Last week, the UN Intergovernmental Panel on Climate Change issued a dire report—although some experts say it wasn’t dire enough—that described the need for immediate, far-reaching action to spare the world from the most severe impacts of global warming. Job one is to reduce the vast amounts of climate-altering greenhouse gases currently being dumped into the atmosphere by power plants, vehicles, agriculture, and other sources.
Fortunately, there is an easy way to significantly reduce this dangerous dumping. It comes straight out of the pages of economics textbooks written by fervent believers in capitalism: Make polluters pay. If you do that, polluters will start looking for creative ways to avoid dumping. Also, the money collected from them can be used to clean up their mess.
Call it a carbon tax. Or maybe don’t, because that three-letter word makes a lot of conservatives lose their minds. But I’ll get to that later.
A prize-winning idea. If you ask the Royal Swedish Academy of Sciences, a carbon tax is a brilliant idea. Mere hours after the new UN climate report came out, the Academy awarded its 2018 Nobel Prize in Economic Sciences to William D. Nordhaus of Yale University and Paul M. Romer of New York University for integrating climate change and technological innovations, respectively, into models of long-term economic growth.
Nordhaus, a trailblazer in the field of environmental economics, has long advocated for a tax on carbon emissions. Romer’s work shows how economic forces (say, carbon taxes) govern the willingness of companies to generate new ideas and technological innovations. In a recent interview with CBC Radio, he said that the climate crisis can easily be averted through economic policy that encourages people to find ways to produce cleaner energy. “All we need to do is create some incentives that get people going in that direction,” Romer said. “We don’t know exactly what solution will come out of it—but we’ll make big progress.”
A conservative idea. A carbon tax has widespread support among economists and the general public. It is fundamentally a capitalist idea, because it doesn’t favor one industry or technology over another; the idea is to let the market decide on the best and most cost-effective ways to reduce carbon pollution.
Even ExxonMobil likes the idea of putting a price on carbon. Last week, the world’s largest oil and gas company pledged $1 million to a campaign by Americans for Carbon Dividends, a group promoting the Baker-Shultz carbon tax plan, which is spearheaded by James A. Baker and George P. Shultz, who both served as Secretary of State in Republican administrations.
Political conservatives once paid close attention to what senior statesmen, economists, and major corporations had to say. Today, not so much. In fact, many Republican politicians throw a hissy fit whenever the idea of a carbon tax is mentioned. Because, you know, “tax.”
This is not to say that a carbon tax is a silver bullet that would solve everything having to do with climate change; environmentalists see a carbon tax as just one tool in a broader toolbox to combat climate change, and some favor a cap-and-trade system (which sets a maximum level of pollution and distributes emissions permits among polluters) over a carbon tax.
As usual, the devil is in the details: It has been reported that the plan that ExxonMobil supports would protect fossil fuel companies from lawsuits over the damage caused by climate change, which, if true, raises some serious questions. As Lee Wasserman, the director of the Rockefeller Family Fund, told the New York Times: “I’m sure Exxon’s management must think it’s hilarious that a contribution of less than their weekly ad budget might protect the company from paying hundreds of billions of dollars in climate damages its leadership has already caused.” (The Rockefeller Family Fund supports holding fossil fuel companies accountable for climate damages.) Nonetheless, ExxonMobil’s move is significant; as the New York Times reported, Sen. Sheldon Whitehouse—a Rhode Island Democrat—called Exxon’s announcement a “signal shift” from the days when the company supported “climate denial and obstruction.”
Washington leads the way. No, not that Washington. Washington state could become the first in the United States to adopt a carbon fee that would charge polluters for the right to dump greenhouse gases—and use the money collected to reduce pollution “by investing in clean air, clean energy, clean water, healthy forests, and healthy communities.” The ballot initiative will be put to a statewide vote next month.
There. Did you see how I called it a “fee” instead of a “tax”? Sounds much better, amiright? The supporters of the Baker-Shultz tax prefer to call their proposal a carbon “dividend” rather than a tax or fee. But it probably doesn’t matter what it’s called, because most Republican politicians are dead-set against even a fee or dividend that is revenue-neutral for the government, in which all the money paid in carbon taxes (for example, the higher prices that consumers would likely pay for gasoline at the pump) would be returned to the American people, possibly through direct monthly deposits to their checking accounts.
Phillips 66, Chevron, BP, and Shell are among the energy companies that have pledged millions of dollars to fight the Washington state initiative. I understand why they would prefer not to pay a fee to continue dumping their carbon pollution into the atmosphere. But as some economists are wont to say, there ain’t no such thing as a free lunch. When carbon polluters pay nothing to use the atmosphere as their personal landfill, that means that everyone else pays a steep price. The damages caused by increasingly extreme weather, bigger wildfires, rising seas, droughts, forced migration, and other climate impacts are already costing hundreds of billions of dollars annually.
The other Washington. In the halls of Congress, most Republican politicians are vehemently opposed to even the most conservative proposals for a carbon tax. In 2016, a House vote condemning carbon taxes had unanimous Republican support. More recently, a July 2018 House resolution declaring carbon taxes to be “detrimental” to the US economy received support from all but six Republicans, including most of the Republican members of the bipartisan Climate Solutions Caucus.
One of the six defectors was Carlos Curbelo of Florida, who not only voted against the resolution but that same day introduced carbon tax legislation he said would avoid “saddling young Americans with a crushing environmental debt.” By one analysis, Curbelo’s plan would cut greenhouse gas emissions by up to a third by 2025, enabling the United States to meet its commitments under the Paris Agreement.
Sadly, Curbelo’s bill has almost no chance of passing, even at a time when Hurricane Michael has just devastated Florida, and a UN special report called for a carbon tax as an essential tool for bringing global warming under control. The only glimmer of progress is that the number of House Republicans who are not utterly resistant to a market-based climate solution has risen from zero to six in the past two years.