The idea is simple, popular and effective: Make a bad thing – polluting the atmosphere – more expensive; and therefore make it cheaper for people and businesses to live cleaner.
Yes, the concept is called a “carbon tax.”
But try to get past the T-word for a second.
Because proponents see this as a blue-collar climate policy – one for the Trump era.
“This is a pro-growth policy. It is a pro-competitiveness policy,” said Ted Halstead, founder and CEO of the Climate Leadership Council, which released a white paper this week advocating for a carbon tax. “It would rebalance trade, it would promote jobs – and, most of all, it would help working class Americans.”
The plan – outlined in a paper called “The Conservative Case for Carbon Dividends” – has the backing of a list of influential GOP old-timers that includes James Baker and George Shultz, former secretaries of state in Republican administrations; Gregory Mankiw, a conservative Harvard economist; Henry Paulson, the former treasury secretary under President George W. Bush; and Rob Walton, the former head of Wal-Mart. They’re trying to pitch the plan to the White House – and the public.
This could be a historic moment.
Here are four things you should know about the proposal:
1. Most families would make money off the tax
Carbon taxes have long been regarded as a “holy grail” by many climate policy experts.
By putting a price on carbon pollution, you encourage people and businesses to switch to cleaner alternatives.
The Climate Leadership Council proposes an escalating $40 per ton tax on each ton of carbon dioxide pollution – one of the key pollutants that’s warming the planet. The tax would increase the cost of any activity that burns fossil fuels and therefore pollutes the atmosphere and contributes to dangerous climate change. The average cost of a gallon of gas, for example, would be expected to go up 36-cents, Halstead told me.
That might sound like a bad deal for consumers.
But the group suggests giving proceeds from the tax back to the public.
A four-person family would receive a $2,000 carbon dividend during the first year of the tax, Halstead said.
That might come in the form of a check or a direct deposit into a bank account or retirement account. While families might pay more up front for fossil fuel energy, many of them would break even or make money from the carbon dividend payments. Most Americans – the bottom 70% of earners – actually would profit from the tax, he said.
Meanwhile, clean activities like buying power from solar panels or wind turbines, or driving an electric car, say, would save consumers money, since nonpolluting activities wouldn’t be taxed.
Over time, those cleaner sources of energy would become more popular.
“Economists are nearly unanimous in their belief that a carbon tax is the most efficient and effective way to reduce carbon emissions,” the Climate Leadership Council report says. “A sensible carbon tax might begin at $40 a ton and increase steadily over time, sending a powerful signal to businesses and consumers, while generating revenue to reward Americans for decreasing their collective carbon footprint.”
The tax would be applied to each ton of CO2 at the source of pollution – for example, at a refinery, mine or port.
“This is as good as it gets,” Gernot Wagner, a research associate at Harvard’s School of Engineering and Applied Sciences, and co-author of “Climate Shock,” said of the proposal.
Steve Valk, spokesman for the Citizens’ Climate Lobby, a grassroots organization that advocates for putting a price on carbon pollution, called the proposal “an aggressive, properly designed carbon tax that employs the power of the free market to do the work is more effective and efficient than regulations.”
2. Backers see it as politically feasible – and popular with voters
This is a strange political moment to be proposing any climate change policies.
President Donald Trump erroneously has called climate change a hoax (it’s real and we’re causing it primarily by burning fossil fuels), and his “America First Energy Plan” aims to revitalize industries that contribute to dangerous warming.
But Halstead told me it’s becoming clear to him that the Trump administration and Republicans in Congress need plans of their own. It’s not good enough just to repeal Obamacare, the thinking goes. You have to replace it, too. Similarly, climate regulations need to be replaced with something, he said.
“This is the only way I see for Republicans to have a viable and popular way to cut regulations significantly, because otherwise there will be popular backlash,” Halstead said. “These regulations are there for a reason.”
The polls are with him on this.
3. The tax could help curb US climate pollution
The Climate Leadership Council proposes repealing Obama-era climate regulations alongside passing a carbon tax. Some environmentalists certainly would take issue with removing at least some of those regulations, seeing them as compatible with the tax. But an analysis commissioned by the Climate Leadership Council says its plan would be nearly twice as effective as all Obama-era climate regulations at reducing global warming pollution.
And nearly three times as effective as repealing the regulations and doing nothing else.
This matters because the Earth’s atmosphere isn’t waiting for politics to catch up. Humans already have pumped dangerous quantities of greenhouse gases into the atmosphere, enough to warm the planet about 1 degree Celsius compared to pre-industrial levels. The Paris Agreement on climate change sets the international target of limiting warming to 1.5 or at most 2 degrees Celsius. The world is not far – perhaps only a number of years – from ensuring the planet moves into those danger zones.
“A price signal is essential and it definitely will do the things the white paper says in terms of unleashing investment in cleaner energy and reducing dependence on foreign oil,” said Vicki Arroyo, executive director of the Georgetown Climate Center. “That all is really critical.”
Some climate policy experts would rather see the dividends from the tax be spent on infrastructure projects that go further toward reducing emissions. And the idea of repealing some climate regulations – like energy efficiency standards, which help families save money – makes little sense to Arroyo.
4. Unclear if Congress, White House will go for it
Of course, none of these details matter if neither the White House nor Congress takes up the idea.
The GOP old-timers pushing the carbon tax aren’t in the administration – or in Congress.
Halstead told me the group met with White House officials and were received warmly.
But it’s hard to imagine a climate change denier like Trump championing climate legislation.
“My crystal ball broke back in November and it keeps breaking every week now in terms of what might happen next,” Arroyo told me. “But I would be quite surprised” if the Trump administration ran with this policy proposal, she said.
Still, this is a critical moment in climate change policy.
Trump is threatening to send the US back into the fossil fuel era – and that’s happening at exactly the moment China and others are making massive investments in renewable energy. World leaders are trying to figure out how to meet the targets they set as part of the Paris Agreement on climate change – and whether that agreement will continue to exist in the modern political climate.
“This kind of conservation is really essential at this particular moment,” Arroyo said.
“This is the major challenge of our time – and at least they’re putting forth a proposal.”