, all by itself, to meet America’s commitment under the Paris climate agreement.

Environmentalists should like the long-overdue commitment to carbon pricing. Growth advocates should embrace the reduced regulation and increased policy certainty, which would encourage long-term investments, especially in clean technologies. Libertarians should applaud a plan premised on getting the incentives right and government out of the way. Populists should welcome the distributive impact.

The appeal of this plan is obvious: as the authors note, simply repealing Obama’s measures would be immensely unpopular; unlike Congressional “deniers,” most Americans accept the reality of climate change and support measures to address it.

Recent polls show that 64 percent of Americans are concerned about climate change, 71 percent want America to remain in the Paris agreement, and an even larger share favor clean energy. If the Republican Party fails to exercise leadership on our climate challenge, they risk a return to heavy-handed regulation when Democrats return to power.

If the goal is to reduce carbon emissions–and that is the goal among people who accept the reality of climate change–Republicans and Democrats who share that goal should embrace any proposal that will demonstrably achieve it.

If carrots will do what sticks cannot, I’m all for carrots.

Who Pays?

Americans talk a lot about growing inequality, but we often fail to recognize how frequently poorer folks shoulder the costs of change simply because existing systems work that way. “The way things are” often translates into an unthinking acceptance of burdens that should—and could–be reallocated.

A recent column in the LA Times by Mark Schapiro  makes that case with numerous and telling examples.

Congress may continue to resist a carbon tax, but Schapiro points out that the American  middle and working classes are already paying for the costs of climate change. Those costs may not look like the much-disdained carbon tax, but if we are honest, they amount to one. Every time the average American uses fossil fuels, he increases his tax burden.

Schapiro counts the costs of recovering from Superstorm Sandy, Hurricane Katrina and a growing number of major droughts—the sorts of dramatic climate “incidents” that are likely to become much more frequent as climate change advances. And he details the economic consequences of changing weather patterns for all of us.

“Start with food: Farmers have always faced good years and bad years, but as bad years get more frequent, taxpayers pick up more and more of the tab. When the Government Accountability Office issued its biannual audit of the government’s highest financial risks last year, for the first time since the list was launched in 1990 climate change was identified as a major financial threat, specifically because of the government’s flood and crop insurance programs.”

Federally subsidized payouts for crop insurance have skyrocketed (from $4.3 billion in 2010 to $10.8 billion in 2011 and to $17.3 billion in 2012). Even more significantly, the USDA has estimated that the 2012 drought led to a 20% jump in meat prices. And the price of cereals has doubled since 2000, according to the U.N. Food and Agriculture Organization, again due to climate change.

Acidification of the oceans and rising sea levels (from melting ice packs and glaciers) have given us declining yields—and soaring costs—of shellfish.

The list goes on. And that’s just at the grocery.

Scientists writing in the journal Health Affairs report that “over the first nine years of this century, six “climate-related” events (floods, hurricanes, infectious disease outbreaks) led to 760,000 encounters with the healthcare system amounting to as much as $14 billion in health costs.”

Even that substantial sum is dwarfed by the millions spent by the CDC and other research institutions to study the ways in which climate change is enabling an ever-expanding universe of bacteria and diseases affecting humans, plants and animals in new and troubling ways.

There is much more, but the bottom line is that the general public–that’s you and me– bears the costs of climate change through both higher prices and higher taxes; meanwhile,  the fossil fuel companies contributing to the problem continue to enjoy massive subsidies.

The farmer who needs fuel for his combine, the factory worker who fills his tank for his commute to work, the soccer mom doing car pool duty—these are the people who are paying the tax that isn’t labeled a tax.

The major corporate producers of these fossil fuels continue to make unprecedented, outsize profits, thanks in large part to public policies that underwrite and subsidize fossil fuel exploration. Those energy policies exacerbate inequality by placing the costs of climate change and energy exploration almost entirely upon the consumer.

There are obviously much more important reasons for addressing climate change than the unfair allocation of costs—reasons of life and death. But those of us who advocate for responsible environmental policies also need to insure that the costs of necessary remedial measures are equitably distributed.

We need to take care that the burdens do not always fall on the most vulnerable–and in this case, at least, the least culpable—Americans.