Charles Komanoff – Page 23

Carbon Tax Center

Pricing carbon efficiently and equitably

Inspiring scenes from the March for Science, NYC

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21 years old and already a scientist. Not to mention, activist.

Why do we march? To make a statement, to influence news coverage, to affect policy and politics — of course. But also to inspire each other; to build community, to find one another.

I joined the NYC March for Science today for a couple of hours. Time will tell if we made the news or if only the main march in DC got covered. But I sure found myself inspired by the people I encountered.

Hey, let’s see who’s that older man in the lab coat and a Tufts cap? Daniel Wellner, professor of biochemistry at Weill Cornell Medical Center on Manhattan’s east side. Dig a little and learn that he was born in Belgium in 1934, and, with two older siblings, was taken in during the Nazi occupation by a Catholic family with 8 children who raised them as their own. After the war, Daniel’s brother married one of the 8 and settled, happily, in Syracuse where he taught physics at the university and still does research. Daniel emigrated to NYC in 1949 and never left. He has run 52 marathons and is registered to ride in next month’s Bike NY 5-boro bike tour.

Harriet Kang, PhD, medical researcher at Mount Sinai Beth Israel, and Daniel Kellner, PhD, biochemistry professor to medical students at Weill Cornell Medical Center.

The young woman hoisting the “ICE Has No Agenda” sign is a Smith College junior majoring in Africana Studies and minoring in Environmental Sciences. She told me that she’s just back in NYC after several months with a crew from college doing marine research in the Caribbean. Her mother, a remedial math teacher and director of the Willow Interfaith Women’s Choir, lamented that the U.S. government refused the crew’s proffer of their research findings on water temperature and species counts. The data is being sent instead to the Dominican Republic science ministry. Both mother and daughter were steadfast.

So many people. So many signs. So many stories. So much resolve.

And so many girls and women! They seemed, to me, to outnumber the boys and men. A good thing, likely signifying the growing ranks of women in STEM (science, technology, engineering, math) as well as their continued leadership following the Jan. 21 Women’s March that ignited the Resist Trump movement.

The light sprinkle turned to a steadier rain and I decided to light out for home. All of the Citibike stations on Broadway were shuttered on account of the march — needlessly, I thought — and I was ready to trek over to Ninth Avenue where there was an active station. But wait, there’s a marcher ahead, walking a Citibike. I caught up to him and asked if I could take it off his hands. We started negotiating the terms when he remembered that Citibiking was free today all over town, for Earth Day. He handed me the bike, I pulled on my rain gear, and half-an-hour later I was home.

Next up, for me: the 2017 People’s Climate March on April 29. I’ll be speaking at the Climate Rally Bergen and Beyond, a satellite rally in Bergen County, NJ, as part of a great line-up of local speakers and musicians. I’ll be talking about why carbon taxes are central to climate sustainability and justice.

“Steminist,” she wrote.

The rally is at the Bergen County Courthouse, 10 Main St, Hackensack, NJ 07601. It starts at 10 a.m. and wraps around 11:30. You can RSVP, here.

The rally location is less than six miles from the Jersey side of the George Washington Bridge, so I’ll be biking there. If you’d like to ride together, meet me on either side of the bridge. We’ll leave from the NY side, 178th St & Cabrini Blvd, at 9:00 a.m. sharp. We’ll stop briefly on the NJ side at Hudson Terrace and leave from there at 9:10.

If you live in the NYC area and aren’t able to go to DC on April 29, I hope to see you in NJ!

Don’t Link Carbon Markets

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Guest post by Jessica F. Green, assistant professor in the Department of Environmental Studies, New York University. This post is adapted from the longer original version published last month in Nature.

Carbon trading programs are pro­liferating. These allow companies to buy and sell the right to emit carbon dioxide. The European Union’s Emissions Trading System cov­ers 11,000 emitters across all EU member states, as well as Norway, Iceland and Liech­tenstein. California and Quebec share a mar­ket, which Ontario, Manitoba and provinces in Brazil and Mexico plan to join. China is due to launch its national cap-and-trade sys­tem later this year, comprising 7,000 emitters.

Around 100 nations have said they are planning or considering carbon pricing to reach their emissions-reduction goals in the 2015 Paris agreement on climate change, according to the World Bank’s State and Trends of Carbon Pricing 2016 report. These pricing plans include carbon taxes and trading schemes.

(Graphic is from original version of this post, in Nature magazine.)

Many policymakers are urging that cap-and-trade programs be linked together in a global carbon market. According to prevailing economic theory, linking markets together should promote trading, smooth financial flows and lower the overall cost of reducing emissions. A global price on carbon emissions would emerge without the need for long and fractious diplomatic negotiations.

But reality is more complicated. Initial attempts to join up trading schemes in Europe, California and Quebec have led to price crashes and volatility, not stability. It is becoming clear that cap-and-trade works only under special circumstances — when one entity controls the market and parallel initiatives do not undermine it.

Single carbon markets are difficult to manage; this becomes even more challenging when many regulatory authorities compete in linked markets. Interactions with other climate policies trigger unintended outcomes. Policymakers find it hard to keep prices at the ‘right’ level — neither so high that a carbon market becomes politically unaccep­table, nor so low that it fails to change behav­ior. As I show below, California’s case shows that lawmakers can be tempted to use regulatory loopholes to drive down prices and weaken the mar­ket’s effectiveness. Such problems will only worsen when more markets are linked up.

So, policymakers should keep it simple. A truly global carbon market would need a central carbon bank to manage allowances and prices. But that approach seems unlikely in today’s political climate. In the absence of such a body, national and regional carbon markets should maximize their autonomy, manage their own prices and regularly ratchet down the caps on total emissions. Prices must be kept high and regulatory loopholes avoided for net emissions to fall.

Lessons From Acid Rain

Proponents of carbon markets often trumpet the success of the US Acid Rain Program. In 1990, the Environmental Protection Agency (EPA) created a nationwide market for sul­fur dioxide. The agency capped the total amount of the gas that could be emit­ted nationally, and gave allowances to power plants on the basis of their past SO2 emissions. The plants could then trade these allowances.

Between 1990 and 2004, the sulfur cap-and-trade program reduced US SO2 emissions by almost 6 million metric tons (“tonnes”), a roughly 35% drop, even as US electricity gen­eration increased by almost one-third. By 2010, SO2 emis­sions had halved again to 5 million tonnes. Compliance was close to 100%. The health benefits alone were estimated to exceed $50 billion a year — a bargain, given that the program’s annual administration costs were about $0.5 billion.

Enthusiasm grew for cap-and-trade mechanisms to manage other pollutants. During the Kyoto Protocol climate nego­tiations in the late 1990s and early 2000s, the idea of an international carbon market took hold. The protocol created the Clean Development Mechanism (CDM), which in 2005 became the first global exchange for carbon offsets, allowing countries to receive credit for financing emissions-reduc­tion activities out­side their borders. The same year, the EU created its Emissions Trading System, which it linked immediately to the CDM. This allowed companies to pay for offsets abroad through the CDM as a way of meeting their EU emissions quotas.

But the Acid Rain Program was a special case. It ran under the sole authority of the EPA. Power plants that did not comply faced onerous financial penalties: $2,000 per tonne of emitted SO2, compared to €100 (US$106) per tonne of CO2 for the EU-ETS. Moreover, the EPA program began as a closed regulatory system. Policymakers delib­erately avoided adding other policies such as technology requirements or performance standards to reduce SO2 emissions. By con­trast, carbon markets are influenced by other policies on climate change and energy.

The second phase of the Acid Rain Program shows how problems arise when a closed regulatory system is opened up. In 2005, the EPA created the Clean Air Inter­state Rule to target nitrogen oxides, too. This tightened the cap on SO2 emissions, widened the program to cover more US states and made trading optional.

The changes led to a spike in prices. At the same time, a number of downwind states sued the EPA on grounds that the changed rules were too lax. The suit was successful and gave rise to new regulations. The market became volatile and, eventually, irrelevant. Now, SO2 trades at a few cents per tonne. Emissions continue to fall, and are down more than sevenfold from 1990 levels. The rise in supplies of natural gas and increased availability of low-sulfur coal also played a part.

Mixed Messages

Attempts to join up carbon markets have faced similar challenges. There are two notable examples: the EU-ETS link with the Kyoto Protocol’s CDM, and California and Quebec’s shared market.

In mid-2008, EU-ETS carbon prices plum­meted from roughly €25 to less than €10 per tonne of CO2. They have yet to recover — a permit to emit a metric ton of CO2 now trades at around €5. The main reason is too many allowances. After the financial crisis, falling industrial output coupled with changing environmental poli­cies lowered emissions across Europe, leaving power plants with allowances to spare — further exacerbating the problem of excess allowances. Joining the CDM added more emissions credits to a system that was already awash with them.

The European Commission has intro­duced reforms to reduce the glut. In 2011, it barred certain CDM offset cred­its, starting in 2014. The most significant prohibition was on credits for destroying the potent greenhouse gas HFC-23, a by-product in the manufacture of the refrigerant HCFC-22. The CDM had already unwittingly created a perverse incentive, as legal scholar Michael Wara pointed out: companies had been generat­ing more HCFC-22 to capture offset credits from destroying HFC-23. Worse, when these credits were banned, they flooded the mar­ket as firms rushed to sell them before they became worthless. Businesses banked their other allowances, lowering demand further.

Despite this and other steps, European carbon prices remain low and oversupply is unsolved. In February, the European Par­liament voted to accelerate the tightening of the cap on emis­sions, from the current annual decrease rate of 1.74% per year, to 2.2%, but that won’t start until 2021.

California is also experiencing low demand for credits, and low carbon prices as a result. The scheme launched in 2013 as part of the state’s suite of policies for achieving its ambitious emissions-reduction goals. It was an open regulatory system from the start, and interacted with other climate-related poli­cies. Prices are higher than in Europe because there is a price floor below which carbon allowances cannot be sold (currently around $13 per ton). In the most recent auction, in Feb­ruary, only 18% of available allowances were sold.

In 2014, California and Quebec began pooling their allowances through joint quar­terly auctions, but this has only spread California’s carbon-trading woes to Canada. Nevertheless, Ontario’s carbon market, launched at the start of 2017, intends to link with that of California and Quebec, although no date has been set. The provinces of Acre in Brazil and Chiapas in Mexico plan to join during or after 2018.

Neither the EU’s nor California’s effort at linking has delivered a strong carbon price. Links only make carbon markets more interdependent, and thus sensitive to changes elsewhere..

It is difficult to escape the conclusion that carbon trading is more a political fix than an effective way to mitigate climate change. Without stringent caps and careful management, cap-and-trade sys­tems have scant effect on net emissions. For example, Californian law allows electricity providers to meet the emissions cap by buy­ing energy from sources outside the state. Instead of buying dirty energy, from, say, a high-emissions Nevada coal plant, providers can swap to cleaner sources (an Oregon nat­ural-gas plant, for instance). Although the Californian utility is emitting less by using energy from a cleaner source, a non-Cali­fornian utility will still buy the dirty energy. The result of this ‘resource shuffling’ is lower emissions in California but no net change in US or global emissions, as energy economist and legal scholar Danny Cullenward has pointed out.

A Higher Price

A central carbon bank could solve many of these problems, in part by adjusting the supply of allow­ances to prevent price volatility. But creating a new international institution — and insulating it from political influence — is a tall order. In the meantime, I offer three suggestions.

  1. Policymakers should limit links to other markets. China’s national market will be the largest in existence when it launches this year. It should postpone linkages to other cap-and-trade systems. Policymakers should also reject offsets from other jurisdic­tions. The EU-ETS should expand its list of barred credits to include more, or even all, CDM projects.
  2. Policies should be designed to avoid over-allocation and ensure rising prices. Regulators should establish institutions to insulate the allocation process from political pressure. The forthcoming EU-ETS Market Stability Reserve could be a promising start in protecting the European cap-and-trade program from member-state influ­ence.
  3. Policymakers should eliminate loopholes that limit the environmental effec­tiveness of cap and trade. For example, the “resource shuffling” noted above was barred in California’s initial regulations, but was later allowed in under pressure from utility companies. The result has been outsourcing of emissions rather than net reductions.

The worst possible outcome of linked markets is a set of policies that appear to address climate change but allow emissions to continue to rise.

Jessica F. Green is an assistant professor in the Department of Environmental Studies, New York University, New York City, USA. e-mail:

Why China’s Emissions Triumph Surpasses the United States’

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On the eve of China president Xi Jinping’s scheduled two-day visit with the U.S. president, we took a deep dive into data on China’s energy use and carbon emissions. With the help of Fordham University student (and CTC intern) Cristina Mendez, who drew on official Chinese government statistics along with outside sources including Carbon Brief, we find that China has essentially capped its carbon pollution emissions — far ahead of the 2030 date for capping CO2 to which China committed in the landmark 2014 agreement between President Xi and then-U.S. President Obama.

If three years make a trend, China is a decade-and-a-half ahead of schedule in capping its carbon emissions.

That agreement followed a year-long diplomatic offensive initiated by then-U.S. Secretary of State John Kerry, and effectively ended the “axis of denial” by which China and the United States, by far the world’s largest climate polluters, pointed to the other’s inaction to justify its own. The bilateral accord in turn paved the way for the December 2015 Paris climate agreement in which nearly 200 nations pledged to rein in their emissions of carbon dioxide and other climate-destroying greenhouse gases.

A naysayer could point out the divergence between U.S. and China carbon emissions since 2005 (a standard “baseline” year for comparisons over time). In that year, U.S. emissions of CO2 from burning coal, oil and gas were around 5,810 million metric tons (“tonnes”), just a shade below China’s estimated 6,160 million tonnes in the same year. Since then, U.S. emissions have fallen by around 800 million tonnes while CO2 from fossil fuel burning in China grew by over 3,000 million tonnes.

That’s a swing of nearly 4 billion tonnes between the changes in the two countries’ emissions, a huge difference that can’t be swept under the rug. Nonetheless, it is tempered by four key considerations.

1. China’s carbon emissions, though now nearly twice those of the United States, are well under half of U.S. emissions on a per capita basis. With almost 1.4 billion people, The population of China is more than four times the U.S. population of 325 million. U.S. per capita CO2 emissions, which we estimate at 15.4 metric tons last year, are nearly two-and-a-half times as great as China’s 6.4 tonnes per person.

2. A considerable part of China’s CO2 comes from electricity and direct fuel burning to manufacture goods exported to the United States. Those emissions far outstrip U.S. emissions to supply agricultural and other products to China.

3. Based on historical CO2 emissions — which determine the amount of atmospheric carbon pollution now trapping Earth’s heat, given the roughly hundred-year time scale for a carbon dioxide molecule to distintegrate — U.S. climate-damage responsibility is roughly double China’s, even without normalizing for population. (For that calculation we added the past dozen years of respective emissions to the World Resources Institute’s compilation of the world’s nations cumulative carbon emissions during 1900-2004.)

Coal’s dominance in China energy is weakening, albeit slowly.

4. Most importantly, if we wish to look forward: The apparent capping of China’s CO2 emissions over the past three years marks a sea-change in that country’s previously inexorable rise in carbon pollution over the prior several decades. It was only in 1988 that China’s CO2 emissions from fossil fuels (along with cement manufacture, which is otherwise excluded from the data in this post) passed 2 billion metric tons, based on a terrific WRI times-series visualization. The implied annual growth rate to 2013, when the total (without cement) surpassed 9 billion, was greater than 6 percent per year. From 2005 to 2013, China’s compound average emissions increase rate was 5.3 percent. To bring emissions to a screeching halt since then, without war, famine or other cataclysm, is close to miraculous.

Two charts tell the story. The first, directly above, shows the overwhelming dominance of coal in China’s energy supply, but moderating since 2011 and falling since 2013. This is significant because coal is the most carbon-intensive fossil fuel, not to mention the most polluting in terms of “conventional” pollutants such as sulfur dioxide and fine particulates that kill several million Chinese people each year and sicken hundreds of millions more, as the New York Times has reported on multiple occasions. (See, for example, here, here and, perhaps most damningly, here.)

The second graph, below, highlights the changes in that supply over the past three years. Coal is down, while all other energy sources are up. In carbon terms (not shown in the graph), the combined increase in oil and gas use slightly more than offset the decline in coal burning, thus statistically creating a minuscule net estimated increase in CO2 of four-tenths of one percent from 2013 to 2016. Perhaps more importantly, energy output from carbon-free hydro-electric dams, non-hydro renewables (chiefly wind turbines and solar-photovoltaics) and nuclear power all increased, with their combined gain easily exceeding the net expansion in fossil fuel use.

Other fuels and technologies are finally starting to push down coal use in China.

The United States is not without its own climate triumph; as we pointed out in our recent “Good News” blog post and report, U.S. electricity-sector emissions (from power plants burning fossil fuels) fell 25 percent from 2005 to 2016 — a reduction equalling nearly four-fifths of the Clean Power Plan’s intended 32 percent drop in power-sector emissions from 2005 to 2030. (Note that our 25 percent figure is down slightly from the 27 percent reduction we reported in December, with preliminary 2016 data; both the post and report have been updated to reflect full-year emissions.)

But that’s electricity only — the “low-hanging fruit” for the U.S. and most other countries. U.S. emissions from transportation are up, as we’ll report shortly in a separate post. Far more worrisome, of course, is the Trump administration’s neanderthal assault not just on climate-related standards, regulations and research but on the very notion of energy efficiency and environmental stewardship.

The point of this data exercise is to underscore China’s historic achievement in flattening its carbon emissions. It may be premature to crown China as the new global leader in climate action, as some commentators have proposed lately. Let’s not forget that it was Germany’s pump-priming for renewable energy a decade or more ago that propelled the Chinese solar-PV industry down the cost curve. And lately the United Kingdom has been driving down carbon emissions at a remarkable rate.

But turning the corner on carbon emissions, as China apparently has done while providing material prosperity for well over a billion people, is no mean feat. The U.S. president will likely remain oblivious, but other Americans can acknowledge and celebrate China’s achievement.

Energy data for 2005-2015 are from BP, Statistical Review of World Energy, 2016, June 2016. We calculated 2016 energy data by applying year-on-year percentage changes in China Energy Portal, 2016 detailed electricity statistics, Jan. 20, 2017, and National Bureau of Statistics of China, Statistical Communiqué of People’s Republic Of China on the 2016 National Economic And Social Development, Feb. 28, 2017, Section XII. Resources, Environment and Work Safety, both accessed April 5, 2017. For coal, we applied the estimated 1.3% drop to 2016 in coal consumption stated in Jan Ivar Korsbakken & Glen Peters, A closer look at China’s stalled carbon emissions, March 1, 2017, posted to Carbon Brief, rather than the 4.7% drop asserted in NBS-China’s Statistical Communiqué. Emissions data are from BP Statistical Review (2005-2015), with 2016 calculated from the 0.3% rise to 2016 (excluding cement) estimated in Korsbakken & Peters.

Carbon tax ‘consequential’ as UK emissions fall to 1894 levels

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This post was researched and written by CTC intern Michael Kendall. More recent info, including 2016 carbon emissions data, are in the U.K. section of our Where Carbon Is Taxed page.

The United Kingdom, the birthplace of the Industrial Revolution and a kingdom built on coal, has cut emissions of carbon dioxide to levels not seen since the late 19th Century, according to a report from the UK consultancy, Carbon Brief.

CO2 emissions from fossil fuel burning in the UK (England, Scotland, Wales and Northern Ireland) totaled just 381 million metric tons (“tonnes”) last year, a 6 percent decrease from 2015 and 36 percent less than levels in 1990 (or 44 percent less than levels in 1970 when CO2 emissions peaked at 685 tonnes).

As Carbon Brief noted, total UK emissions hadn’t been that low since 1894, save for 1921 and 1926, when miner strikes paralyzed the coal industry.

No more carrying coals to Newcastle, as the historic but filthy fuel disappears from the UK.

Coal burning is disappearing from the former perennial bastion of coal, while use of oil and gas is down considerably from 2005, despite upticks since 2014 for both fuels. At the same time renewables are thriving, with a Carbon Brief analysis showing that wind generated more electricity throughout the UK than coal in 2016.

Data from British Petroleum’s comprehensive annual Statistical Review of World Energy show coal consumption in 2015 down 38 percent from 2005. That steep drop has driven down total CO2 emissions from UK fossil fuel combustion nearly 25 percent over the same period. (The UK Department for Business, Energy and Industrial Strategy will release official figures later this month.)

These reductions stem from a coordinated effort to cut emissions, reliant upon setting a national price on carbon in 2013. “Perhaps the most consequential factor,” says Carbon Brief editor Simon Evans, “is the UK’s top-up carbon tax, which doubled in 2015 to £18 per tonne of CO2.” (Brits sometimes refer to their carbon tax as a “top up” tax since it was intended to top up the carbon price determined via the auctioning of emission permits under the EU’s Emissions Trading Scheme.)

The UK carbon tax equated to $24-$25 per short ton in 2016, at last year’s average 1.5-to-1 sterling to dollar exchange rate (the exchange rate is a good deal lower at this writing in 2017, however), and converting metric to short tons. A carbon tax targets coal above all, on account of coal’s higher carbon content per Btu compared to oil or gas, which enhances the profitability and deployment of zero-carbon substitutes for coal-fired electricity, such as wind. And in fact Evans has charted the month-by-month collapse in coal use.

UK wind turbines generated more electricity than coal-fired plants in 2016, reports Carbon Brief.

Last week Drax, an energy generation company specializing in biomass, presented commissioned research taking carbon pricing a step further. The researchers modeled the likely impact on use of coal and natural gas and CO2 emissions from alternatively removing or doubling the UK carbon tax. Their models show that without the carbon tax, coal generation would have doubled and emissions would have risen 21 percent, significantly undercutting past emission gains; whereas doubling the tax would have cut coal generation by an extra 47 percent and shaved another 10 percent off overall CO2 emissions.

Continuing the good news: belying the standard notion that pricing carbon emissions must increase household energy bills, UK households paid less in energy bills (gas plus electricity) in 2016 than they did in 2008. We’ll look to Simon Evans for a summary:

Since 2008, household consumption of gas is down by 23% and electricity by 17%, cutting the average bill by £290 and more than offsetting the increase in policy costs over the same period… These energy savings are largely the result of energy efficiency policies and regulations, from UK rules mandating more efficient condensing boilers to EU product policy on more efficient fridges and ovens.

In short, while the price per kWh of electricity has risen for UK households, improvements in efficiency have cut household usage even more, enabling total household costs to fall. This stands as a model instance of regulation working in tandem with carbon pricing, as more-efficient appliances became more available due to regulation and more attractive due to the higher unit cost of electricity.

An unprecedented 15 percent drop since 2005 in electricity generation has helped drive down emissions as the UK economy has grown.

A further dividend of electricity savings, of course, is that the nationwide increase in electricity from wind turbines and gas-fired generation has been at the expense of coal rather than in addition to it — mirroring the U.S. experience since 2005 that we distilled and quantified in our December report, The Good News.

Where does the carbon tax stand now, with last year’s Brexit vote set to remove the UK from the European Union? The government’s March 2011 Budget set a 2020 target of a £30 per tonne tax on CO2, but in 2014 that figure was reduced to £18 via a price cap until 2020. In 2016 this cap was extended to 2021 “to limit the competitive disadvantage faced by business and reduce energy bills for consumers.” (See “The Carbon Price Floor” House of Commons briefing paper, p.3.)

Last week’s Spring Budget 2017 is vague about the future of the carbon price floor, stating that the “government remains committed to carbon pricing” but reserving details until the Autumn Budget 2017. The most promising statement in the budget is this, at page 34: “Starting in 2021-22, the government will target a total carbon price.” It suggests that the UK intends to continue to price carbon despite the country’s imminent exit from the EU. Carbon Brief provides a fuller analysis of the Budget’s potential impact on climate policy.

House GOP resolution plants a marker for eventual climate action

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Note: This post was updated in mid-May to reflect three additional signatories.

Republicans hold 241 seats in the U.S. House, a 47-vote margin over the Democrats’ 194. Earlier this week, 17 [now 20] of the GOP members issued a resolution “expressing the commitment of the House of Representatives to conservative environmental stewardship.”

The resolution doesn’t call for a carbon tax or any specific climate action; it doesn’t even mention “climate change,” though it does refer to “a changing climate.” In fact, the resolution is word-for-word identical to one issued eighteen months ago, in September 2015, also by 17 House Republicans, a group that included 10 of the signatories of the new resolution. (The other seven signers from 2015 are out of office — five declined to run, and two lost their seats to Democrats last November; none were “primaried” out. Of the seven new signers, four were newly elected to the House in 2016.)

Nevertheless, the resolution stands as a positive if halting step in the possible emergence of a critical mass of Republican officeholders to endorse and eventually vote for a carbon tax to combat climate change.

The resolution was by and for House Republicans only, a not unreasonable way to strike a small flame that would not be overshadowed by solid Democratic support for climate action. The 17 [now 20] signers hail almost evenly from Trump states and Clinton states, with four [now six] from New York, three each from Pennsylvania and Florida, and the other seven [now eight] from seven [now eight] other states. Only one represents a heartland state — Don Bacon, who just won election to the House from Nebraska — though two [now three] others are from the mountain West: Mark Amodei of Nevada and Mia Love of Utah [and also Mike Coffman of Colorado]. (See map.)

The 17 GOP House members who signed the March 14 resolution. Not shown: 224 Republicans who didn’t, although three of those signed on in May: Mike Coffman (CO-06), Peter King (NY-02) and Dan Donovan (NY-11).

The resolution kicks off with this “whereas”:

[I]t is a conservative principle to protect, conserve, and be good stewards of our environment, responsibly plan for all market factors, and base our policy decisions in science and quantifiable facts on the ground. (emphases added)

Mild stuff since the time of Teddy Roosevelt — or the dawning of The Enlightenment — but relatively bold in the current era of Republican denial of science and dismissal of considerations that might interfere with short-term profit.

It goes on for eight more whereases, culminating (or petering out) with this resolution:

Resolved, That the House of Representatives commits to working constructively, using our tradition of American ingenuity, innovation, and exceptionalism, to create and support economically viable, and broadly supported private and public solutions to study and address the causes and effects of measured changes to our global and regional climates, including mitigation efforts and efforts to balance human activities that have been found to have an impact.

Weak tea, to be sure, but the point isn’t the resolution’s text but its existence. A small flag planted in an otherwise barren landscape.

More Dems and Independents “are worrying a great deal about global warming,” reports Gallup. But not Republicans.

And barren it is, on the GOP side. The Gallup Organization this week released new poll data indicating that amidst an upsurge in Democrats and self-declared Independents who “worry a great deal about global warming,” the share of Republican worriers is stalled below 20 percent (see graph at left). That’s less than the rate a dozen years ago, before the Koch Brothers launched their insidious campaign to cloak denialism in pseudo-scientific respectability and ensure that GOP office-holders shield fossil fuel interests from regulation.

Note that our Polls page has more on the Gallup findings along with new and more encouraging data showing growing support for carbon taxes, from the National Survey on Energy and Environment (NSEE) from the University of Michigan and Muhlenberg College.

The graph makes clear that many Republican office-holders — unlike the distinguished party elders who last month unveiled the Climate Leadership Council‘s right-of-center, revenue-neutral fee-and-dividend proposal — are skating on thin (melting?) ice. Yet despite, or perhaps on account of, the “lite” nature of their climate resolution, they deserve our support. Here’s what you can do:

  • If you live in one of the 17 [now 20] districts represented in the map above, write to your Congressmember expressing appreciation and support for participating in the March 14 resolution.
  • If you live in one of the other 224 [now 221] other districts represented by Republicans, write your Representative and urge/insist s/he sign on.
  • If you live in any of the 194 districts represented by Democrats, let your representative know about the resolution and urge her/him to reach across the aisle to support the 17 [now 20] signers — particularly those from their state.

As you write your representative, you may want to consult FiveThirtyEight’s listing of your district’s Trump-vs.-Clinton vote from last November. It shows 21 districts where Clinton outpolled Trump but with a Republican member who hasn’t signed the resolution; they may be more amenable to suasion than other GOP representatives.

At least as important, join and support Citizens’ Climate Lobby, which since 2009 has been organizing to create political will for carbon taxes and which played a major role in both the 2015 and 2017 resolutions. A new CCL Web page on the Republican Climate Resolution makes it easy to take the first two steps outlined above.

What the WSJ Got Wrong About the Shultz-Baker Carbon Tax Proposal

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The carbon tax proposal that the Climate Leadership Council unveiled last month upends orthodoxies on both sides of the political divide. It is revenue-neutral, which goes against the desires of many on the Left to invest carbon tax revenues in a “just transition” to clean energy. It distributes those revenues as “dividends” to U.S. families, an income-progressive outcome that frustrates those on the Right who might accept a carbon tax as a way to pay for reducing the corporate income tax, at least in theory.

Editorial endorsements for the Shultz-Baker carbon tax proposal, as of March 1.

We at CTC heartily endorsed the council’s proposal in a blog post hours after its release. So did a dozen leading newspapers, including the Dallas Morning News, the Houston Chronicle, the Financial Times and Barron’s, some of which were likely impressed that the CLC rollout was led by GOP icons James Baker and George Shultz, both of whom held multiple cabinet posts in earlier Republican administrations. But that wasn’t good enough for the Wall Street Journal, whose editorial page sometimes reads as if written by the Koch Brothers-financed, climate change-denying Americans for Prosperity. Its Feb. 25 editorial attacking the CLC proposal, The Carbon Tax Chimera, didn’t so much rebut the proposal as excoriate it.

Messrs. Shultz and Baker responded in a letter in the Journal last Friday, We Thought We Would Hit Your Sweet Spot. Their letter isn’t aimed at the Journal’s editors, who are tethered to hard-right climate denialism, but to the paper’s remaining readers who recognize that catastrophic climate change poses risks to their bottom line (and themselves) and are looking for a policy response they can support. In the same spirit, we present this point-by-point rejoinder to the Journal’s editorial by Dr. Peter Joseph, group leader of the Marin County, CA chapter of Citizens’ Climate Lobby. Dr. Joseph is an outspoken advocate for the fee-and-dividend approach to carbon taxing which forms the heart of the CLC proposal.

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1. WSJ: The climate may change but one thing that never does is the use of climate change as a political wedge against Republicans.

Dr. Joseph: Following Sen. John McCain’s 2008 campaign acknowledgment of climate change, it was Republicans who turned climate change into a wedge issue by conflating scientific uncertainty — a necessary and ever-present part of scientific inquiry — with the well-established scientific consensus about global warming. The Journal seems not to appreciate that the Shultz-Baker plan, tailored to appeal to fiscal conservatives, can serve as Republicans’ escape ladder from this untenable position once they let go of the “I am not a scientist” trope and decide to join every other major political party – including conservative — in the Western democracies and get serious about this threat.

2. Also never changing is the call from some Republicans to neutralize the issue by handing more economic power to the federal government through a tax on carbon.

Revenue neutrality with 100 percent of the revenues returned to U.S. families as carbon dividends actually deprives the federal government of more economic power by channeling all the money back to citizens and reserving decision-making power to households, companies and markets.

3. The risk is that Donald Trump takes up the idea, which would hurt the economy with little benefit to the environment.

A fully refunded carbon tax will cut emissions with greater efficiency and less economic drag than regulations. It also produces greater environmental benefits and promotes business stability. The Climate Leadership Council estimates that by 2025 its plan will reduce CO2 emissions reductions by 28% below the 2005 baseline, meeting America’s Paris commitment. The Carbon Tax Center, modeling a more robust rise in the tax level after the initial $40/ton, estimates that the council’s plan would, by 2030, reduce our annual CO2 emissions from 2005 levels by 40 percent.

4. Such a tax might be worth considering if traded for radically lower taxes on capital or income, or is [sic] narrowly targeted like a gasoline tax.

Some economists recommend tax swaps, with Republican-leaning economists preferring cuts to the corporate income tax and Democratic-leaning ones favoring cutting the payroll tax. But politics point strongly to the dividend approach. The tax code is so complex, and Treasury Department bookkeeping so labyrinthine, that it’s extremely difficult to pull off a tax swap that’s immune to suspicions that the government is “stealing” the money. Accountability is crucial. Plus, the carbon tax has to rise each year, since it can’t start at the high levels that are required without seeming punitive. This requires the public to trust that the tax revenues will actually come back to them. A dividend like the council’s can win their trust, since the dividend checks rise in concert with the tax level.

5. But in the real world the Shultz-Baker tax is likely to be one more levy on the private economy.

Reinjecting billions directly back into the Main Street economy will act as a stimulant, not a drag. When families, particularly at the lower end, receive money regularly, they spend it. Sectors other than the hydrocarbon industry will benefit, and the predictable glide path toward the low-carbon economy will allow industry to adapt.

Former Secretary of State & Treasury James Baker, at the Climate Leadership Conference’s Feb. 8 rollout of its carbon tax proposal at National Press Club.

6. Even if a grand tax swap were politically possible, a future Congress might jack up rates or find ways to reinstate regulations.

The carbon tax signal should escalate predictably, and as long as the public receives the funds they won’t be inclined to revolt, since a clear majority will be made better off. As for wealthier households, many will hardly notice that their dividend checks don’t cover their carbon tax bite. Provided the tax levels are robust rather than token, Congress will have no incentive to “jack up rates” later on. Remember, Washington keeps none of the money.

7. Another problem is the “dividend.” A carbon tax would be regressive, as the poor spend more of their income on gasoline and household energy.

Full dividend return converts a regressive policy into a progressive one. The key is the dividend: since wealthier people have larger-than-average carbon footprints (they buy more stuff, live in bigger houses, fly more, etc.), they’ll pay in, while most middle-income and virtually all low-income families will take out. Models show that close to two-thirds of the population comes out ahead with full revenue return via dividends rebate. Citizens will retain the freedom to lower their consumption and use the spread between their carbon dividend check and carbon footprint costs as an incentive to reduce personal emissions and make some money, if they choose, without being required to do so by the government.

8. The plan purports to solve this in part by promising to return the tax to the American public. But the purpose of taxes is to fund government services, not shuffle money from one payer to another. No doubt politicians would take a cut to funnel into renewable energy or some other vote-buying program.

Taxes fund programs, agencies and services that make America great. But a fully refunded “tax” such as the council’s isn’t really a tax if the government doesn’t keep the money. It’s a fee, not intended to generate operating revenue but to correct a market failure. True, politicians might find it difficult to let huge sums slip through their fingers. As then-ExxonMobil CEO Rex Tillerson quipped in a 2009 speech advocating a revenue-neutral carbon tax, “I know that’s hard for a politician to say.” He suggested the tax be called “a refundable greenhouse gas emissions fee.” The U.S. government will return the funds unmolested as required by law.

9. The rebates would also become a new de facto entitlement with an uncertain funding future.

The dividends will rise initially, then level off and eventually — and predictably — decline as the rising fee does its job of lowering carbon intensity. (That decline is another argument against using the carbon revenue for tax swaps or government programs, as the eventual budget shortfalls would require a future Congress to raise taxes.) At the same time, energy from wind and sunlight, whose fuel is free, combined with efficiencies and innovative processes and products, will stabilize or decrease the costs of goods and services. What matters to citizens is their overall household budgets. There will also be savings in healthcare costs as the air gets cleaner, and presumably military expenditures as we wean off unstable sources of foreign oil.

10. Meanwhile, the energy import fee looks like an appeal to Mr. Trump’s protectionist impulses…The idea is an attempt to export U.S. climate and tax policy with the threat of tariffs, which other countries may resent.

The Journal would do well to look more broadly at the council’s border carbon tariff. It’s an incentive to other countries, a tool to ensure a level playing field for U.S. manufacturers, and an act of leadership by the world’s most vibrant economy. A sustainable climate and a habitable earth require controlling global emissions. Without a global carbon price, too many nations will be unable to fulfill the reduction targets they promised in Paris, which are all voluntary. The global economy is the only enforcement mechanism there is. From a practical political standpoint, without a border carbon tariff no carbon charge will ever get through Congress if it disadvantages U.S. exporters.

11. The tax rate would also be influenced by international climate models that have overestimated the increase in global temperature for nearly two decades.

Must the WSJ editorial page continue to cling to this wearisome canard, in the face of year after year of record-setting temperatures? As for alleged IPCC “overestimates,” presumably referring to the alleged “pause” in surface temperature increases, that spurious claim has been thoroughly debunked. The excess retained heat energy has been going into the oceans, where it’s accelerating the disintegration of the polar ice shelves — dams restraining the great land ice sheets —threatening much higher sea level rise than previously predicted and threatening to inundate vast stretches of our nation’s and the world’s coastal areas.

12. A carbon tax is always pitched as “insurance” against climate change, but no one thinks it will change the trajectory of temperatures.

That might apply to an anemic price signal. It hardly applies to a carbon tax that starts at $40 per ton of CO2 and rises from there. The data indicate that most known fossil fuel reserves must remain in the ground to prevent catastrophic warming. Only a robust price signal can enable markets to resist the disastrous allure of trillions of dollars worth of carbon products. A rising fee on carbon emissions is the most powerful lever we have to phase out fossil fuels as fast as practicable.

13. A 2016 paper from the Cato Institute makes the point that insurance policies hedge risks that are well-known, unlike climate change, whose risks are highly uncertain.

The Cato Institute, known for its climate denial, is hardly a source of sound advice. The scientific consensus tells us that the chances that climate change will wreak catastrophic damage on property, let alone ecosystems and civil society, are far greater than the probability that, say, one’s home will be destroyed by fire. Yet every homeowner has fire insurance.

14. Fossil fuels make up about 80% of U.S. energy; solar, wind and hydropower are more expensive and lack the scale to be a viable substitute.

Fossil fuels rose to dominance through political arrangements that externalized the true costs of dumping their combustion products into the atmosphere and oceans. One can argue that these costs were unknown until now. Today to not know is to deny reality. The carbon tax internalizes those costs, rectifying a massive market failure. Yet even without that tax, solar and wind are rapidly gaining market share and grid parity, and there are no limits to the eventual scope of their deployment. A carbon tax will accelerate this transition.

Harvard economics professor Greg Mankiw at the Feb. 8 CLC press conference.

15. Congress has never shown the self-restraint to collect an estimated $1 trillion in taxes and return it to the public. Any Republican who supported a carbon tax can expect no help from Democrats, who won’t restrain the Environmental Protection Agency.

As Secretary Tillerson observed, it is tough for a politician to utter the words “revenue neutral.” The public will have to demand it, and the business community, understanding that climate disasters are terrible for business, must lobby for it. Elected officials will then follow. The Shultz-Baker plan calls for suspending most EPA authority over CO2, an olive branch to anti-regulation interests. Evidence that Democrats and their environmental allies might be willing to relinquish control over the carbon tax revenue stream can be found in the resolution that California’s Democratic-controlled legislature passed last August calling on Congress to enact a revenue-neutral carbon fee and dividend proposal similar to the Shultz-Baker plan.

16. You won’t read this elsewhere, but what’s driven the recent reduction in U.S. carbon emissions is fracking for natural gas, which might never have happened had a carbon tax been in place.

While it’s undeniable that fracked gas contributed to overall reductions bydisplacing dirtier coal, a recent report by the Carbon Tax Center established that since 2005 the combination of electricity savings from efficiencies and increased wind and solar have played a greater part in reducing carbon emissions tha the replacement of coal by gas. Moreover, efficiency, wind and sunlight — unlike fracking — generate zero emissions of methane, which is also a potent greenhouse gas.

17. Human ingenuity and prosperity are the best insurance against climate change.

Perhaps. But even human ingenuity is hard pressed to overcome broken markets that fail to price carbon emissions’ damages. As Harvard economics professor Gregory Mankiw pointed out in the CLC press conference rolling out the carbon dividend plan (@32 min), a carbon tax is as close to a silver bullet as there is, precisely because it engages the enormous power of money and markets, with minimal risk, in a nonpartisan way. The WSJ should support it.

Dr. Joseph may be reached at pjmd1@me.com. He asked us to note that the views expressed here are Dr. Joseph’s and not necessarily those of Citizens’ Climate Lobby or Citizens’ Climate Education. — editor.

If Midwestern states like Kansas start leading on renewable energy, choosing renewable energy, working in renewable energy jobs, associating their state identity and state pride with renewables — that, more than anything, is likely to shift their opinions on global warming (and openness to serious climate policy).”

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Vox blogger David Roberts, in Renewable energy draws increasing Republican support. That could shift climate politics., Feb. 16.

What the Surge in U.S. Driving Says about Carbon Taxing

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Driving in the United States didn’t just inch upward during the past two years, it practically erupted. Total on-road vehicle-miles traveled (VMT) by cars, trucks and buses jumped by 87.5 billion last year, after increasing the year before by 105.2 billion, according to FHWA data. The two-year increase, nearly 193 billion miles — that’s just under 600 miles for every U.S. resident — is the largest in U.S. history (see graph).

2014-2016 VMT rise is biggest two-year jump in U.S. history (yes, we checked all the way back).

2014-2016 VMT rise was biggest 2-year jump ever (yes, we checked all the way back).

Percentage-wise, the increases may not look momentous — 3.5 percent in 2015 and another 2.8 percent last year. But the two-year growth percentage, 6.4 percent, is the highest in almost three decades. And it comes after a spate of articles and reports celebrating (or decrying, depending on one’s point of view) the arrival of “peak driving,” or, at least, peak driving per capita.

So what’s going on?

The prime factor couldn’t have been population growth; it totaled just 1.4 percent from 2014 to 2016. And let’s not over-credit 4.2 percent economic growth over the same period, since the level of driving is more molasses-like than GDP, as we discuss further below. (Also note that GDP subsumes population, so the two factors wouldn’t be additive.) What about pent-up demand from the 2008-2011 economic slowdown? It makes for good anecdotes but probably not enough to move the dial.

My candidate for key cause of the surge in U.S. driving is super-cheap gasoline, or, more precisely, the precipitous drop in U.S. gasoline prices since 2014.

The nationwide average pump price was $3.43 in 2014, the fourth consecutive year in the mid-three dollar range. It dropped nearly a dollar in 2015, to $2.51, and fell again in 2016, to $2.20. Adjusted for general inflation (which is how we economists calibrate these things), the 2014-2015 price drop was 26.8%, and the 2015-2016 drop was 13.3%. The two-year real fall in price, 37%, is the largest over two consecutive years since at least 1950.

A drop in gasoline prices would cause an uptick in driving. If it’s cheaper to drive a mile, or 100 miles, it stands to reason that people will drive more miles. But how much more? How sensitive is the amount of miles driven (VMT) to the price of gasoline? Or, more precisely, how sensitive are changes in VMT to changes in the price of gas?

The answer: the relationship between VMT and gas prices isn’t super-sensitive; but it’s more than zero, and enough to make a big difference in the amount of driving when gas prices take a large turn.

Let’s look at how the math works. The parameter we’re looking for is the gasoline price-elasticity of VMT (driving). Let’s say it’s negative 0.1. (Negative because a lower price means more driving; and just 0.1 because the connection is probably slim.) Now let’s say the price of gasoline drops by one-fourth, or 25%. Based on the assumed -0.1 price-elasticity, we would expect a 3% rise in driving. (Mathematically, that’s because 0.75 raised to the negative 0.1 power, written as 0.75^(-0.1), is 1.029, which denotes a 2.9% increase.)

Does that feel right? Would a one-fourth drop in the price of gas — not just over a single day or month, but over a sustained period — actually lead people to drive 3% more? Would people take more car trips, or longer trips, to that extent? It seems reasonable that they would, though how much is an empirical question. (Which is why the entire vast literature on price-elasticities is based on observed behavior.)

The steep price drops in gasoline could have caused much of the rise in VMT.

Biggest factor in VMT rise: probably steep drop in price of gas.

In the table at right I’ve run the actual drops in the price of gas through that calculation, for two possible VMT price-elasticities: (negative) 0.10, and half that value, or 0.05. For the 0.10 value, the drop in the price of gas would have evoked much or most of the observed rise in driving. For the lower 0.05 value, not so much but still a significant portion. (The influence for 2016 should actually have been greater than shown because of the lagged effect from the 2015 price drop.)

What, then, are the best estimates for the price-elasticity in the literature (again, we’re looking for the change in VMT as a function of changes in the price of gasoline)? For the past decade I’ve relied on a seminal 2007 paper by U-C Irvine transportation economists Ken Small and Kurt Van Dender in which they derived a long-run price elasticity of gasoline consumption for the U.S. of -0.38, with 46% of that being due to changes in the amount of vehicle travel. Multiplying those two figures yields a long-run elasticity of VMT with respect to the price of gasoline of -0.175.

(The Small – Van Dender paper is summarized on CTC’s Effectiveness page — drop down to the first bullet point. The paper, “Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect,” is available here. The result just given appears on p.24 (FN 27). Small and Van Dender also remark that the 46% share of gasoline price elasticity accounted for by VMT declined to 27% when recalibrated to prices and driving behavior observed toward the end of their sample period. It’s also true that their elasticity figures are long-run, whereas the VMT behavior we seek to explain here is short-run, implying a still-lower price-elasticity; on the other hand, when the price of gas changes it’s easier to change the amount of driving quickly than to change miles per gallon, which suggests that the short-run elasticity of VMT might not be many times smaller than the long-run figure.)

My takeaway is suggested by the table above: while numerically the gasoline price-elasticity of VMT is small, the fall in gas prices in 2015 and 2016 was so severe that it almost certainly explains a lot of the observed rise in driving. Of course, rising incomes would also have played a role, but likely a small one. The Small – Van Dender income-elasticity of driving is 0.11 in the short run and 0.53 in the long run. Assuming a value of 0.25 for our purposes, the 2.6% increase in real GDP from 2014 to 2015 would have been expected to evoke only a 0.6-0.7% increase in driving (since 1.026 raised to the 0.25 power is 1.0064); for the 1.6% rise in GDP from 2015 to 2016, the effect on driving would have been smaller still.

What does this exercise suggest about carbon taxes? Take it as yet one more demonstration that prices influence the level of usage of just about everything, including fuels, energy, even driving. The price sensitivities (elasticities) may not be enormous, but they are felt nonetheless. In 2015 and 2016 they were enough to power a record two-year rise in total U.S. miles driven. And they’ll also act in reverse, which is how a carbon tax — particularly one with a rising price trajectory that can filter out market volatility — can be so powerful in slashing gasoline use and fossil fuel use generally.

And remember, the price elasticity of gasoline use (and its carbon emissions) is at least twice as great as the elasticity of driving with respect to the price of gas, which is what we’ve explored here. (We explored the price elasticity of gasoline in this Sept 2015 post, which is one of our most-viewed ever.)

So when you see someone parading false facts like this one on the New York Times letters page earlier this month,

[F]act — as documented by the Energy Information Administration and experienced by anyone who must drive regularly regardless of cost — fuel prices have little effect on gas consumption. (The letter, from Food & Water Watch, is the third of five in that link.)

you’ll know how to push back.

A Way Forward for Carbon Taxes

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Here we cross-post my article published in The Nation magazine this morning, under the headline, Progressives Need to Get Over Themselves and Support This GOP-Backed Carbon-Tax Plan. Except for a few extra links below, the two versions are the same.

To stay up to date on carbon tax policy, politics and economics, join our email list, click here.

  — Charles

Carbon tax haters can relax. The proposal for a national carbon tax released on February 8 by high-level Republicans, including uber-GOP consigliere James Baker, isn’t going anywhere. Financially and ideologically, the American right is wedded to carbon fuels. Trumpism runs on and reeks of them. Predictably, not a single Republican in Congress, and no one in the White House, has uttered a single positive word about the new carbon tax plan.

Nevertheless, the proposal’s intended audience may not be Beltway Republicans, but rather those ordinary Americans, majorities in both parties, who say they want action on climate, and who therefore might yet figure in the political equation over climate policy. That group includes progressives. We should pay attention: Carbon taxes matter.

nation-meme-1Our long-building climate crisis is already materializing as drowned coasts, punishing droughts, vanishing glaciers—and political upheaval. At its root is a century-old lie: market prices for gasoline and other fossil fuels that do not factor in the damage from burning them.

A clean energy revolution is at last underway, with wind power, solar electricity, and energy efficiency becoming not only cheaper by the day, but easier to deploy. Still, the clean energy transition will be slowed until prices of coal, oil, and gas reflect their true environmental costs. A carbon tax could do that, if designed properly.

How carbon taxes work is simple enough, at least in theory. Fuel use is infinitely varied and intricately woven into society in ways that regulations such as auto mileage standards can’t fully reach. Clear price signals, on the other hand, can be a nearly magic wand to help billions of invisible hands rapidly reduce and replace fossil fuels.

But with a carbon tax come difficult choices about the vast revenue it will generate. Carbon taxing had a test run at the ballot box last November in the state of Washington, and it ended badly.

On November 8, voters in the Evergreen State rejected by a nearly 3-to-2 margin what would have been the nation’s first statewide carbon tax. A win for “Initiative 732” would have given the United States a carbon tax beachhead, like Canada’s British Columbia, which has had a small but successful carbon tax since 2008.

Remarkably, the decisive factor in defeating I-732 may not have been money from big carbon or even popular aversion to higher taxes, since the initiative was tailored to keep Washingtonians’ tax burden unchanged. What doomed I-732 was a fissure within the climate movement, with centrist economists and other policy wonks in favor of the initiative and progressive greens opposed.

Stated briefly, climate activists in Washington split over opposing answers to two key questions: What are carbon taxes for, and who gets to design them?

Carbon taxes can cut emissions in two ways. As noted above, they raise the price of carbon fuels, thereby worsening their competitive position vis-à-vis cleaner fuels. In addition, the tax revenues raised by a carbon tax can be invested in clean energy infrastructure such as public transit and community solar.

The first path—the “price pull” of boosting market prices of carbon fuels—is what dazzles economists. The second route—the “revenue push” of investing in green infrastructure—appeals to many ordinary folks, especially on the left. Some progressives actively distrust policies that lean hard on price signals, partly for fear that workers in dirty industries will be penalized as investment migrates to cleaner alternatives.

For decades, reactionary forces in the US have been able to block seemingly every new public endeavor by labeling it tax-and-spend. The Washington state carbon tax proponents believed they had an antidote: don’t allow the government to spend the revenues from the carbon tax; rather, use those revenues to reduce other taxes. The political assumption seemed to be that going “revenue-neutral,” though it might frustrate the left—bye-bye public investment—could placate the right or at least capture the center. And so Carbon WA, as the advocates of I-732 called themselves, fashioned its ballot initiative around cuts to the state’s regressive sales tax.

Progressive greens recoiled. The Alliance for Jobs and Clean Energy, a state umbrella group of environmental justice organizations and mainstream allies, blasted I-732 for starving green jobs and ignoring frontline communities. So did nationally prominent progressive leaders like Naomi Klein and Van Jones. The measure’s electoral chances, which were never good, could not withstand this split. On election day, as Hillary Clinton was besting Trump in Washington state by half-a-million votes, the carbon tax was rejected, 59 percent to 41 percent.

But progressives can’t just walk away from carbon taxes. Carbon taxes are the only policy tool that, by slashing demand in a rapid, predictable way, divests our economy from fossil fuels and enables governments, business and consumers to make investments in the transition to clean energy. Carbon taxes also have the best chance of catching fire globally.

The carbon tax James Baker brought to the Trump White House on February 8 on behalf of the new Climate Leadership Council has a lot in common with I-732: the Council’s proposal is also avowedly revenue-neutral. But rather than lowering an existing tax, it relies on a so-called tax-and-dividend model: as the state of Alaska does with oil revenues, revenues from the Council’s national carbon tax would be returned equally to all American households in quarterly “dividends” digitally deposited in Social Security accounts. The tax would start at $40 per ton of carbon dioxide.

Earmarking all of the revenue to these dividends creates the political will to raise the tax every year, since the dividends rise in tandem with the tax rate. Ramping up the tax by $5 a year would shrink the use of carbon fuels so drastically that, by my calculations, US carbon emissions in 2030 would be 40 percent less than they were in 2005 (a standard baseline year).

Yet this progress comes with a catch. The Council would phase out much of the Environmental Protection Agency’s regulatory authority over greenhouse gases and would outright repeal President Obama’s Clean Power Plan to cut emissions from electricity generation. It would also immunize fossil fuel companies from lawsuits for damages done by their products—lawsuits such as those bound to arise from the revelations that ExxonMobil and other companies knew for decades about the climate damages their products cause, and lied about it.

nation-meme-2But government policy revolves around trade-offs, and on balance the Council’s carbon tax is worth supporting. After all, well over 80 percent of the Clean Power Plan’s targeted reductions for 2030 were already achieved by the end of 2016. Thus trading away the Clean Power Plan for a tax that could scour fossil fuels from the entire economy is like swapping an aging ballplayer for the next superstar.

Of course, not everyone will see it that way, particularly traditional green groups that helped write the laws and regulations that cleaned up the nation’s air and water. Some will regard the Council’s trade as a ploy to undo the EPA’s authority to protect not just climate—where it may be largely ineffectual anyway—but public health.

With Republicans tightly lashed to climate denial, the value of Baker’s carbon tax proposal may be less as a gateway to legislation and more as a spur for progressives and other citizens to take a clear look at carbon pricing.

Will progressives trust the verdict of economists that a revenue-neutral carbon tax can drive the energy transition so long as the tax level is high enough? Or do we support carbon taxes only if the revenues are invested in the clean energy transition? If so, how do we craft a spending program that reconciles the claims of competing interests? And what is our blueprint for building political power to enact such a carbon tax, when “tax” remains a dirty word in national politics?

Clear majorities of Americans want climate action. Remarkably, some polls have even found that majorities of Americans support carbon taxes like the Climate Leadership Council’s proposal. With the Democrats’ national defeats last November, the failure of climate activists to unite on the Washington state referendum is looking like an unforced error of cruel proportions. We can’t afford to repeat that mistake at the national level.